A multinational bank with four branches in Vietnam faces billion lawsuit over 1MDB scandal

Hanoi / London —Standard Chartered, the UK-headquartered multinational bank with a strong focus on Asian markets and four branches in Vietnam, is now at the center of a massive legal battle linked to one of the world’s largest financial scandals.

The bank is facing a $2.7 billion compensation claim filed by asset liquidators for Malaysia’s sovereign wealth fund, 1MDB. The claim alleges that between 2009 and 2013, Standard Chartered facilitated more than 100 internal fund transfers without adequate oversight, enabling the concealment of embezzled funds. These transactions reportedly included payments to personal accounts of former Malaysian Prime Minister Najib Razak, as well as purchases of luxury jewelry and watches for his family.

This is not the first time Standard Chartered has faced accusations of weak internal controls. In 2016, Singapore fined the bank SGD 5.2 million for breaches of anti-money laundering (AML) regulations, citing “serious deficiencies” in its customer and transaction monitoring systems. Earlier, in 2019, Standard Chartered agreed to pay $1.1 billion in fines to US and UK authorities for AML compliance failures.

In the 1MDB case, the lawsuit claims the bank failed to conduct proper due diligence on over 100 internal transfers between accounts within its system, transactions that allegedly played a crucial role in concealing illicit funds.

This legal action is part of a broader global effort to hold financial institutions accountable and recover stolen funds for Malaysia’s state coffers. Standard Chartered has denied all allegations, arguing that the plaintiffs are not legitimate legal entities but “shell companies” operating under false pretenses. The bank stated that it closed the relevant accounts in early 2013 and has “fully cooperated with authorities” since the 1MDB scandal came to light.

The case adds to mounting legal pressure on Standard Chartered, which has faced claims totaling more than $4 billion in legal penalties and settlements since the beginning of 2025.

The unfolding situation raises critical questions about the bank’s role and responsibility in safeguarding the integrity of international financial flows. If proven true, the allegations suggest that Standard Chartered overlooked clear red flags, allowing illicit funds to move through its system for years. Beyond reputational damage, the case could spark deeper concerns over the bank’s governance and risk management practices.

Despite the bank’s assertions that it has significantly strengthened its internal controls since past scandals, regulators and stakeholders will likely scrutinize its actions closely. Even in the absence of intentional wrongdoing, failure to detect and prevent suspicious transactions may still be viewed as serious negligence under international banking standards.

Source: Financial Times

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