Malaysian order targets Barbados-held accounts in laundering probe

Financial watchdogs are monitoring suspicious transactions involving millions of dollars in funds allegedly held in a Barbados-based bank that are believed to be linked to money misappropriated from the state-owned 1Malaysia Development Berhad (1MDB), Barbados TODAY can reveal exclusively.

The Central Bank of Barbados and the Financial Services Commission (FSC) are tracking the developments.

The Malaysian Anti-Corruption Commission (MACC) said it has obtained a prohibitory court order on the funds amounting to US$1.7M (BDS$3.4M).

The MACC said the money is held in two bank accounts at the locally registered institution whose headquarters are in Switzerland. It also named the bank operating from Barbados.

The Malaysian Commission said in a statement that the order was issued in April by a Kuala Lumpur high court judge after he was satisfied with the prosecution’s application under Section 53 of the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act.

“The application showed that the funds are linked to money laundering activities based on investigations by MACC’s Special Operations Division,” the MACC said.

Investigations found that between 2014 and 2019, several individuals who were account holders and directors of offshore companies are suspected of receiving, concealing, transferring and converting proceeds of unlawful activities through the companies’ bank accounts in Barbados.

Following this, the Kuala Lumpur High Court granted a prohibitory order on financial transactions involving US$56 285.88 (BDS$112 571.76) owned by a global fund company and US$1 649 118.40 (BDS$3.2M) owned by another fund institution.

The Central Bank of Barbados said it was “aware of media reports concerning a foreign court order related to funds held at a Barbados-licensed institution”.

Governor Dr Kevin Greenidge told Barbados TODAY: “We do not comment on specific supervisory matters involving individual licensees. Barbados’ regulatory framework requires licensed financial institutions to comply with anti-money laundering and counter-financing of terrorism obligations, and the Central Bank works with competent domestic and international authorities in accordance with the law. 

“Any matters involving suspected proceeds of crime must proceed through the appropriate legal and regulatory channels.”

The Financial Services Commission told Barbados TODAY in a statement on Friday it was monitoring the situation.

“The commission is monitoring the issue and will communicate in due course if/when warranted. Matters such as these that speak to accusations of fraud, money laundering, and so on, have a multi-institutional approach, which includes Barbados’ Financial Intelligence Unit. These discussions can sometimes include foreign authorities.

“Additionally, note that the entity in question is linked to a registrant regulated/supervised by the Central Bank of Barbados.”  

The 1Malaysia Development Berhad (1MDB) is an insolvent Malaysian strategic development company, wholly owned by the Ministry of Finance in Kuala Lumpur.

In 2015, the company became the subject of a major international corruption scandal, with evidence pointing to money laundering, fraud and theft.

A lawsuit filed by the United States Department of Justice alleged that at least US$3.5B (BDS$7B) was stolen from the Malaysian state-owned fund.

Then-US attorney general Jeff Sessions had described it in an international conference as “kleptocracy at its worst”.

In September 2020, the alleged amount stolen had been raised to US$4.5 billion (BDS$9B), and a Malaysian government report listed 1MDB’s outstanding debts to be at US$7.8B (BDS$15.6B).

The scandal implicated Malaysian prime minister Najib Razak, contributing to his party’s 2018 election loss and his eventual trial and imprisonment.

As of August 6, 2022, in an ongoing effort to fight global kleptocracy, the US justice department recovered and returned a total of US$1.2 billion (BDS$2.4B) of 1MDB funds misappropriated within US jurisdiction to Malaysia, joining a list of several countries which have initiated recovery or that have already repatriated smaller recovered amounts. 

(EJ)