KYC360 News

The laundering of billions of dollars from a Malaysian government wealth fund using offshore companies is the worst type of kleptocracy [seen], according to US Attorney General Jeff Sessions.

Sovereign wealth fund 1Malaysia Development Bhd (1MDB) was set up by the Malaysian government to promote economic development, but instead allegedly corrupt officials laundered its billions to purchase New York real estate, art work and a multi-million dollar yacht.

“In total, 1MDB officials allegedly laundered more than $4.5 billion in funds through a complex web of opaque transactions and fraudulent shell companies with bank accounts in countries ranging from Switzerland and Singapore to Luxembourg and the United States.

“This is kleptocracy at its worst,” Sessions said in a speech prepared for delivery at the inaugural Global Forum on Asset Recovery event.

Nearly half of the US government’s $3.5 billion corruption proceeds are related to 1MBD alone, and the US Department of Justice is “working to provide justice to the victims of this alleged scheme,” he explained.

Sessions also urged countries to co-operate closely in terms of sharing information for criminal investigations and said: “[We are] also working towards the implementation of a framework with some of our closest allies that would supplement the MLAT process and reduce potential conflicts of law regarding the disclosure of electronic evidence.

“That kind of framework would enhance public safety efforts in the U.S. and around the world.”

Executive Assistant District Attorney Michael Sachs, Chief of the Investigation Division at the Manhattan District Attorney’s Office, recently discussed with KYC360 some of the issues pertaining to MLAT, investigations and asset recovery.

“I think really in terms of evidence gathering, the MLAT process, is a very good process, but at the same time, I think it’s become somewhat antiquated in terms of the digitalisation of the global economy,” he said.

“So I’d like to see easier access to financial records, working on improving that area I think would be a huge boon.”

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1MDB scandal – in a nutshell

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1MDB debt could trigger Malaysia credit downgrade