Recent developments demonstrate that regulators are focused on allegations of corruption in sovereign wealth funds.
On January 30, 2016, the Swiss attorney general’s office announced that $4 billion may have been misappropriated from state-owned companies in Malaysia through transfers involving Swiss financial institutions. Two days later, the Monetary Authority of Singapore announced that they had seized a “large number” of bank accounts in connection with their investigation of possible money-laundering involving the Malaysian state investment fund, 1Malaysia Development Berhad (1MDB). Both regulators have indicated that they are cooperating with U.S. authorities.
In light of this, financial firms' interactions with sovereign wealth funds will likely continue to be a focus of U.S. regulatory interest.
In this client alert, RK&O attorney Audrey Laning Ingram discusses what the 1MDB corruption scandal means for the regulatory landscape and for financial institutions that have dealings with sovereign wealth funds and suggest ways in which firms can protect themselves through robust compliance programs.