U.S. investigators are examining whether Goldman Sachs violated the Bank Secrecy Act when it didn't inform regulators about a potentially suspicious transaction involving Malaysia's embattled state fund 1MDB, the Wall Street Journal reported Tuesday.
After raising $3 billion via a bond issue for the troubled fund, Goldman sent the proceeds to a Swiss bank account controlled by 1MDB, with much of that amount then disappearing offshore and some reappearing in the prime minister's bank account, the WSJ reported, citing people familiar with the matter and bank-transfer information.
At issue is whether Goldman should have viewed the transfer to the Singapore branch of Swiss private bank BSI instead of a large global bank as suspicious and a potential sign the funds weren't being used for their intended purpose, the WSJ said.
Goldman Sachs did not immediately respond to a request for comment.
The funds were meant to finance a major real-estate project in Kuala Lumpur, Malaysia's capital, the WSJ said.
BSI didn't respond to a request for comment, the WSJ said. Prime Minister Najib Razak has repeatedly denied wrongdoing. 1MDB has denied sending funds to Najib's account.
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In late May, Singapore's regulators ordered BSI to shut down, with prosecutors in the city-state and in Switzerland weighing criminal charges.
The Monetary Authority of Singapore (MAS) said Switzerland-based BSI Bank would lose its status as a merchant bank in Singapore due to "serious breaches of anti-money laundering requirements, poor management oversight of the bank's operations, and gross misconduct by some of the bank's staff."
It was the first time since 1984 that MAS has withdrawn a merchant bank's approval.
While Singapore's authorities didn't mention 1MDB, Swiss authorities said the move was related to its investigation of the fund.
BSI Bank in Switzerland issued a statement in which it said it had cooperated with both Swiss and Singapore regulators in their investigations into the troubled wealth fund.
Questions about movement of funds from 1MDB gained attention in July last year, when the Wall Street Journal reported that in 2013 nearly $700 million had flowed from the fund to Malaysian Prime Minister Najib Razak's personal bank account.
Najib has repeatedly denied wrongdoing and, under pressure from the outcry caused by the WSJ report, said the funds were a private donation from a Middle Eastern country he declined to name. He has denied benefiting personally from any of the funds.
In January, Malaysia's Attorney General Mohamed Apandi Ali said that Saudi Arabia's royal family gave Najib a $681 million gift, of which Apandi said about $600 million was later returned.
Apandi said that no criminal offense had been committed. But globally, investigations into 1MDB in locales as varied as US, Switzerland, Singapore and the Seychelles have continued.