The ripple effects of a major Asian scandal involving money laundering and siphoning money from Malaysia-based 1MDB continue to be felt. A top court in Singapore has issued a major ruling.

(Updates with EFG International comment from its 2024 annual report.)

Singapore’s High Court has rejected BSI Bank Limited’s appeal to strike out the $394 million claim brought by scandal-hit Malaysian fund 1MDB for funds misappropriated through BSI accounts. It previously failed to achieve such a result on its first-strike out application in August 2024. 

BSI Bank Ltd is now in liquidation, a statement from the parties representing 1MDB said earlier this week. 

The court’s action enables 1 Malaysia Development Berhard and Brazen Sky – its subsidiary – to pursue a case in full against the bank. The claim alleges that BSI and its officers facilitated fraudulent transfers as part of a complex scandal that led to the theft of billions from 1MDB. The saga surrounding the fund is one of the largest such frauds in recent financial industry, affecting a number of banks and prompting calls for tighter AML and other controls in jurisdictions including Singapore and the US. 

The lawsuit against BSI Bank Ltd and several of its former officers was filed on 2 May last year. It seeks redress for financial losses said to be suffered as a result of unauthorised fund transfers and money laundering schemes orchestrated through accounts at BSI. 

The claim seeks damages of $394 million for BSI’s alleged role in the complex corruption, bribery and money laundering scandal, by which billions of dollars were misappropriated from 1MDB. It alleges that BSI and several of its former officers facilitated these transfers, assisting in the misappropriation of 1MDB's assets, according to a statement issued earlier this week by those acting for 1MDB.

In August 2024, BSI failed on its first strike-out application, and subsequently appealed the dismissal of its application, including on grounds relating to whether the claims were time-barred.

In a decision given on 27 May 2025, Justice Maniam found against BSI on all grounds and ordered BSI to pay 1MDB and Brazen Sky’s costs for the appeals. The dismissal of the appeals allows 1MDB and Brazen Sky’s case against BSI to proceed in full. The action forms part of 1MDB's ongoing global asset recovery efforts to reclaim billions of dollars of misappropriated funds, the statement said. 

“We are pleased this application has been denied and are committed to holding accountable the institutions and individuals involved in misappropriating money from Malaysia’s sovereign wealth fund. Through this action and others around the world, we will ensure the rightful recovery and restitution of these assets back to the Malaysian people,” a spokesperson for 1MDB said. 

BSI is a wholly-owned subsidiary of BSI AG of Switzerland (BSI AG), which in turn was previously owned by Brazil’s BTG Pactual (known as Latin America’s equivalent to Goldman Sachs). BSI AG was sold in 2017 to the Zurich-based banking group, EFG International.

In its 2024 annual report, EFG International said: "The following contingent liabilities (that arose through the acquisition of BSI), that management is aware of, could have a material effect on the Group. However, based on presently available information and assessments, the Group is not able to reliably measure the possible obligation. The Group is entitled to indemnification against losses that may arise
from these matters listed below from the seller of the former BSI Group. 

"In the criminal investigation against BSI SA into money laundering allegations involving 1Malaysia Development Berhad (1MDB), a sovereign wealth fund owned by the government of Malaysia, the Swiss Federal Prosecutor issued a summary penalty order in 2024. The summary penalty order stated a fine against BSI SA in the amount of SFr4.5 million ($5.46 million) which will be fully borne by the seller
of the former BSI Group (disclosed as provision). The 1MDB parties filed objections to the terms of the summary penalty order and the Swiss Federal Criminal Court has sustained those objections, thereby requiring the Federal Prosecutor to reconsider the terms of any summary penalty order. The Swiss Federal Prosecutor determined that it does not have authority to adjudicate the attendant civil claims brought by SRC International (Malaysia) Ltd. (a former indirect, wholly owned subsidiary of 1MDB) in the amount of $864.5 million, and 1MDB and five affiliated companies in the amount of $5.24 billion. This determination was not the subject of the 1MDB parties’ objections to the terms of the summary penalty order.

"Group does not expect a material cash outflow, however any obligation arising would be offset by indemnification received The following contingent liability is not expected to have a significant adverse effect on the Group’s financial position and the Group is entitled to indemnification against losses that may arise from this matter from the seller of the former BSI Group," it added.

Based on a media release issued by EFG International on 1 November 2016, BTG Pactual agreed to indemnify EFG International against “certain known liabilities and damages” to “de-risk[…] the acquisition.” BTG Pactual also owns almost a third of EFG. 

The 1MDB statement noted that in Switzerland, where BSI is headquartered, the bank has been convicted of money laundering. Following a court application by 1MDB and several of its subsidiaries, including Brazen Sky, who are acting as criminal plaintiffs, Swiss authorities are updating the conviction to specify in detail the criminal acts perpetrated against the 1MDB entities, it said.

In parallel with the appeals, the joint liquidators for Brazen Sky, Angela Barkhouse and Toni Shukla of Kroll (Cayman) Ltd, have filed an application in the Singapore High Court to pursue related claims against BSI Bank and its officers, the 1MDB statement added. 

BSI's Singapore business lost its Singapore banking licence in 2016 after the Monetary Authority of Singapore punished it, and fellow Swiss bank Falcon Private Bank, for serious anti-money laundering control failings.

The 1MDB statement added that the appeals were heard before the Honourable Justice Andre Maniam on 30 April 2025 and 2 May 2025. 1MDB and Brazen Sky were represented by King’s Counsel Ng Jern-Fei, assisted by Tan Jun Hong of Duxton Hill Chambers (Singapore Group Practice) and Qabir Sandhu, Law May Ning and Clara Lim of LVM Law Chambers LLC. Lim Chee Wee Partnership of Kuala Lumpur acts as global co-ordinating counsel for all 1MDB-related asset recovery efforts in Malaysia and abroad.

Angela Barkhouse and Toni Shukla of Kroll (Cayman) Ltd are the joint liquidators for Brazen Sky and are represented by Oon & Bazul LLP.