Legal
Malaysia's 1MDB Wins Major Singapore Court Ruling Vs BSI Bank Ltd

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.