A court in the Southeast Asian nation has ditched charges against the US firm. However, proceedings against two bankers who worked on deals linked to 1MDB continue, because a July settlement and today's ruling do not cover them, reports said.

Malaysia has dropped criminal charges against units of Goldman Sachs over its role in the alleged theft of billions of dollars from the government-backed 1MDB fund, the Wall Street Journal and other media reported today. The move is a big step in the terms of a recent $3.9 billion settlement.

The US firm was the main banker for 1MDB, which Malaysia created in 2009. Goldman Sachs raised billions of dollars for the Malaysian fund.

As reported in July, the firm agreed to pay Malaysia $2.5 billion and guaranteed the recovery of $1.4 billion in assets allegedly stolen from the fund.

Malaysia agreed to drop criminal proceedings against the bank related to the fund.

A Malaysian court today discharged and acquitted three subsidiaries of the bank over their alleged involvement in the scandal.

Goldman raised $6.5 billion for 1MDB through three bond sales in 2012 and 2013, much of which US authorities say was stolen by a Malaysian government advisor, Jho Low, who is still at large.

Goldman has said it was misled by two bankers who worked on the deals, Southeast Asia chairman Timothy Leissner and managing director Roger Ng. Leissner has pleaded guilty in the US to charges of conspiracy to launder money and violate anti-bribery laws. Ng has been indicted on bribery and money-laundering charges. He has pleaded not guilty.

The July settlement and today’s court decision do not cover proceedings against Messrs Leissner and Ng, the WSJ said.

The reports added that Goldman Sachs is still in talks with the US Department of Justice for a settlement.