1MDB Scandal: J.P. Morgan Suisse Penalized
J.P. Morgan’s Swiss arm has been hit with a three-million-franc penalty in connection with the long-running 1MDB corruption scandal. The decision by Switzerland’s Federal Prosecutor adds yet another chapter to the global fallout from Malaysia’s sovereign wealth fund.
The Office of the Attorney General of Switzerland (BA) has issued a penalty order and partial dismissal of proceedings against J.P. Morgan Suisse. The bank was fined 3 Swiss million francs ($3.7 million), according to a statement released on Friday.
The Swiss unit of the Wall Street bank had been under investigation since November 2022 in connection with the corruption and embezzlement scandal surrounding Malaysia’s sovereign wealth fund, 1Malaysia Development Berhad (1MDB).
Alleged Failures in Anti-Money Laundering Controls
Prosecutors accused the bank of failing to take all necessary and reasonable organizational measures to prevent aggravated money laundering. The offences occurred between October 2014 and July 2015.
The total funds involved amounted to around 174 million francs. The case focused on the bank’s dealings with PetroSaudi, a company, and its executives.
PetroSaudi Executives Convicted
In August 2024, the Federal Criminal Court convicted those executives for embezzling more than 1.8 billion francs from the Malaysian fund.
The conviction was linked to criminal proceedings led by the Swiss prosecutor over misappropriated assets. Since 1MDB, acting as a private claimant, confirmed it would receive compensation of 1.4 billion Malaysian ringgit – equivalent to approximately 268 million francs – the Swiss prosecutor refrained from pursuing additional claims.
Lengthy Time
In setting the penalty, prosecutors took into account the bank’s cooperation as well as the lengthy time lapse since the misconduct occurred.
Both parties confirmed they would not contest the penalty order or the partial dismissal of proceedings. The ruling is therefore legally binding.
J.P. Morgan: Controls Strengthened
«We appreciate the collaboration with the Malaysian government in resolving past matters related to 1MDB, which have been thoroughly reviewed. Since then, we have strengthened our control mechanisms and gained the confidence of regulators in Switzerland and beyond. We are pleased these matters are now concluded and remain focused on providing clients with first-class service,» J.P. Morgan said in a statement.
