Luxembourg court fines bank €25m over 1MDB-linked money laundering

Summary

• Edmond de Rothschild Europe has been ordered by a Luxembourg court to pay a €25 million (RM120 million) fine after it was convicted of money laundering linked to the 1MDB scandal.

• The bank is the first in Luxembourg to be convicted of money laundering.

• Local authorities say there are other ongoing cases linked to 1MDB, including charges being prepared against the bank’s employees.

A Luxembourg court has ordered private bank Edmond de Rothschild Europe to pay a €25 million (RM120 million) fine in a landmark criminal settlement over money laundering and concealment charges related to 1MDB.

Luxembourg Times reported that the court’s ruling marks a historic moment, as it is the first time a banking institution in the country has been convicted of money laundering.

“This is the first time that a Luxembourg banking institution has been convicted of money laundering,” the court stated in a press release.

International investigations into the massive 1MDB scandal - which continues to impact Malaysia’s political and financial landscape - estimate that at least US$4.5 billion (RM16.8 billion) was misappropriated from the government-owned fund between 2009 and 2013.

Of that amount, about US$472.5 million (RM2.2 billion) was deposited into accounts at Edmond de Rothschild Europe, a Luxembourg-based private bank.

‘Guilt established’

Luxembourg Times further reported that the bank entered into a jugement sur accord - a negotiated settlement - with Luxembourg’s public prosecutor earlier this year.

Under the agreement, the bank acknowledged its role in the money laundering and concealment offences and agreed to pay the €25 million fine. The funds, which had already been seized, will go to the Luxembourg state.

The agreement was submitted on April 2 and was formally approved in Thursday’s ruling.

The court concluded that “the guilt of the accused party was established and that the penalties set out in the settlement agreement were legal and appropriate”, according to the report.

In a statement to Luxembourg Times, the bank said it takes note of the decision issued by the District Court of Luxembourg in connection with the criminal proceedings related to the 1MDB case, which stems from events that occurred around 15 years ago.

“Edmond de Rothschild Europe recalls that these historical events led to the implementation of a comprehensive remediation plan, launched in 2016 and completed in 2019. The employees involved are no longer part of the organisation.

“The bank fully and transparently cooperated with the authorities throughout the proceedings and welcomes the opportunity to definitively close this chapter.”

Other cases ongoing

While the ruling concludes the case against the bank itself, Luxembourg authorities confirmed that related investigations remain active.

A probe into four of the bank’s directors and employees has concluded, and prosecutors are preparing formal charges.

The court said a separate investigation into the bank’s clients and affiliated companies is also “actively continuing”.

The 1MDB scandal - often labelled one of the largest financial frauds in modern history - continues to hold significant legal and political weight in Malaysia and around the world.

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