Millions allegedly siphoned from 1MDB passed through US law firms' accounts

Millions allegedly siphoned from 1MDB passed through US law firms' accounts
The Park Laurel building in New York. The US Justice Department says one condo in it was bought and sold with allegedly misappropriated funds from 1MDB that passed through US law firms' pooled accounts for client money.
PHOTO: The Wall Street Journal

Tens of billions of dollars every year move through opaque law-firm bank accounts that create a gap in US money-laundering defences, according to a Wall Street Journal analysis.

These accounts were used by suspects in a multibillion-dollar scandal involving a Malaysian state investment fund known as 1MDB, according to a Justice Department description of events. They also played a part in a Florida Ponzi scheme, in a case related to an official of Equatorial Guinea and in a dozen other US money-laundering cases over the past decade, case records show.

Law firms lump together client money they are holding for short periods, such as while real-estate sales are pending, into pooled bank accounts, and the law firms face no requirement to disclose whose cash is in the accounts. Banks say they generally see only a law firm's name.

Graphic: The Wall Street Journal

Money often stays in the accounts for only a few days or weeks. At the request of law firms' clients, funds can be sent from the accounts to other parties, with scant transparency.

While banks and other firms that move money across borders face heavy pressure to alert regulators to suspicious activity, US law firms protect the confidentiality of their pooled accounts in the name of attorney-client privilege.

on SPH Brightcove

Read the full article here


- Goldman Sachs' Ties to Scandal-Plagued 1MDB Run Deep

- How a Malaysian Scandal Spread Across the World

- Malaysia Controversy

More about

Your daily good stuff - AsiaOne stories delivered straight to your inbox
By signing up, you agree to our Privacy policy and Terms and Conditions.