The Financial Times revealed last month that Deutsche Bank cleared almost €6m funds for Jho Low, the Malaysian businessman who is facing corruption allegations related to the 1MDB scandal, before he bought a house and new nationality in Cyprus under that country’s “golden passport” scheme. The FT said that the payment was made on June 24, 2015 from Low’s Swiss account at Abu Dhabi-owned Falcon Bank to the Bank of Cyprus. It is alleged that Low was instrumental in stripping huge amounts of money out of Malaysia’s 1MDB state investment fund and he is still facing US criminal indictment. It was unsealed in 2018 accusing Low of conspiring with others to misappropriate more than $2.7bn from 1MDB. Under a separate financial settlement with the US government last year, Low agreed to forfeit assets including a Bombardier jet, high-end real estate in London, New York and Los Angeles, and a “luxury boutique hotel” in Beverly Hills. He admitted no wrongdoing.
Low bought a €5m house in the holiday resort of Ayia Napa and went to Nicosia in September 2015 to get his Cypriot passport, using a government scheme that offered citizenship to foreigners who invested in property. Low also gave €300,000 to a theological school in Cyprus.
This all took place months after the investigative website, Sarawak Report, published a lengthy article alleging Low was pivotal to the misappropriation of more than $700m from 1MDB for a business joint venture. Low denies the allegations.
Bank of Cyprus reported transactions involving Low later in 2015 to Mokas, the Cypriot body responsible for combating money laundering.
Correspondent banking has long been at the mercy of potentially suspicious international money transfers and has always been the subject of contention as global anti-money laundering regulation has become more stringent. Deutsche has pulled out of some regions, such as Cyprus, where it used to offer correspondent banking service.
Deutsche had limited anti-money-laundering responsibilities in the Cyprus transfer involving Low, who was not its client. Correspondent banks are required to monitor their business partners’ transactions “with a view to detecting any changes in the respondent institution’s risk profile or implementation of risk mitigation measures”, according to a guideline from the Financial Action Task Force. Abu Dhabi’s Falcon Bank received $3.8bn in cross-border payments between 2012 and 2015 involving accounts held by offshore-companies linked to the 1MDB scandal, according to an investigation published in 2016 by the Swiss regulator Finma. It also found the bank had a “young Malaysian businessman with links to individuals in Malaysian government circles” among its clients. The unnamed individual acquired $135m in assets “in an extremely short period of time” and later received $1.2bn in payments to his account.