The 1MDB Scandal

by | Dec 7, 2025 | Uncategorized | 0 comments

Executive Summary

The 1Malaysia Development Berhad (1MDB) scandal represents one of the most significant financial frauds in modern history, involving the systematic looting of billions of dollars from Malaysia’s sovereign wealth fund between 2009 and 2015. The recent rejection of Roger Ng’s appeal in December 2025 marks another milestone in ongoing efforts to hold perpetrators accountable. This case study examines the mechanics of the fraud, its regional impact particularly on Singapore, and provides comprehensive solutions for preventing similar crises.

Roger Ng’s Appeal Rejected

The 2nd US Circuit Court of Appeals in Manhattan has affirmed Roger Ng’s conviction The StarBloomberg, rejecting his attempt to overturn his 10-year prison sentence for his role in the massive 1MDB fraud scheme. US Circuit Judge Amalya Kearse wrote in a 50-page opinion on December 5 that the court found none of his contentions persuasive The Star.

Background on the Case

Roger Ng was the only Goldman Sachs banker to face trial in the United States for the 1MDB scandal, which involved looting billions of dollars from Malaysia’s sovereign wealth fund. He was convicted in 2022 by a federal jury in Brooklyn on three counts: conspiring to violate US anti-bribery laws, conspiring to launder money, and circumventing Goldman Sachs’ internal controls.

The scheme involved paying bribes to government officials in Malaysia and Abu Dhabi to secure bond deals, with fugitive financier Jho Low (the alleged mastermind) taking $1.42 billion for himself. Ng’s former boss Tim Leissner made $73.4 million while Ng received $35.1 million from the scheme.

Ng’s Defense Arguments

Ng’s appeal centered on three main claims:

  1. The trial judge unfairly blocked a key video recording between his wife and Leissner that he claimed would prove the $35 million he received wasn’t a kickback but related to an investment
  2. The government violated an extradition agreement with him
  3. The case shouldn’t have been tried in Brooklyn

The appeals court rejected all these arguments.

Current Status

Interestingly, Ng has been in Malaysia since 2023, as the US allowed him to return home to assist with Malaysia’s 1MDB investigation just before he was scheduled to begin serving his sentence. He has been testifying as a defense witness in former Malaysian Prime Minister Najib Razak’s 1MDB trial there.

With this appeal denial, Ng’s conviction stands, though it remains unclear when he will return to the US to serve his 10-year prison sentence.

Case Background

The Scheme’s Architecture

1MDB was established in 2009 as a Malaysian sovereign wealth fund intended to drive economic development. However, it became the vehicle for massive corruption orchestrated by financier Jho Low, with assistance from officials at Goldman Sachs and complicit government figures.

Key Players:

  • Jho Low (Low Taek Jho): Malaysian financier and alleged mastermind, currently a fugitive
  • Roger Ng: Former Goldman Sachs managing director, convicted in 2022, 10-year sentence upheld in 2025
  • Tim Leissner: Former Goldman Sachs Southeast Asia chairman, pleaded guilty, sentenced to two years
  • Najib Razak: Former Malaysian Prime Minister, convicted in Malaysia
  • Goldman Sachs: Facilitated bond deals, later paid $2.9 billion settlement

The Fraud Mechanics

The scheme operated through several interconnected mechanisms:

Phase 1: Bond Issuances (2012-2013) Goldman Sachs helped 1MDB raise approximately $6.5 billion through three bond offerings. The bank earned unusually high fees (9-11% compared to typical 1-2%), which should have triggered red flags about the transactions’ legitimacy.

Phase 2: Fund Diversion Proceeds from these bond sales were systematically diverted through complex networks of shell companies, offshore accounts, and intermediaries. Money flowed through jurisdictions including Switzerland, Singapore, Luxembourg, and the United States.

Phase 3: Bribery and Corruption Hundreds of millions of dollars were paid as bribes to Malaysian and Abu Dhabi officials to secure approvals for the bond deals and maintain silence about the diversions. Roger Ng received $35.1 million while his superior Tim Leissner took $73.4 million.

Phase 4: Laundering and Spending The stolen funds financed extravagant purchases including luxury real estate in New York and Los Angeles, a superyacht, artworks by Monet and Van Gogh, jewelry, and even the funding of the Hollywood film “The Wolf of Wall Street.”

The Unraveling

The scheme began to collapse in 2015 when investigative journalism by The Edge (Malaysia) and Sarawak Report exposed massive unexplained fund flows. Subsequent investigations by authorities in multiple countries revealed the scope of the fraud, leading to criminal charges, civil asset forfeitures, and regulatory actions spanning at least 10 jurisdictions.

Roger Ng’s Case: Legal Developments

Original Conviction (2022)

Roger Ng became the only Goldman Sachs banker to face trial in the United States. A federal jury in Brooklyn convicted him on three counts:

  1. Conspiracy to violate the Foreign Corrupt Practices Act (FCPA)
  2. Conspiracy to commit money laundering
  3. Conspiracy to circumvent Goldman Sachs’ internal accounting controls

He received a 10-year prison sentence and was ordered to forfeit $35.1 million.

The Appeal Arguments (2025)

Ng’s legal team mounted an appeal based on several contentions:

The Blocked Evidence Claim: Ng argued that the trial judge unfairly excluded a recorded video call between his wife and Tim Leissner. He claimed this recording would prove the $35 million payment was related to a legitimate investment his wife had with Leissner’s wife, not a kickback from the fraud scheme.

The Extradition Agreement: Ng contended the government violated an agreement under which he had waived extradition from Malaysia, though specifics of this alleged violation were not detailed in public filings.

Venue Challenge: He argued the case should not have been tried in Brooklyn, presumably on jurisdictional grounds.

Appeal Rejection (December 2025)

The 2nd US Circuit Court of Appeals unanimously rejected all of Ng’s arguments in a comprehensive 50-page opinion issued December 5, 2025. Judge Amalya Kearse wrote that the court found “none of his contentions persuasive.”

On the blocked recording issue, prosecutors successfully argued that the disputed call did not actually prove any prior legitimate investment between the wives, undermining Ng’s central defense claim.

Current Status and Anomaly

In an unusual arrangement, the US government allowed Ng to return to Malaysia in 2023 to assist with their ongoing 1MDB investigation, just as he was scheduled to begin serving his sentence. He has been testifying as a defense witness in former Prime Minister Najib Razak’s trial in Kuala Lumpur. With his appeal now denied, questions remain about when he will return to the US to serve his sentence.

Singapore’s Central Role and Impact

Singapore as a Financial Hub: Vulnerability and Exposure

Singapore’s position as a premier international financial center made it both an attractive conduit for 1MDB funds and a significant victim of reputational damage. The city-state’s sophisticated banking system, strong rule of law, and connectivity to global markets ironically made it vulnerable to exploitation by sophisticated criminals.

Money Flows Through Singapore

Investigations revealed that approximately $1 billion connected to 1MDB flowed through Singapore’s banking system between 2009 and 2015. This represented one of the largest concentrations of stolen funds outside Malaysia itself.

Key Singapore Entities Involved:

  • Multiple private banks accepted and processed suspicious transactions
  • Wealth management firms handled diverted funds
  • Shell companies registered in Singapore served as pass-through vehicles
  • Singapore-based intermediaries facilitated transfers

Regulatory Response and Actions

The Monetary Authority of Singapore (MAS) took unprecedented enforcement actions in response to the scandal, demonstrating the severity with which authorities viewed these breaches.

Bank Penalties and Closures:

  • BSI Bank had its operations shut down in 2016, marking the first bank closure in Singapore in 32 years
  • Falcon Private Bank had its merchant bank status withdrawn
  • UBS, DBS, Standard Chartered, and other major banks faced significant fines and restrictions
  • Financial penalties exceeded SGD 30 million across multiple institutions

Individual Prosecutions: Eight relationship managers and other banking professionals in Singapore were prosecuted for various offenses including money laundering, forging documents, and witness tampering. Several received prison sentences.

Systemic Investigations: MAS conducted deep reviews of anti-money laundering controls at affected banks, leading to mandatory remediation programs, enhanced monitoring requirements, and restrictions on business growth for non-compliant institutions.

Reputational Impact on Singapore

The 1MDB scandal posed serious questions about Singapore’s financial system:

International Perception: Financial centers compete partly on reputation for integrity. Media coverage highlighting Singapore’s role in facilitating the fraud raised concerns among international investors and correspondent banks about the robustness of compliance systems.

Trust Deficit: The revelation that so much money moved through Singapore undetected for years created a trust deficit that required years of regulatory reform and enforcement to address.

Competitive Pressure: Singapore faced pressure from competing financial centers like Hong Kong and Switzerland to demonstrate that it had addressed the vulnerabilities exposed by 1MDB. Any perception of being a “safe haven” for illicit funds could have driven legitimate business elsewhere.

Economic and Financial Sector Impacts

Private Banking Sector Restructuring: The scandal accelerated consolidation in Singapore’s private banking sector. Smaller players faced increased compliance costs that made independent operation less viable. Banks became significantly more risk-averse in onboarding clients from Southeast Asian countries.

Compliance Cost Escalation: Banks and wealth managers faced dramatically increased costs for compliance operations. Hiring of compliance officers, implementation of enhanced monitoring systems, and more intensive client due diligence processes increased operational costs by 20-40% at many institutions.

Client Relationship Changes: Banks adopted more conservative approaches to politically exposed persons (PEPs) and high-net-worth individuals from emerging markets. Many legitimate clients from Southeast Asia faced increased scrutiny, documentation requirements, and in some cases, account closures.

Cross-Border Banking Caution: Financial institutions became more cautious about facilitating cross-border transactions, particularly those involving multiple jurisdictions or complex corporate structures, even when legitimate.

Positive Outcomes for Singapore

Despite the initial reputational damage, Singapore’s aggressive response demonstrated regulatory strength:

Regulatory Credibility: Swift action against banks and individuals showed Singapore’s commitment to maintaining integrity, actually enhancing long-term credibility with serious institutional investors.

Systems Improvement: Forced upgrades to anti-money laundering systems and processes have made Singapore’s financial sector more resilient to future attempts at financial crime.

Regional Leadership: Singapore’s transparent handling of the scandal positioned it as a regional leader in financial crime prevention, contrasting with less transparent responses in some other jurisdictions.

Outlook: Future Implications

Legal and Regulatory Trajectory

Ongoing Prosecutions: The 1MDB saga continues to generate new cases. As of December 2025, multiple jurisdictions still have active investigations and prosecutions. Malaysia’s cases against Najib Razak and others continue through appeals processes.

Asset Recovery: Global asset recovery efforts have returned several billion dollars to Malaysia, but significant amounts remain unrecovered. Jho Low remains a fugitive, and assets hidden through complex structures continue to be traced.

Regulatory Evolution: Financial regulators worldwide continue to update frameworks based on lessons from 1MDB. The scandal serves as a case study in regulatory training programs globally.

Geopolitical Considerations

Malaysia-Singapore Relations: While cooperation has been generally good, the scandal has created some tension around the extent of Singapore’s responsibility for funds that flowed through its system. Malaysia has sought greater information sharing and cooperation.

US Extraterritorial Reach: The Roger Ng case demonstrates continued US willingness to prosecute foreign nationals for corruption involving US financial markets, even when the primary victims are in other countries. This extraterritorial approach is likely to continue.

China Factor: Some assets and relationships in the 1MDB case have connections to mainland China. The geopolitical implications of pursuing certain individuals or entities may complicate future recovery efforts.

Banking Industry Transformation

Permanent Behavioral Change: The financial penalties and reputational damage from 1MDB have created lasting changes in how banks approach risk. Conservative approaches to PEPs and complex transactions are now standard practice.

Technology Adoption: Banks have accelerated adoption of artificial intelligence and machine learning tools for transaction monitoring, in part driven by lessons from 1MDB.

De-risking Concerns: Overly cautious approaches by banks may exclude legitimate customers from emerging markets, creating financial inclusion concerns that regulators must balance against anti-money laundering imperatives.

Sovereign Wealth Fund Governance

Global Scrutiny: Sovereign wealth funds worldwide face increased scrutiny of governance structures and investment decisions. The 1MDB scandal has prompted reviews of transparency and accountability mechanisms at state investment vehicles globally.

International Standards: Organizations like the Santiago Principles for sovereign wealth funds have gained renewed importance as benchmarks for proper governance and transparency.

Solutions and Recommendations

Short-Term Solutions (0-2 Years)

1. Enhanced Transaction Monitoring

Financial institutions must implement next-generation transaction monitoring that goes beyond simple rule-based systems.

Implementation Steps:

  • Deploy machine learning algorithms that can identify unusual patterns in transaction flows, even when individual transactions appear normal
  • Establish real-time monitoring for transactions exceeding $100,000 or involving more than three jurisdictions
  • Create specialized monitoring protocols for government-related accounts and PEPs
  • Implement behavioral analytics that flag deviations from established customer patterns

Resource Requirements: Technology investments of $5-20 million for major banks, with ongoing operational costs of 15-20% of implementation expense annually.

2. Mandatory Independent Reviews

All major financial institutions should undergo independent third-party reviews of anti-money laundering (AML) controls annually.

Implementation Steps:

  • Engage forensic accounting firms with no other relationship to the institution
  • Conduct transaction sampling of at least 2% of high-risk accounts quarterly
  • Review governance structures for compliance functions to ensure independence
  • Test effectiveness of suspicious transaction reporting processes

Resource Requirements: External review costs of $500,000-$3 million annually depending on institution size, plus internal staff time for coordination.

3. Whistleblower Protection and Incentives

Jurisdictions should establish robust whistleblower programs with significant financial incentives and legal protections.

Implementation Steps:

  • Create confidential reporting channels independent of financial institutions
  • Offer rewards of 10-30% of recovered funds up to reasonable caps
  • Provide employment protection and relocation assistance where needed
  • Establish expedited investigation processes for credible whistleblower reports

Resource Requirements: Government funding for whistleblower program administration and rewards, estimated at $5-10 million annually for major financial centers.

4. Enhanced Due Diligence for PEPs

Strengthen know-your-customer (KYC) requirements for politically exposed persons and their family members.

Implementation Steps:

  • Require source of wealth documentation, not just source of funds
  • Implement mandatory senior management approval for onboarding any PEP
  • Conduct adverse media searches in multiple languages and jurisdictions
  • Establish ongoing monitoring with quarterly reviews of PEP accounts
  • Create centralized PEP databases accessible across institutions

Resource Requirements: Increased compliance staff (20-30% more officers) and enhanced database subscriptions ($100,000-$500,000 annually).

5. Cross-Border Information Sharing Protocols

Establish formal mechanisms for rapid information sharing between financial regulators across Southeast Asian nations.

Implementation Steps:

  • Create secure digital platforms for sharing suspicious transaction reports
  • Establish memoranda of understanding with 48-hour response time commitments
  • Conduct joint training exercises simulating cross-border fraud scenarios
  • Harmonize suspicious activity reporting standards across jurisdictions

Resource Requirements: Technology platform development ($2-5 million), plus ongoing operational costs and dedicated liaison officers in each jurisdiction.

Medium-Term Solutions (2-5 Years)

6. Beneficial Ownership Registries

All jurisdictions should establish comprehensive, publicly accessible beneficial ownership registries for corporations, trusts, and foundations.

Implementation Approach:

  • Require disclosure of ultimate beneficial owners controlling 10% or more of any entity
  • Implement systems for real-time updates when ownership changes occur
  • Create verification processes using multiple data sources including tax records
  • Establish penalties for false or incomplete beneficial ownership disclosures
  • Design systems with API access for financial institutions to verify ownership during onboarding

Expected Outcomes: Transparency in beneficial ownership makes it significantly harder to use shell companies for hiding stolen funds. The UK’s Companies House registry demonstrates feasibility, though implementation challenges include privacy concerns and enforcement across borders.

Resource Requirements: Initial system development costs of $10-50 million for comprehensive registries, plus ongoing maintenance and enforcement costs of $5-10 million annually.

7. AI-Powered Network Analysis

Deploy sophisticated artificial intelligence systems capable of mapping relationships between individuals, companies, and transactions across multiple financial institutions.

Implementation Approach:

  • Pool anonymized transaction data from multiple banks to identify cross-institution patterns
  • Use graph database technology to visualize relationships between entities
  • Apply machine learning to identify networks of companies controlled by the same beneficial owners
  • Create risk scores for transaction networks, not just individual transactions
  • Integrate public records, corporate registries, and social media data

Expected Outcomes: The 1MDB fraud relied on complexity and fragmentation of funds across multiple institutions and jurisdictions. Network analysis can reveal patterns that individual banks miss. Early detection could have identified unusual coordination between supposedly unrelated entities receiving 1MDB funds.

Resource Requirements: Significant investment in data infrastructure and AI talent, estimated at $20-100 million for comprehensive systems serving major financial centers, plus ongoing operational costs.

8. Goldman Sachs-Style Accountability

Establish regulatory frameworks that hold financial institutions and their senior executives personally accountable for enabling financial crimes.

Implementation Approach:

  • Create reverse burden of proof where banks must demonstrate adequate controls when staff are implicated in fraud
  • Implement “senior managers regime” requiring named executives to certify compliance with specific obligations
  • Establish minimum penalties of 25-50% of transaction fees for deals found to involve corruption
  • Create personal liability for executives who failed to ensure adequate oversight
  • Implement clawback provisions allowing recovery of bonuses paid for fraudulent transactions

Expected Outcomes: Goldman Sachs earned extraordinary fees (9-11% versus typical 1-2%) on 1MDB bonds, which should have triggered scrutiny. When executives face personal liability, they have stronger incentives to question unusual profit opportunities.

Resource Requirements: Primarily regulatory framework changes with modest implementation costs, but significant implications for bank governance and executive compensation structures.

9. Correspondent Banking Due Diligence

Strengthen requirements for due diligence on correspondent banking relationships, which enable smaller banks to access international payment systems.

Implementation Approach:

  • Require major banks to conduct on-site visits to correspondent partners annually
  • Implement transaction sampling requirements for correspondent banking flows
  • Establish mandatory exit procedures when correspondent partners fail compliance tests
  • Create industry-wide standards for correspondent banking risk assessment
  • Develop technology solutions for monitoring correspondent banking transactions

Expected Outcomes: Correspondent banking relationships enabled some smaller institutions to move 1MDB funds into major international payment systems. Enhanced scrutiny creates a defense in depth.

Resource Requirements: Increased compliance costs for major banks ($2-10 million annually), but distributed across the industry.

10. Real Estate Transaction Transparency

Implement beneficial ownership disclosure requirements for high-value real estate purchases, eliminating anonymous property ownership.

Implementation Approach:

  • Require disclosure of beneficial owners for all property purchases exceeding $1 million
  • Mandate reporting of all-cash purchases to financial intelligence units
  • Establish verification requirements for funds used in property purchases
  • Create public registries of property beneficial ownership
  • Implement enhanced due diligence for purchases by foreign entities or trusts

Expected Outcomes: Significant 1MDB proceeds were laundered through luxury real estate in multiple countries. Transparency in property ownership makes this avenue less attractive for laundering stolen funds.

Resource Requirements: Registry development costs of $5-15 million, plus enforcement mechanisms and integration with existing land title systems.

Long-Term Structural Solutions (5-10 Years)

11. International Court for Financial Crimes

Establish a specialized international court with jurisdiction over major cross-border financial crimes, modeled on international criminal tribunals.

Vision and Structure:

  • Create treaty-based jurisdiction accepted by major financial centers
  • Empower the court to prosecute individuals for financial crimes exceeding $100 million when national prosecutions fail
  • Establish fast-track extradition procedures among treaty signatories
  • Provide resources for sophisticated financial investigations
  • Enable judgments enforceable in all signatory jurisdictions

Rationale: The 1MDB case demonstrates challenges of multi-jurisdictional prosecution. Jho Low remains a fugitive partly because of coordination challenges between national systems. An international court could overcome sovereignty barriers that protect sophisticated criminals.

Implementation Challenges: Requires international treaty negotiations overcoming sovereignty concerns. Would likely need to start with regional pilot (e.g., ASEAN nations) before expanding globally. Estimated 10-15 years for full implementation.

Expected Impact: Would create consistent standards for prosecution of major financial crimes and eliminate safe havens for financial criminals. Could reduce prosecution times from 10+ years to 3-5 years for complex cases.

12. Global Beneficial Ownership Database

Create an international database linking beneficial ownership registries from all major jurisdictions, enabling real-time verification of ultimate owners.

Vision and Structure:

  • Establish international organization managing centralized database
  • Require all jurisdictions to report beneficial ownership data in standardized format
  • Create API access for financial institutions globally to verify ownership
  • Implement blockchain or distributed ledger technology for tamper-proof records
  • Establish governance ensuring data privacy while enabling verification

Rationale: The 1MDB fraud used shell companies across multiple jurisdictions to obscure beneficial ownership. A global database would make it impossible to hide behind corporate structures spread across borders.

Implementation Pathway:

  • Phase 1 (Years 1-3): Pilot program among G20 nations
  • Phase 2 (Years 4-6): Expand to major financial centers and offshore jurisdictions
  • Phase 3 (Years 7-10): Universal coverage with enforcement mechanisms for non-compliant jurisdictions

Expected Impact: Would fundamentally transform ability to trace beneficial ownership. Financial institutions could verify ultimate owners in minutes rather than weeks or months. Estimated to reduce due diligence costs by 40-60% while dramatically improving accuracy.

13. Sovereign Wealth Fund Transparency Standards

Establish mandatory international transparency standards for all sovereign wealth funds exceeding $10 billion in assets.

Vision and Structure:

  • Require annual audited financial statements by Big Four accounting firms
  • Mandate disclosure of all investments exceeding $100 million
  • Establish independent board governance requirements with majority non-government directors
  • Implement quarterly reporting of fund performance and major transactions
  • Create international oversight body to certify compliance with standards

Rationale: 1MDB operated with virtually no transparency or independent oversight. Clear standards would make similar schemes impossible to hide and enable earlier detection of diversions.

Implementation Approach:

  • Develop standards through international organizations like IMF and World Bank
  • Create incentive structures where compliant funds receive better terms from international investors
  • Establish financial center requirements that compliant status be verified for sovereign fund transactions
  • Phase in requirements over 5 years to allow adaptation

Expected Impact: Would restore confidence in sovereign wealth funds as legitimate development tools. Estimated to affect 60+ major sovereign funds globally, managing over $10 trillion in assets.

14. Educational and Cultural Transformation

Implement comprehensive ethics and financial crime awareness training across the finance industry, making compliance a core professional competency.

Vision and Structure:

  • Establish mandatory continuing education requirements on financial crime and ethics (20 hours annually for senior bankers)
  • Integrate ethics and compliance deeply into business school curricula
  • Create industry-recognized professional certifications in financial crime prevention
  • Develop case study repositories using real examples like 1MDB for training
  • Establish mentorship programs pairing compliance professionals with deal-makers

Rationale: Cultural change in financial institutions requires moving beyond “check the box” compliance to genuine ethical awareness. Many bankers involved in 1MDB likely rationalized their actions or failed to see red flags because of inadequate training and culture prioritizing revenue over compliance.

Implementation Approach:

  • Industry associations develop and mandate training standards
  • Regulators require demonstration of training compliance during audits
  • Business schools integrate throughout curriculum, not just in dedicated ethics courses
  • Create career paths making compliance roles prestigious rather than backwater positions

Expected Long-Term Impact: Over 10-15 years, would create generational shift in financial industry culture. Success metrics would include increased suspicious transaction reporting, reduced compliance violations, and exit of individuals unwilling to meet ethical standards.

15. Blockchain-Based Transaction Tracking

Develop blockchain or distributed ledger systems for tracking high-value international transactions, creating immutable audit trails.

Vision and Structure:

  • Establish international consortium of central banks and major financial institutions
  • Develop open-source blockchain protocols for recording transactions exceeding $100,000
  • Create privacy-preserving technologies allowing legitimate privacy while enabling regulatory access
  • Implement smart contracts that automatically flag suspicious patterns
  • Design systems compatible with existing payment infrastructure

Technical Approach:

  • Use zero-knowledge proofs allowing transaction verification without revealing details
  • Implement role-based access where regulators can access necessary information with proper authorization
  • Create distributed governance preventing any single entity from controlling the system
  • Design for scalability handling millions of transactions daily

Expected Outcomes: Would make it essentially impossible to move large sums through complex networks without creating traceable records. The fragmentation of 1MDB funds across hundreds of transactions would be immediately visible to regulators on a blockchain system.

Implementation Timeline:

  • Years 1-3: Technical development and pilot programs
  • Years 4-6: Voluntary adoption by major institutions
  • Years 7-10: Regulatory mandates requiring participation for cross-border transactions

Resource Requirements: Estimated $500 million to $1 billion for development of global system, distributed among participating institutions and central banks.

Integrated Implementation Framework

Successful prevention of future 1MDB-scale frauds requires coordinated implementation of solutions across multiple timelines and stakeholders.

Stakeholder Responsibilities

Financial Institutions:

  • Immediate investment in enhanced monitoring and due diligence systems
  • Cultural transformation prioritizing compliance over short-term revenue
  • Active participation in information-sharing initiatives
  • Leadership in developing industry best practices

Regulators:

  • Swift enforcement demonstrating serious consequences for violations
  • Coordination across borders through formal mechanisms
  • Regular updating of requirements based on emerging threats
  • Balanced approach preventing over-regulation that stifles legitimate business

Governments:

  • Legislative reforms establishing beneficial ownership transparency
  • Resource allocation for financial intelligence units
  • International cooperation through treaties and information sharing
  • Establishment of appropriate whistleblower programs

International Organizations:

  • Development of global standards and frameworks
  • Facilitation of cross-border cooperation
  • Technical assistance for jurisdictions with limited capacity
  • Monitoring and reporting on global implementation progress

Success Metrics

Measuring progress in preventing financial crimes requires both leading and lagging indicators:

Leading Indicators:

  • Number of suspicious transaction reports filed (should increase initially as systems improve)
  • Time from suspicious activity to regulatory notification (should decrease)
  • Percentage of PEP accounts undergoing enhanced due diligence (should approach 100%)
  • Investment in compliance technology as percentage of revenue (should increase)

Lagging Indicators:

  • Scale of financial frauds detected (successful prevention should reduce size)
  • Time from fraud initiation to detection (should decrease dramatically)
  • Amount of funds successfully recovered (should increase as systems improve)
  • Number of individuals successfully prosecuted (should increase initially, then stabilize)

Estimated Investment and Returns

Total Global Investment Required:

  • Short-term solutions: $20-50 billion globally over 2 years
  • Medium-term solutions: $50-100 billion over 5 years
  • Long-term solutions: $100-200 billion over 10 years

Expected Returns:

  • Direct fraud prevention: $500 billion – $1 trillion over 10 years
  • Reduced compliance costs (long-term): 30-50% as systems become more efficient
  • Increased confidence in financial systems: Incalculable but significant for global trade and investment
  • Recovered assets from existing frauds: $50-100 billion

The return on investment significantly exceeds costs, even before considering non-financial benefits like increased public trust and political stability.

Singapore-Specific Recommendations

Immediate Actions for Singapore

1. Regional Leadership Initiative

Singapore should leverage its experience with 1MDB to establish itself as the regional leader in financial crime prevention.

Specific Actions:

  • Host annual regional conference on financial crime prevention bringing together regulators from ASEAN nations
  • Offer training programs for compliance professionals from neighboring countries
  • Establish Singapore-based center of excellence for financial crime investigation techniques
  • Share lessons learned from 1MDB case through white papers and case studies

Expected Benefits: Positions Singapore as trusted financial center that learns from mistakes rather than one that enabled fraud. Strengthens regional relationships while improving collective defense against financial crime.

2. Enhanced MAS Supervision

The Monetary Authority of Singapore should further strengthen supervisory capabilities.

Specific Actions:

  • Increase compliance examination staff by 25-30%
  • Implement unannounced inspections of high-risk institutions
  • Establish dedicated unit focusing on cross-border transaction monitoring
  • Create fast-track escalation procedures for potential major frauds
  • Implement mandatory reporting of unusual fee structures exceeding industry norms

Resource Requirements: Additional annual budget of $20-30 million for increased staffing and technology.

3. Technology Hub for Compliance

Establish Singapore as global center for development of compliance and anti-money laundering technology.

Specific Actions:

  • Create innovation sandbox for testing AML technologies
  • Provide grants for startups developing compliance solutions
  • Partner with universities on research into AI applications for fraud detection
  • Attract international compliance technology firms to establish regional headquarters
  • Develop expertise in emerging technologies like blockchain for transaction tracking

Expected Outcomes: Creates new economic opportunities while addressing financial crime challenges. Singapore’s technology capabilities and financial expertise position it well for leadership in this emerging sector.

4. Bilateral Information Sharing

Strengthen bilateral relationships with key financial centers for enhanced information sharing.

Priority Relationships:

  • United States: Given FCPA implications and US dollar transactions
  • Switzerland: Given both countries’ roles as financial centers
  • Hong Kong: Given competition and similar vulnerabilities
  • Malaysia: Given geographic proximity and shared interest in preventing repeat

Specific Mechanisms:

  • Secondment programs exchanging regulatory staff
  • Joint investigations of suspected cross-border frauds
  • Rapid information sharing protocols with 24-hour response commitments
  • Harmonized suspicious transaction reporting standards

Building Long-Term Resilience

5. Generational Education Program

Implement comprehensive education program targeting future financial professionals.

Implementation:

  • Require all business schools in Singapore to include financial crime case studies in core curriculum
  • Establish scholarship programs for students pursuing compliance careers
  • Create internship programs placing students in regulatory agencies
  • Develop public awareness campaigns about financial crime impacts

Long-Term Vision: Create generation of financial professionals who view compliance as central to professional identity, not as obstacle to business.

6. Regular System Stress Testing

Implement regular “red team” exercises testing Singapore’s financial system defenses.

Approach:

  • Hire specialized firms to attempt to move suspect funds through Singapore’s system
  • Conduct exercises simulating various fraud scenarios
  • Test information sharing with foreign regulators under realistic conditions
  • Evaluate response times and effectiveness of detection systems
  • Use results to identify and address vulnerabilities

Frequency: Comprehensive exercises every 18-24 months, with focused tests quarterly.

Conclusion

The 1MDB scandal and the recent rejection of Roger Ng’s appeal in December 2025 serve as stark reminders that financial crimes of extraordinary scale remain possible even in sophisticated regulatory environments. The approximately $4.5 billion stolen from 1MDB represents just a fraction of the total damage when considering the costs of investigation, prosecution, reputation damage to financial centers, and erosion of public trust.

For Singapore specifically, the scandal exposed vulnerabilities in a financial system previously considered among the world’s best regulated. However, the city-state’s aggressive response demonstrates how jurisdictions can emerge stronger from such crises. The bank closures, prosecutions, and enhanced regulations implemented since 2016 have materially improved Singapore’s defenses against financial crime.

Looking forward, preventing future 1MDB-scale frauds requires sustained commitment across multiple dimensions. Short-term technical solutions like enhanced transaction monitoring provide immediate risk reduction. Medium-term structural reforms like beneficial ownership registries make systematic fraud harder to execute. Long-term transformational initiatives like international courts and blockchain-based systems could fundamentally alter the risk-reward calculus for would-be financial criminals.

The solutions outlined in this study are ambitious and expensive, with total global costs potentially exceeding $200 billion over a decade. However, this investment pales in comparison to the trillions of dollars that flow through illicit financial channels annually. More importantly, the non-financial benefits including increased political stability, reduced corruption, and greater public trust in financial institutions justify substantial investment.

Success ultimately depends on sustained political will, international cooperation, and cultural transformation within financial institutions. The 1MDB case demonstrates that technical controls alone are insufficient when individuals within institutions are willing to circumvent them. Creating an environment where financial professionals view enabling fraud as incompatible with their professional identity is perhaps the most important long-term solution.

As Roger Ng’s case proceeds toward final resolution with his appeal rejected, the broader lessons of 1MDB must continue to inform policy and practice. The scandal serves as both warning and opportunity: a warning of the damage possible when sophisticated criminals exploit weaknesses in the global financial system, and an opportunity to build more resilient, transparent, and ethical financial infrastructure for the future.

For Singapore, maintaining its position as a trusted global financial center requires continued vigilance and leadership in financial crime prevention. The reputational damage from 1MDB has largely been overcome through decisive action, but the city-state must continue investing in capabilities and demonstrating commitment to the highest standards. By doing so, Singapore can turn the 1MDB experience from liability into asset, demonstrating that even financial centers that have been exploited can emerge as global leaders in integrity and transparency.

The fight against financial crime is never fully won, but each scandal like 1MDB provides opportunity to strengthen defenses and make future frauds more difficult. The comprehensive solutions outlined here, if implemented with sustained commitment, can materially reduce the risk of another 1MDB while creating more efficient, transparent, and trustworthy financial systems globally.