The axe has fallen. On Thursday 22 May, the VIIth correctional chamber of the Luxembourg district court convicted Bank Edmond de Rothschild (Europe) of money laundering and handling stolen goods, the judicial administration announced in a press release. “This is the first time that a Luxembourg banking institution has been convicted of money laundering.”
The penalty handed down includes the confiscation of €25m “previously seized from the bank’s assets, and now attributed to the Luxembourg state.”
This conviction comes in the context of the “1MDB” affair and the fraudulent misappropriation of several billion dollars to the detriment of the Malaysian sovereign wealth fund 1Malaysia Development Berhad.
An affair on an international scale
As a reminder, the 1MDB fund was set up in September 2009 at the instigation of the Malaysian prime minister at the time, Najib Razak, to finance development projects for Malaysia. But between 2009 and 2013, “a very large proportion of the funds raised by 1MDB and its subsidiaries were misappropriated by the Malaysian prime minister, Malaysian officials, as well as others.”
Amongst the money laundering circuits identified, “a national of the United Arab Emirates opened dozens of bank accounts with the Luxembourg bank in the name of various European and offshore companies of which he was the beneficiary of which he was the economic beneficiary,” explains the Luxembourg public prosecutor’s office.
“The investigation conducted by the examining magistrate and the Judicial Police Service, Anti-Money Laundering Section has established that, through complex international financial flows, funds originating from 1MDB were credited infine to the bank accounts of several of these companies, and this after having transited through numerous other jurisdictions.”
Three judicial inquiries, two of which are still ongoing
The judicial inquiry, opened in 2016, has led to 153 reports, wiretaps and numerous searches. “Thirty-one nullity appeals were also tolled by the council chambers of the District Court and the Court of Appeal and numerous requests for international judicial assistance were sent to foreign states (France, Switzerland, Singapore, Isle of Man, United States, United Arab States, Malaysia, British Virgin Island, Netherlands).”
The judgment closed the first part of the case, that relating to the bank’s criminal liability. “In fact, in accordance with the wishes of article 578 of the Code of Criminal Procedure, the judgment puts an end to the public prosecution with regard to the person prosecuted who concluded the agreement and this with regard to all the facts covered by the agreement,” says the judgement.
A second part, targeting certain managers and employees of the bank, “has been finalised at the stage of the judicial investigation. It is now up to the public prosecutor to finalise the indictment against them.” The third part, focusing on the bank client and his companies, remains open and “is actively pursuing its course.”
In a statement issued following the ruling, Edmond de Rothschild (Europe) stated that it acknowledged the decision. The bank emphasised that it had “fully and transparently cooperated with the authorities throughout the proceedings and welcomes the opportunity to definitively close this chapter.”
This article was originally published in French.
