The Luxembourg-based bank Edmond de Rothschild was fined 25 million euros on Thursday as a result of a money-laundering scandal which has rocked the Grand Duchy's financial centre.

Marking the first time a Luxembourgish banking institution has been convicted of money laundering, 25 million euros were confiscated from the establishment as part of Thursday's sentencing at the capital's district court.

Nicknamed the "1MDB" affair, the case relates to the fraudulent misappropriation of several billion US dollars, taken from the Malaysian wealth fund 1Malaysia Development Berhad.

A United Arab Emirates national had opened dozens of bank accounts with the Luxembourg bank Edmond de Rothschild (Europe) SA in the name of various European and offshore companies, including companies established in the British Virgin Islands, Cayman Islands and the Isle of Man. These were later used to embezzle funds using a number of complex transactions.

In 2016, a judicial investigation was opened into the matter, offering up a total of 153 police reports, amid plentiful searches and wire-tapped conversations.

A judicial press release said Thursday's sentencing concludes the Edmond de Rothschild bank's criminal liability. It is now up to the prosecution to finalise the requisitions with regard to the bank's director and staff. However, the investigation into the bank's clients is set to continue.

The 25 million euros will be paid into the Luxembourg government's coffers.

RTL

© Domingos Oliveira

The statement went on to clarify the details of the 1MDB case.

The 1MDB fund, created in September 2009 by Malaysian Prime Minister Najib Razak, was managed by a senior management team, a board of directors and an advisory committee in order to pursue investment and development projects in the economic interest of Malaysia.
 
A very large part of the funds raised by 1MDB and its subsidiaries had been embezzled over the years, notably between 2009 and 2013, by the Malaysian Prime Minister, Malaysian officials, as well as other people.

Under Luxembourg law, the infractions of laundering and concealment presuppose the existence of a primary infraction. For this reason, the origin of the embezzled funds were ultimately traced by investigators back to the accounts opened by the UAE national with the Edmond de Rothschild bank.