Malaysia's Ambank to pay government $700 million in 1MDB-linked settlement

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FILE PHOTO: A man wearing a protective mask walks past an Ambank branch, amid the coronavirus disease (COVID-19) outbreak in Kuala Lumpur

KUALA LUMPUR (Reuters) - Malaysian banking group AMMB Holdings Berhad (AmBank) will pay 2.83 billion ringgit ($699 million) to the government to settle claims related to a multi-billion-dollar financial scandal at state fund 1MDB, the finance ministry said on Friday.

An AmBank spokesman had no immediate comment.

AmBank Group has been under scrutiny over its role in the alleged theft of $4.5 billion from 1Malaysia Development Berhad, a state fund former prime minister Najib Razak set up in 2009.

Last year, Najib was found guilty of corruption and money laundering charges over the transfer of millions of dollars linked to a 1MDB unit into his Ambank accounts between 2014 and 2015. He denies wrongdoing and has filed an appeal.

As part of the settlement with AmBank, Malaysia's securities regulator will require AmInvestment Bank Berhad to take corrective measures, including putting in place systems and processes to strengthen its due diligence framework, the finance ministry said.

"Resolving this through the court system would have cost a lot of time, money and resources," Finance Minister Tengku Zafrul Aziz said in a statement.

"With this settlement, the payment of the monies will be expedited, instead of being held up by lengthy court battles, and can be utilised to fulfil 1MDB’s outstanding obligations."

The government said in November 1MDB was still $7.8 billion in debt following the scandal.

In 2015, the Malaysian central bank gave AmBank a 53.7 million ringgit fine by for breaching certain financial regulations.

($1 = 4.0480 ringgit)

(Reporting by Rozanna Latiff and Joseph Sipalan; Editing by David Goodman and Barbara Lewis)