SINGAPORE (Reuters) -A Singapore court has cleared the way for a $2.7 billion lawsuit against Standard Chartered Bank ( SCBFF ) over its alleged role in 1MDB fraud, liquidators seeking to recover the funds said on Monday.

Singapore High Court dismissed an application by the bank to strike out a suit filed against it by liquidators, the liquidators said in a press release, calling it "a significant legal victory" allowing the case to continue.

Liquidators trying to recover money from Malaysia's sovereign wealth fund 1MDB sued Standard Chartered Bank ( SCBFF ) in Singapore in June, alleging it enabled acts of fraud that caused more than $2.7 billion in financial losses more than 10 years ago.

"We are pleased that this application has been dismissed," they said in the statement. "It also enables us to continue the work of recovering misappropriated assets that rightfully belong to the people of Malaysia."

The move was the latest in a wide-ranging effort to recover money belonging to 1Malaysia Development Berhad (1MDB), from which U.S. investigators say about $4.5 billion was stolen between 2009 and 2014 in a complex, globe-spanning scheme.

"Standard Chartered ( SCBFF ) disagrees with the decision and will be filing an appeal," said a spokesperson for the bank on Monday.

The bank sent a second statement on Tuesday, saying the claims were "without merit" and had been brought against the bank by "shell companies that misappropriated funds from 1MDB". 

"We reported the transaction activities of these companies before we shut their accounts in early 2013. We take our responsibility to fight financial crime extremely seriously, in service of our clients and the markets in which we operate," said the spokesperson.

The liquidators did not immediately respond to a request for comment on Standard Chartered's ( SCBFF ) allegations.

Three companies in liquidation linked to 1MDB say Standard Chartered ( SCBFF ) permitted over 100 intrabank transfers between 2009 and 2013 that helped conceal the flow of stolen funds.

They also allege the bank chose to overlook obvious red flags in relation to the transfer of funds, resulting in the losses, the liquidators said.

The liquidators said the funds that flowed through the Standard Chartered ( SCBFF ) accounts included transfers to the personal bank account of former Malaysian Prime Minister Najib Razak, who is serving a six-year prison sentence after being convicted of graft linked to 1MDB.

At least six countries, including Singapore and Switzerland, have launched investigations into 1MDB dealings in a global probe that has implicated high-ranking officials and bankers worldwide, including Najib and executives from U.S. bank Goldman Sachs ( GS ).

Malaysia said last year it had recovered a total of 29 billion ringgit ($7.01 billion) in 1MDB assets between 2019 and February 2024.

In 2016, Singapore's central bank imposed penalties of S$5.2 million on the local unit of Standard Chartered ( SCBFF ) for money laundering breaches related to the 1MDB scandal.

($1 = 4.1390 ringgit)