Liquidators seeking to recover misappropriated funds from Malaysia's 1MDB have filed a $2.7 billion lawsuit against Standard Chartered (HKG:2888) in Singapore, Reuters reported Tuesday.

Standard Chartered shares declined about 1% on Wednesday morning trading in Hong Kong.

Appointed by financial services firm Kroll, the liquidators allege the UK-based bank enabled more than 100 intrabank transfers between 2009 and 2013 that helped conceal stolen funds, resulting in losses exceeding $2.7 billion, according to Reuters. The case was filed in Singapore's High Court.

The claimants accuse Standard Chartered of overlooking "obvious red flags" and failing in its oversight duties, the report said.

Standard Chartered told Reuters it had not yet received the claim documents but "emphatically rejected" the allegations and said it would "vigorously defend" itself.

The bank added that the companies involved were previously described by the liquidators as shell entities linked to fugitive financier Jho Low, who has denied wrongdoing.

Reuters also reported that the alleged fund flows included transfers to the personal bank account of former Malaysian Prime Minister Najib Razak, who is serving a six-year prison sentence for graft linked to 1MDB.

The board of 1MDB welcomed the legal action, saying the Malaysian people were "the true victims of this global fraud," according to Reuters.

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