This comes after former senior partners of the firm were indicted for bribery and money laundering involving the embattled sovereign wealth fund.
The firm, in its third-quarter earnings report filed to regulators on Friday, said it was cooperating with investigators.
It also stated that the scandal had forced the firm to scrutinise its business culture and internal controls.
The WSJ reported that the 400-word disclosure by the firm is “the most extensive yet” concerning investigations into 1MDB, which, among others, highlighted the potential weaknesses in Goldman’s compliance programme.
Former senior executive Timothy Leissner had pleaded guilty to corruption and money laundering charges in the US. Roger Ng, a former participating managing director, was also charged alongside fugitive Malaysian businessman Low Taek Jho, the alleged mastermind of the 1MDB scandal, who was charged in absentia.
Leissner had easily circumvented internal accounting controls and prioritised the sealing of deals over compliance, the report said.
The WSJ also quoted an analyst as saying that the disclosure by the firm indicated that it might be talking with prosecutors about a settlement.
Regulators are expected to examine the bank’s language about its controls when considering a penalty.
“There’s an expectation among regulators that business culture alone may not be (reason) enough (for culpable individuals) to get past the internal controls,” the report quoted William Garrett, content and data analytics manager for the Foreign Corrupt Practices Act Clearinghouse, a research centre and part of the Rock Center for Corporate Governance at Stanford Law School, as saying.
It also reported that a Goldman partner, cited in court documents as an unnamed co-conspirator who allegedly knew bribes were being paid, and had helped Leissner get around the compliance officials, has been put on leave.
The disclosure follows allegations, unsealed last week by US prosecutors, that Ng, and Leissner, a former participating managing director who had led Goldman’s Southeast Asia unit, paid bribes, and stole and laundered money from 1MDB.