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If there was any doubt that Goldman Sachs' compliance controls "don't work very well", as Malaysian Prime Minister Mahathir Mohamad wryly stated during an interview with CNBC last month, this should put it to rest. And as the Vampire Squid's lax compliance standards (the bank's compliance department was unwilling or unable to stop then-CEO Lloyd Blankfein from holding a one-on-one sit down with a shady Malaysian financier accused of stealing billions from the sovereign wealth fund, all in the name of landing a lucrative deal) have emerged as a focal point in a DOJ investigation into the bank's conduct.

On Tuesday Bloomberg highlighted another troubling detail that raises questions about when the bank's willingness to circumvent its own internal controls to win deals of placate valuable clients.

Goldmann

According to Bloomberg, investigators are looking into a mysterious transaction involving Goldman and Falcon Bank, a Singapore-based bank that was implicated by Singaporean authorities for allegedly helping to launder money stolen from 1MDB.

Goldman suffered "unexpected losses" during the trade after Singaporean regulators shuttered Falcon Bank over its role in the 1MDB theft.

An obscure Swiss bank implicated in Malaysia’s 1MDB corruption scandal was involved in another trade with Goldman Sachs Group Inc. in 2016 that exposed the Wall Street firm to unexpected losses. Falcon Private Bank had been a key player in the 1MDB drama since the end of 2015, when it first surfaced as a suspected conduit for hundreds of millions of dollars siphoned from Malaysia’s investment fund. By July of 2016, Singapore regulators found "substantial" breaches of money-laundering regulations at Falcon.

Yet even after Singapore accused Falcon during the summer of 2016 of helping to facilitate the 1MDB fraud, Goldman ignored the warnings and entered into a trade with the bank at the behest of a valuable client. But Falcon stiffed its Wall Street peer after regulators forced Falcon out of business, leaving Goldman with an $800 million hole. Investigators are trying to figure out why such a large trade with an obscure and tainted counterparty was allowed to be executed.

By July of 2016, Singapore regulators found "substantial" breaches of money-laundering regulations at Falcon. Yet weeks later, Goldman Sachs entered into a trade with Falcon at the urging of controversial businessman Lars Windhorst, people with knowledge of the matter said. Now, Falcon’s role in that trade is emerging at an uncomfortable time for Goldman Sachs. Regulators investigating 1MDB are said to be looking at how Goldman’s moneymakers allegedly dodged internal controls while helping the Malaysian fund amass more than $6 billion. The Falcon deal prompts a further question: why a sizable trade with an obscure firm mired in a money-laundering probe didn’t trip alarms.

Goldman was briefly exposed to massive losses as a result of the trade, and responded by firing a junior executive who later sued the bank, arguing that he was "scapegoated" by higher ups who had pressured him to make the deal. This is how the transaction became part of the public record.

Chris Rollins, the executive who was fired for his role in the trade, said Goldman's compliance department wouldn't allow traders to deal directly with Lars Windhorst, so Windhorst suggested that Rollins deal with Falcon instead. Singaporean authorities yanked Falcon's license after its role in the scandal was exposed. Goldman has disputed Rollins' account, saying that Rollins knew the bank had "misgivings" about the transaction.

But that still doesn't explain how and why the transaction wasn't blocked - which is particularly relevant after the New York Fed reportedly pressured Goldman to "tighten up" its internal controls after the first 1MDB deal closed.

With regulators breathing down its neck and the prospect of "significant" fines or sanctions looming over the bank, it is belatedly taking steps to "mitigated" its legal risks (and hopefully put a floor under spiraling Goldman shares) by intensifying oversight of "high risk" employees, according to the Financial Times.

Still, this is just one more sign that the "culture of corruption" alleged by Tim Leissner in his plea agreement is real, and that CEO David Solomon's "outraged" was merely feigned for show.