NEW YORK (Reuters) – Goldman Sachs Group Inc (GS.N) may need to boost its legal reserves by as much as $1 billion to prepare for potential penalties related to its dealings with the Malaysian sovereign wealth fund 1MDB, analysts said.

The U.S. investment bank has been under scrutiny for its role in helping raise funds through bond offerings for 1Malaysia Development Bhd (1MDB) [TERRN.UL], which is the subject of corruption and money-laundering investigations in at least six countries.

U.S. prosecutors have brought criminal charges against two former Goldman bankers. Goldman has consistently denied any wrongdoing.

The bank is in “active conversations” with the DOJ and has been for almost two years, Chief Operating Officer John Waldron said in a CNBC interview on Tuesday.

In November, the bank disclosed in a securities filing that it may face penalties from dealings with 1MDB.

In interviews this week, analysts said Goldman might have to set aside $500 million to $1 billion for legal reserves in the next few quarters to prepare for potential fines. The bank does not disclose its total reserves.

That amount would not have a large impact on Goldman’s capital levels, but could lead management to restrict bonuses in order to send a message that it takes the matter seriously, said Marty Mosby, director of bank and equity strategies at Vining Sparks.

UBS analyst Brennan Hawken wrote in a note that expectations for potential fines typically range from the $600 million banking fees Goldman earned from 1MDB transactions to the $2.5 billion sum embezzled from the funds.

The Department of Justice estimates that $4.5 billion was misappropriated from the funds by high-level officials of the fund and their associates between 2009 and 2014.

Malaysian Finance Minister Lim Guan Eng has said his country would seek a “full refund” of around $600 million in fees the bank earned from raising $6.5 billion for the fund.

A Goldman Sachs spokesman declined to comment for this article.

Longer-term revenue could also be at risk if the scandal hurts Goldman’s reputation in Asia-Pacific, Hawken wrote. The bank derives 15 percent of its revenue from that region.

Morgan Stanley analyst Betsy Graseck downgraded the bank’s stock last month, citing regulatory concerns. The stock has fallen 4 percent from $192.60 to $184.31 since the note’s release.

Goldman may not have to bolster reserves until it is clear fines will be imposed and it may not want to boost reserves, said Geoffrey Miller, a professor and expert in banking regulation and law at New York University School of Law.

Reserving too early can “be taken as a sign of how much you are expecting to pay, and thus set an unfavorable anchor for settlement negotiations,” he said.

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