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SINGAPORE/KUALA LUMPUR (Reuters) - Police in Singapore said on Wednesday they have frozen two bank accounts in connection with an investigation into alleged financial mismanagement and graft at Malaysia's troubled state fund 1Malaysia Development Berhad (1MDB).
It was the first time accounts outside Malaysia had been frozen in connection with the investigation, which has left Malaysian Prime Minister Najib Razak facing his biggest crisis since he took office in 2009.
"On 15 July 2015, we issued orders under the Criminal Procedure Code to prohibit any dealings in respect of money in two bank accounts that are relevant to the investigation," Singapore police said in a statement.
Police did not identify the banks or the accounts in question because the investigation is continuing.
A 1MDB spokesman declined to comment.
1MDB, a property-to-energy group whose advisory board is chaired by Najib, is facing criticism over its debt of nearly 42 billion ringgit (£7.07 billion) and alleged mishandling of its finances.
The freezing of the Singapore bank accounts follows a similar move in Malaysia where a task force investigating 1MDB said this month that it had frozen half a dozen bank accounts following a media report that millions of dollars had been transferred to accounts belonging to Najib.
The Wall Street Journal reported on July 3 that investigators looking into 1MDB had traced close to $700 million (£448 million) of deposits moving through Falcon Bank in Singapore into the personal account of Najib in Malaysia.
Reuters has not verified the Wall Street Journal report.
Najib has denied taking any money for personal gain and said the corruption allegations are part of a malicious campaign to force him out of office.
A 14-day notice period given to Dow Jones & Co, which publishes the Journal, to respond to a letter from Najib's lawyers seeking clarification, ended on Tuesday.
Singapore's central bank also said it is in contact with financial institutions in relation to the 1MDB investigation and Falcon Bank has said it is co-operating with inquiries.
On Tuesday, the Monetary Authority of Singapore (MAS) said it was looking into whether banks followed rules on properly identifying customers and their sources of funds and on reporting suspicious transactions.
"We're actually looking back to see if they have done all these things," MAS managing director Ravi Menon told a news conference.
Malaysian authorities have set up a task force including police, the attorney-general, the central bank and the national anti-corruption agency to look into the 1MDB affair.
As part of the investigation, two people have been arrested this week, the Bernama state news agency reported.
One of them was identified as the managing director of a company, who was arrested on Tuesday, while the director of a construction company were arrested at Kuala Lumpur's international airport on Monday, Bernama said.
Authorities did not identify the two.
Separately, two opposition lawmakers who have both been critical of 1MDB said on Wednesday they had been barred from leaving the country.
Tony Pua and Rafizi Ramli both said authorities had not given them a reason for the travel ban. Immigration authorities were not immediately available for comment.
Earlier, a former newspaper editor seen as close to the ruling party recently alleged that the two had worked with
a website to forge documents on 1MDB. The two politicians denied that.
The website, Sarawak Report, has published allegations of graft and mismanagement within 1MDB, citing documents from whistleblowers.
The site's editor, Clare Rewcastle-Brown, has also denied the accusation. Authorities have blocked her website since Sunday for violating an Internet law.
Additional reporting by Trinna Leong, Anshuman Daga, Saeed Azhar and Praveen Menon; Editing by Rachel Armstrong, Robert Birsel