By Elizabeth Dilts Marshall

WASHINGTON (Reuters) - The U.S. Federal Reserve said on Tuesday that it permanently barred a former Goldman Sachs Group Inc <GS.N> executive from the banking industry over his role in Malaysia's multi-billion-dollar 1MDB corruption scandal.

Andrea Vella, who was formerly co-head of Goldman's Asia investment banking division ex-Japan, failed to escalate information he had about Malaysian financier Low Taek Jho's involvement in three bond offerings that Goldman underwrote for Malaysia's sovereign wealth fund, the regulator said.

Malaysian and U.S. authorities have charged Low in connection with the theft of billions of dollars from 1MDB, which was originally set up by former Malaysia Prime Minister Najib Razak to fund infrastructure projects.

The Federal Reserve said that Vella "engaged in unsafe and unsound practices by failing to ensure" that Low's involvement was "fully escalated within the firm."

Vella consented to the bar without admitting or denying any of the allegations made by the regulator, according to the statement from the Federal Reserve.

Andrew Levander, a lawyer at Dechert representing Vella, said the fact that his client was not fined shows that Vella did not know about wrongdoing, such as others discussing or accepting bribes or kickbacks.

"Mr. Vella agreed to this limited settlement in order to move on to the next stage of his career and to avoid putting himself and his family through years of litigation," Levander said in a statement.

A spokeswoman for Goldman Sachs confirmed that Vella had left the firm in recent days after being on leave since October 2018.

The U.S. Justice Department says that $4.5 billion was misappropriated by high-level 1MDB fund officials and their associates between 2009 and 2014.

In November 2018, the U.S. Justice Department filed criminal charges against two former Goldman Sachs bankers tied to the scandal, Tim Leissner and Roger Ng.

Leissner pleaded guilty to conspiracy to launder money and conspiracy to violate the Foreign Corrupt Practices Act, and agreed to forfeit $43.7 million. Ng pleaded not guilty to charges in May, and his case is currently pending in federal court in Brooklyn.

According to the U.S. Justice Department, Goldman earned $600 million in fees for its work with 1MDB. Leissner, Ng and others received large bonuses in connection with that revenue.

Goldman is in ongoing discussions with U.S. and Malaysian authorities over their investigations into what the bank knew about the transactions at the time.

(Reporting by Pete Schroeder in Washington and Bharath Manjesh in Bengaluru; Editing by Chizu Nomiyama and Lisa Shumaker)