According to an investigation by the Wall Street Journal, about $10 million originating from SRC was transferred to Najib's personal bank accounts, a fraction of the hundreds of millions of dollars from 1MDB that was allegedly funnelled to him.
Looking exhausted as he appeared in court, Najib was charged with three counts of money laundering over claims that he pocketed 42 million ringgit ($10.3 million).
Earlier, Najib arrived at the courthouse in a four-car motorcade accompanied by his children.
The charges were read out in a Sessions Court in Kuala Lumpur and the case is now being transferred to the High Court, where Najib is expect to enter a plea for each of the charges later on Wednesday. "So it's got nothing to do with 1MDB.", Najib's lawyer Muhammad Shafee Abdullah told reporters outside the court.
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He has been criticised by Labour MPs, some Tories and Muslim groups, who said the party was not doing enough to tackle prejudice. He also said it made its wearers look like letter boxes or bank robbers.
Najib, 65, was arrested last month and pleaded not guilty to abuse of power and three counts of criminal breach of trust. Asked if he understood them, Mr Najib said: "I understand".
Meanwhile, the High Court will hear submissions this Friday on the gag order on the case that was issued earlier and to set trial dates.
Najib was summoned on Tuesday by the Malaysian Anti-Corruption Commission (MACC) for a new round of questioning, which lasted for about 45 minutes. But reports emerged later that billions of U.S. dollars were misappropriated.
DOJ has alleged that an estimated $4.5 billion was misappropriated from 1MDB by high-level officials of the fund and their associates.
The then attorney general - who had ties to Najib's party - cleared the leader of wrongdoing, and said that the money had been a donation from the Saudi royal family. Malaysian financier Low Taek Jho (better known as Jho Low) allegedly bought the yacht using funds stolen from 1MDB.