KUALA LUMPUR (Reuters) - Indonesia has agreed to hand over to Malaysia a $250 million luxury yacht it impounded in Bali earlier this year in connection with a corruption scandal at a Malaysian state fund, Indonesian authorities said on Saturday.

FILE PHOTO: A man covers his mouth as he walks past a 1 Malaysia Development Berhad (1MDB) billboard at the funds flagship Tun Razak Exchange development in Kuala Lumpur, Malaysia, February 27, 2015. REUTERS/Olivia Harris/File Photo

The Cayman Islands-flagged Equanimity was seized in February at the request of U.S. authorities as part of a multi-billion dollar corruption investigation launched by the Department of Justice (DOJ) related to 1Malaysia Development Berhad (1MDB).

An Indonesian court ruling in April declared that the yacht was wrongfully impounded and should be released to its owners, but Indonesian police seized the boat again in July following a formal request for legal assistance from the United States.

Indonesian police said they would hand the yacht over to Malaysia but did not specify when.

“The yacht will be handed over at the border between Indonesia and Malaysia’s waters,” Daniel Silitonga, deputy director for economic and special crimes at the Indonesian national police force’s Criminal Investigation Agency, told Reuters by text message.

“We have to maintain the good relations between the two countries,” he said, adding that the yacht is currently in waters close to the border of Singapore and the Indonesian island of Batam.

A spokesman for Malaysian Prime Minister Mahathir Mohamad’s office said “some arrangements” were being made with Indonesian authorities regarding the yacht and that an announcement would be made when the details were finalised.

A source familiar with the negotiations told Reuters on Friday that Indonesia had agreed to hand the yacht to Malaysia following a personal request by Mahathir.

Mahathir, who previously served as prime minister from 1981-2003 and is now 93, visited Indonesia in June on his first official visit in the region since returning to power in May in a surprise election win over Najib Razak.

1MDB, founded by Najib, is at the center of money-laundering probes in at least six countries, including the United States, Switzerland and Singapore. A total of $4.5 billion was misappropriated from 1MDB by high-level officials of the fund and their associates, according to U.S. civil lawsuits filed by the DOJ. Najib has denied wrongdoing.

Malaysian financier Low Taek Jho is described in the lawsuits as a central figure in the scandal. The DOJ says Low used proceeds diverted from 1MDB to procure Equanimity, a 300-ft (91-m) yacht registered in the Cayman Islands.

The $250 million vessel is said to have an interior clad in marble and gold leaf, a spa and sauna, a 20-meter swimming pool on deck, a movie theater, a lift and a helipad.

In an emailed statement, a spokesman for Low’s legal team said the handing over of Equanimity to Malaysia was illegal and that it was politically motivated.

Malaysian authorities are seeking to arrest Low, whose whereabouts are unknown. His Malaysian passport was revoked and an arrest warrant has been issued against him. Low has previously denied any wrongdoing.