The watchdog said the country has undertaken initiatives to update and deepen its understanding of illicit finance risks.
KUALA LUMPUR: Global financial crime watchdog, the Financial Action Task Force (FATF) and Asia/Pacific Group on Money Laundering (APG) in a report published yesterday revealed that Malaysia has further strengthened its defences against illicit finance since 2015, notably by enhancing its legal framework and supervision of financial and non-financial sectors.
The watchdog upgraded Malaysia to the highest category of “Enhanced Measures” for its anti-money laundering, countering terrorist financing and proliferation financing (AML/CFT/CPF) framework from “Regular Follow-Up” in 2015.
It said the country has undertaken initiatives to update and deepen its understanding of illicit finance risks, as well as to strengthen domestic cooperation and coordination mechanisms.
“However, Malaysia faces significant challenges in translating money laundering investigations into prosecutions and convictions,” it said in the 275-page Mutual Evaluation Report (MER) released yesterday.
The FATF and APG mutual evaluation of Malaysia assessed the effectiveness of the country’s AML/CFT/CPF measures, and their level of compliance with the international FATF Standards, at the time of an onsite visit by an international team of assessors in February 2025.
It is to be noted that Malaysia was one of the first countries to be assessed in the new round of evaluations, FATF president Elisa de Anda Madrazo said in a statement released with the report.
She said Malaysian authorities were highly committed to the process and had shown notable progress in strengthening the country’s AML/CFT regime, resulting in stronger supervisory frameworks for financial institutions, robust risk understanding and effective coordination among agencies.
“Substantial reforms and a strengthened legal framework have put Malaysia on a stronger footing to deal with major cases, such as 1Malaysia Development Bhd (1MDB), that shake public confidence,” she said.
Malaysia must sustain and build on these reforms, strengthen international cooperation, improve its sanctions framework, and work at pace to demonstrate a sustained increase in money laundering prosecutions and convictions in the next three years, she said.
“By implementing the FATF’s standards and recommendations, countries not only safeguard the integrity of their financial system, but make people and communities safer by stemming the flows of illicit finance that sustain harmful crimes such as human trafficking, drug trafficking, corruption and organised crime,” she added.
Between 2019 and February 2025, Malaysia convicted 62 individuals and five legal persons for money laundering, and seven individuals for terrorist financing, it said.
The assessment found that Malaysia had a strong understanding of the risks associated with the misuse of corporate structures and has implemented risk-based measures to mitigate the misuse of legal arrangements.
“However, further improvements are needed to ensure authorities have timely access to the critical information they need for criminal investigations,” it said.
The assessment found that Malaysia demonstrates robust domestic coordination and cooperation at the policy and operational levels. — Bernama
