Malaysia has been moved into the highest follow-up category under the FATF review process, signalling increased international confidence in the country’s ability to prevent and combat financial crime.
According to FinTech Malaysia, the decision follows the publication of Malaysia’s latest Mutual Evaluation Report (MER) by the FATF and the Asia Pacific Group on Money Laundering, marking a clear improvement on the country’s previous assessment in 2015.
The evaluation found that Malaysia has made significant progress in both technical compliance and effectiveness across anti-money laundering, counter-terrorism financing and counter-proliferation financing measures. According to the report, this progress reflects sustained reforms to the country’s legal and institutional framework, alongside stronger coordination between public authorities and private-sector stakeholders.
The MER highlights amendments to a wide range of legislation as a key driver of improvement, including updates to the Anti Money Laundering, Anti Terrorism Financing and Proceeds of Unlawful Activities Act 2001, the Penal Code, the Companies Act 2016 and the Labuan Companies Act 1990. Reforms to trust-related legislation, including the Trustees Incorporation Act 1952 and the Trustee Act 1949, were also cited as strengthening transparency and accountability across higher-risk areas.
Commenting on the findings, Bank Negara Malaysia Governor Dato’ Sri Abdul Rasheed Ghaffour said, “On behalf of the NCC, we welcome the publication of the MER. This achievement reflects Malaysia’s whole-of-nation commitment and efforts to safeguarding the integrity of its financial system and combating money laundering, terrorism and proliferation financing.
“We will continue to strengthen our AML/CFT/CPF framework to address emerging risks, maintain global confidence in Malaysia’s financial sector, and ensure Malaysia remains an attractive and competitive investment destination.”
The report points to a more mature understanding of financial crime risks, supported by three national risk assessments and a series of thematic reviews. It also highlights stronger coordination through bodies such as the National Coordination Committee to Counter Money Laundering, the National Anti Financial Crime Centre and a dedicated multi-agency task force.
Supervisory and enforcement frameworks were found to be more robust, with authorities making greater use of technology and data analytics to support risk-based supervision. Financial institutions and virtual asset service providers have also strengthened preventive controls, underpinned by improved financial intelligence and enhanced information sharing between agencies.
One of the most notable outcomes identified in the report is a sharp rise in asset recovery, which reached RM37.63bn — a fifteen-fold increase compared with 2015. The evaluation also records progress in terrorism financing investigations and prosecutions, stronger implementation of targeted financial sanctions and improved oversight of higher-risk non-profit organisations.
Following the report’s publication, the National Coordination Committee is expected to develop national strategies and action plans to address remaining recommendations and further strengthen Malaysia’s financial crime framework.
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