Bank Negara Malaysia (BNM) has opened a public consultation to shape how artificial intelligence (AI) can be used responsibly in the country’s financial system.
Napier AI welcomed the move, highlighting the importance of consistent standards, strong governance, and collaboration between regulators, banks, and technology providers.
BNM’s consultation addresses a key issue: defining what truly counts as AI. Many financial institutions still label automated or rules-based systems as AI, which can create confusion and inconsistent oversight. Napier AI said that a clear, sector-specific definition will help regulators and firms apply the right standards of transparency and accountability.
The rise of agentic AI—self-learning systems capable of operating autonomously—adds urgency to this effort. While such systems could transform risk management and compliance, they also raise new challenges around explainability and control. Napier AI supports global alignment on AI definitions to ensure clarity across jurisdictions.
AI is already transforming financial crime compliance in Malaysia. The Napier AI / AML Index 2025–2026 found that Malaysia lost 5.04% of GDP to money laundering in 2024 despite spending $1.95bn on compliance. The report suggests AI could save the country up to $0.56bn annually by improving detection and reducing false positives.
To guide this shift, Napier AI recommends that financial institutions focus on governance, model risk management, and maintaining human oversight. It also urges BNM to engage regularly with the sector to ensure policies evolve alongside new technologies.
Ultimately, AI regulation represents a “win-win-win” opportunity for Malaysia—enhancing regulatory oversight, boosting institutional efficiency, and strengthening consumer trust, Napier AI explained.
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