KUALA LUMPUR (Dec 11): Malaysia now needs to demonstrate effectiveness in fighting illicit finance by turning out more prosecutions and convictions in the next three years, a global financial crime watchdog said.
The Financial Action Task Force (FATF) has provided a list of recommended actions that must be completed by Malaysia, such as strengthening international cooperation and boosting its sanction framework, following a status upgrade. The country will have to report back its progress to the multilateral body in 2029.
Malaysia has strengthened its defences against illicit finance and must now “sustain and build on these reforms”, Elisa de Anda Madrazo, president of the Paris-based FATF, said in a statement.
The recommendations follow Malaysia’s upgrade to the highest category of “Regular Follow-Up” following a review by the inter-governmental body against money laundering, terrorist financing and the financing of proliferation of weapons of mass destruction.
The assessment was jointly carried out by FATF member countries Canada, Hong Kong, Japan, United Arab Emirates, Macau and the US, covering Malaysia’s efforts since 2019 and up to February 2025. The previous round of evaluation rated Malaysia as “Enhanced Follow-Up” in 2015.
Over the review period, Malaysia recorded 234 prosecutions and secured 52 convictions despite opening more than 2,600 money laundering cases, reflecting serious shortcomings in translating investigations into outcomes.
“Issues such as evidence collection challenges, legislated time limits to investigate, lack of training of and experience for prosecutors, and a preference for compounds and tax-based asset recovery continue to limit the effectiveness of criminal enforcement,” the report flagged.
The number of prosecutions and convictions “are not fully in line with Malaysia’s risk profile, particularly relating to high- and medium-high risk predicate offences”, the FATF said, noting the low overall sentences imposed in money laundering cases.
Malaysia must now “work at pace to demonstrate a sustained increase in money laundering prosecutions and convictions in the next three years”, de Anda Madrazo said in the statement accompanying the report spanning over 270 pages.
Countries implementing FATF’s standards and recommendations will not only “safeguard the integrity of their financial system, but make people and communities safer by stemming the flows of illicit finance that sustain crimes such as human trafficking, drug trafficking, corruption and organised crime”, she added.
The status upgrade “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”, said Bank Negara Malaysia (BNM) governor Datuk Seri Abdul Rasheed Ghaffour.
BNM is the chair of a committee set up to coordinate, implement and monitor Malaysia’s initiatives in combating money laundering. Other members include the Attorney General’s Chambers, the Companies Commission of Malaysia, the Royal Malaysian Police and the Securities Commission Malaysia.
“We will continue to strengthen our framework to address emerging risks, maintain global confidence in Malaysia’s financial sector, and ensure Malaysia remains an attractive and competitive investment destination,” Abdul Rasheed said.