KUALA LUMPUR (Dec 11): Malaysia has been urged to provide speedier legal assistance to foreign authorities and to seek more help from its counterpart abroad in combating illicit fund flows.
There had been several delays in responses from Malaysia to formal requests for cooperation despite “broadly positive feedback” from other countries, according to the multilateral financial crime watchdog Financial Action Task Force (FATF).
“A new case management system is a positive step that may help address delays,” the FATF noted in its report issued on Thursday. “As it was only introduced in December 2024, its impact on effectiveness cannot be determined at this stage.”
The recommendation, among others, follows Malaysia’s upgrade to the highest category of “Regular Follow-Up” following a review by the intergovernmental body against money laundering, terrorist financing and the financing of the proliferation of weapons of mass destruction.
FATF comprises 38 member jurisdictions and two regional organisations. The assessment was jointly carried out by member countries Canada, Hong Kong, Japan, the United Arab Emirates, Macau and the US, covering Malaysia’s efforts from 2019 up to February 2025.
The task force took note that delays in rendering help to foreign authorities were primarily due to incomplete requests, with almost one quarter of incoming mutual legal assistance (MLA) requests closed due to a lack of information despite follow-up by Malaysia.
Malaysia prioritises requests according to the severity of the offence, the urgency as stated by the requesting country and the risk of asset dissipation. However, in practice, more than half of the requests received were acceded to or denied within 12 months, according to the FATF.
However, Malaysia should also increase its use of MLA in investigations and prosecutions, particularly related to high-risk predicate offences such as fraud, drug trafficking, smuggling and organised crime, the FATF said.
Malaysian authorities utilise other forms of cooperation such as information exchanges, especially in addressing terrorism financing and cross-border drug trafficking and smuggling, though “these measures cannot substitute for the underutilisation of MLA,” the FATF stressed.
“Moreover, Malaysia has successfully repatriated illicit proceeds in very limited cases, and competent authorities do not systemically pursue illicit proceeds that have been moved abroad in a manner that is fully commensurate with the country’s risk profile,” the task force warned.