KUALA LUMPUR (Dec 11): High-profile corruption cases, including the 1MDB scandal, underscore the need for stronger measures in combating illicit fund flows, a global financial crime watchdog said.
Officially known as 1Malaysia Development Bhd, 1MDB is a defining case study in a report by the Financial Action Task Force (FATF). The multilateral taskforce took into account Malaysia’s handling of the scandal that exposes vulnerabilities across policy, supervisory and institutional safeguards.
While Malaysia accelerated reforms in the wake of the scandal, gaps persist in translating financial crime investigations into prosecutions and convictions across a broader range of offences, the FATF said.
Created by former prime minister Datuk Seri Najib Razak in 2009, 1MDB has been embroiled in graft and money-laundering investigations spanning more than a dozen jurisdictions from the US to Switzerland, and from the United Arab Emirates to Singapore.
Najib has since been found guilty in a case involving 1MDB’s former subsidiary, and was sentenced to 12 years' jail as well as fined RM210 million. A partial pardon reduced his prison term to six years and fine to RM50 million. He is now seeking to serve the remainder of his sentence under house arrest, while his family and co-conspirators have also been charged.
The FATF “duly acknowledged” Malaysian authorities’ efforts in the case — including diverting specialised personnel to investigate, prosecute and recover assets, including tracing complex financial flows across multiple jurisdictions.
The investigations are “a significant achievement and demonstrate enhanced coordination” between various law enforcement agencies, Bank Negara Malaysia, the financial intelligence unit and the Attorney General’s Chambers, the taskforce highlighted.
"While this focus has been critical in addressing the case and restoring public confidence, it has affected the law enforcement agencies’ capacity to pursue other money laundering matters," the FATF said.
Malaysia has been urged by the FATF to step up its efforts in combating illicit finance, including strengthening international cooperation as well as turning more investigations into prosecutions and convictions, following the latest round of evaluations.
The country was upgraded 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.