This article first appeared in The Edge Malaysia Weekly on February 9, 2026 - February 15, 2026
REGULATORS in the Asia-Pacific (APAC) region, including Malaysia, are stepping up enforcement actions in relation to anti-money laundering (AML) compliance breaches — slapping a total of US$57.5 million fines on financial institutions last year. This marks a 79% increase over the previous year’s US$32.1 million, largely driven up by China. A total of 36 penalties were served in 2025, according to annual data compiled by Fenergo, a Dublin-headquartered global group that provides digital solutions for client lifecycle management (CLM), know your customer (KYC) and transaction monitoring.
In Malaysia, the value of penalties imposed climbed to US$846,672 in 2025, from US$158,157 in 2024 and US$129,113 in 2023, with the upward trend likely to persist in the next few years, says Rory Doyle, Fenergo’s head of financial crime policy.
“We’ve seen a three-year increase in enforcement actions in Malaysia,” Doyle tells The Edge in a telephone interview. “We foresee that in the next few years, if the Malaysian government adheres to the recommendations by the Financial Action Task Force (FATF) and Asia/Pacific Group on Money Laundering (APG), then, as a natural result, enforcement actions should increase.”
Doyle was referring to the FATF/APG mutual evaluation on Malaysia last year, which assessed the effectiveness of the country’s AML, countering terrorist financing and proliferation financing measures.
The assessment found that Malaysia had significantly strengthened its defences against illicit finances since 2015, notably by enhancing its legal framework and supervisory approaches.
“However, Malaysia faces significant challenges in translating money laundering investigations into prosecutions and convictions,” FATF/APG flagged in their joint report last December. (FATF is an independent, intergovernmental watchdog for AML and counter-terrorism financing, while APG is the regional body overseeing the same.)
FATF/APG provided Malaysia with key recommended actions that it must complete within three years, and the country will have to report back on its progress. The recommendations include “strengthening international cooperation, improving its sanction framework and demonstrating a sustained increase in money laundering prosecutions and convictions”.
The watchdogs noted that between 2019 and February 2025, Malaysian authorities conducted 2,648 money-laundering investigations — three times more than in 2015 — but secured only 234 prosecutions and 52 convictions.
“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 said.
Malaysia was upgraded to the highest category of “Regular Follow-Up” following the FATF/APG review last year, from “Enhanced Follow-Up” in 2015.
Meanwhile, Fenergo’s data — which only takes into account fines of at least US$10,000 — shows that of the US$57.5 million regulatory fines issued in APAC last year, nearly half (around US$28 million) was by Chinese regulators. In fact, China ranked ninth globally among fine issuers — the highest among APAC countries — based on the value of penalties issued, which was higher by 574% from 2024. Cases involving The People’s Bank of China all focused on customer due diligence and suspicious activity report failings.
Interestingly, Singapore, which uncovered its biggest ever money laundering scandal in 2023, ranked 11th globally for fines issued in 2025 (nearly US$22.3 million).
“And it wasn’t just domestic banks that found themselves in the crosshairs of Singaporean regulators during 2025; three Swiss banks, along with UK, US and Lichtenstein-based financial institutions were also penalised by the regulator, the Monetary Authority of Singapore (MAS),” Doyle notes.
Based on news reports last July, MAS penalised six banks — Credit Suisse, UOB, UBS, Citibank, Julius Baer and LGT Bank — and three other financial institutions a total of S$27.45 million (about US$21.5 million then) in relation to a scandal that involved the seizure of more than US$2.2 billion in illicit assets following the arrest of 10 foreigners in a series of raids in August 2023. The penalties marked the conclusion of MAS’ enforcement actions against financial institutions in that case.
A pick-up in fines in Malaysia or the region in relation to the now-defunct 1Malaysia Development Bhd (1MDB) — the multibillion-ringgit graft and money-laundering scandal that emanated from Malaysia, but spanned many jurisdictions from the US to Switzerland — is unlikely, Doyle thinks.
“I think the [1MDB] scandal is now becoming a legacy issue, whereas if you look at Singapore and its money laundering scandal, the authorities have been decisive on that, and that’s only happened in the last 18 months. So, I envisage that the recovery of [1MDB] assets could still continue at a smaller rate. That is because of the length of time between when the scandal was first reported and the current date,” he says.
The FATF/APG report shows that between 2019 and February 2025, Malaysia recovered €8.11 billion in assets, with €6.08 billion linked to the 1MDB case. The majority of these 1MDB-related assets were repatriated through foreign civil forfeiture actions and settlements.
Meanwhile, as regulators across APAC step up enforcement for financial crime lapses, a key question is whether monetary penalties are an effective deterrent. Doyle’s view is that penalties can play a role in combating money laundering and terrorist financing, but their effectiveness may lie less in their monetary value than in the reputational impact they carry. He notes that in APAC, especially, enforcement actions can shape how banks are perceived by clients and counterparties. A negative regulatory action can translate into lost business and revenue, making reputation a powerful incentive for stronger compliance.
“So, purely from a reputational point of view, I think that is where enforcement actions are much more valuable in the fight against financial crime, rather than the actual monetary value,” he says.
Fenergo data shows that, globally, penalties for breaches related to AML, KYC, sanctions and customer due diligence fell to US$3.8 billion in 2025, from US$4.6 billion in 2024 and US$6.6 billion in 2023. The decline last year was mainly because of a drop in US fines.
The single-largest penalty last year, at US$985 million (€835 million), was issued to Swiss bank UBS by French authorities in relation to a protracted tax and money-laundering case. As a result, France became the second-largest enforcer globally (US$1.11 billion) behind the US (US$1.676 billion).
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