Malaysia has been moved into the highest follow-up category under the FATF review process after its latest mutual evaluation found significant improvements in the country’s approach to tackling financial crime.
According to FinTech Malaysia, the decision follows the publication of Malaysia’s most recent Mutual Evaluation Report (MER) by the FATF and the Asia Pacific Group on Money Laundering.
The findings mark a clear step forward from the country’s previous evaluation in 2015, with assessors pointing to stronger technical compliance and improved effectiveness in addressing money laundering, terrorism financing and proliferation financing risks.
According to the report, Malaysia now benefits from a comprehensive legal and institutional framework that has been reinforced through amendments to several key pieces of legislation. These include the Anti Money Laundering, Anti Terrorism Financing and Proceeds of Unlawful Activities Act 2001, alongside updates to the Penal Code, the Companies Act 2016, the Labuan Companies Act 1990, the Trustees Incorporation Act 1952 and the Trustee Act 1949. Together, these reforms have strengthened the country’s ability to prevent, detect and respond to financial crime across the financial system.
Bank Negara Malaysia Governor Dato’ Sri Abdul Rasheed Ghaffour said, “On behalf of the NCC, we welcome the publication of the MER. This achievement 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.
“We will continue to strengthen our AML/CFT/CPF framework to address emerging risks, maintain global confidence in Malaysia’s financial sector, and ensure Malaysia remains an attractive and competitive investment destination.”
The evaluation also highlights Malaysia’s improved understanding of financial crime risks, supported by three iterations of national risk assessments and a series of thematic reviews. Authorities have strengthened coordination through bodies such as the National Coordination Committee to Counter Money Laundering, the National Anti Financial Crime Centre and a multi-agency task force, helping to align policy, supervision and enforcement activity.
Supervisory and enforcement frameworks were found to be more robust, with regulators making greater use of technology and data analytics to support risk-based supervision. Financial institutions and virtual asset service providers were also assessed as having a stronger grasp of their risk exposure, alongside improved preventive measures, enhanced financial intelligence capabilities and more effective inter-agency information sharing.
Asset recovery was identified as a major area of progress, rising to RM37.63bn, representing a fifteen-fold increase since 2015. The report attributes this growth to clearer policy direction and stronger operational focus across relevant authorities. Assessors also noted advances in terrorism financing investigations and prosecutions, improved implementation of targeted financial sanctions, and enhanced outreach and monitoring of higher-risk non-profit organisations.
Following the publication of the MER, the National Coordination Committee is expected to develop and implement national strategies and action plans to address remaining risks and outstanding recommendations.
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