The MALAYSIA FATF ASSESSMENT – HIGH LEVEL SUMMARY

In this 5th round, (2nd effectiveness round) the report (275 pages) on Malaysia is the first country assessment that has been published. Here is a very high level summary and some key data points.

1. Main Period of Assessment 2019 – Feb 2025.
2. On the 40 Recommendations, Malaysia had all Compliant and Largely Compliant Ratings.
3. For Effectiveness, 6 were rated as Substantially Effective and 5 Moderately Effective. The Moderately Effective ratings were for IO2 International Cooperation, IO4 None FI Supervision & Preventative Measures, IO5  Transparency & Beneficial Ownership, IO7 ML Investigations, Prosecutions and Convictions, IO8 Asset Recovery.
4. Highest risk predicates generating ML threats come from fraud, corruption, illicit drug trafficking, smuggling, and organised crime, followed by tax crimes, forgery, human trafficking/migrant smuggling, sexual exploitation, and environmental crime.
5. In terms of sectoral risks, banking institutions, dealers in precious metals and stones (DPMS) and lawyers face the highest sectoral ML risks.
6. 341,700 STRS reported in 2024, with 321,000 reported by banks (94%) of which 84,630 Disseminations by the FIU in 2024 representing a conversion rate of 25%.
7. Between 2019 and Feb 2025 (6 years), there were 488,862 Predicate Crime Investigations & 2,648 ML Investigations. This led to 234 ML Prosecutions & 52 ML convictions. Of these convictions 51 were for self laundering & 1 for Third party ML. There were 4 prosecutions for foreign ML and 0 Convictions.
8. ML related fines and sentences in 2024 less than 1 year imprisonment and an average €90,000 fine.
9. Between 2019 and Feb 2025 (6 years), €8.11 Billion in asset recoveries.  Approx $6 Billion related to 1 MDB and most represented recoveries from ML cases overseas. Of the remaining €2Billion, €1.8 Billion recovered in tax related cases.
10. FATF figures for asset recoveries as a % of estimated proceeds of crime at 17.7% (using the €8 Billion number) and 4.5% (using the €2 Billion number). FATF references possible estimates at 2-5% of GDP with GDP at €380 Billion, and take a 2% figure which generates €7.6 Billion to generate the 17.7%/4.5% figures.
11. Alternative estimates which take 3.5% (as the midpoint between 2-5%) would generate an estimate of €13.3 Billion for POC. Based on this figure the estimates would be 10% & 2.6% respectively.
12. If the 1MDB and the Tax related recoveries are excluded (tax crimes are not included in the UN 2-5% estimate of POC) then the recoveries are €200 Million over 6 years and represent either  0.43% (if POC are 2% of GDP) or 0.25% (if POC are 3.5% of GDP).

Conclusion: This is an improvement on the previous review which was published in 2015. A decade later and despite or in spite of 1MDB, Malaysia has still much to do to improve effectiveness so that it has a material impact, especially on IO7 ML Investigations, Prosecutions and Convictions, IO8 Asset Recovery.

For a copy of thr Report click HERE: