By Faikaq Kamaruddin

Malaysia has been successful in the fight against financial crime, recovering about €8 billion in assets between 2019 and February 2025, with a significant portion linked to the 1Malaysia Development Bhd (1MDB) case, according to the Financial Action Task Force (FATF).

In its latest Mutual Evaluation Report on Malaysia, FATF said the country recovered €8.11 billion over the period, of which €6.08 billion was attributed to 1MDB.

Most of the 1MDB-linked assets were returned through civil forfeiture actions and settlement agreements abroad, it said.

However, FATF noted concerns over the remaining €2.03 billion in recoveries unrelated to 1MDB, as much of it came from tax-based actions by the Inland Revenue Board.

This reflects a strong dependence on administrative recovery methods rather than criminal forfeiture proceedings.

“In terms of criminal confiscation, Malaysia relies more on non-conviction-based forfeiture than on conviction-based forfeiture (CBF).

“Although the FATF methodology does not favour one form of asset recovery over the other, the low use of CBF highlights broader challenges in effectively prosecuting and securing convictions for money laundering offences,” it said.

The task force noted that the most substantial recoveries have been in corruption and fraud cases.

However, forfeiture outcomes for drug trafficking, organised crime, and smuggling remain below expectations given their cross-border nature and high-risk classification in Malaysia’s national risk assessment.

“Beyond the 1MDB case, Malaysia makes limited use of asset recovery linked to foreign predicate offences or overseas assets.

“Overall, while the 1MDB asset recovery efforts are significant, other recovery efforts are not fully aligned with the country’s identified risk exposure, particularly for high- and medium-high-risk predicate offences,” it added.