Malaysia: Malaysia’s recent recognition by the Financial Action Task Force (FATF) under the ‘Regular Follow-Up’ status for the Mutual Evaluation Report 2025 (MER 2025) has underscored international confidence in the country’s robust, risk-based framework for anti-money laundering, counter-terrorism financing, and counter-proliferation financing (AML/CFT/CPF).
According to BERNAMA News Agency, the evaluation highlighted the Labuan International Business and Financial Centre (Labuan IBFC) as a key contributor to Malaysia’s strong overall assessment outcomes, reflecting the effectiveness of the regulatory and supervisory measures within the offshore financial centre.
Labuan FSA, in a statement to Bernama, emphasized the authority’s pivotal role in reinforcing the national AML/CFT/CPF framework through rigorous oversight of the Labuan IBFC market. The MER 2025 report noted Labuan FSA’s sound understanding of money laundering risks, while also identifying opportunities to further enhance risk assessments to address increasingly sophisticated typologies.
The report positively assessed Labuan FSA’s licensing, registration, and supervisory controls over the Labuan trust company sector, highlighting the robust licensing approach as a key strength of Malaysia’s AML/CFT/CPF framework. It emphasized the critical role of trust companies in preventing criminal access to financial institutions, making effective supervision essential for safeguarding the integrity of Labuan IBFC.
Additionally, the MER praised Labuan FSA’s use of advanced supervisory technology, such as network analysis, to establish links between beneficial owners across multiple entities. By leveraging information from its registry, the authority has been able to uncover nested relationships, conduct risk-based sampling, and identify possible ultimate beneficial owners, thereby strengthening transparency and oversight.
Looking forward, Labuan FSA is expected to continue collaborating with Labuan financial institutions to further bolster AML/CFT/CPF regulations within Labuan IBFC. Key priorities include deepening insights into the evolving risk landscape, advancing risk-based supervision, strengthening beneficial ownership transparency, and maintaining alignment with changing FATF standards.
These efforts reaffirm Labuan IBFC’s commitment to remaining a credible, well-regulated, and resilient international financial centre, while reinforcing Malaysia’s integrity and standing within the global financial system.
