Introduction

Economic crime has placed long-standing pressure on Malaysia’s economy. Between 2018 and 2023, the country is estimated to have lost RM277 billion (equivalent to approximately USD 60 to 65 billion over the period, depending on exchange rates) to corruption, about RM1,609 per Malaysian. This figure is higher than a full month of minimum wage during that period for many Malaysians, which puts the real-world impact of these statistics into perspective.

The shadow economy is also significant, estimated at up to 30.2% of GDP, driven by smuggling, tax evasion and unreported business activity. On the digital front, online fraud reported losses reached RM5.62 billion from 2023 to 2025, spanning phone scams, e-commerce fraud and fake investment schemes.

Over the past 18 to 24 months, however, Malaysia has shown meaningful progress. Stronger laws, faster coordination, and firmer prosecutions have improved outcomes: faster fund tracing, more mule-account takedowns, fewer successful phishing attacks, and more blocked fraud attempts.

Series Overview

This article begins a series examining how Malaysia is rebuilding its anti-economic-crime ecosystem. It first looks at the recent wave of legal and policy reforms aimed at strengthening financial crime enforcement, enhancing transparency, and expanding investigative powers. These developments are reshaping how investigations, asset restraint and regulatory compliance operate in practice.

Subsequent parts will examine the institutional and operational architecture that supports enforcement, from fund-tracing and intelligence sharing to cross-border cooperation, before turning to prosecutorial developments and the broader governance challenge: how technology, including AI-enabled compliance tools, can strengthen enforcement while still requiring sound human judgement, accountability and ethical oversight.

Law and Policy Reforms

Anti Money Laundering, Anti Terrorism Financing and Proceeds of Unlawful Activities (Amendment) Act 2025

This amendment expands the scope of the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (“AMLA”) to include “restricted activity financing”, expressly covering proliferation financing. It also strengthens provisions for investigation, prosecution, supervision, reporting and forfeiture, raising expectations for reporting institutions, including designated non-financial businesses and professions (“DNFBPs”) such as law firms, accountants and registered estate agents.

In practice, the reforms enable earlier asset freezes and broaden the scope of chargeable conduct, strengthening both deterrence and enforcement outcomes.

Companies (Amendment) Act 2024

This amendment places beneficial ownership (“BO”) firmly within the framework of the Companies Act 2016. The new section 60A defines a beneficial owner as the natural person who ultimately owns or controls a company and empowers the Companies Commission of Malaysia (“CCM”) to issue BO identification guidelines.

Under CCM’s Guidelines for the Reporting Framework for Beneficial Ownership of Companies (Revised 2025), BO is assessed using criteria such as whether a person exercises ultimate effective control, formally or informally.

These provisions directly target shell structures and layered ownership commonly used to conceal proceeds of crime, enabling easier tracing in corruption and fraud investigations.

Penal Code (Amendment) Act 2024

The amendments introduce targeted offences into the Penal Code under Sections 424A to 424D to address mule accounts and account-rental schemes.

New offences criminalise:

  • possession or control of another person’s account or payment instrument without lawful authority;
  • giving another person possession or control of one’s own account; and
  • conducting unlawful transactions using one’s own or another person’s account.

These targeted provisions close a long-standing enforcement gap by allowing prosecutors to directly charge mule-account holders who facilitate scam networks.

Criminal Procedure Code (Amendment) Act 2024

Section 116D, newly added to the Criminal Procedure Code, empowers police officers (Sergeant rank and above) to seize or prohibit dealings with funds in accounts where there is reasonable suspicion of criminal involvement.

This provides investigators with a practical early-intervention tool to prevent the rapid dissipation of funds, which is especially critical in scam and commercial crime cases.

Government Procurement Bill 2025

For the first time, Malaysia introduces a dedicated procurement law. The Bill seeks to standardise procurement rules and make open and competitive tenders the default. Its scope extends to companies in which the Minister of Finance (Incorporated) or a State-owned body holds more than 50% equity, bringing many government-linked companies and subsidiaries within its reach.

A national vendor registration framework ensures suppliers meet fit-and-proper criteria, declare conflicts of interest, and adhere to codes of conduct. Non-compliant vendors can be suspended or barred from tenders. Heavier sanctions for corruption, falsification, and undisclosed conflicts of interest improve accountability.

By turning procurement governance into enforceable law rather than policy, the bill enhances transparency, traceability, and deterrence, enabling auditors and authorities to detect manipulation, such as repeated awards to related parties, suspicious panel rotations, or last-minute specification changes.

E-Invoicing

Malaysia is also implementing mandatory e-Invoicing, which requires every invoice, credit note and debit note to be electronically submitted for validation before being shared with customers.

The system improves tax transparency, reduces invoice fraud, and enables smoother audit processes by ensuring that transaction records are digitally verified and traceable.

Looking Ahead

While these reforms significantly strengthen Malaysia’s legal framework against economic crime, laws alone are only one part of the enforcement ecosystem.

The next article will examine how Malaysia’s institutional infrastructure, including the National Scam Response Centre, financial intelligence systems, and cross-border cooperation mechanisms, is translating these reforms into more effective tracing, restraint and recovery of illicit assets. A further article will then consider recent prosecutorial developments and landmark cases, and what they signal about the trajectory of economic-crime enforcement in Malaysia.

This article is authored by our Partner, Mr Leonard Yeoh and Associate, Ms Sharon Teo. The information in this article is intended only to provide general information and does not constitute any legal opinion or professional advice.