Malaysia Strengthens RegTech Compliance Framework

After significant RegTech-based changes to financial crime controls, Malaysia is moving to the top FATF follow-up category.

The Malaysian market has achieved the highest level of follow-up in the Financial Action Task Force assessment and the level of improvement is a significant figure for its enhanced regulatory body and RegTech implementation. The most recent Mutual Evaluation Report has reported stronger technical compliance and enhanced, more effective measures against money laundering, terrorism financing, and proliferation financing.

Authorities reinforced legal and institutional frameworks by revising the most significant acts and increasing the collaboration between agencies, such as the National Coordination Committee and the National Anti-Financial Crime Centre. The broader utilization of technology and data analytics is credited to risk-based supervision in the report, which highlights the smartening trends of RegTech in enforcement and monitoring.

These providers of financial services, financial institutions, and virtual asset services have equally enhanced their risk knowledge and have been aided through the financial intelligence software and cross-agency information exchange. The rate of asset recovery shot up to RM37.63 billion, which is fifteen times more than that of 2015 and reflects much more precise priorities on both policy and operational levels.

Malaysia has made significant progress in combating terrorism financing, enacting targeted sanctions, and supervising high-risk nonprofit organizations. The remaining gaps are now expected to be addressed through regulators formulating national strategies and action plans to go on with transforming the compliance ecosystem in the country with the continued help of RegTech.