Malaysia’s "Regular Follow-Up Status" By FATF Underscores Labuan IBFC AML Framework's Strength
LABUAN, Jan 9 (Bernama) -- 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).
In the evaluation, the Labuan International Business and Financial Centre (Labuan IBFC) was recognised for contributing to Malaysia’s strong overall assessment outcomes, reflecting the effectiveness of the regulatory and supervisory measures implemented within the offshore financial centre.
Labuan FSA, in a statement to Bernama today, said the assessment highlighted the authority’s central role in reinforcing the national AML/CFT/CPF framework through rigorous oversight of the Labuan IBFC market.
Recapping the MER 2025, Labuan FSA demonstrated a sound understanding of money laundering risks within Labuan IBFC, with the report noting opportunities to further enrich its risk assessments to address increasingly sophisticated typologies.
The report also positively assessed the authority’s licensing, registration and supervisory controls over the Labuan trust company sector, describing the robust licensing approach as a key strength of Malaysia’s AML/CFT/CPF framework.
It noted that trust companies play a significant gatekeeper role in preventing criminals and their associates from gaining access to financial institutions, making effective supervision critical to safeguarding the integrity of Labuan IBFC.
In addition, the MER highlighted Labuan FSA’s use of advanced supervisory technology, including network analysis, to establish links between beneficial owners across multiple entities.
By leveraging information in its registry, the authority has been able to uncover nested relationships, conduct risk-based sampling and identify possible ultimate beneficial owners, as well as strengthen transparency and oversight.
Looking ahead, Labuan FSA is expected to continue working closely with Labuan financial institutions to further strengthen 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 ongoing commitment to remaining a credible, well-regulated and resilient international financial centre, while reinforcing Malaysia’s integrity and standing within the global financial system.
-- BERNAMA