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In 2025, Malaysia made major improvements to its legal system to strengthen the fight against financial crimes such as money laundering and the financing of terrorism. These changes were made through amendments to the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (AMLA). The updated law now reflects international standards, especially those recommended by the Financial Action Task Force (FATF), an international body that sets global guidelines to combat financial crime.

This review will look at the key amendments, their benefits, and the challenges that may arise during implementation. Although these legal reforms bring many positive changes, their success depends on how they are enforced and managed in real-life situations.

Main Changes Introduced in 2025
One of the most important changes is the expansion of the law to include proliferation financing, which involves the funding of activities related to weapons of mass destruction (WMDs). This new coverage means that individuals or companies helping to fund dangerous items can now be investigated and punished under AMLA. This is a big step for national and global security.
Another change gives authorities the power to freeze or seize assets believed to be linked to criminal activities, even before a person is found guilty in court. This prevents criminals from moving or hiding money while a case is still under investigation.

The amendments also require all banks and financial institutions to have internal compliance programs. These programs must include staff training, monitoring systems, and a person in charge of ensuring the institution follows the AML/CFT laws. This change encourages businesses to take more responsibility for preventing illegal transactions.

In addition, the law now allows enforcement agencies to publicly disclose information about their actions and case outcomes. This increases transparency and helps build public trust in the system.

Another major improvement is the introduction of personal responsibility. Previously, companies could be held accountable, but individuals such as directors or managers were not directly liable. Now, if they fail to take steps to prevent crimes in their organisation, they too can face legal consequences.
Lastly, the authorities now have greater powers to act without going to court in every case. For example, they can issue fines or orders to fix problems when they find non-compliance. For more serious offences, the law now includes mandatory minimum sentences, which ensures that certain crimes are punished more strictly and consistently.

Positive Impacts of the Amendments
There are several good points about the 2025 amendments. First, including proliferation financing in the law improves Malaysia’s national security. As the country is active in international trade, this helps reduce the risk of being used as a channel for illegal funding of dangerous materials.
Second, the power to freeze assets early is a powerful tool. Financial criminals often move money quickly, and if the authorities must wait until a trial ends, the money may be gone. Being able to act early makes law enforcement more effective and prevents further damage.
Third, making internal compliance programs mandatory ensures that financial institutions take active steps to detect and report suspicious activities. This means fewer crimes are missed and institutions become part of the solution.
Fourth, publishing enforcement results shows that the law is being used and offenders are being held accountable. This helps the public believe in the fairness and strength of the legal system.
Fifth, holding individuals responsible encourages better leadership and accountability. Directors and managers will be more careful in making sure their organisations follow the law.
Lastly, allowing regulators to use administrative actions such as issuing fines or corrective instructions can make enforcement faster and more efficient. Not all breaches require a court process, and this change helps resolve smaller issues quickly.

Challenges in Applying the Amendments
Despite the advantages, the amendments also create some challenges. One of the biggest concerns is the lack of technical expertise to deal with complex crimes like proliferation financing. These cases involve special knowledge and international networks, and Malaysian authorities may need further training to handle them properly.

Another concern is that freezing assets before a person is found guilty could lead to unfair treatment if the wrong person is targeted. There must be clear rules and oversight to protect people’s rights.

Also, the requirement for compliance programs might be too costly or difficult for smaller businesses, such as rural cooperatives or family-run firms. Without proper guidance or support, they may struggle to follow the law or withdraw from certain services out of fear of punishment.

The introduction of mandatory minimum sentences may also lead to unfair outcomes. For example, not all offences are equally serious, and a person who made a mistake or acted under pressure may still face a harsh sentence. This removes the judge’s ability to consider the unique facts of each case.

Furthermore, the increased use of administrative powers by enforcement officers—without court involvement—raises the risk of misuse. There must be proper procedures and ways for people to appeal these decisions if they feel they were treated unfairly.

Finally, the delegation of enforcement duties to different agencies such as Bank Negara Malaysia, the Securities Commission, and others could lead to confusion or inconsistent enforcement. Without strong coordination between agencies, some offences might be missed or treated differently depending on who handles them.

Conclusion
The 2025 amendments to Malaysia’s AML/CFT law represent a major step forward in fighting financial crime. They bring the country closer to international best practices and give authorities stronger tools to detect, prevent, and punish illegal financial activities. By expanding the scope of the law, strengthening enforcement, and improving institutional responsibilities, Malaysia is sending a clear message that it takes money laundering and terrorism financing seriously.

However, the real impact of these changes will depend on how well they are put into action. This includes ensuring that enforcement agencies are well-trained, small businesses are supported, individual rights are protected, and government agencies work together smoothly. If these issues are managed effectively, the amendments will strengthen Malaysia’s financial system and improve public trust in its legal system.

By MK