Country Reports on Terrorism 2016 (Malaysia)

Country Reports on Terrorism 2016 is submitted in compliance with Title 22 of the United States Code, Section 2656f (the “Act”), which requires the Department of State to provide to Congress a full and complete annual report on terrorism for those countries and groups meeting the criteria of the Act

Country Reports on Terrorism 2016


Overview: Malaysia’s 2016 counterterrorism efforts focused on monitoring and arresting ISIS supporters, increasing border security capacity at airports and in the Sulu Sea, countering violent extremist messaging on social media, and developing the capacity of its judiciary to effectively prosecute terrorism cases using a rule-of-law approach.

In June, Malaysia suffered its first ISIS-inspired attack, a grenade attack at a nightclub in Puchong, Selangor that injured eight people.  The Royal Malaysian Police said that a number of other terrorist attacks were foiled by arresting individuals who were in the final stages of attack planning.  There was an increase in kidnappings for ransom in Malaysian territorial waters off eastern Sabah.  Many of these kidnappings were linked to the Abu Sayyaf Group (ASG).

Malaysia also uses it national security laws to arrest, jail, harass, and intimidate critics and political opposition.  In November, police arrested a human rights activist under the Security Offenses (Special Measures) Act on the eve of a planned public demonstration and held her in solitary confinement for 10 days.

2016 Terrorist Incidents: On June 28, ISIS-affiliated attackers threw a hand grenade into a bar in Puchong, injuring seven Malaysians and one Chinese tourist.  Two Malaysians were arrested and charged for the attack, and two additional Malaysians arrested in the following weeks were believed to be linked to the attack.

There were a number of kidnappings in Malaysian territorial waters near Eastern Sabah by gunmen with links to the ASG, although the kidnappings appeared to be more for financial gain than ideological reasons.  The attackers used speedboats to approach and board the vessels and the victims were subsequently transported to the southern Philippines, where they were held for ransom.

Most of the kidnapping victims during the year were Indonesian and Malaysian fisherman. For example, on November 18, gunmen attacked a Malaysian-flagged fishing trawler in the Celebes Sea off the coast of Sabah.  The gunmen abducted the captain and a crewmember and took an outboard engine and some of the crew’s personal belongings before departing in an unmarked speedboat.

On November 6, gunmen in a speedboat attacked a private yacht, abducting a 70-year-old German man from his yacht and killing his wife, who reportedly tried to resist the attack.  An ASG spokesman claimed the yacht was initially intercepted while cruising near Tanjong Luuk Pisuk, Sabah.  Local residents subsequently found the yacht drifting near Laparan Island in the Philippines with the remains of the deceased German woman.  The ASG later posted a video of the German man requesting assistance in raising ransom money.

On December 8, police killed three suspected kidnappers and captured two others during a shootout off the coast of Semporna after the suspected kidnappers reportedly mistook an unmarked police vessel for a fishing trawler that they could hijack.  The kidnappers had already hijacked two other vessels that night, and one of the two kidnap victims, the captain of a fishing trawler, was rescued after the shootout.  This was the first time Malaysian security forces engaged kidnappers in the area.

Legislation, Law Enforcement, and Border Security: In 2016, the Malaysian government employed both recently amended and new legislation to arrest and prosecute individuals with suspected links to terrorism, including the financing of terrorism.  These laws, however, have also been used to stifle dissent critical of the alleged misappropriation of sovereign wealth fund money from 1MDB, Malaysia’s government-owned investment fund. Malaysia’s Attorney General’s Chambers stated that at year’s end they had prosecuted, or were in the process of prosecuting, 70 terrorism-related cases. Of those, they had secured 22 convictions, while five cases were ongoing at the High Court.

In August, the government passed the National Security Council Act, granting the prime minister expanded powers intended to counter terrorism.  The new law gives the prime minister the authority to unilaterally enforce martial law by declaring security areas of concern where police have expanded search, seizure, and arrest powers.  It has not been used or tested in courts.

The Royal Malaysian Police Special Branch Counterterrorism Unit has the lead counterterrorism law enforcement role.  This unit proactively identifies terrorist threats on soft targets and reported during the year that it had foiled a number of attacks in the final planning stages, including a series of attacks on tourist sites and entertainment outlets that were allegedly planned to take place on August 31, Malaysia’s Independence Day.  Malaysian authorities continued to improve interagency cooperation and information sharing, including participation in regional meetings, Global Counterterrorism Forum (GCTF) events, and training conducted through Malaysia’s Southeast Asia Regional Center for Counter-Terrorism, which is part of Malaysia’s Ministry of Foreign Affairs.

The Malaysian government intensified its cooperation with Indonesia and the Philippines to respond effectively to kidnapping incidents in the Sulu and Celebes Seas.

The Royal Malaysian Police and Immigration Department took steps to provide immigration authorities with direct access to INTERPOL databases.  Malaysia reports its stolen and lost travel documents regularly to INTERPOL.  Malaysia has a no-fly list; passengers are compared to that list by the immigration officer at the port of entry and the decision to deny entry is made at the airport. Malaysia co-sponsored UN Security Council resolution (UNSCR) 2309 on aviation security, and took steps to improve intelligence and information sharing.

To support the implementation of UNSCR 2178 (2014) on foreign terrorist fighters, the government has criminalized travel to, through, or from Malaysia to engage in terrorism, and police have arrested individuals on arrival at the airport who were suspected of having traveled to Syria and Iraq to fight for terrorist groups.

In October, the government launched the National Special Operations Force to respond to terrorist threats, which was not operational at year’s end. The new joint unit will reportedly include land, air, and maritime forces from the Malaysian Armed Forces, Royal Malaysian Police, and the Malaysian Maritime Enforcement Agency.

On September 23, Ardit Ferizi was sentenced in a U.S. District Court to 20 years’ imprisonment for providing material support to ISIS.  Ferizi, a Kosovo citizen living in Malaysia, hacked into a U.S. company’s database and illegally obtained customer information, including personally identifiable information (PII) of 1,300 U.S. military and other U.S. government personnel.  Ferizi then provided the PII to an ISIS recruiter and attack planner and posted a tweet containing a document with the PII.  Ferizi admitted that he provided the PII to ISIS with the understanding that ISIS would use the PII to “hit them hard.” Malaysian authorities provisionally arrested Ferizi based on a U.S. request in October 2015 and extradited him in January 2016.

Countering the Financing of Terrorism: Malaysia became a full member of the Financial Action Task Force (FATF) in February 2016 and is a member of the Asia/Pacific Group on Money Laundering, a FATF-style regional body. Malaysia’s financial intelligence unit, the Unit Perisikan Kewangan, Bank Negara Malaysia, is a member of the Egmont Group of Financial Intelligence Units.  In September 2015, FATF published its Mutual Evaluation Report on Malaysia’s anti-money laundering/countering the financing of terrorism (AML/CFT) measures. The report gave Malaysia positive ratings for its robust policy framework, strong political commitment, and well-functioning coordination structures for AML/CFT, although it underscored the need for Malaysia to improve its understanding of terrorist finance risk.

In 2014, Malaysia elevated the risk of terrorism and terrorist financing to high due to the threats posted by ISIS and foreign terrorist fighters. In particular, a small but growing number of “self‑financed” terrorists have sought to raise funds through family, friends, and the internet to support their travel to fight with ISIS.

Between January and early October, the government pressed charges in a total of 12 terrorist finance cases and convicted two.  One of the convictions included the brother of Syria-based Malaysian ISIS operative Muhammad Wanndy.  Wanndy’s brother, Mohamed Danny, was sentenced to four years’ imprisonment for transferring approximately US $3,000 to Wanndy from Malaysia through his bank account.

Malaysia has implemented sanctions in accordance with relevant UNSCRs, including designating domestic and foreign entities pursuant to UNSCR 1373 obligations, and co‑sponsoring designations and freezing assets of individuals and entities on the UN Security Council ISIL (Da’esh) and al-Qa’ida sanctions list.  The 2014 amendments to the Anti-Money Laundering and Anti-Terrorist Financing Act provide for automatic translation of United Nations (UN) designations into designations under Malaysian law and direct reference to the lists maintained by the United Nations. Malaysia routinely distributed lists of terrorist designations and freezing obligations to financial institutions.

The use of informal remittances created vulnerability for abuse by terrorist financiers.  Malaysia has continued to undertake strong regulatory and enforcement action against unauthorized money services businesses that operate in the informal economy.  Strengthened controls, enforcement, and other supervisory measures have boosted the use of formal remittance channels, although risks from unauthorized money services businesses remain.

Malaysia requires Know Your Customer data for a wide range of entities and requires financial institutions to promptly report transactions suspected to involve proceeds of any unlawful activity via suspicious transaction reports (STRs). Non-profit organizations (NPOs) are required to file annual financial reports to the Registrar of Societies (ROS), which may file STR reports. Law enforcement works with the ROS and other charity regulators to prevent misuse and terrorist financing in the NPO sector, especially those considered vulnerable by Malaysia.  The ROS also conducts an annual conference for its members on the risks of terrorist financing.

For further information on money laundering and financial crimes, see the 2017 International Narcotics Control Strategy Report (INCSR), Volume II, Money Laundering and Financial Crimes:

Countering Violent Extremism: The Malaysian government established a new counter‑messaging center, supported research on radicalization, and officially launched an integrated rehabilitation module for terrorist detainees in 2016.  The government had not initiated steps by year’s end to develop or implement a national countering violent extremism strategy in line with the UN Secretary‑General’s Preventing Violent Extremism (PVE) Plan of Action.

The Malaysian government published a study in 2016 that identified a diverse set of suspected drivers of violent extremism in Malaysia, including a poor understanding of Islam, a lack of critical thinking skills, sympathy for the plight of Syrian Sunnis under Bashar al-Assad, and the possibility of adventure.  The study also cited a lack of willingness by the government to “comment on anything with regards to Islam for fear of treading on sensitivities associated with religion” as a factor that cedes the narrative to ISIS.

Non-government observers have identified other possible local drivers of radicalization, including government-sanctioned religious intolerance, the stifling of political dissent and civil society, the politicization of Islam, and deepening divisions between Malay Muslims and other non-Muslim Malaysian citizens.

There is recognition by government and non-government observers alike that pro-ISIS Malaysians, especially those who have traveled to Syria, have had a powerful effect in accelerating radicalization to violence via their extensive social media presence.

International and Regional Cooperation: Malaysia supports the efforts of international and regional organizations involved in countering terrorism, to include the United Nations, the GCTF, the Association of Southeast Asian Nations (ASEAN), the ASEAN Regional Forum, the Asia Pacific Economic Cooperation, and the East Asia Summit.  In January, Malaysia hosted the International Conference on Deradicalization and Countering Violent Extremism for ASEAN member states and strategic partners.  The Southeast Asia Regional Centre for Counter Terrorism hosted a number of multilateral events during the year, including ones on preventing the flow of foreign terrorist fighters, countering ISIS narratives, and the radicalization of undergraduate students.