KUALA LUMPUR, Nov 2 — Malaysia was not attacked by terrorist groups such as Daesh and al-Qaeda but was used by these organisations as a "source and transit point”, according to the United States Department of State's Country Reports on Terrorism 2018.

It said Malaysia was used as a transit point by suspected Daesh supporters deported from Turkey and individuals planning to travel to the southern Philippines to support Daesh-affiliated groups.

"Malaysia monitored, arrested, deported, and tried suspected supporters of terrorist groups, and also cooperated with the United States and others to increase border security capacity at airports and in the Sulu Sea, to counter terrorist messaging on social media, and to improve terrorist prosecutions,” stated the report.

It also noted that last year's 14th general election in May also led to the incumbent Pakatan Harapan government pledging to review and potentially amend or repeal several pieces of legislation that govern how terrorist suspects are arrested, investigated, and detained.

But it expressed concern over the government's decision on November 30, 2018, to lift the moratorium recently imposed on several security laws, including the Prevention of Crime Act, the Prevention of Terrorism Act 2015, the Sedition Act 1948, and the Security Offences (Special Measures) Act 2012.

"The laws were under formal review for potential repeal or revision to remove 'elements of oppression'. However, a riot at a Hindu temple in Selangor on November 27 sparked concern among officials about the potential threat to national security, public order, and race relations, if the laws were no longer available.

"Legislative amendments were not announced by year’s end, but officials said the legislation would only be used to protect those three areas of concern. However authorities continued to use the Sedition Act against individuals who criticized the country’s royalty,” said the report.

On a more positive note, Malaysia's efforts to counter the financing of terrorism has not gone unnoticed, as the report states Bank Negara Malaysia issued the Anti-Money Laundering and Counter Financing of Terrorism Policy for Digital Currencies (Sector 6) policy directive in February.

"The directive aims to ensure that effective measures are in place against money laundering and terrorism financing risks associated with the use of digital currencies and to increase the transparency of digital currency activities in Malaysia.

"It requires all entities and persons who are involved in the exchange of digital currencies into money and vice versa, as well as the exchange of one digital currency for another, to register with BNM,” it said.

The directive also requires the filing of reports pertaining to the identification and verification of customers and beneficial owners and the ongoing monitoring of customers’ transactions.

The US Department of State added that Malaysia was also credited by intergovernmental organization Financial Action Task Force (FATF) in its Third Enhanced Follow-up Report and Technical Compliance Re-Rating for Malaysia on Anti-Money Laundering/Combating Terrorist Financing Measures, published in October last year.

"Due to Malaysia’s progress in strengthening its framework to tackle money laundering and terrorist financing since its 2015 mutual evaluation, the FATF has re-rated the country on four of the 40 recommendations, and found Malaysia to be compliant on all four, including on the 'terrorist financing offence',” it said.

Malaysia is one of seven countries in the East Asia and Asia-Pacific region analysed by the report, out of a total of 91 countries and territories around the world surveyed.