HOLDING an offshore financial account is not in itself an offence, but experts warn that the lack of proper documentation and disclosure could expose individuals to allegations of tax evasion and financial crime, particularly amid revelations that nearly 15,000 Malaysians hold more than RM10 billion in undisclosed overseas accounts.
Tax specialists and governance advocates said the scale of the funds involved is troubling, noting that offshore structures are frequently used by criminals to conceal wealth and launder proceeds of illegal activities.
KPMG senior tax policy adviser Dr Veerinderjeet Singh said offshore financial accounts are commonly used by businesses and individuals for legitimate purposes, including overseas investments and tax planning.
“But documentation here is crucial. Malaysians with offshore accounts must be able to prove why they find it a necessity to set up such accounts.
“If you have income here, you paid your taxes and invested overseas, there is nothing wrong with that,” The Star quoted him saying he said.
Veerinderjeet added that Malaysians who generate income overseas are not required to repatriate those earnings to Malaysia.
“One must not jump to conclusion that it is an offence just having an offshore financial account,” he said.
Centre to Combat Corruption and Cronyism chief executive officer Pushpan Murugiah said the Inland Revenue Board’s disclosure mirrors past global financial leaks such as the Pandora Papers, Panama Papers and Paradise Papers.
“Offshore secrecy isn’t just about ‘tax planning’ – it is a system that has been repeatedly used to hide wealth, avoid scrutiny and in some cases, launder the proceeds of corruption or illicit activity,” he said.
Describing the issue as one of governance and integrity, Pushpan said the findings suggest offshore concealment of wealth has likely been widespread for years, with Malaysia only now gaining clearer visibility through automatic exchange of information with more than 100 countries.
“If the Pandora Papers taught us anything, it is that without strong transparency rules, the same loopholes get recycled: shell companies, nominees, trusts, and secrecy jurisdictions that make it difficult to identify the true owner and the true source of funds.”
Pushpan said modern enforcement requires real-time data integration rather than ad hoc investigations.
“Instead of handling offshore data as ad hoc cases, offshore data must be systematically matched against domestic filings and risk-scored.
“The government should publish aggregate results - how many came forward, how much tax was recovered and how many were prosecuted. Otherwise, this becomes another news cycle without actual deterrence,” he said.
He added that the Inland Revenue Board already has access to cross-border data pipelines and should follow through with audits, recovery actions, penalties and coordinated financial crime investigations rather than settling for what he described as “quiet settlements”.
“The lesson from those leaks is clear. Malaysia needs enforcement that is predictable, proportionate and insulated from interference.
“Otherwise, offshore secrecy just evolves and repeats itself,” he said.
In 2021, at least 10 wealthy Malaysians were named in the Pandora Papers, a leak involving 3TB of confidential financial data published by the International Consortium of Investigative Journalists. Malaysians were also implicated in the Panama Papers in 2016 and the Paradise Papers in 2017.
Transparency International Malaysia president Raymon Ram said offshore accounts are often used to obscure beneficial ownership, in addition to facilitating tax evasion and money laundering.
“In some cases, they were genuine misunderstanding of tax residence and reporting obligations. But when the numbers are this large, it will be misleading to treat this as mere administrative non-compliance,” he said.
Raymon said Malaysia should consider introducing mandatory asset declarations for high-risk public positions such as ministers, Members of Parliament, senior civil servants and government-linked company leaders.
He added that asset declarations should be linked to beneficial ownership data to enable authorities to cross-check complex or offshore corporate structures against ultimate ownership and control.
“Malaysia has strengthened beneficial ownership requirements under the Companies Act framework. The next step is using that data operationally.
“There is also a strong case for introducing an unexplained wealth or illicit enrichment mechanism, with proper due-process safeguards, to address situations where wealth cannot be credibly explained even if criminal conviction is difficult,” he said.
Raymon said the issue should be addressed through a whole-of-government approach, with the Malaysian Anti-Corruption Commission or other relevant agencies intervening where necessary.
“Public confidence will ultimately be shaped not by announcements, but by recoveries, prosecutions in egregious cases, and demonstrable prevention,” he said. - February 3, 2026
