Iran Uses Malaysia to Fund Terror Proxies

Latest Developments

Undersecretary of the Treasury Brian Nelson embarked on a four-day trip to Singapore and Malaysia on May 6 to address terror financing in Southeast Asia. On May 7, Nelson reported that Iran is using Malaysian companies to sidestep sanctions and transship oil to Singapore and beyond. Tehran uses that revenue to fund its terror proxies in the Middle East. “Stopping these oil shipments will deal a critical blow to Iran’s ability to fund these attacks around the world,” Nelson said. He added that the United States wants to “prevent Malaysia from becoming a jurisdiction” for Hamas fundraising.

Expert Analysis

“The government in Kuala Lumpur is playing a dangerous game. The government’s open embrace of Iran and Hamas has not only led to the assassination of several Hamas operatives on Malaysian soil. It may soon lead to sanctions or other punitive measures. This possibility is now clear, with senior Treasury officials paying a visit. Such visits are usually a precursor to harsher measures if remediation is not quick and clear.” — Jonathan Schanzer, FDD Senior Vice President for Research

“Malaysia is a critical hub in Hamas’s global fundraising and operations networks. Washington should make clear to Kuala Lumpur that it will face consequences for providing a base for the Iran-backed terrorist group.” — David May, FDD Research Manager and Senior Research Analyst

Hamas in Malaysia

Hamas has maintained an active presence in Malaysia for years. The terrorist group began planning and training on Malaysian soil as early as 2010. In 2018, Mossad agents gunned down a Hamas weapons developer in Kuala Lumpur. Hamas’s Al-Quds International Foundation, which the terrorist group uses to move funds, also has a branch in Malaysia. Malaysian lawmaker Datuk Mukhriz bin Tun Dr. Mahathir — the son of a former Malaysian prime minister Mahathir Mohamed — is the chair of the Al-Quds board of trustees. Malaysian organizations likewise funnel money to Hamas. In 2020, an Israeli court indicted a Gazan imam for smuggling money on behalf of two Malaysian charities to Hamas in Gaza.

Malaysia Backs Hamas in Gaza War

The Malaysian government refused to condemn Hamas’s October 7 massacre. On October 16, Malaysian Prime Minister Anwar Ibrahim said that Kuala Lumpur had “a relationship with Hamas from before and this will continue.” Ibrahim maintained on November 9 that Malaysia will not “punish the group as a terrorist organization” even if that that leaves Kuala Lumpur vulnerable to Western sanctions. “I will not accept any threats,” he said. On December 19, Malaysia banned vessels bearing Israeli flags and ships destined for Israel from anchoring in Malaysian waters. Kuala Lumpur also blocked Israeli company ZIM Integrated Shipping Services from docking in Malaysia.

Related Analysis

“Malaysia Bans Israeli Shipping Services,” FDD Flash Brief

“10 Things to Know About Hamas,” FDD Insight

“How Malaysia Became a Training Ground for Hamas,” by Jonathan Schanzer