Zeti says Malaysia central bank's 1MDB move vital for integrity

[NEW YORK] Malaysia's central bank had to take action against a debt-ridden state investment company to protect the integrity of the financial system, according to governor Zeti Akhtar Aziz, who said an improvement in the country's political situation would help the ringgit.

The attorney general's office earlier this month dismissed the central bank's second request for criminal proceedings against 1Malaysia Development Bhd for breaching the Exchange Control Act. Bank Negara Malaysia revoked three permits given to 1MDB for investments abroad totaling US$1.83 billion, and instructed it to repatriate the amount.

"He has the right to make that assessment," Ms Zeti said, referring to the attorney general. "But for the central bank we believe it is very, very important to comply with our rules and regulations that we have in place. This is vital, it's critical for the functioning of the financial system" and its integrity, she said.

BLOOMBERG