Digital Compliance in Action: A Comparative Study of AML Strategies in Malaysia and Indonesia’s Financial Sectors

This paper presents a comparative analysis of digital anti-money laundering (AML) compliance strategies in Malaysia and Indonesia, two major financial hubs in Southeast Asia. Using institutional theory and innovation diffusion as analytical lenses, the study explores differences in regulatory frameworks, institutional readiness, and adoption of digital tools such as e-KYC, AI-based monitoring, and RegTech. Through qualitative content analysis of national policies, FATF evaluations, and official reports, the research reveals that Malaysia exhibits greater digital maturity, policy coordination, and regulatory innovation, supported by initiatives like the Fintech Regulatory Sandbox and e-KYC guidelines. In contrast, Indonesia's AML transformation remains constrained by institutional fragmentation, limited digital infrastructure, and uneven implementation. Despite these differences, both countries face shared challenges, including data siloes, talent shortages, and emerging risks from fintech platforms. The findings offer key insights into how ASEAN economies can strengthen AML efforts through digital innovation, cross-border cooperation, and harmonized regulatory approaches.