KUALA LUMPUR (Reuters) - Malaysia has begun work on a regulatory structure for digital currencies such as bitcoin, its central bank governor said on Wednesday, aimed at further securing Malaysia against money-laundering and terrorism financing.

FILE PHOTO - A copy of bitcoin standing on PC motherboard is seen in this illustration picture, October 26, 2017. REUTERS/Dado Ruvic

Governor Muhammad Ibrahim told a counter-terrorism financing summit that from next year those converting crypto currencies into conventional currency will be designated as “reporting institutions” under the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act.

Reporting institutions are required by law to undertake preventive measures to prevent their firms from being used as a conduit for money laundering and terrorism financing activities, according to the central bank.

“This is to prevent the abuse of the system for criminal and unlawful activities and ensuring the stability and integrity of the financial system,” Muhammad said.

He did not say when the regulations would be finalised.

Commenting on terrorism financing in Malaysia, Muhammad said the total number of suspicious transaction reports (STRs) from financial institutions have increased this year.

In the first six months of this year, Malaysian authorities received 346 STRs related to terrorism financing which have led to 34 disclosures to law enforcement agencies, compared to 93 reports in 2015, the central bank governor said.

Malaysia has arrested hundreds of people over the past few years for suspected links to militant groups. The Southeast Asian country has been on high alert since suicide bombers and gunmen linked to Islamic State launched multiple attacks in Jakarta, the capital of neighbouring Indonesia, in January 2016.

A grenade attack on a bar on the outskirts of Kuala Lumpur in June last year wounded eight people. Islamic State claimed responsibility for the attacks, the first such attacks on Malaysian soil.

Meanwhile, Australian Justice Minister Michael Keenan said the country has been sharing intelligence with Indonesia, Malaysia and others in the region for many years.

“Any information that we have that is relevant to the security of our friends in the region, we will share. My expectation is that will be reciprocated,” Keenan said at the summit.