KUALA LUMPUR - Malaysia's central bank said Friday it has recommended that criminal proceedings be launched against a state-owned company linked to Prime Minister Najib Razak and which is at the centre of a massive corruption scandal.

The statement by Bank Negara is the latest troubling development for Najib and the company that he launched - 1Malaysia Development Berhad (1MDB) - who have been under pressure to explain massive sums of money allegedly missing from overseas investments.

Najib also has been rocked by the sensational revelation in July that nearly $700 million in mysterious transfers had been made to his personal bank accounts, and which remain unexplained.

Najib, 62, and 1MDB have repeatedly denied any wrongdoing, and have insisted that the premier's funds were not syphoned off from 1MDB.

But Bank Negara, the central bank, said it recommended that the attorney-general "initiate criminal prosecution against 1MDB for breaches" of laws on overseas money transfers.

Bank Negara also directed 1MDB, an investment vehicle launched in 2009 by Najib, to repatriate $1.83 billion that it said was invested abroad based on inaccurate or incomplete disclosures to the central bank.

The central bank is perhaps the most respected government institution in Malaysia, but it remained to be seen whether the recommendation would be heeded by Najib's government, which has moved to hobble scrutiny of the affair.

Najib fired Malaysia's longtime attorney general in July amid speculation that he was preparing criminal charges against the premier, and police have conducted raids on the offices of the country's anti-corruption agency, which also was pursuing investigations.

Various official investigations are now believed to be frozen, though the government denies it.

Bank Negara's statement appeared to indicate either confusion or divisions within the government.

On Thursday, the attorney-general's office, now headed by a Najib appointee, declared that 1MDB had been cleared of any infractions.

The affair has deeply tarnished Najib just as his United Malays National Organisation (UMNO), which has controlled the country for nearly six decades, faces steadily sliding support due to its repressive tactics, corruption, Najib's economic stewardship and other issues.

His standing took another blow Wednesday when the respected Islamic sultans, who serve as the ceremonial rulers of nine states, issued a rare joint statement saying the scandals had created a "crisis of confidence" and called for a full investigation.

Analysts say Najib faces no imminent threat of ouster - his government has a tight grip on key institutions like the police, and Najib retains control over key party leaders under a system critics say is rife with money politics.

Malaysia's next elections are not until 2018.

But regulators in the United States and elsewhere are now reportedly scrutinising the affair, with authorities in Switzerland and Singapore announcing they have frozen millions of dollars in funds as they probe possible money-laundering and other crimes.

Already facing rising scrutiny over 1MDB's murky finances, Najib was hit in July with the bombshell revelation that Malaysian investigators had discovered the nearly $700 million in transfers to his accounts.

The premier's allies call the funds "political donations" from Middle Eastern sources but have refused to provide details, and the claim is widely dismissed by Najib's opponents, including some key ruling-party figures.