The superyacht "Equanimity", widely reported to be owned by Malaysian businessman Low Taek Jho, better known as Jho Low, was properly seized under Malaysian laws, said Attorney-General Tommy Thomas.
"The seizure was done at the initiative of the DOJ, which asserted ownership of the yacht on behalf of Malaysia and 1MDB (1Malaysia Development Bhd) because monies belonging to us were used to purchase it", he said.
Cynthia Gabriel, a member of an official team set up to recover assets allegedly bought with stolen 1MDB money, said that the Equanimity being handed over to Malaysia was "very significant".
Former Malaysian prime minister Najib Razak will be charged on Wednesday (Aug 8) with money laundering offences, the Malaysian Anti-Corruption Commission (MACC) confirmed in a statement on Tuesday.
Indonesian authorities detained the super-yacht following a request by the US Department of Justice, which is investigating alleged massive misappropriation involving the 1MDB state fund.
The anti-graft agency issued a statement soon after Najib's departure from their offices saying that the former prime minister would be charged under the anti-money laundering act.
Lawyers representing the wanted financier, also known as Jho Low, filed a notice yesterday to a California district court to direct the U.S. government to reveal its knowledge of the yacht's transfer. Indonesia then agreed it would hand over the yacht to Malaysia. His Malaysian passport has been revoked and an arrest warrant issued.
Manchester United open talks with Bayern Munich to buy Jerome Boateng
United boss Jose Mourinho has wanted his former Chelsea winger all summer, despite insisting signing forwards was not a priority.
Najib set up 1MDB when he took power in 2009, but it accumulated billions in debts.
Mahathir said any claimants to the yacht should provide proof that it belonged to them, and where they got the money to pay for it.
"The Mahathir regime's illegal act today, ignoring court rulings in legal proceedings in the US and Indonesia, prove he has no interest in a fair and just process", he said in a statement Monday.
The charges are related to the RM42mil that allegedly went from SRC International into Najib's personal bank accounts.
In filings to a California district court Monday, Low's lawyers also opposed the USA government's bid to suspend court proceedings.
The Equanimity's lavish amenities include a helicopter landing pad, plunge pool, gymnasium and a cinema.