Malaysia's anti-graft agency says former prime minister Muhyiddin Yassin has been arrested and will face corruption charges.

The agency said in a statement on Thursday that Muhyiddin was taken into custody after he was questioned about an economic recovery project launched by his government.

A crowd of supporters had gathered outside the agency building, chanting "Allahu Akbar," or "God is great" in Arabic.

Muhyiddin will face several charges related to alleged abuse of power and money laundering. He served as prime minister for 17 months until August 2021.

He and his party have come under scrutiny since his loss to Prime Minister Anwar Ibrahim in a tightly contested election in November.

Anwar ordered a review of government projects approved by Muhyiddin, alleging that they did not follow proper procedures. These included COVID-19 relief programs.

In 2018, former prime minister Najib Razak was arrested over a corruption scandal involving the state fund called 1MDB. He was found guilty last year.