Former Malaysian Prime Minister Najib Razak on Saturday announced that he was stepping down as head of the Barisan Nasional coalition and its main party, the United Malays National Organisation (UMNO).
Minutes after his post, Malaysian immigration authorities said the couple has been barred from leaving the country.
"If we found some of the complaints are valid, we have to act quickly because we don't want to settle with the problem of extradition from other countries".
What followed was a major investigation by the Wall Street Journal, which reported it had seen a paper trail that allegedly traced close to $700 million from the fund to Najib's personal bank accounts.
Mr Najib, 64, had said earlier that he and his wife Rosmah Mansor would go on a holiday on Saturday.
His holiday plans come as strong calls emerged from his ruling Malay party, which dominates the National Front coalition, for Najib to step down over the election results.
Mahathir said Friday he would begin the process of obtaining an immediate pardon for Anwar, who was imprisoned twice on charges widely believed to be fabricated by the National Front to crush the opposition.
"There is sufficient evidence for an investigation into things done by the former PM, if necessary the rule of law will apply", said Mahathir.
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Following the announcement of the ban, Najib said he and his family would respect it and stay in the country.
"We accept the people's verdict with an open heart", Najib said. "Maybe this will be an opportunity for us to fix our weaknesses and shortcomings, although these are more a matter of perceptions than reality", he said. "God willing, UMNO will continue to live".
Her openly spendthrift ways have been galling for ordinary Malaysians who increasingly complain of soaring living costs, particularly after Najib's government introduced an unpopular sales tax in 2015. But this year, in a bid to remove Najib Razak, who has been accused of a $3.2 billion corruption scandal, Mahathir joined the opposition and agreed to run as its leader.
Najib's coalition was ousted in Wednesday's general elections after the party had been in power for 60 years.
The three new ministers, all leaders of the component parties of the Pakatan Harapan (PH) coalition, are finance minister Lim Guan Eng, defense minister Mohamad Sabu and minister of home affairs Muhyiddin Yassin.
Najib also thanked his supporters who entrusted him as a leader and urged them to retain their confidence towards the party.
Local politicians including PM Lee have been congratulating Malaysian prime minister Mahathir via Facebook. Lim is the chief minister of Penang state, but is largely unknown in global financial circles.
Second day in office, Mahathir announced appointments of senior ministers in the new Cabinet.