Najib was charged at a lower court in the capital, Kuala Lumpur, on Wednesday.
The charges were related to three electronic transfers amounting to 42 million ringgit (10 million dollars) from SRC International — a former unit of the state fund 1MDB — into Najib’s personal bank account.
The case now has been transferred to the high court to be heard later on Wednesday, along with other charges, including abuse of power and breach of public trust.
Each charge carries a penalty of up to 20 years in prison.
Some 681 million dollars in 1MDB funds are said to have gone into Najib’s personal bank account, making the corruption scandal the biggest in the country’s history.
Najib and his wife, Rosmah Mansor, have come under intense scrutiny since May, when he was ousted from office in elections and his 93-year-old former mentor, Mahathir Mohamad, was elected prime minister.
Mahathir barred them from leaving the country and reopened an investigation into the 1MDB as soon as he took office.
He has pledged to bring to justice all of those responsible for the alleged multi-billion-dollar fraud.
Najib was arrested last month but was released after posting bail.
1MDB was founded by Najib himself. It is being investigated by at least six countries — including Singapore, Switzerland, and the United States — over alleged money laundering and graft.
According to lawsuits filed in US courts by the US Department of Justice, an estimated 4.5 billion dollars was misappropriated from 1MDB by high-level officials of the fund and their associates.
Najib, however, has consistently denied the charges, saying that his trial would be a “test” for the Malaysian judiciary.
The former prime minister was cleared of all wrongdoing in an earlier probe when he was in office, but critics say that probe was a sham.