Speaking for the first time on the "political donation" controversy, Prime Minister Najib Razak said Middle Eastern donors who wanted to send him money as "a gift" had asked him to open a bank account.
In an interview aired yesterday, he also said he had informed Malaysia's central bank about the incoming funds.
The revelations were the first time that Datuk Seri Najib had admitted opening an account specifically to receive funds from abroad.
And it was also the first government admission that Bank Negara Malaysia was aware of the inflow. This comes after five months of public questions on why the central bank was seemingly unaware that US$680 million (S$960 million) had been deposited into the personal account of the country's top leader.
The mystery donation is one of two major scandals that plagued Mr Najib this year, the other being the debt troubles of state investment fund 1Malaysia Development Berhad (1MDB), which he founded.
The issue of the Arab donor's identity and why he would give so much money to the Prime Minister continues to dominate media headlines and coffee-shop chats. In Malaysian media reports, the sum is rendered as RM2.6 billion (S$850 million).
There remains widespread public scepticism about the government's explanation, partly because the donor or donors have never been named.
Speaking at a function of Umno rebels on Monday, former premier Mahathir Mohamad, who has repeatedly pressed Mr Najib on the so-called donations and on 1MDB, said it was impossible to find such a rich, generous person who would throw away money for nothing.
"I think even if the Arab is mad, he won't give such sums away," Tun Dr Mahathir said to laughter from those present.
The US$680 million first came to light five months ago when The Wall Street Journal reported about the sum of money discovered in Mr Najib's bank accounts by investigators probing the troubles at 1MDB.
Mr Najib, asked in the interview aired on TV3 why he received the funds in his own bank account, said: "That is what the donors wanted. The donation to me was on a personal basis."
He added: "When the account was opened, Bank Negara was told about it. There was no intention to cheat or do something else because Bank Negara was aware of the account.
"The donors do not want anything back, and they also do not think this is a bribe but a gift."
The Malaysian Anti-Corruption Commission said on Monday that its officers had gone to the Middle East to interview the penderma - Malay for donor - but did not want to identify him or his nationality.
But Mr Najib, in the interview, referred to penderma penderma, or donors.
Whether one donor or more, Malaysians have been asking how many super-rich Arabs there are out there who would be willing to hand Mr Najib such a sum of money without wanting anything in return.
Interestingly, Deputy Prime Minister Ahmad Zahid Hamidi had, in August, hinted at who the person might be.
Datuk Seri Zahid, speaking at an Umno function in Johor, said he had met "the donor's chief investment officer" and "the trustee of the funds".
He claimed the donation was for the Malaysian government's "commitment to counter terrorism and maintain Malaysia's status as a Sunni country".
"I asked them, any other reasons (for the donation)? Yes, because we are Sunni, we don't want other mazhab (schools of thought) that can twist us away from the sunnah (prophetic traditions)," he was quoted as saying by The Malaysian Insider news website at the time.
Asked who the donors were, Mr Zahid said they were "a particular family from a particular country".