An Israeli man faces up to 40 years in a Malaysian prison and a caning after he was charged with trafficking firearms and possessing ammunition in the country, a prosecutor said Friday.

Shalom Avitan, 38, was arrested on March 27 at a hotel in the capital Kuala Lumpur where police allegedly found six handguns and 158 bullets in his possession.

Avitan pleaded not guilty to the charges after they were read out in court on Friday. He remains in police custody.

"It is a serious offence," deputy public prosecutor Mohamad Mustaffa P Kunyalam told reporters inside the court.

"He faces a possible jail term of 30 to 40 years plus whipping with not less than six strokes of the cane."

Police said previously that Avitan arrived in Malaysia from the United Arab Emirates on a French passport on March 12.

After his arrest, he told authorities he had come to Malaysia to look for another Israeli due to a family dispute.

Muslim-majority Malaysia has no diplomatic relations with Israel and has long supported Palestinian statehood.

Israelis require a visa and permission from the Ministry of Home Affairs to enter Malaysia.