The US State Department will downgrade Malaysia to the lowest ranking in its closely watched annual report on human trafficking to be released later on Thursday, two sources familiar with the matter told Reuters.

The country will fall to "Tier 3" after spending three years on the "Tier 2 Watchlist" in this year's Trafficking in Persons (TIP) report, the sources said.

The sources did not want to be identified as they were not authorised to talk to media...