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Anti Money Laundering Manual

ANTI MONEY LAUNDERING MANUAL

TABLE OF CONTENTS
CORPORATE STATEMENT....................................................................................................................................3

1. Introduction................................................................................................................................................4

2. Applicability ................................................................................................................................................4

3. Definition of Money Laundering and Financing of Terrorism ...........................................................4

4. Scope of Application..................................................................................................................................5

5. Roles and Responsibilities of Board of Directors and Senior Management ...................................5

6. Responsibilities for AML/CFT Compliance ............................................................................................6

7. Staff Integrity.............................................................................................................................................8

8. Customer Integrity and Customer Due Diligence (CDD) Process ....................................................8

9. Management Information System (MIS) ............................................................................................13

10. AML/CFT Risk Management...................................................................................................................13

11. Follow-up of Existing Policy Owners/ Participants ..........................................................................16

12. Keeping of Records..................................................................................................................................17

13. Recognition and Reporting of Suspicious Transaction/ Financing of Terrorism ........................18

14. Compliance Program ...............................................................................................................................19

15. Training......................................................................................................................................................19

16. Non-Compliance with Provision under The Act .................................................................................20

GLOSSARY ...........................................................................................................................................................22

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CORPORATE STATEMENT

1. Mayban Fortis Group of Operating Entities (herein referred


as the ‘Group’) is committed to uphold the highest standard
of integrity and reputation with regards to anti money
laundering and counter financing of terrorism in all the
markets and jurisdictions in which the Group operates.

2. The Group shall comply with relevant and applicable laws,


rules and standards pertaining to Anti Money Laundering
and Counter Financing of Terrorism.

3. The Group shall co-operate fully with local and international


competent authorities and law enforcement agencies in
combating money laundering and countering financing of
terrorism.

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1. Introduction

Mayban Fortis group of Operating Entities (herein referred as ‘the Group’) is committed to
prevent its operations and those of its subsidiaries from being abused for money
laundering or other financial crimes, including the financing of terrorism. The Group
values an impeccable reputation as a trustworthy insurance services group and therefore
will not enter into relationships with individuals or organisations engaged in or suspected
of illegal or unethical activities. New customers are accepted with due care and the Group
shall be protected at all times from being abused by criminal organisations or individuals.
The Group also committed to pursue high standards of Anti Money Laundering and
Counter Financing of Terrorism (AML/ CFT) policy and requires all staff to adhere to these
standards.

2. Applicability

This manual is applicable to all operation under the Group including branches and
subsidiaries outside Malaysia. Overseas branches and subsidiaries shall comply with this
manual and where there is conflict between the manual and the regulatory requirement of
the host country, the more stringent requirement shall be adopted to the extent that it is
permitted by the host country’s laws and regulations. In addition, special attention should
be given to overseas subsidiaries/ branches operating in countries which have insufficiently
implemented the internationally accepted AML/ CFT measures.

In the event an overseas branch or subsidiary is unable to observe the more stringent
requirements, including the reporting of suspicious transaction to the Financial Intelligence
Unit (FIU) of Bank Negara Malaysia (BNM) due to the prohibition of the host country’s law
and regulations, Compliance Officer of such overseas branch or subsidiary shall issue an
exception report to the centralised AML & Fraud Prevention Unit under Compliance Division,
which shall inform the FIU. The Board of Directors (BoD) may consider cease the operation
of overseas branch or subsidiary that failed to observe the AML/ CFT requirement or put in
place the necessary mitigating control.

This manual is applicable to all products and services offered by both the insurance and
takaful industries. The conventional terms used in this manual correspond to the Islamic
products, terms and concepts listed in Appendix I.

3. Definition of Money Laundering and Financing of Terrorism

i) Money laundering covers all activities and processes to change the identity of illegally
obtained money so that it appears to have been originated from a legitimate source.
Money laundering is defined as the act of a person who-
a) Engages, directly or indirectly, in a transaction that involves proceeds of an
unlawful activity.
b) Acquires, receives, possesses, disguises, transfers, converts, exchanges, carries,
disposes, uses, removes from or brings into Country proceeds of any unlawful
activity.
c) Conceals, disguises or impedes the establishment of the true nature, origin,
location, movement, disposition, title of, rights with respect to, or ownership of,
proceeds of an unlawful activity.
d) Participate in, be an accomplice in, attempt to, aid to, exhort to, facilitate or
provide counsel regarding any of the acts referred to the above.

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where:-
a) The person has knowledge, facts or reason to believe that the property is proceeds
from any unlawful activity.
b) Negligence in taking reasonable steps under normal circumstances to ascertain
whether or not the property is proceeds from any unlawful activity.

ii) Financing of terrorism involves any transactions linked to terrorists’ activities. The fund
used may be legitimate and not necessarily owned by terrorist but focus is on the
primary intention that is to assist terrorism activities. Essentially, financing of terrorism
involves:-
a) Providing or collecting property for carrying out an act of terrorism.
b) Providing services for terrorism purposes.
c) Arranging for retention or control of terrorist property.
d) Dealing with terrorist property.

iii) There are three stages of money laundering:

a) Placement
The criminal introduces his illegal profits and ill-gotten gains into the financial
system. This is the physical disposal or dealing of the initial proceeds derived from
illegal activities.

b) Layering
In this phase, the criminal engages in a series of conversions or movements of the
funds to distance them from their source. The illicit proceeds are separated from
their source by creating complex layers of financial transactions designed to
disguise the audit trail and provide an appearance of legitimacy as well as
anonymity.

c) Integration
Once layering succeeds, the criminal proceeds have been successfully laundered,
i.e. cleaned and are regarded for all intent and purposes as legitimate funds and
then reintroduced, i.e. bring back into the financial system through investment,
purchase of assets, etc.

4. Scope of Application

The provisions of the Malaysian laws list various acts covering serious offences. Please refer
to Appendix II for the details of relevant and applicable laws.

5. Roles and Responsibilities of Board of Directors and Senior Management

Commitment and leadership of BoD and Senior Management play significant role in the
success of AML/ CFT implementation.

i) Board of Directors
a) The BoD or a committee of the Board shall be responsible for overseeing the
overall management of compliance risk, including the approval and implementation
of AML/CFT measures.

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b) Ensure necessary steps are taken to rectify AML/ CFT issues effectively and
expeditiously.
c) To determine the risk appetite with regards to AML/ CFT.

ii) Audit Committee


a) Ensure that regular independent audits are conducted to check and test the
effectiveness of the internal controls for AML/ CFT measures.
b) Ensure the effectiveness of internal audit function in assessing and evaluating the
AML/ CFT controls.
c) Ensure the AML/ CFT measures are in compliance with the AMLA, its regulation
and the relevant guidelines.
d) Assess whether current AML/ CFT measures which have been put in place are in
line with the latest developments and changes of the relevant AML/ CFT
requirements.
e) Review of internal control issues highlighted by auditors and regulatory authorities.
f) Report the audit findings to the Board of Directors on a regular basis to highlight
inadequacies of AML/ CFT measures and control systems.

iii) Senior Management


a) Formulate strategic direction to counter money laundering and terrorism financing
activities.
b) Evaluate AML/CFT internal controls effectiveness and adequateness.
c) Approve business relationship with higher risk customers on the basis of enhanced
customer due diligence (CDD) process.
d) Develop clear customer acceptance policies and procedures, including a description
of the types of customer that are likely to pose a higher risk.
e) Ensure that these policies will consider factors such as customers’ background,
country of origin, public or high profile position, linked accounts, business activities
or other risk indicators that may be identified. The extension of the required due
diligence should be related to the level of identified risk.

6. Responsibilities for AML/CFT Compliance

The approach towards the management of AML/CFT compliance within the Group shall be
similar to the management of other types of risk, which is premised on three lines of
defence as follows:-

o First line of defence - Business Units


o Second line of defence - Risk control units such as Compliance and Risk
Management
o Third line of defence - Internal Audit

i) Business Units
Business units shall be constantly vigilant in deterring criminals and prevent the Group
from being part of money laundering and financing of terrorism activities.

The duty of vigilant consists mainly of the following:-


a) Customer Due Diligence (CDD), including underwriting checks and verification of
identity.
b) Recognition and reporting of suspicious customers/transactions to Compliance
Officers.

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c) Provisions affecting the business units and the staff, such as keeping of records,
the recruitment of staff and training.
d) Identification of money laundering and financing of terrorism risks associated with
new products or services or arising from insurance service provider’s operational
changes, including the introduction of new technology and processes.

Business units shall be responsible for the day-to-day management of compliance with
AML/CFT that inherent in their operation and activities.

ii) Compliance Officers


a) Review compliance with relevant AML/CFT acts and regulation.
b) Implementation of the AML/CFT policies.
c) Ensure appropriate AML/CFT procedures, including customer acceptance policy,
customer due diligence, record keeping, on-going monitoring, reporting of
suspicious transactions and combating the financing of terrorism are implemented
effectively.
d) Review risk assessment process of money laundering and financing of terrorism
with regards to new products or services including introduction of new technology
and process.
e) Ensure the AML/CFT mechanism is regularly assessed to ensure that it is effective
and sufficient to address any change in money laundering and financing of
terrorism trends.
f) Develop specific money laundering/ financing of terrorism indicators that assist in
detecting money laundering/ financing of terrorism.
g) Review and verify internal generated suspicious transaction and evaluate before
submission to FIU of BNM.
h) Act as a central point representing the business units in dealing with BNM and
other relevant law enforcement, including receipt and submission of reports on
suspicious money laundering activity.
i) Assemble and distribute information, policy and procedure related to AML/CFT
measures and channel of reporting to key personnel, front line staff, relevant
department/ functional heads and branches.
j) Assist in the provision of AML/CFT training.
k) Ensure audit findings and reports issued by auditor are submitted to the FIU within
two weeks of from the issuance date.

iii) Functional Head/ Branch Manager


a) Ensure compliance with relevant AML/CFT laws, rules and standards.
b) Ensure distribution of information, direction, policies and procedural matters to
staff, Financial Executive (FE) and agents are carried out on timely basis.
c) Ensure that key personnel, front line staff, FE and agents are familiar with the
monitoring, detection and reporting procedures.
d) Ensure records in relation to AML/CFT matters are properly kept.
e) Ensure that no staff is in a position to handle the entire customer acceptance
process autonomously.
f) Ensure sufficient and appropriate attention to front line staff, FE and agents’
training in order to promote and ensure adhesion to AML/CFT manual and strict
compliance with it.
g) Ensure staff are aware of the risk entailed by irresponsible customer acceptance.
h) Commercial staff shall adopt a critical attitude towards new customers and uses
the evaluation tools available. They should systematically check the situation,
motivation and antecedents of new customers.

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i) Identify and know every person entering into a business and obligation to identify
the persons for whom, as the case may be, their customers are acting and the
ultimate economic beneficial owner.
j) Identify the originator of every occasional transaction and retain copies of the
documents connected with the identification and the transactions carried out.

iv) Internal Audit


a) Conduct independent review of compliance framework and effectiveness of the
AML/CFT measures undertaken on a periodical basis.
b) Report the audit findings to the Audit Committee, which should be used to
highlight inadequacies of any internal AML/ CFT measures and controls.
c) Checking and testing the compliance with, and effectiveness of AML/ CFT policies,
procedures and controls.
d) Assessing whether current measures are in lines with the latest developments and
changes of the relevant AML/ CFT requirements.

7. Staff Integrity

i) The highest standard of staff integrity should be maintained at all the times.
Appropriate staff assessment system (commensurate with the size of operations and
risk exposure of the business units to money laundering and financing of terrorism)
that is approved by the BoD should be in place to screen its staff.
ii) The assessment system should include evaluation of an staff’s personal information,
including criminal records, employment and financial history as part of the recruitment
process.

8. Customer Integrity and Customer Due Diligence (CDD) Process

CDD process is vital when:


i) Establishing business relationship with new customer.
ii) Carrying out cash or occasional transaction that involves a sum in excess of RM5,000
and RM10,000 per annum in respect of individual and group respectively (both single
and annual insurance premium policies).
iii) Suspicion of money laundering or financing of terrorism.
iv) Doubt about the veracity or adequacy of previously obtained information.

To preserve the integrity and reputation of the Group, only the following new customers are
accepted:
i) Whose identity is correct, complete and ascertained by means of valid documents such
as passports or identity cards.
ii) Whose moral standing is irreproachable.
iii) Whose source of wealth and funds can be reasonably established to be legitimate.
iv) Who are not subject to economic or trade sanctions or legal freeze lists.
v) In case of a corporate customer, its legal existence, good financial standing, proper
management and correct business activity are ascertained.
vi) The same criteria apply to:
a) Representatives and/or beneficial owners of policy owners.
b) Main shareholders and top management of policy owners.

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Front line staff, FE and agents should verify and satisfied with the identity of their customers
and the nature and legitimacy of the insurance transactions to be undertaken, be it
individual, group, corporate or even direct-mail customers.

They should gather such information, including by consulting available external data deemed
useful in order to find out more about the new customer. The front line staff, FE and agents
should satisfy themselves that the new customers demonstrate beyond doubt that this rule is
complied with.

8.1 Subject of Verification


Verification of all parties to an insurance contract/certificate should be undertaken, for
e.g. – proposer/applicant, policy owners, principals, nominee/ beneficiary, underlying
principals that the policy owners/ participants are acting on behalf of and all the joint
proposers/ applicants.

8.2 Methods of Verification


‘Know Your Customer Policy/Certificate’ - satisfactory evidence of the identity of
proposer/ applicants and policy owners is required to be obtained and the purpose and
intention underlying the proposed contract/ certificate be known.

The relevant supporting documents should be sighted, and details of the applicant
must be verified against original documents. For insurance policies (both single and
annual insurance premium policies) with insurance premium exceeding RM50,000 and
RM100,000 per annum in respect of individual and group policies respectively, a copy
of the verified documents should be retained by the business units as follows.

i) For individual customers, verify and/ or substantiate against the original


document:-
a) Copy of NRIC/ passport (substantiated by NRIC/passport No).
b) Current permanent & mailing address.
c) Occupation type/ self employed.
d) Name and address of employer.
e) Nature of business.
f) Contact number (home, office or mobile).
g) Specimen signature.
h) Where there is doubt, produce other supporting identification documents
(with photograph) issued by official authority.

ii) For corporate customers, verify and/ or substantiate against the original
document:-
a) Memorandum/ Article/ Certificate of Incorporation/ Partnership.
b) Identification document of Directors/ Shareholders/ Partners.
c) Board of Directors’ Directors Resolution.
d) Authorisation for any person to represent the company/ business.
e) Identification document of authorised person.
f) Identify the source of fund and beneficial owner in case of changes in
business structure or ownership or payment profile.
g) Where there is doubt:-
o Conduct a basic search or enquiry on the background.
o Verify with the Companies Commission.
o Understand the ownership and control structure.

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iii) For clubs, societies and charities, verify and/ or substantiate against the original
document :-
a) Relevant constitution documents (or other similar documents).
b) The identification of the office bearer.
c) Authorisation for any person to represent the club, society or charity.

iv) For legal arrangements, verify and/ or substantiate against the original
document:-
a) Establish customer relationship with a party to a legal arrangement, for e.g.
trustee or nominees.
b) Understand the relationship among the relevant parties handling a trustees
or nominee business and obtain satisfactory evidence of its legal status, the
identity of the said trustee, settler or nominee, authorised signatories,
beneficiaries and the nature of their capacity and duties as trustee or
nominee.
c) Business units are allowed to rely on verification of identity of beneficial
owner performed by trustee or nominee. For this purpose, it is a
requirement to obtain written undertaking from trustee or nominee that
identification and documentation process have been conducted according to
the Group standard. The record shall be made available upon request.

v) For beneficial ownership and control, verify and/ or substantiate against the
original document:-
a) If the transaction appears to be conducted on behalf other person,
business units should pay attention to the person who ultimately owns or
controls the transaction.
b) CDD process should cover at least the same process that covered individual
customer.

vi) Forcorporations registered outside Malaysia, verify and/ or substantiate against


theoriginal document:-
a) Comparable documents to the items (i), (ii) or (iii).
b) Verify the place of origin of the documents, nature of business relationships
and transactions with person who ultimately control the entities, especially
from countries which do not or insufficiently apply Financial Action Task
Force (FATF) recommendations.
c) Perform appropriate verification of identity of the directors except for
entities listed in a recognised stock exchange.

vii) Non-face to face customers (business relationship via information


communication technology for e.g. the internet, post, fax or telephone).
a) Verification for insurance premium exceeding RM5,000 per annum or
RM10,000 for any single insurance premium shall be performed in the
same process as conducted through face-to-face interaction.
b) The insured is required to produce a certified copy of the identification
documents.
c) Business units shall only establish business relationship upon completion of
the CDD process conducted through face-to-face interaction.

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viii) Foreign Politically Exposed Person (PEP).
Business relationship with PEP, company or family members or close associate
clearly related to them may expose the Group to reputation and/or legal risk.
Business units, in addition to perform normal due diligence measures, should:
a) Have appropriate risk management process to determine whether the
customer is PEP – gather sufficient and appropriate information from the
customer and through publicly available information.
b) Obtain Senior Management approval for establishing business relationship
with PEP.
c) Take reasonable measure to establish the source of wealth and source of
funds.
d) Conduct enhanced ongoing due diligence through the business relationship
with foreign PEP.

ix) Intermediaries
Business units are permitted to rely on intermediaries (FE, agents and brokers)
or other third parties to perform CDD process or to introduce business provided
the following criteria are met:
a) Intermediaries have adequate CDD process.
b) Intermediaries have a reliable mechanism to verify customer identity.
c) Immediately obtain the necessary information of CDD process and take
adequate steps to satisfy that copies of identification data and other
relevant documentation relating to the CDD requirements will be made
available from the third party upon request without delay.
d) Intermediaries are regulated, supervised and has measures in place to
comply with CDD requirements.

The relationship between business units and intermediaries should be governed


by an agreement that clearly specifies the rights, responsibilities and
expectations of all parties. However, business units are responsible to conduct
CDD based on own record or record produced by intermediaries.

x) Reinsurance arrangements
Due to the nature of the business and the lack of contractual relationship
between the insurance policy owner and the reinsurer, business units are
required to carry out verification only on the ceding company, and not their
ceding company’s customers. The following verification procedure applies to
reinsurance arrangements:
a) Verification is not required where the ceding company is licensed under the
Insurance Act 1996 or the Offshore Insurance Act 1990, or a takaful
operator licensed under The Takaful Act 1984.
b) Reinsurers should take necessary steps to verify that the ceding company is
authorised to carry on insurance business in its home jurisdiction which
enforce AML standards equivalent those in AMLA.

xi) Higher risk customers


a) To conduct enhanced CDD.
o More detailed information from the customer and through publicly
available information i.e. purpose of transaction and source of funds.
o Obtain approval from Senior Management before establishing the
business relationship with the high risk customer.

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b) Examples of higher risk customers are as follows:
o High net worth individuals.
o Non-resident customers.
o Countries with inadequate AML/CFT laws and regulations such NCCT.
o Foreign PEP.
o Excessive cash based businesses.
o Unregulated industries.

Business units should pay attention to all complex, unusual large transactions, which
have no apparent economic or visible lawful purpose. If business units suspect or have
reasonable grounds to suspect that funds are the proceeds of a criminal activity or are
related to terrorism financing, the background and purpose of such transaction should
be properly examined, the findings established in writing and helpful to Compliance
Officers. AML law and regulation required prompt reporting of suspicious case to FIU.

Business units should pay special attention to any money laundering threats from new
and developing technologies that might favour anonymity and take measures to
prevent their use in money laundering schemes.

Business units should ensure effectiveness of the on going CDD process that would
enable detection of money laundering and financing of terrorism transactions at the
point of customer contact.

Business units should not commence business relations or perform any transaction, or
in case of existing business relations with customers, it should terminate such business
relations if the customer fails to comply with the customer due diligence requirement
and consider lodging a suspicious transaction report to AML and Fraud Prevention of
Compliance Division for deliberation. However, business units should assess its
contractual obligation before making such decision.

8.3 Cases Exempted From Verification At Point of Sales


Identification and verification of the customer/beneficiary may take place after the
insurance contract has been concluded, but at or before the time of payout or when
the beneficiary intends to exercise vested right under the insurance policy. The
verification procedure may be performed at or before the time the benefits are paid
out in the following circumstances:
i) Any insurance policies sold with insurance premiums not exceeding RM5,000 per
annum or RM10,000 for any single insurance premium policy (applicable to
insurance policies with surrender value or death benefits).
ii) Verification of beneficiaries (if different from the applicant).
iii) Verification of individual members covered under group insurance policies
(verification of the group policy owners/ participants should be carried out at the
point of sale).
iv) Similarly, verification for insurance policies sold without face-to-face contact (e.g.
through call centres, internet, direct mailing and telemarketing) may be
performed at or before the time the benefits are paid out if the premium do not
exceed RM 5,000 per annum or RM10,000 for any single insurance premium
policy.
v) In the event, the risk of money laundering and financing of terrorism are low and
there are publicly available measures to sufficiently identify a customer (e.g.
Government agency, public educational institution or company listed on Bursa
Malaysia), the reporting institution would only need to ascertain whether such
customer, falls within the categories mentioned in this paragraph.

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8.4 Cases Exempted From Verification
Where customer due diligence has previously been conducted by the reporting
institution, further verification by the reporting institution is not required:
i) For renewal and reinstatement of policies with no significant changes to the
terms and conditions of the policy (including benefits under the policy).
ii) For application of pure insurance covers which do not provide for payment of
surrender values, including hospital and surgical insurance, critical illness
insurance and pure term life insurance covers if the annual insurance premium
does not exceed RM5,000 per annum or RM10,000 for single insurance premium.
iii) For general insurance application if the annual insurance premium does not
exceed RM5,000 per annum.

9. Management Information System (MIS)

Efficient management information system should be in place to support customer due


diligence process. The MIS will provide timely information on a regular basis to enable
detection of any suspicious activity. The information would include multiple transaction over
a certain period, large transactions, abnormality in transaction trend and transaction that
trigger the red flag indicator.

10. AML/CFT Risk Management

Functional Head should ensure appropriate risk management process with regards to
AML/CFT is in place. Business units should determine the level of risk whether prohibited,
caution (extra verification effort need to be carried out) or allowable. Sometimes a single
indicator is sufficient for this purpose, but in most cases a combination of indicators is
involved and it is a matter of looking for and establishing the connection between them.

To assess the risk, the business unit should conduct the risk assessment. This assessment
should weight a number of factors, including the risk identification and measurement of
products and services, customers (for e.g. PEP, Non Resident Alien (NRA), non-
governmental organisations (NGO) and charities) and geographic locations (for e.g.
embargoes, countries supporting terrorism, Non-cooperative Countries & Territories
(NCCT)). As change in existing products and services and the Group expands through
mergers and acquisitions, management of AML/CFT should evolve. Furthermore, even
without such changes, the management of AML/CFT should be periodically reassessed.

i) Geographical Location
The Group regards the Organisations for Economic Corporations and Development
(OECD) countries as safe and no additional measures is required, provided there is no
indication (for e.g. on the basis of other risk indicators) of a higher risk. All
geographical elements need to be taken into account (for e.g. country of beneficiary,
country of insured risk, country of policy owners/participants).

a) Prohibited
Various sanction regimes apply towards certain countries and/or regions. In
some cases the sanction regimes are de facto aimed exclusively at certain
specific individuals. Sometimes these financial sanction regimes prohibit, limit or
otherwise influence the provision of financial services to certain countries,
companies or individuals. The regimes may also involve a requirement for the

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freezing of balances. UN Security Council resolutions and European Union
regulations underlie these sanction regimes.

b) Cautioned Risk
FATF is an intergovernmental organisation with the task of developing and
promoting policy at international level in order to combat money laundering.
One of the areas of attention is the identification and monitoring of NCCT
countries. The FATF has drawn up a list of NCCT countries that display serious
shortcomings with respect to the combating of money laundering and/or fight
against terrorism financing. In the case of direct or indirect links with an NCCT
country the non-routine acceptance procedure is followed.

The Office of Foreign Assets Controls (OFAC) is part of the US Treasury


Department. The OFAC’s area of responsibility includes the imposition and
application of economic and trade sanctions. The sanctions arise from US
foreign policy and the national security policy aimed at certain countries, drug
traffickers and terrorisms. Many of the OFAC sanctions are based on UN
mandates.

For countries falling outside the scope of the Group core business (for e.g. a
new country for the Group) there is a risk-increasing factor and acceptance
takes place on a non-routine basis. This is because the current activities of the
Group are not geared to the characteristics of these countries and other
countries generally also attract different types of customers which might require
a different kind of customer due diligence.

ii) Commercial activities/ Industry


The ‘commercial activity/industry’ indicator relates to the customer’s activities and the
industry to which the customer has been assigned and in which it is active. In some
cases the products and/or services are also to be examined.

a) Prohibited
The Group does not provide any services to persons involved with illegal
practices or to industries falling outside the strategy. These include illegal
activities, such as trafficking in ivory, exotic animals, people and drugs. It also
includes firms and individuals whose financial resources are suspected to have
come from such activities. Non-strategic are trade and industry in diamonds,
gambling and sex. Gambling is qualified as non-strategic if it is not regulated by
the government. The trade and industry in gambling and sex are regarded as
non-strategic on account of money laundering and reputational risks. Trade and
industry in diamonds are regarded as non-strategic if the diamonds are mined in
countries suffering from civil war and it is clear or there is evidence to suggest
that the war and related matters are financed with diamonds.

b) Caution Risk
For activities falling outside the scope of the Group (for e.g. a new market or
industry) there is a risk-increasing factor and acceptance takes place on a non-
routine basis. This is because the current activities of the Group are not geared
to the characteristics of these divergent activities and other services generally
also attract different types of customers which might require a different kind of
customer due diligence.

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If a person may be regarded as forming part of the weapons industry or its
activities, products and/or services are related to the weapons industry and/or
arms trade or if there is a link with war-related activities (either offensive or
defensive), there is then an increased risk for the Group and the acceptance of
the customer takes place on a non-routine basis.

The financial situation of a person needs to be transparent so that the nature of


its activities and the source and allocation of the cash flows can be clearly
established. In the case of firms with sizeable cash transactions the situation
may be less transparent. In addition, these transactions may involve an
increased risk of money laundering. Persons involved in the hospitality/catering
industry fall into this category and are accepted under the non-routine
procedure.

Pressure groups and international organisations expose problems worldwide in


such fields as environmental pollution, child labour and violations of human
rights. The focus in these circumstances is also on persons and governmental
authorities that play a significant role in the facilitation or coming into being of
such practices. The potential exists for pressure groups and organisations to
place the focus in the future on the financing of these firms, governmental
authorities, activities and related matters. If a customer and/or the latter’s
commercial activity is susceptible to pressure groups, acceptance is at non-
routine level.

iii) Product/ Service


By ‘product/service’ is understood the specific product or service being sought from the
Group by the customer. In determining the risk particular attention needs to be paid to
a product or service having the ability or potential for criminally obtained means to be
channelled away and/or recycled in concealed or disguised form. To ensure new
insurance or takaful products or services as well as delivery mode does not create an
avenue for money laundering and terrorism financing activities, business units must
ensure all the relevant controls are in place prior to the launch of any new insurance or
takaful products/ services or engagement of a new technology.

a) Prohibited
Cash consignments are prohibited if these take place at the request of a
customer, whereby the staff is asked to play an active role in the physical
transport of the money.

b) Caution Risk
Naturally, life insurances present a bigger risk than property insurances.

vi) Customer, behaviour and background


Under ‘customer behaviour’ comes any behaviour that is unusual and gives therefore
cause to special vigilance. By ‘customer background’ is meant in particular the
structure and management of a firm, both of which are indicators for determining the
risk. The structure and organisation of a firm is clear and transparent (how is the
organisation structured, who is behind it and how do the organisational elements tie
up). Structure means more than just the organisation chart of the firm but also
includes identifying matters such as the relationship between the firm and a parent
company and/or other companies forming part of the group. The way in which the
share capital is structured and divided is also relevant. The underlying notion is that it
is transparent to the Group who it is dealing with (‘who is running the show’), so as to

15
prevent a reputational risk from being incurred and/or an ambiguous structure from
being used to recycle funds.

a) Prohibited
The Group shall not have any business relationship with blacklisted or freeze list
UN Security Council resolutions and European Union.

Providing incorrect, misleading and/or intentionally incomplete statements,


information or documents is considered unacceptable. The same goes for a
customer who refuses to answer questions. If funds do not tally with the
customer profile or if their source is unclear, the customer must not be
accepted.

b) Caution Risk
Some of the OFAC are aimed at drug traffickers and terrorisms. The Group also
may be exposed to reputation or other risks if there is any business relationship
with PEP. Such individuals or networks are in a position to abuse their power for
purposes of unauthorised enrichment; in brief, these are individuals or networks
whose position makes it possible for them to abuse their power. This risk also
exists for their families and close associates.

It must be possible to establish with certainty that the firm is in fact a corporate
entity and not projecting itself as such, or that for example a corporate entity is
being used by a natural person so as to use anonymous accounts. The
management of a firm can also be an indicator of an increased risk. Here again
the reputation must be known and sound and it must be possible to establish
with whom the Group is dealing. Risk increasing factors are negative publicity
and/or a doubtful or poor reputation, frequent changes in management, not
personally known and/or not known in the past or an unusual shareholder
structure under which one or several minority shareholders have extensive
decision-making powers. The examples of factors that give rise to particular
vigilance in case of a life insurance policy are as follows:
o a customer who is not interested at all in the return of his life insurance
investment,
o a customer who seems preoccupied by his right of termination and by
recuperating his investment,
o a customer who proposes abnormal payment schemes (for e.g. cash
payments, complicated money transfers),
o a customer who gives an unusual domicile (for e.g. in a country with which
he has no connection, a P.O. Box).

11. Follow-up of Existing Policy Owners/ Participants

All existing policy owners/ participants are to be followed-up either by means of a


permanent monitoring process evidencing unusual or unexpected behaviour and/or
transactions or by means of a periodic review. Follow-up of those policy owners/
participants who have been non-routinely accepted is to be organised on a more systematic
and more frequent basis.

Business units should update existing customer records and profile, including further
evidence in identifying the existing customers, to ensure compliance with customer due
diligence requirements.

16
Causes for particular vigilance in the case of a life insurance policy are for e.g.:
¾ Inexplicable termination.
¾ Premature surrender.
¾ Surrender by a third party who does not have a legitimate connection with the policy
owners/ participants.
Subsequent payments by a third party that does not have a legitimate connection with the
policy owners/ participants are also cause for further investigation.

Follow-up of existing policy owners/ participants may result in:


¾ Cancelling the existing business relationship, if legally possible.
¾ Reporting the business relationship to the relevant public authorities.

The decision to cancel an existing business relationship is to be taken by Senior


Management. The decision whether to report suspicious customer to the relevant public
authorities is to be taken by the Compliance Officers.

12. Keeping of Records

Business units are required to:

i) Maintain any records for a minimum period seven (7) years from the date an account
has been closed or the transaction has been completed or terminated.
ii) Maintain records to enable the reconstruction of any transaction in excess of such
amount as the competent authority may specify, for a minimum period seven (7)
years from the date the transaction has been completed or terminated. Subject to on
going investigation or prosecution in court, the record must be retained until it satisfies
the requirement by the competent authority.

The business units have to ensure that, there are adequate procedures and records to
access:

i) Initial proposal documentation inclusive of customer’s personal data, copies of


regulatory documentation, details of the payment method, illustration of benefits and
copy documentation in support of verification by insurance licensees.
ii) All post-sale records associated with the maintenance of the contract, up to and
including maturity of the contract/ certificate; and details of the maturing processing
and/or claim settlement, including completed “discharge documentation”.

The records should contain:

i) Details of personal data, including the names and addresses of the policy owner and
any other parties connected to contract.
ii) Transaction details should be recorded and include the nature of transactions, contract/
certificate prices and valuation (for unit-linked policies), destinations of funds,
memoranda of instructions and authorities, the date of transaction and the mode of
premium payment.

All the records should be kept in readily retrievable forms and be accessed with ease. The
records may be retained by way of original document or as scanned documents.

17
Any records maintained by vendors, through any outsourced agreements, are regarded as
readily retrievable only if the Group is satisfied, as contracted, that the vendor is able and
willing to keep such records and to disclose them as and when required.

The business units have to maintain a separate register or logbook for all enquiries made to
them by any law enforcement authority. The minimum details to be put in the register are:

i) The date and nature of the enquiry.


ii) The name and agency of the enquiring office.
iii) The powers being exercised.
iv) The details of the policies/ certificates involved.

13. Recognition and Reporting of Suspicious Transaction/ Financing of


Terrorism

Transactions are deemed suspicious when:


i) It exceeded predetermined parameter or threshold limit.
ii) Customer fails in complying with the CDD requirements.
iii) Sum insured or premium amount that not match the customer profile.
iv) It is believed to have connection with terrorism activities. The consolidated list of
terrorist linked individuals and entities is published by United Nation Security Council
(UNSC) in their website, http:www.un.org/ Docs /sc /committees/ 1267/1267/
ListEng.htm. Business units should consolidate the UNSC list together with the order
issued by Ministry of Internal Security and ensure their database is updated regularly.
v) Existing customer that unreasonably evasive or uncooperative.

The examples of suspicious transaction are listed in Appendix III.

Upon the detection of a suspicious transaction, the front line staff, FE or agents should report
to the Head of Department, for recommendation and endorse it before forwarding this
suspicious transaction, using the "Internal Suspicious Transaction Report on Money
Laundering/ Financing of Terrorism” form (as per Appendix V) to the respective Compliance
Officers.

After investigation of the file and of the disclosed unusual financial transactions in particular,
the Compliance Officers will evaluate whether such transactions are effectively suspicious
within the nature of money laundering or financing of terrorism. Upon affirmation of the
same, the Compliance Officers shall forward this via a prescribed form to the FIU for their
further action. If the customers’ names perfectly match any name in the database,
Compliance Officer should update FIU promptly and the business units should immediately:
o Reject the customer, if the transaction has not commenced.
o Freeze the customer’s transaction, if it is an existing customer.

If there is no reasonable ground for suspicion, the Compliance Officer should document the
decision and ensure it is supported by the relevant document and file the report. The Senior
Management and the BoD will be informed and updated accordingly.

i) Code of conduct relating to suspicious transactions

a) Refrain from making any comment with regard to the customer concerned.
b) Gather as much information as possible concerning: the transaction and the
reason (why, context) for the transactions.

18
c) Remain vague about the competent internal decision making circuits of the
Business units for the assessment and the taking of the decision about the
proposals made and/or the transactions proposed.
d) Abstain from providing any document with the Group letterhead.

ii) AMLA Suspicious Transactions Reporting Structure

Board of Directors Information limited


to modus operandi,
nature of AML/ CFT
activity and statistic
only. No details of
Senior Management / individuals to be
Management Team shared.

Maybank’s The Company’s AML Financial Intelligence


Compliance Compliance Officer Unit - BNM
Department

Financial Functional Head Branches


Executives

Agencies Intermediaries
/ Front line staff

14. Compliance Program

The responsibilities of the compliance function should be carried out under compliance
program that sets out its planned activities, such as the implementation and review of
specific policies and procedures, risk assessment, compliance testing and educating staff on
compliance matters. The compliance program should be risk-based and subject to oversight
by the Head of Compliance to ensure appropriate coverage across businesses and co-
ordination among risk management functions.

15. Training

All staff, Financial Executives (FE) and agents should be made aware of their responsibilities
with regards to reporting and identification of suspicious transactions relating to money
laundering and financing of terrorism activities.

The training and awareness program should be conducted regularly and supplemented with
refresher courses for staff, with special emphasis for those staff who are exposed to higher
risk of potential money laundering and financing of terrorism activities, for example front-line

19
staff. These programs should update staff on the latest AML/ CFT development such as
products or transaction modes, which are vulnerable to the risk of money laundering and
financing of terrorism and remind them of their responsibilities under the AML/ CFT program.

The minimum training requirements should at least adapt the needs to the following levels of
staff:

i) New Staff
a) General background on money laundering and financing of terrorism.
b) Requirement and obligation under Group policy to monitor and report suspicious
transactions to the Compliance Officer of AML and Fraud Prevention unit under
Compliance Division.
c) Importance of ‘Know Your Customer’ policy.

ii) “Front-Line” Staff/ Agents


a) The business units must adopt a risk-based approached in ensuring that its front-
line staff/ agents received initial and on-going training relevant AML/ CFT
measures:
1. Conduct on-going customer due diligence, as the agent deals directly with
new businesses and the acceptance of the new customers.
2. Factors that may give rise to suspicion, such as dealing with non-regular
customers transacting in large cash, foreign PEP, higher risk customers and
the circumstances where enhanced customer due diligence is required.
3. Detect suspicious transaction.
4. Measures that need to be taken upon determining a transaction as
suspicious.
b) The front-line staff/ agents and should be made aware of their legal
responsibilities and the AML/ CFT policies and procedures of the Group, in
particular:-
1. Customer acceptance policy and all other relevant policies and procedures.
2. Requirements of verification and records.
3. Recognition and reporting of transaction suspected to involve in ML/ FT to
the centralised AML and Fraud Prevention unit of Compliance Division.

iii) Managers, Senior Management and Board of Directors


The training should include higher level of instructions covering all aspects of AML/ CFT
procedures, in particular:
a) Risk-based approach to customer acceptance.
b) Customer due diligence.
c) Customer risk profiling.
d) Penalties for non-compliance to the AML/ CFT requirement.
e) Procedure addressing the financing of terrorism issues.

16. Non-Compliance with Provision under The Act

The Act stipulates various offences that will subject staff or any person to a fine and
imprisonment as follows:
i) Any person is subject to a fine maximum of RM 250,000 for failure to comply with any
provision under the Act (Section 86).
ii) Bank Negara Malaysia has right to take appropriate enforcement action, including
obtaining Court Order against any or all of the officers or staff of the reporting
institution, for failure to comply with reporting obligation (Section 22).

20
iii) The Officers is subject to a fine maximum RM100,000 or maximum 6 months
imprisonment or both for failure to comply with the Act, or failure to implement specific
compliance program as instructed by Bank Negara Malaysia (Section 22).
iv) Additional fine maximum 50% of the maximum fine for that offence, including daily
fine for continuing offence (Section 92).
v) Fine maximum RM100,000 for refusing to comply with guidelines by relevant
authorities (Section 66E(5)).

21
APPENDIX I

GLOSSARY
Contribution/ Premium The monetary contribution payable once or periodically by a
participant to a takaful operator/ insurance company for the
purpose of investment and tabarru’.

Mudharabah Arrangement or agreement between a capital provider and an


entrepreneur, whereby the entrepreneur can mobilise funds for
its business activities. Any profit made will be shared between
the capital provider and the entrepreneur according to an
agreed ratio while losses are borne solely by the capital
provider.

Takaful Mutual guarantee provided by a group of people against a


defined risk or catastrophe befalling one’s life, property or any
form of valuable things.

Wakalah Agency-principal relationship, where a person nominates


another to act on his behalf.

Claims Notification to a insurance company/ takaful operator that


payment of an amount is due under term of the certificate/
policy.

Certificate/ Policy An evidence of the contract/ certificate between a participant/


policy holder and a takaful operator/ insurance company and
fellow participants which set out terms and condition of the
particular certificate.

Politically Exposed Person Senior foreign political figures and their immediate family
members and close associates.

Intermediaries Consist of Brokers, Financial Executives and Agents.

Policy Owners/ Participants The person who has legal title to a policy and include
a) Where a policy has been assigned, the assignee.
b) The personal representative of a deceased policy
owner, where such personal representative is entitled
as against the insurer to the benefit of a policy.
c) In relation to a policy providing for the payment of
annuity, an annuitant; and
d) Where under a policy, moneys are due to payable,
whether periodically or otherwise, the person to whom
the moneys are due or payable.

Beneficial owner Refers to any natural person(s) who ultimately owns or controls
a customer and/or the person on whose behalf a transaction is
being conducted. It also incorporates those persons who
exercise ultimate effective control over a legal person or
arrangement.
o For companies the person(s) who ultimately owns or controls
a customer and/or the person on whose behalf a

22
APPENDIX I
(Cont’d)
transaction is being conducted includes the natural person
with a controlling interest and the natural persons who
comprise the mind and management of company.

Constituent document In relation to an institution, means the statute, charter,


memorandum of association and articles of association, rules
and by-laws, partnership agreement, or other instrument,
under, or by, which the institution is established and its
governing and administrative structure and the scope of its
functions and business are set out, whether contained in one or
more documents.

Intermediaries Generally refers to third parties, namely persons or businesses


who are relied upon by the reporting institution to conduct the
customer due diligence process.

Person Includes a body of persons, corporate or unincorporated.

Property Means:
a) Assets of every kind, whether corporeal or incorporeal,
moveable or immovable, tangible or intangible, however
acquired.
b) legal documents or instruments in any form, including
electronic or digital, evidencing title to, or interest in, such
assets, including bank credits, traveler’s cheques, bank
cheques, money orders, shares, securities, bonds, drafts
and letters of credit.

Reporting institution Means any person, including branches and subsidiaries outside
Malaysia of that person, who carries on any activity listed in the
First Schedule to the AMLA.

Terrorist property Means:


a) Proceeds from the commission of a terrorist act.
b) Property that has been, is being, or is likely to be used to
commit a terrorist act.
c) Property that has been, is being, or is likely to be used by a
terrorist, terrorist entity or terrorist group.
d) Property owned or controlled by or on behalf of a terrorist,
terrorist entity or terrorist group, including funds derived or
generated from such property.
e) Property that has been collected for the purpose of
providing support to a terrorist, terrorist entity or terrorist
group or funding a terrorist act.

Terrorist act An act or threat of action within or beyond Malaysia that-


a) Involves serious bodily injury to a person.
b) Involves serious damage to property.
c) Endangers a person’s life.
d) Creates a serious risk to the health or the safety of the
public or a section of the public.
e) Involves the use of firearms, explosives or other lethal
devices.

23
APPENDIX I
(Cont’d)
f) Involves releasing into the environment or any part of the
environment or distributing or exposing the public or any
part of the public to-
i) Dangerous, hazardous, radioactive or harmful
substance.
ii) Toxic chemical.
iii) Microbial or other biological agent or toxin.
g) Designed or intended to disrupt or seriously interfere with
any computer system or the provision of any services
directly related to communications infrastructure, banking
or financial services, utilities, transportation or other
essential infrastructure.
h) Designed or intended to disrupt, or seriously interfere with
the provision of essential emergency services such as
police, civil defence or medical services.
i) Involves prejudice to national security or public safety.
j) Involves any combination of any of the acts specified in
paragraphs (a) to (i)

Where the act or threat is intended or may reasonably be


regarded as being intended to:
a) Intimidate the public or a section of the public.
b) Influence or compel the Government of Malaysia or the
Government of any State in Malaysia, any other
government, or any international organization to do or
refrain from doing any act, and includes any act or
omission constituting an offence under the Aviation
Offences Act 1984 [Act 307].

CONVENTIONAL TERM ISLAMIC TERM


Bancassurance Bancatakaful
Contract Aqad
General Insurance General Takaful
Life Insurance Family Takaful
Insurance Takaful
Insurance policy Takaful plan
Insurance premium Takaful contribution
Reinsurers Retakaful
Premium Contribution

ACCRONYM

24
APPENDIX I
(Cont’d)

AML/CFT Anti Money Laundering / Counter Financing Terrorism


CDD Customer Due Diligence
NCCT Non-cooperative Countries & Territories
OFAC Office of Foreign Assets Controls
FATF Financial Action Task Force
FIU Financial Intelligence Unit
PEP Politically Exposed Person
NRA Non Resident Alien
BoD Board of Directors
BNM Bank Negara Malaysia
OECD Organisations for Economic Cooperation and Development

25
APPENDIX II

ANTI-MONEY LAUNDERING ACT 2001


1 Subsection 4(1) of this Offence of money laundering
Act
ANTI-CORRUPTION ACT 1997 ( ACT 575 )
2 Section 10 Offence of accepting gratification
3 Section 11 Offence in giving or accepting gratification by agent
4 Section 12 Acceptor or giver of gratification to be guilty notwithstanding that
purpose was not carried out or matter not in relation to principles’
affairs or business
5 Section 13 Corruptly procuring withdrawal of tender
6 Section 14 Bribery of officer of public body
7 Section 15 Misuse of position
8 Section 16 Dealing with, using, holding, receiving or concealing gratification of
advantage in relation of any offence
9 Section 17 Attempts, preparations, abetments and criminal conspiracies
punishable as offences
BANKING AND FINANCIAL INSTITUTIONS ACT 1989 (ACT 372)
9A Section 4 Carrying on banking, finance company, merchant banking, discount
house and money-broking business without a valid license
10 Section 25 Receiving, taking or acceptance of deposits prohibited except under
and in accordance with valid license granted under subsection 6(4)
10A Section 26 Unsolicited calls
10B Section 27 Advertisements for deposits by person other than licensed
institutions
10C Section 28 Fraudulent inducement in relation to deposits
10D Section 112 Attempts, preparations, abetments and conspiracies punishable as
offences
10E Section 115 Prohibition on receipt of gifts, commissions, etc.
BETTING ACT 1953 ( ACT 495)
11 Section 4 Common betting-houses and betting information centres
12 Section 6(3) Betting in a common betting-house, and book-making
CHILD ACT 2001 (ACT 611)
12A Section 43 Offences relating to selling, procuring, detention, etc. or any
attempts thereto, of a child for prostitution
12B Section 48 Unlawful transfer of possession, custody or control of child
12C Section 49 Importation of child by false pretences
COMMON GAMING HOUSES ACT 1953 (ACT 289)
13 Section 4 Common gaming houses
14 Section 4A Assisting in carrying on a public lottery etc.

26
APPENDIX II
(Cont’d)

COMPANIES ACT 1965 (ACT 125)


15 Section 27 Invitation to public by private companies
16 Section 38 Invitation to public to lend or deposit money with a corporation
17 Section 366 Including persons to invest money
COPYRIGHT ACT 1987 (ACT 332)
18 Section 41 Infringement of copyright
CORROSIVE AND EXPLOSIVE SUBSTANCES AND OFFENSIVE WEAPONS ACT 1958 (ACT
357)
19 Section 3 Possession of corrosive or explosive substance for the purpose of
causing hurt
CUSTOMS ACT 1967 (ACT 235)
19A Section 133 Making incorrect declarations and falsifying documents
20 Section 135 Smuggling offences
DANGEROUS DRUGS ACT 1952 (ACT 234)
21 Section 4 Restriction on importation of raw opium, coca leaves, poppy-straw
and cannabis
22 Section 5 Restriction on exportation of raw opium, coca leaves, poppy-straw
and cannabis
23 Section 12 Restriction on import and export of certain dangerous drugs
24 Section 19(4) Export of dangerous drugs
25 Section 20(5) Import of dangerous drugs
26 Section 39B Trafficking in dangerous drugs
DANGEROUS DRUGS ( FORFEITURE OF PROPERTY) ACT 1988 (ACT 340)
27 Section 3 Use of property for activity constituting certain offences
28 Section 4 Dealing with, or using, holding, receiving or concealing illegal
property
29 Section 56 Attempts, abetments and criminal conspiracies punishable as
offences
EXPLOSIVE ACT 1957 (ACT 207)
30 Subsection 4(2) Power to prohibit the manufacture, possession or importation of
specifically dangerous explosives
31 Section 5 Acts causing explosions or fire
32 Section 6 Causing explosion likely to endanger life or property
33 Section 7 Attempt to cause explosion, or making or keeping explosive with
intent to endanger life or property
34 Section 8 Making or possessing explosives under suspicious circumstances
FIREARMS (INCREASED PENALTIES) ACT 1971 (ACT 37)
34A Section 7 Trafficking in firearms

27
APPENDIX II
(Cont’d)

FUTURE INDUSTRY ACT 1993 (ACT 499)


35 Section 3 Establishment of futures markets
36 Section 16 Future brokers to be licensed
37 Section 16A Future fund managers to be licensed
38 Section 79 False trading
39 Section 80 Bucketing
40 Section 82 Manipulating of price futures contract and cornering
41 Section 83 Employment of devices, etc,. to defraud
42 Section 86 Prohibition or abuse of information obtained in official capacity
INSURANCE ACT 1996 (ACT 553)
42A Section 9 Carrying on insurance, insurance broking or adjusting business
without a license
42B Section 10 Holding out as an insurer, insurance broker or adjuster without a
license
42C Section 184 Acting as agent or insurance broker for an unlicensed person
without the approval of the Bank
42D Section 205 Falsifying, omitting, altering, etc. entries in documents with intent
to deceive
42E Section 212 Attempts, abatements and conspiracies
INTERNAL SECURITY ACT 1960 (ACT 82)
42F Section 5 Prohibition of quasimilitary organization
42G Section 6 Illegal drilling
KIDNAPPING ACT 1961 (ACT 365)
43 Section 3 Abduction, wrongful restraint or wrongful confinement for ransom
44 Section 5 Knowingly receiving ransom
45 Section 6 Knowingly negotiating to obtain, or for payment of, ransom
MONEY-CHANGING ACT 1998 (ACT 577)
45A Section 4 Carrying on money-changing business without a license
OPTICAL DISC ACT 2000 (ACT 606)
46 Section 4 Manufacturing without a valid license
47 Section 21 Applying false manufacturer’s code
PENAL CODE (ACT 574)
47A Section 125 Waging war against power in alliance with the Yang Di-Pertuan
Agong
47B Section 125A Harbouring or attempting to harbour any person in Malaysia or
person residing in a foreign State at war or in hostility against the
Yang Di-Pertuan Agong
47C Section 121 Waging or attempting to wage war or abetting the waging of war
against the Yang Di-Pertuan Agong, a Ruler or Yang Di-Pertua Negri

28
APPENDIX II
(Cont’d)

47D Section 121A Offences against the person of the Yang Di-Pertuan Agong, Ruler or
Yang Di-Pertua Negeri
47E Section 121B Offences against the Authority of the Yang Di-Pertuan Agong, Ruler
or Yang Di-Pertua Negeri
47F Section 121C Abetting offences under section 121A or 121B
48 Section 161 Public servant taking gratification, other than legal remuneration in
respect of an official act
49 Section 162 Taking gratification in order, by corrupt or illegal means, to
influence a public servant
50 Section 163 Taking a gratification, for the exercise of personal influence with a
public servant
51 Section 164 Abetment by public servant of the offences under section 163
52 Section 165 Public servant obtaining any valuable thing, without consideration,
from person concerned in any proceeding or business transacted by
such public servant
53 Section 207 Fraudulent claim to property to prevent its seizure as a forfeiture or
in execution of decree
54 Section 213 Taking gifts, etc, to screen an offender from punishment
55 Section 214 Offering gifts or restoration of property in consideration of
screening offender
56 Section 215 Taking gifts to help recover stolen property, etc
57 Section 216A Harbouring robbers or gang-robbers etc
58 Section 217 Public servant disobeying a direction of law with intent to save
person from punishment, or property from forfeiture
59 Section 218 Public servant framing an incorrect record or writing with intent to
save person from punishment or property forfeiture
59A Section 300 Murder
60 Section 327 Voluntarily causing hurt to extort property or to constrain to an
illegal act
61 Section 329 Voluntarily causing grievous hurt to extort property, or to constrain
to an illegal hurt
62 Section 330 Voluntarily causing hurt to extort confession or to compel
restoration or property
63 Section 331 Voluntarily causing grievous hurt to extort confession or to compel
restoration of property
64 Section 347 Wrongful confinement for the purpose of extorting property or
constraining to illegal act
65 Section 348 Wrongful confinement for the purpose of extorting confession or of
compelling restoration of property
66 Section 363 Kidnapping
67 Section 364 Kidnapping or abducting in order to murder
68 Section 365 Kidnapping or abducting with intent to secretly and wrongfully to
confine a person

29
APPENDIX II
(Cont’d)

69 Section 366 Kidnapping or abducting a woman to compel her marriage, etc


70 Section 367 Kidnapping or abducting in order to subject a person to grievous
hurt, slavery, etc
71 Section 368 Wrongfully concealing or keeping in confinement a kidnapped
person
72 Section 369 Kidnapping or abducting child under 10 years with intent to steal
movable property from the person of such child
73 Section 370 Buying or disposing of any person as a slave
74 Section 371 Habitual dealing in slaves
75 Section 372 Selling minor for purposes of prostitution, etc
76 Section 373 Buying minor for purposes of prostitution, etc
77 Section 373A Importing for purpose of prostitution
77A Section 374 Unlawful compulsory labour
78 Section 379 Theft
79 Section 379A Theft of a motor vehicle
80 Section 380 Theft in dwelling house, etc
81 Section 381 Theft by clerk or servant of property in possession of master
82 Section 382 Theft after preparation made for causing death or hurt in order to
commit theft
83 Section 384 Extortion
84 Section 385 Putting person in fear of injury in order to commit extortion
85 Section 386 Extortion by putting a person in fear of death or grievous hurt
86 Section 387 Putting person in fear of death or of grievous hurt in order to
commit extortion
87 Section 389 Putting person in fear of accusation of offence, in order to commit
extortion
88 Section 392 Robbery
89 Section 394 Voluntary causing hurt in committing robbery
90 Section 395 Gang-robbery
91 Section 396 Gang-robbery with murder
92 Section 399 Making preparation to commit gang-robbery
93 Section 400 Belonging to gang of robbers
94 Section 402 Assembling for purpose of committing gang-robbery
95 Section 403 Dishonest misappropriation of property
96 Section 404 Dishonest misappropriation of property possessed by a deceased
person at the time of death
97 Section 406 Criminal breach of trust
98 Section 407 Criminal breach of trust by carrier, etc
99 Section 408 Criminal breach of trust by clerk or servant

30
APPENDIX II
(Cont’d)

100 Section 409 Criminal breach of trust by public servant, or by banker, merchant
or agent
101 Section 411 Dishonest receiving stolen property
102 Section 412 Dishonest receiving property stolen in the commission of a gang-
robbery
103 Section 413 Habitual dealing in stolen property
104 Section 414 Assisting in concealing of stolen property
105 Section 420 Cheating and dishonestly inducing delivery of property
106 Section 421 Dishonest or fraudulent removal or concealment of property to
prevent distribution among creditors
107 Section 422 Dishonest of fraudulently preventing from being made available for
his creditors a debit or demand due to the offender
108 Section 424 Dishonest or fraudulent removal or concealment of consideration
109 Section 465 Forgery
110 Section 468 Forgery for the purpose of cheating
111 Section 489A Forging or counterfeiting currency notes or bank notes
111A Section 489B Using as genuine, forged or counterfeit currency notes or bank
notes
112 Section 489C Possession of forged or counterfeit currency notes or bank notes
112A Section 489D Making or possessing instruments or materials for forging or
counterfeiting currency notes or bank notes
SECURITIES INDUSTRY ACT 1983 (ACT 280)
113 Section 7 Establishment of stock market
114 Section 12 Dealer’s license
115 Section 15A Fund Manager’s license
116 Section 84 Market rigging
117 Section 85 Market manipulation
118 Section 87A Use of manipulative and deceptive devices
119 Section 89E Insider trading.
TAKAFUL ACT 1984 (ACT 312)
120 Section 4 Carrying on business as takaful operator without a license
121 Section 35 Carrying on takaful business as an agent or broker for a person
other than a licensed takaful operator

31
APPENDIX III

AML RED FLAGS INDICATOR

Life Business

a) New Business
1. Premium via cash exceeding RM50,000 per annum.
2. New Business with Total Sum At Risk (TSAR) exceeding RM1,000,000.
3. A customer introduced by an overseas broker, affiliate or other intermediary, when
both customer and introducer are based in Non Cooperative Countries Territory (NCCT)
or countries where production of drugs or drug trafficking may be prevalent.
4. Single premium proposal.
5. A customer with no discernible reason for using the insurer’s service, e.g. customers
with distant addresses who could find the same service nearer their home base, or
customers whose requirement are not in the normal pattern of or inconsistent with the
insurer’s business and could be more easily serviced elsewhere.
6. A personal line customer for whom verification of identity proves unusually difficult,
who is evasive or reluctant to provide full details.
7. A corporate/ trust customer where there are difficulties and delays in obtaining a copy
of statements of accounts or other documents of incorporation.

b) Claims, surrender and cancellation


1. Multiple Surrender/ Cancellation within short period.
2. Refund of premium/contribution other than policy/ certificate owner.
3. Similar pattern on claims & purchase of policy/certificate.
4. Maturity Payment with Premium/contribution Suspense exceeding 50% of sum assured
or Premium Paid in Advance (PPA)/ Discounted Advance Premium (DAP) exceeding
RM50,000 per annum whichever is higher.
5. Early Policy/certificate cancellation exceeding RM100,000 for regular
premium/contribution & exceeding RM500,000 per annum for single
premium/contribution.

c) Transaction which are abnormal or do not make economic sense


1. Assignment to natural persons with TSAR exceeding RM1,000,000 for regular
premium/contribution & exceeding RM500,000 for single premium/contribution.
2. Policy/certificate assigned to unrelated party/ beneficiary other than applicant.
3. Increased in sum assured with TSAR exceeding RM1,000,000 for regular
premium/contribution & exceeding RM500,000 per annum for single
premium/contribution.
4. Reinstatement with TSAR exceeding RM1,000,000 for regular premium/contribution &
exceeding RM500,000 for single premium/contribution.
5. Top-up with TSAR exceeding RM1,000,000 for regular premium/contribution &
RM500,000 for single premium/contribution.
6. Inclusion of rider for level term policies with TSAR exceeding RM1,000,000.

d) Payment
1. Policies’ premium/contributions paid by third party cheques.
2. Pre-payment or early payment of premium/contributions.
3. Unmatched Premium/contribution exceeding RM100,000 for regular
premium/contribution & exceeding RM500,000 per annum for single
premium/contribution.
4. Large or unusual payment of insurance premiums or transaction settlement by cash.
APPENDIX III
(Cont’d)

5. Overpayment of insurance premiums with a request to refund the excess to a third


party or different country.
6. Payment by way of third party cheque or money transfers where there is a variation
between the account holder, the signatory and the prospective insured.
7. Policy loan repayment.

Non Life Business

a) New Business
1. Premium via cash RM 50,000.
2. Premium payment with exceeding RM50,000 (individual) and RM100,000 (group plan)
per annum.
3. Any transaction in which the insured is unknown ( for e.g. treaty reinsurance, business
introduced under binding authorities, etc.)
4. A customer introduced by an overseas broker, affiliate or other intermediary, when
both customer and introducer are based in Non Cooperative Countries Territory (NCCT)
or countries where production of drugs or drug trafficking may be prevalent.
5. A personal line customer for whom verification of identity proves unusually difficult,
who is evasive or reluctant to provide full details.
6. A corporate/ trust customer where there are difficulties and delays in obtaining a copy
of statements of accounts or other documents of incorporation.
7. A customer with no discernible reason for using the insurer’s service, e.g. customers
with distant addresses who could find the same service nearer their home base, or
customers whose requirement are not in the normal pattern of or inconsistent with the
insurer’s business and could be more easily serviced elsewhere.

b) Payment
1. Multiple policy taken out by the same insured for low insurance premiums, each
purchased for cash and then cancelled with return of insurance premium to third party.
2. Large or unusual payment of insurance premiums or transaction settlement by cash.
3. Overpayment of insurance premiums with a request to refund the excess to a third
party or different country.
4. Payment by way of third party cheque or money transfers where there is a variation
between the account holder, the signatory and the prospective insured.
5. Policy loan repayment.

c) Claims and reinsurance


1. Strong likelihood of risk occurring, resulting in substantial claims, with consequently
high insurance premiums.
2. Claims paid to persons other than the insured.
3. Claims which, appear legitimate, occur with abnormal irregularity.
4. Regular small claims within insurance premium limit.
5. Treaty reinsurance with high incidence of small claims.
6. Regular reinsurance claims paid overseas to third parties.
7. Recent change of ownership/ assignment of policies just prior to a loss.
8. Abnormal loss ratios for the nature and class of risk bound under a binding authority.
9. Early claims with huge amount.
APPENDIX III
(Cont’d)

d) Transaction which are abnormal or do not make economic sense


1. A customer with no discernible reason for using the insurer’s service, e.g. customers
with distant addresses who could find the same service nearer their home base, or
customers whose requirement are not in the normal pattern of or inconsistent with the
insurer’s business and could be more easily serviced elsewhere.
2. Proposal from an intermediary not in keeping with the normal business introduced.
3. Proposal not in keeping with an insured’s normal requirements, the market in which the
insured or intermediary is active and the business which the insured operates.
4. Early cancellation of policies with return of insurance premium, for no discernible
purpose or in circumstances which appear unusual.
5. A number of policies entered into by the same insurer/ intermediary for small amounts
and then cancelled at the same time, the return of insurance premium being credited
to an account different from the original account.
6. Any transaction in which the nature, size or frequency appears unusual, e.g. early
termination or cancellation, especially where cash had been tendered and/ or the
refund cheque is to a third party or a sudden purchase of a lump sum contract from an
existing customer whose current contracts are small and with regular payments only.
7. Assignment of policies apparently to unrelated third parties.
8. Transactions not in keeping with normal practice in the market to which they relate, for
e.g. with reference to the size or class of business.
9. Other transactions linked to the transaction in question which could be designed to
disguise money and divert it into other forms or other destinations or beneficiaries.
10. Willingness to pay insurance premiums on high risks, which have a likelihood of regular
claims being made.
11. Policy/certificate cancellation/ surrender recurrence for the same policy/certificate
owner for 2 year period.

34
APPENDIX IV

Contact Persons

Head, AML and Fraud Prevention


Ishak bin Mohamad Nor
ishak@maybanlife.com.my
03-22971801

Head, Regulatory Supervision


Azhar Azlam Yatim
azharay@mni.com.my
03-27825676

Compliance Staff
Nizar Mohamed Daud
nizar@maybanlife.com.my
03-22971710

Compliance Staff
Radhiha Bt Mohd Naim
RadhihaN@TakafulNasional.com.my
03-26125336
APPENDIX V

SUSPICIOUS TRANSACTION REPORT OF MONEY LAUNDERING

Note: The person reporting should exercise due care to ensure that the customer does not become
aware that such a report has been made against him.

Part A: Particulars of Person Reporting

Name Department
(authorisation i/d)

PF number Tel.
Date

Part B: Documents Attached

Individual Customers:
‰ Copy of identity card(s) and/or passport(s) for the policy owners/ participants and life
insured; and
‰ Copy of the life insurance proposal, nomination form, trust application form, and
assignments, if any; and/or
‰ Any other related documents:
……………………………………………………………………………………………..

Corporate customers:
‰ Copy signature card(s);
‰ Copy power(s) of attorney;
‰ Copy articles of association and any modifications thereof;
‰ Copy minutes of the extraordinary and/or annual general meetings;
‰ Copy evidence of registration in the trade register;
‰ Copy accounting documents;
‰ Copy statement of account – ledger;
‰ Copy of the life insurance proposal, policy owners/ participants document regarding the
life insurance;
‰ Other documents (to be detailed):
……………………………………………………………………………………………..

Direct Mail Customers:


‰ Documents as forwarded by mail:
……………………………………………………………………………………………..
APPENDIX V
(Cont’d)

Part C: Particulars Relating to the Suspicious Transaction

1. Identity and residence of the policy owners/ participants (if it concerns a individual customer as
well as a body corporate).
…………………………………………………………………………………………
…………………………………………………………………………………………

2. Did the policy owners/ participants readily disclose proper address for residence or business
establishment?
‰ Yes

‰ No
If NO, why not?
…………………………………………………………………………………………

3. Is your branch the nearest to the policy owners/ participants’ place of residence or place of
business
• inform the immediate supervisor about the unusual situation with which he has been
confronted.
‰ Yes

‰ No
If NO, why does he call on you?
…………………………………………………………………………………………

4. If the answer to the above is YES, please answer this question.


Do you know the policy/certificate owner?
‰ Yes

‰ No
If YES, since when and in what capacity?
…………………………………………………………………………………………

5. Overall information

a) Do you know the origin of the money that is being used to pay the
premium/contribution?
‰ Yes

‰ No
If YES, tick one:
‰ Lump sums derived from a previous investment ?
‰ Sale of real estate or corporation ?
‰ Inheritance or donation
‰ Revenues derived from the normal occupational or corporate business
‰ Others (to be specified):
……………………………………………………………………………………
APPENDIX V
(Cont’d)

b) What is the occupational or corporate business practiced by the policy owners/


participants?
………………………………………………………………………………………
c) Is the transaction proportional to the financial capacity of the policy owners/participants
known by you or to the result of the annual financial accounts?
‰ Yes

‰ No
If NO, specify:
………………………………………………………………………………………

6. In which way(s) is the premium/contribution being paid?


‰ debiting of his own bank account

‰ debiting of a third party's bank account

7. Is such third party an exchange office?


‰ Yes. Please specify the name of the exchange office.

………………………………………………………………………………………
‰ No. Please specify the relationship between the third party and the policy owners/
participants.

‰ Check issued by the policy owners/ participants


‰ Certified check of a bank
‰ Cash delivered by an intermediary
‰ Cash deposited by another bank
‰ Cash deposited with the insurer
‰ Others, (to be specified):
………………………………………………………………………………………

8. Is the policy owners/ participants acting on his own behalf or that of a third party?
‰ Yes

‰ No
If YES, what is the relationship of such third party with the policy owners/ participants?
…………………………………………………………………………………………

Part D: Additional Remarks:

Specify hereafter any useful information which does not match any where else.
.....................................................................................................................................…..
..........................................................................................................................................
APPENDIX V
(Cont’d)

Part E: Policy/Certificate Details on Suspicious Transaction

Suspicious Transaction of Anti Money Laundering

A. Transaction Details

1. Policy Number / Proposal No. / Claim No.: (Please only indicate the Proposal No. or Policy No. if others are not applicable)

2. Policy
3. Commencement Date:
4. Payment
5. Payment (Cash/Cheque/Debit ac/Credit Card)

6.
7. Premium Amount:
8. Payment/Issue Amount:
(Top-up/Increase in Sum Assured/Reinstatement/Cancellation/Refund of Unmatched Premium/All other refunds/Maturity/Claim Amount/Surrender/Withdrawal)

9. Sum Assured:
10. TSAR Amount:
11. Request (functional areas as defined in the parameters)

12. Effective Date: (for requested transaction- e.g. top-up/withdrawal/assignment e.t.c.)


13. Transaction Date: (Payment /

B. Particulars of Policy Owners/ Participants


14. Name:
15. NRIC No. / Passport No./ Business Reg. No.:
16. Relationship to Life Assured:
17.
18. Occupation / Business:
19. Address:

C. Particulars of Life Assured


20. Name:
21. NRIC No. / Passport No. / Business Reg. No.:
22.
23. Occupation / Business:
24. Address

D. Particulars of Assignee
25. Name:
26. NRIC. No. / Passport No. / Business Reg. No.:
27. Relationship to Policyowner/Life Assured:
28.
29. Occupation / Business:
30. Address

This report is to be submitted to AML and Fraud Prevention Unit by the staff authorising the transaction
APPENDIX V
(Cont’d)

The undersigned ..................................................... declares in good faith that he/she has


correctly completed the questionnaire on the basis of all information known to him/her at this point
in time.

Signature (s) : .....................................................


Name (as contained in the I/C) :
I/C No :

Part F: Comments / Recommendation by Functional Head

The Head of Division/Department/Unit is required to put forward his recommendation based on the
information given by the person reporting the suspicious transaction.

………………………………………………………………………………………………………………….
………………………………………………………………………………………………………………….
………………………………………………………………………………………………………………….
………………………………………………………………………………………………………………….
………………………………………………………………………………………………………………….
………………………………………………………………………………………………………………….

Signature (s) : ....................................................


Name :
I/C No :
Designation :

*Note
APPENDIX VI

SECRET
FIU/STR/02/02
Please send completed form to:
REFERENCE NUMBER:
FINANCIAL INTELLIGENCE UNIT
BANK NEGARA MALAYSIA
JALAN DATO' ONN, 50480 KUALA LUMPUR
Tel: 03- 26988044 ext 8071 / 7367 Fax: 03 - 26933625

SUSPICIOUS TRANSACTION REPORT


a. This report is made pursuant to the requirement to report suspicious transactions under the Anti-Money Laundering Act 2001(AMLA).

b. Under section 24 of the AMLA, no civil, criminal or disciplinary proceedings shall be brought against a person who makes a report unless it
was made in bad faith.

PART A: INFORMATION ON CUSTOMER

1. Name(s):
(Include all aliases / commonly used names. If organisation, please provide registered business / organisation name.)

2. NRIC No. / Passport No. /


Business Reg. No.:
(NRIC number for Malaysian, passport number for foreigners, and business registration number for businesses.)

3. Nationality:

4. Occupation / Business:
(Where appropriate, principal activity of the person conducting the transaction, if known to the person making the report.)

5. Address:

6. Town: 7. Postcode: 8. State:

PART B: INFORMATION ON INTERMEDIARY AND BENEFICIARY

9. Name(s) of intermediary:
(Include all aliases / commonly used names. If organisation, please provide registered business / organisation name.)

10. Intermediary NRIC No. /


Passport No. / Business Reg. No.:
(NRIC number for Malaysian, passport number for foreigners, and business registration number for businesses.)

11. Name(s) of beneficiary:


(Include all aliases / commonly used names. If organisation, please provide registered business / organisation name.)

12. Beneficiary NRIC No. /


Passport No. / Business Reg. No.:
(NRIC number for Malaysian, passport number for foreigners, and business registration number for businesses.)

13. Occupation / Business:


(Where appropriate, principal activity of the person conducting the transaction, if known to the person making the report.)

14. Address of beneficiary:

15. Town: 16. Postcode: 17. State:

PART C: TRANSACTION DETAILS


18. Policy / application number:

19. Claim number:

20. Type of insurance:

21. Type of policy:

22. Date of transaction: 23. Date of policy


d d m m y y y y commencement: d d m m y y y y

24. Sum insured (RM): 25. Currency type:

26. Payment mode:


(Yearly / half-yearly / quarterly / monthly / lump sum.)

27. Premium amount (RM): 28. Currency type:

41
APPENDIX VI
(Cont’d)

PART D: DESCRIPTION OF SUSPICIOUS TRANSACTION

29. Give details of the nature and the circumstances surrounding it:

(e.g. nature / type of transaction, source of funds, destinations, etc.)

30. Grounds for suspicion:

(Please include attachments if space is insufficient.)


31. Date of reporting:
d d m m y y y y

PART E: FOR BANK NEGARA MALAYSIA USE ONLY

Receiving officer: Date received:


d d m m y y y y

42