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FINANCIAL SECTOR TALENT ENRICHMENT PROGRAMME

ANTI MONEY LAUNDERING AND COUNTER FINANCING OF TERRORISM

Malaysian Anti Money Laundering Act 2001 / Malaysian Anti-Money Laundering (Amendment) Act 2003

FINANCIAL SECTOR TALENT ENRICHMENT PROGRAMME

ANTI MONEY LAUNDERING AND COUNTER FINANCING OF TERRORISM

What’s The issue with AML/CFT?

A Global Issue A Regional Issue A National Issue

And How It Affects:

The Malaysian Financial Services Sector Your Institution You

FINANCIAL SECTOR TALENT ENRICHMENT PROGRAMME

ANTI MONEY LAUNDERING AND COUNTER FINANCING OF TERRORISM

Role of the Reporting Institution

Role of the Employee – You!

FINANCIAL SECTOR TALENT ENRICHMENT PROGRAMME

ANTI MONEY LAUNDERING AND COUNTER FINANCING OF TERRORISM

Money Laundering is a Major Global Issue:

Estimated >1 trillion dollars of illicit funds circulating worldwide

250 billion dollars associated with US drug sales

Other countries which are target for money launderers are nations with a high GNP / high per capita income

FINANCIAL SECTOR TALENT ENRICHMENT PROGRAMME

ANTI MONEY LAUNDERING AND COUNTER FINANCING OF TERRORISM

Process whereby criminals attempt to hide & disguise the true origin & ownership of the proceeds of their criminal activities

i.e. concealing existence, source or application of illegal income

A process to make illegitimate income appear legitimate thereby avoiding prosecution, conviction & confiscation of the criminal funds.

FINANCIAL SECTOR TALENT ENRICHMENT PROGRAMME

Illicit Activity

Illicit Activity

Drug Drug Production Production and and Trafficking Trafficking

Other Other Criminal Criminal Activities Activities

Placement

Placement

Disposal of Bulk Cash

Disposal of Bulk Cash

• •

• •

• •

• •

Smuggling Bulk Currency

Smuggling Bulk Currency

Mix Illicit Proceeds with legitimate deposits

Mix Illicit Proceeds with legitimate deposits

Deposit amounts in small denominations

Deposit amounts in small denominations

Sub-divide bank or commercial transactions

Sub-divide bank or commercial transactions

transactions Sub-divide bank or commercial transactions Integration Layering Layering Use layered funds to
transactions Sub-divide bank or commercial transactions Integration Layering Layering Use layered funds to
Integration Layering Layering Use layered funds to purchase “Clean Legitimate” Assets Disguise origin of initial
Integration
Layering
Layering
Use layered funds to purchase “Clean
Legitimate” Assets
Disguise origin of initial deposit through:
Disguise origin of initial deposit through:
Multiple Transfers
Multiple Transfers
• Money Assets
Multiple Transactions
Multiple Transactions
• Fixed Assets
• Business
Transfers • Money Assets • • Multiple Transactions Multiple Transactions • Fixed Assets • Business

FINANCIAL SECTOR TALENT ENRICHMENT PROGRAMME

ANTI MONEY LAUNDERING AND COUNTER FINANCING OF TERRORISM

Placement Phase

Front or cash businesses - businesses operated by criminals or their associates

Conversion of cash to monetary instruments, lighten load and reduce bulk

Smuggling of cash out of the country to unregulated countries i.e. in passenger luggage, bulk container shipments

The remainder is ‘smurfed’

FINANCIAL SECTOR TALENT ENRICHMENT PROGRAMME

ANTI MONEY LAUNDERING AND COUNTER FINANCING OF TERRORISM

Layering Phase

Separation of illegal proceeds from their source through layers of complex financial transactions:

Back-to-back loans; Further purchases and transactions; False letter of credit transactions; Bogus Invoices; Use of Professional Intermediaries e.g. lawyers , accountants, secretarial companies.

FINANCIAL SECTOR TALENT ENRICHMENT PROGRAMME

ANTI MONEY LAUNDERING AND COUNTER FINANCING OF TERRORISM

Integration Phase

Provides an apparent legitimate explanation for the launderer’s wealth:

Time deposits Investments Stocks and Bonds Artwork Real Estate Capital Construction Projects

The source of funding for the above is dirty money

FINANCIAL SECTOR TALENT ENRICHMENT PROGRAMME

ANTI MONEY LAUNDERING AND COUNTER FINANCING OF TERRORISM

Your Institution & You - Consequences of Non-Compliance!

Failure to comply:

Fine or

Imprisonment or

Both

FINANCIAL SECTOR TALENT ENRICHMENT PROGRAMME

ANTI MONEY LAUNDERING AND COUNTER FINANCING OF TERRORISM

The Legal Framework - a financial institution is governed by:

Malaysian Anti- Money Laundering Act 2001 / Malaysian Anti- Money Laundering (Amendment) Act 2003

UPW/GP1: Standard Guidelines on Anti- Money Laundering and Counter Financing of Terrorism (AML/CFT)

UPW/GP1[1]: Sectoral Guidelines 1 on AML/CFT

FINANCIAL SECTOR TALENT ENRICHMENT PROGRAMME

MALAYSIAN ANTI MONEY LAUNDERING ACT 2001 (AMLA)

Came into force on Jan 15 2002

Criminalises money laundering

Provides for actions that deters and detects money laundering

Provides for freeze, seize and forfeiture of proceeds derived from money laundering activities

FINANCIAL SECTOR TALENT ENRICHMENT PROGRAMME

MALAYSIAN ANTI MONEY LAUNDERING ACT 2001 (AMLA)

LEGAL FRAMEWORK

Competent Authority/Financial Intelligence Unit (FIU) Reporting Institutions Examination of a Reporting Institutions Investigation by a Competent Authority International Cooperation Highlights of AMLA

MALAYSIAN ANTI MONEY LAUNDERING ACT 2001 (AMLA) The Legal Framework MOF Enforcement Agencies Supervisory /
MALAYSIAN ANTI MONEY LAUNDERING ACT 2001 (AMLA) The Legal Framework MOF Enforcement Agencies Supervisory /
MALAYSIAN ANTI MONEY LAUNDERING ACT 2001 (AMLA)
The Legal Framework
MOF
Enforcement
Agencies
Supervisory /
•BNM
Supervisory /
Regulatory
•ACA
Regulatory
•Customs
Agencies
Agencies
•Police
•BNM
•BNM
•CCM
•SC
•SC
•SC
Competent
•LOFSA
•LOFSA
Authority
•CCM
•CCM
Reporting Institutions
Foreign FIUs

FINANCIAL SECTOR TALENT ENRICHMENT PROGRAMME

MALAYSIAN ANTI MONEY LAUNDERING ACT 2001 (AMLA)

AMLA: Some Critical Provisions

Section 3: wide definition of “money laundering”

- person ‘involved’ in money laundering where,

- by inference, a person knows or has reason to believe proceeds are from an unlawful activity

- a person without reasonable excuse fails to take reasonable steps to ascertain whether proceeds are from any unlawful activity

FINANCIAL SECTOR TALENT ENRICHMENT PROGRAMME

MALAYSIAN ANTI MONEY LAUNDERING ACT 2001 (AMLA)

Section 4: Offence of money laundering

Any person who:

(i)

engages in, or attempts to engage in, or

(ii)

abets the commission of money laundering

FINANCIAL SECTOR TALENT ENRICHMENT PROGRAMME

MALAYSIAN ANTI MONEY LAUNDERING ACT 2001 (AMLA)

Penalty:

Fine of up to RM5 million, or

Imprisonment of up to 5 years, or

Both

FINANCIAL SECTOR TALENT ENRICHMENT PROGRAMME

MALAYSIAN ANTI MONEY LAUNDERING ACT 2001 (AMLA)

Record Keeping & Reporting Requirements

Sections 13, 14, 17

reporting of suspicious transactions & transactions exceeding the specified threshold limit

retain record for 6 years or more from date account was closed or transaction completed / terminated

FINANCIAL SECTOR TALENT ENRICHMENT PROGRAMME

MALAYSIAN ANTI MONEY LAUNDERING ACT 2001 (AMLA)

Customer Identification Section 16

Proper verification / documentation of Customer Identification particulars at account opening

True Name Section 18

Account must not be opened with a fictitious, false or incorrect name [Note: penalty - RM1m fine / 1 year imprisonment / both]

FINANCIAL SECTOR TALENT ENRICHMENT PROGRAMME

MALAYSIAN ANTI MONEY LAUNDERING ACT 2001 (AMLA)

Secrecy Section 20

Secrecy and non-disclosure of information [Note also Section 79: preservation of secrecy]

Protection Section 24

Protection of persons reporting civil, criminal or disciplinary action [Note: reporting must be made in good faith!]

FINANCIAL SECTOR TALENT ENRICHMENT PROGRAMME

MALAYSIAN ANTI MONEY LAUNDERING ACT 2001 (AMLA)

Tipping Off Section 35

No tipping off or disclosing information to any other person! [Note: penalty - RM 1m fine / 1 year imprisonment / both]

FINANCIAL SECTOR TALENT ENRICHMENT PROGRAMME

MALAYSIAN ANTI MONEY LAUNDERING ACT 2001 (AMLA)

DEALING WITH ENFORCEMENT AGENCIES ON AMLA ORDERS

Provision in the AMLA allows Enforcement Agency / Public Prosecutor to make certain orders:

- Section 44: freezing of any property

- Section 50: seizure of movable property in a FI

- Section 51: seizure of immovable property (including in a FI)

FINANCIAL SECTOR TALENT ENRICHMENT PROGRAMME

Thank you