The document discusses money laundering and the obligations of reporting institutions under Malaysia's Anti-Money Laundering and Anti-Terrorism Financing Act 2001 (AMLATFA). It defines money laundering as disguising illegally obtained cash or property to make it appear legitimate. It outlines risks like reputational damage for institutions that don't comply with AMLATFA. Key obligations include conducting customer due diligence, identifying suspicious transactions, and reporting them to the authorities. Failure to comply can result in fines or imprisonment.

1. What Is Money Laundering?
“It is the process of converting
cash or property derived from
illegal or criminal activities, to
give it the appearance of
having been obtained from a
legitimate source”

2. Reputation
risk
Customer lose confidence,
Adverse Publicity
Customer lose confidence,
Adverse Publicity
Operational
Risk Direct / Indirect losses,Direct / Indirect losses,
Concentration
Risk Sudden withdrawal, affecting liquiditySudden withdrawal, affecting liquidity
Legal
Risk Fine/Imprisonment or BothFine/Imprisonment or Both
Licensing
Risk Licence suspend/cancelledLicence suspend/cancelled
Implication on Reporting Institutions

3. Legislative Framework
Anti-Money Laundering and Anti-Terrorism
Financing Act 2001
(AMLATFA 2001)
Reporting Requirement
Section 14(a)
Section 14(b)

4. BNM Guidelines
BNM UPW/GP1:
Standard Guidelines on Anti-Money
Laundering and Counter Financing of
Terrorism (AML/CFT) (15 November 2006)
&
Sectorial Guideline 1 for Banking &
Financial Institution

5. Types of money laundering offences
Protection for informers
Function of BNM as competent authority
Record keeping by reporting institution (RI)
Reporting of suspicious transaction by RI
Investigation by Competent Authority and Enforcement
Agencies
Freezing, seizure and forfeiture of property
What does AMLA provide ?

6. Obligations to fight money laundering/terrorist financing
Obtain sufficient customer identification
(CDD, Enhanced CDD, AMLATFA Watchlist check)
Identify suspicious transactions
Monitor suspicious
`
Report suspicious transaction (STR form)
Record Keeping of documents (Not less than 6 years –Sec 11)
Duty of Reporting Institutions (Banks)

7. Customer Due Diligence (CDD)
Policy
is all about knowing
 Customer’s background
 His nature of business
 Source of funds
CDD is the gathering of information on
individuals and companies (Profiling) and
on the expected trend of account activities.

8. Customer due diligence must be conducted when:
 Establishing business relationship with any customer.
 Carrying out cash or occasional transaction in excess
of BNM specification.
 It has any suspicion of money laundering or terrorism.
 It has doubts of the correctness of previously obtained
information.
CUSTOMER DUE DILIGENCE (CDD)

9. CUSTOMER DUE DILIGENCE (CDD) should comprise of the
following:
 Identify and verify the customer.
 Identify and verify beneficial ownership and control of transaction.
 Obtain information on purpose and intended nature of the business
relationship/transaction.
 Conduct on-going due diligence to ensure information provided is
updated.
 Should not commence business/transaction if customer fails to
comply with due diligence.
CUSTOMER DUE DILIGENCE (CDD)

10. CUSTOMER DUE DILIGENCE (CDD) to be done for the
following transactions:
BDC
 Equivalent to RM20,000.00 for customers.
Over the counter (Branches- Customer)
 For cash transactions (Deposit/Withdrawal) , amount equivalent to
RM50,000.00 and above on customer and person conducting
transaction.
Walk-in Customers
 For amount equivalent to RM50,000.00 and above for both cash & non-
cash on customer and person conducting transaction.
CUSTOMER DUE DILIGENCE (CDD)

11. Bank to obtain following originator’s information
for CDD before effecting transfer:
 Name/Nationality/NRIC No./Passport no.
 Account no./ address
These details to be included in the message.
For wire transfer – amount equivalent to
RM3,000.00 and above.
CDD and Wire Transfer

12. Enhanced CDD for High Risk Customers
Individuals
 Politically Exposed Persons
 Brokers & Dealers
 Cash Intensive Businesses
 Jewellers & Precious Metal dealers
 Mobile Phone dealers
 Money Changers – Owners
 Pawnshops – Owners
 Travel Agencies – Owners
 Used Car Dealer/ parts
manufacturers

13. Enhanced CDD for High Risk Customers – sec 6.1.6
 Personal or business background
(Occupation, Profession, Nature of
business)
 Purpose & Usage of account
 Source of funds (Ask Questions)
 Details of operations in foreign
countries
 Expected pattern of activity
 Details of other banking
relationships

14. Suspicious Transaction Report (STR)
When to submit ?
As and when detect & after conducting
Enhanced customer due diligence with a
possible link to the predicate/serious
offences in Appendix 2
How to submit ?
Where to submit ?
To complete the STR form & get signed-off
from the AML/CFT Compliance Officer
Submit to Money Laundering Reporting
Officer

15. Financial Intelligence Unit, BNM
Branch/Subsidiary Compliance OfficerBranch/Subsidiary Compliance Officer
Money Laundering Reporting Officer (MLRO)Money Laundering Reporting Officer (MLRO)
Flow of Suspicious Transaction Report
Employees

16. Suspicious Transaction Report (STR)
1. Details of account holder
2. Details of person conducting transaction (Walk-In customer)
3. Transaction details, description of suspicious transaction
 Inadequate information given in the STR
 Enhanced CDD not properly done.
 STR raise based on single transaction instead of
previous/behavior pattern (at least 3 – 6 moths)
 Source of fund not determine

17. BNM STR Form

18. Failure to report STR – What if you don’t report?
Section: 86 (AMLA 2001)
Failure to report STR is an offence punishable
upon conviction.
Penalty: Fine not exceeding RM250k
Failure to report can also be tantamount to
abetting the commission of money laundering
which is an offence punishable upon conviction
with the penalty as specified in Section: 4 AMLA
2001

19. HOW TO HANDLE SUSPICIOUS CUSTOMERS
• Don’t create his suspicion
• Be discreet
• Don’t panic
• Use a phone that is out off suspect’s sight
• Don’t discuss with staff in suspect’s
presence
“ NO TIPPING
OFF ”

20. AMLA Penalties

21. Any person who engages
in or attempt to engage
in or abets** the
commission of money
laundering
** to help or encourage
someone to do something
wrong or illegal
Fine not exceeding
RM5 million
or
Imprisonment not
exceeding 5 years
or
BOTH
AMLA Penalties – Appendix 3

22. Failure to retain records for
minimum 6 years from date
account closed or
transaction has
been completed/ terminated
or
Tipping off to any other
person of an investigation
that is likely to prejudice the
investigation
Fine not exceeding
RM1 million
or
Imprisonment not
exceeding 1 year
or
BOTH
AMLA Penalties – Appendix 3

23. BANKS PENALIZED UNDER AMLA

24. Banks Penalized under AMLA :
Financial Services Authority UK fine
•Royal Bank of Scotland GBP 5.6 million – did not perform
sufficient control and not consistently monitored PEP
client
*PEP- Political Exposed Person
• Turkish Bank fined GBP294k by- fail to keep proper
record
BANK PENALIZED UNDER AMLA

25. FINDINGS FROM SURVEY
 Aware about AMLA - 100%
 Attended training AMLA -100%
 Raised STR - 5%
 Never come across suspicious transaction - 75%
 Not sure what is suspicious transaction - 10%
 Not enough time to check in detail -15%

26. Conclusion
1. Money Laundering has major impact on
banks
2. Non compliance to AMLA requirement
leads to heavy penalty
3. Banks must establish good monitoring
system and guidelines to meet reporting
requirement
4. Gap between requirement and
implementation
5. Conflict between business obligation and
compliance obligation

27. Recomendations
1. Establish comprehensive written
guidelines and SOP
2. Systems to monitor and alert suspicious
transaction
3. Continuous training and awareness
programme for all staff especially
frontliners
4. Regular and comprehensive audit by BNM
5. Internal check and audit

28. Disclaim Notes
All photos Illustrated in this presentation are for Illustration purpose only.
Photos are obtained from varies sources from Internet and are for acedemic purpose only.
Q & A