1 Malaysian FIU – Establishing an FIU, Issues and Resolutions By: Datuk Zamani Abdul Ghani Deputy Governor Bank Negara Malaysia 30 March 2005 International

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Malaysian FIU – Malaysian FIU – Establishing an FIU, Issues and Resolutions

By: Datuk Zamani Abdul Ghani

Deputy GovernorBank Negara Malaysia

30 March 200530 March 2005

International Seminar on Anti-Money LaunderingInternational Seminar on Anti-Money Laundering

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OverviewOverviewEstablishing an FIUAMLANational Coordination Committee to Counter Money LaunderingFIU in Bank Negara Malaysia

Background MissionOrganisational Structure

Core partners of the FIUIssues and Resolutions

Building Stakeholders’ ConfidenceBuilding Reporting Institutions’ Confidence in the FIUEnsuring Compliance among Reporting InstitutionsBuilding Expertise among StakeholdersCompliance with International Standards

Challenges

3 FIU- Malaysian Experience

ANTI-MONEY LAUNDERING ACT 2001 (AMLA)

April 2000 Inaugural meeting of National Co-

ordinating Committee to Counter Money Laundering (NCC)

Malaysian Government approved AMLA concept paper

Dewan Rakyat (Lower House) passed AMLA

Dewan Negara (Upper House) passed AMLA

AMLA came into force

October 2000

May 2001

June 2001

January 2002

AMLA (Amendment) Act 2003 gazetted as law

December 2003


National Coordinating Committee to Counter Money Laundering (NCC)

Coordinate the implementation of the national anti-money laundering / combating the financing of terrorism (AML/CFT) programme

Develop and ensure proper implementation of measures to counter money laundering based on internationally accepted standards

Comprises 13 government Ministries and agencies

Each agency is responsible to study, provide information, and report the development of any decision in the NCC meeting


NCC MembersAnti-Corruption

Agency

Attorney-General’s Chambers

Companies Commission of

Malaysia

Inland Revenue Board

Labuan Offshore Financial Services

Authority

Ministry of Domestic Trade and Consumers

Affairs

Bank Negara Bank Negara MalaysiaMalaysia

Ministry of Finance

Ministry of Foreign Affairs

Ministry of Internal Security

Royal Malaysian Customs

Royal Malaysian Police

Securities Commission


FIU in Bank Negara Malaysia - Background

Established in August 2001

FIU in Bank Negara Malaysia

Established under the Anti-Money Laundering Act 2001 (AMLA)

The Minister of Finance appointed Bank Negara Malaysia as Competent Authority under the AMLA on 15 January 2002

Powers and functions under the AMLA


Powers accorded by AMLA

To receive suspicious transaction reports and analyse information Share financial intelligence with enforcement agenciesTo compile statistics and records pertaining to compliance with AMLAMake recommendations to the relevant supervisory authorities, enforcement agencies and reporting institutionsCreate training requirements and provide training for reporting institutions


Mission and Purpose

MissionMission

Formulate and implement AML/CFT laws and measures to deter and detect financial crimes by gathering and sharing financial intelligence

PurposePurpose

To facilitate the implementation and enforcement of the AMLA nationwide and to co-operate with other countries in the global fight against money laundering and serious crimes.


Organisational Structure

Deputy DirectorDeputy Director

IntelligenceIntelligenceAnalysisAnalysis

Clerical Clerical OfficersOfficers

Senior Senior ExecutiveExecutivess



Strategic Strategic and Policyand Policy ComplianceCompliance

InvestigationInvestigationSupportSupport

RelationshipRelationship ManagementManagement

Deputy DirectorDeputy Director

DirectorDirector

ManagerManagerss ManagerManagerss ManagerManagerManagerManager


PersonalPersonal AssistantAssistant

Admin. Admin. AssistantAssistant

STRATEGIC STRATEGIC DEVELOPMENTDEVELOPMENT

INTELLIGENCE INTELLIGENCE MANAGEMENTMANAGEMENT


Core functionsTo carry out roles and functions set out in the AMLA

Spearhead national efforts in combating money laundering and serious crimes by providing value-added contributions to national and international supervisory/enforcement agencies

Formulate and implement comprehensive national anti-money laundering regime

Promote awareness of money laundering and terrorism financing issues and the AMLA

Act as Secretariat to, and coordinate, the NCC’s initiatives


Core partners of the FIUSUPERVISORY & SUPERVISORY &

REGULATORY AGENCIESREGULATORY AGENCIES• Bank Negara Malaysia• Securities Commission• Labuan Offshore Financial Services

Authority• Companies Commission of Malaysia

REPORTING INSTITUTIONSREPORTING INSTITUTIONSw.e.f. 15/01/2002

• Commercial banks• Merchant banks• Finance companies• Islamic banks

w.e.f. 15./04/2002• Discount houses• Insurers• Insurance brokers• Takaful operators• Offshore banks• Offshore insurers• Offshore trust companies

w.e.f 1/06/2002• Money changers

w.e.f 15/01/2003• Pilgrims Fund Board • Pos Malaysia Berhad• Bank Simpanan Nasional• Bank Kerjasama Rakyat

Malaysia Berhad• Licensed casino

ENFORCEMENT ENFORCEMENT AGENCIESAGENCIES

• Bank Negara Malaysia• Royal Malaysian Police• Royal Malaysian Custom• Anti-Corruption Agency• Companies Commission Of

Malaysia• Securities Commission

FOREIGN FIUsFOREIGN FIUs

FINANCIAL INTELLIGENCE UNIT

FINANCE MINISTERFINANCE MINISTER

w.e.f 31/03/2004• Stockbrokers• Futures brokers

w.e.f 30 September 2004• Lawyers• Accountants• Company Secretaries

• Bar Council• Malaysian Institutes of Accountants• Malaysian Institute of Chartered

Secretaries and Administrators• Other company secretaries bodies

SELF-REGULATORY SELF-REGULATORY ORGANISATIONSORGANISATIONS

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Issues and Resolutions


Issue and ResolutionsIssue: Building stakeholders’ confidenceResolutions:

Regular consultation with the relevant supervisory and regulatory authorities Agreement sought on the implementation strategiesGuidelines on AML/CFT issued by relevant regulatory and self-regulatory authoritiesAMLA briefing sessionsAdequate manpower in the FIU



Issue: Building reporting institutions’ confidence in the FIU

Resolutions:

STR submitted in a highly confidential manner

FIU deals directly with the compliance officer

Compliance officers protected by civil, criminal or disciplinary actions under the AMLA for reporting STR

Tipping off is an offence under the AMLA

Financial Intelligence System (FINS) to ensure efficient and secure reporting


Financial Intelligence System (FINS) To facilitate speedy and efficient submission of

STRs or Account Statements (when the need arises) from the reporting institutions through secure online environment

To ensure that submitted information is handled with high security and confidentiality without possible means of interruption throughout the transmission


Intelligence Process

Investigating Investigating AgenciesAgencies

Prosecuting Prosecuting AgencyAgency

Data Data SubmissionSubmission DatabaseDatabase

AnalysisAnalysis

Foreign FIUsForeign FIUs Related Related AgenciesAgencies

Reporting Reporting InstitutionInstitution

Information for prosecuting

Exchange of information Provide input

Analyses information

FIUFIU


Inward Transfer

BANK A BERHAD

BANK Z OVERSEAS

FIU Bank Negara Malaysia

MR. JOHN DOE

MR. RUDY FIASCOROYAL MALAYSIAN

POLICE

BANK B BERHAD

BANK C BERHAD

MR. JOHN DOE

MR. JOHNNY

DOE

MR. JOHNNY DOE

ARRESTEDBANK Y

OVERSEAS

MR. RUDY FIASCO

Outward Transfer



Issue: Ensuring compliance among reporting institutions

Resolutions: Establishing a comprehensive legal framework that consists of:

regulatory/ supervisory

compliance

enforcement


Ensuring Compliance

LEGAL LEGAL FRAMEWORKFRAMEWORK

REGULATORY REGULATORY FRAMEWORKFRAMEWORK

COMPLIANCE COMPLIANCE FRAMEWORKFRAMEWORK

ENFORCEMENT ENFORCEMENT FRAMEWORKFRAMEWORK

Supervisory & Supervisory & Regulatory AgenciesRegulatory Agencies

Reporting Reporting InstitutionsInstitutions

Enforcement Enforcement AgenciesAgencies

• GuidelinesGuidelines

• Supervisory FrameworkSupervisory Framework

• Informal Enforcement Informal Enforcement FrameworkFramework

Compliance Compliance ProgrammeProgramme

AMLA Investigation AMLA Investigation Reference GuideReference Guide


Supervisory FrameworkManagement Management

OversightOversight

Policies and Policies and ProceduresProcedures

Internal ControlInternal Control

Human Resource Human Resource and Trainingand Training

Management Management Information Information

SystemSystem


Supervisory Framework

Evaluate adequacy and effectiveness of AML/CFT policies, procedures, systems and controls

Evaluate adequacy and effectiveness of AML/CFT programmes at FIs

Determine compliance with AMLA

Assess adequacy and comprehensiveness of AML/CFT training and education programmes

Recommend corrective actions

Assess AML risk management structure and highlight high risk areas to be reviewed



Issue: Building expertise among stakeholders

Resolutions:

Conduct regular briefing sessions

Collaborate with training institutes

Collaborate with international bodies for specialised training


Building expertiseFIUFIU

Reporting Reporting InstitutionsInstitutions

SRAs, SROs SRAs, SROs and LEAsand LEAs

• Awareness Awareness programmeprogramme

• Training in Training in collaboration with collaboration with training institutestraining institutes

• Awareness Awareness programmeprogramme

• Training in Training in collaboration with collaboration with training institutes training institutes and international and international bodiesbodies

ExternalExternalInternalInternal

• Specialised training Specialised training programmesprogrammes

• Training in Training in collaboration with collaboration with international bodiesinternational bodies

International Orgns. International Orgns. (ASEM,APG)(ASEM,APG)



Issue: Compliance with international standards

Resolutions:

Membership and participation in various international groups

Benchmarking – compliance with FATF’s 40+9 Recommendations

Information sharing (MoUs)

Mutual legal assistance

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Challenges


Challenges

Organisational effectiveness

Implementation of FATF 40+9 Recommendations

Timely response to emerging ML/TF trends

Documents

1 Malaysian FIU – Establishing an FIU, Issues and Resolutions By: Datuk Zamani Abdul Ghani Deputy Governor Bank Negara Malaysia 30 March 2005 International