International Seminar on AntiMoney Laundering Malaysian FIU Establishing

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

Overview Establishing an FIU AMLA National Coordination Committee to Counter Money Laundering FIU in Bank Negara Malaysia Background Mission Organisational Structure Core partners of the FIU Issues and Resolutions Building Stakeholders’ Confidence Building Reporting Institutions’ Confidence in the FIU Ensuring Compliance among Reporting Institutions Building Expertise among Stakeholders Compliance with International Standards Challenges 2

ANTI-MONEY LAUNDERING ACT 2001 (AMLA) April 2000 October 2000 v Inaugural meeting of National Co-ordinating Committee to Counter Money Laundering (NCC) v Malaysian Government approved AMLA concept paper May 2001 v Dewan Rakyat (Lower House) passed AMLA June 2001 v Dewan Negara (Upper House) passed AMLA January 2002 December 2003 v AMLA came into force v AMLA (Amendment) Act 2003 gazetted as law 3 FIU- Malaysian Experience

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 4 FIU- Malaysian Experience

NCC Members Anti-Corruption Agency Ministry of Finance Attorney-General’s Chambers Ministry of Foreign Affairs Companies Commission of Malaysia Ministry of Internal Security Royal Malaysian Customs Inland Revenue Board Labuan Offshore Financial Services Authority Bank Negara Malaysia Royal Malaysian Police Securities Commission Ministry of Domestic Trade and Consumers Affairs 5 FIU- Malaysian Experience

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 6 FIU- Malaysian Experience

Powers accorded by AMLA To receive suspicious transaction reports and analyse information Share financial intelligence with enforcement agencies To compile statistics and records pertaining to compliance with AMLA Make recommendations to the relevant supervisory authorities, enforcement agencies and reporting institutions Create training requirements and provide training for reporting institutions 7 FIU- Malaysian Experience

Mission and Purpose Mission Formulate and implement AML/CFT laws and measures to deter and detect financial crimes by gathering and sharing financial intelligence Purpose 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. 8 FIU- Malaysian Experience

Organisational Structure Director Personal Assistant INTELLIGENCE MANAGEMENT STRATEGIC DEVELOPMENT Deputy Director Strategic and Policy Admin. Assistant Compliance Managers Senior Executives Deputy Director Relationship Management Intelligence Analysis Investigation Support Managers Manager Senior Executives Clerical Officers 9 FIU- Malaysian Experience

Core functions To carry out roles and functions set out in the AMLA Spearhead national efforts in combating money laundering and serious crimes by providing valueadded 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 10 FIU- Malaysian Experience

Core partners of the FIU SUPERVISORY & REGULATORY AGENCIES FOREIGN FIUs FINANCE MINISTER • Bank Negara Malaysia • Securities Commission • Labuan Offshore Financial Services Authority • Companies Commission of Malaysia • • • Bank Negara Malaysia Royal Malaysian Police Royal Malaysian Custom Anti-Corruption Agency Companies Commission Of Malaysia • Securities Commission FINANCIAL INTELLIGENCE UNIT SELF-REGULATORY ORGANISATIONS ENFORCEMENT AGENCIES • Bar Council • Malaysian Institutes of Accountants • Malaysian Institute of Chartered Secretaries and Administrators • Other company secretaries bodies REPORTING INSTITUTIONS • • w. e. f. 15/01/2002 Commercial banks Merchant banks Finance companies Islamic banks w. e. f 31/03/2004 • Stockbrokers • Futures brokers • • 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 11 w. e. f 15/01/2003 Pilgrims Fund Board Pos Malaysia Berhad Bank Simpanan Nasional Bank Kerjasama Rakyat Malaysia Berhad • Licensed casino w. e. f 30 September 2004 • Lawyers • Accountants • Company Secretaries • • FIU- Malaysian Experience

Issues and Resolutions 12

Issue and Resolutions Issue: Building stakeholders’ confidence Resolutions: Regular consultation with the relevant supervisory and regulatory authorities Agreement sought on the implementation strategies Guidelines on AML/CFT issued by relevant regulatory and self-regulatory authorities AMLA briefing sessions Adequate manpower in the FIU 13 FIU- Malaysian Experience

Issues and Resolutions 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 14 FIU- Malaysian Experience

Financial Intelligence System (FINS) n To facilitate speedy and efficient submission of STRs or Account Statements (when the need arises) from the reporting institutions through secure online environment n To ensure that submitted information is handled with high security and confidentiality without possible means of interruption throughout the transmission 15 FIU- Malaysian Experience

Intelligence Process Reporting Institution FIU Analysis Related Agencies Foreign FIUs Exchange of information Data Submission Database Provide input Analyses information Investigating Agencies Information for prosecuting 16 Prosecuting Agency FIU- Malaysian Experience

MR. JOHNNY DOE MR. RUDY FIASCO BANK Z OVERSEAS ARRESTED BANK Y OVERSEAS Inward Transfer Outward Transfer MR. JOHNNY DOE MR. JOHN DOE BANK A BERHAD BANK B BERHAD BANK C BERHAD ROYAL MALAYSIAN POLICE FIU Bank Negara Malaysia 17 MR. RUDY FIASCO FIU- Malaysian Experience

Issues and Resolutions Issue: Ensuring compliance among reporting institutions Resolutions: Establishing a comprehensive legal framework that consists of: regulatory/ supervisory compliance enforcement 18 FIU- Malaysian Experience

Ensuring Compliance LEGAL FRAMEWORK REGULATORY FRAMEWORK COMPLIANCE FRAMEWORK ENFORCEMENT FRAMEWORK Supervisory & Regulatory Agencies Reporting Institutions Enforcement Agencies • Guidelines • Supervisory Framework • Informal Enforcement Framework Compliance Programme 19 AMLA Investigation Reference Guide FIU- Malaysian Experience

Supervisory Framework Internal Control Management Oversight Management Information System Policies and Procedures Human Resource and Training 20 FIU- Malaysian Experience

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 high risk areas to be reviewed 21 and highlight FIU- Malaysian Experience

Issues and Resolutions Issue: Building expertise among stakeholders Resolutions: Conduct regular briefing sessions Collaborate with training institutes Collaborate with international bodies for specialised training 22 FIU- Malaysian Experience

Building expertise FIU Internal Reporting Institutions • Awareness programme • Training in collaboration with training institutes External SRAs, SROs and LEAs • Awareness programme • Training in collaboration with training institutes and international bodies 23 International Orgns. (ASEM, APG) • Specialised training programmes • Training in collaboration with international bodies FIU- Malaysian Experience

Issues and Resolutions Issue: Compliance with international standards Resolutions: Membership and participation in various international groups Benchmarking – compliance with FATF’s 40+9 Recommendations Information sharing (Mo. Us) Mutual legal assistance 24 FIU- Malaysian Experience

Challenges 25

Challenges Organisational effectiveness Implementation of FATF 40+9 Recommendations Timely response to emerging ML/TF trends 26 FIU- Malaysian Experience