1 PAGE FOR INTERNAL CIRCULATION & TRAINING PURPOSES ONLY CFE/STF/AML_CFT/03/04/2016V1
ANTI-MONEY LAUNDERING & COUNTER FINANCING OF TERRORISM (AML/CFT)
FRAMEWORK AND GUIDELINES
Agent’s Reading Material
2016
Disclaimer: “This reading material is purely used for the internal agency of Great Eastern Life Assurance (Malaysia) Berhad. All or any part of the contents of this reading material shall not be used directly or indirectly for soliciting insurance business, policyholder services and/or facilitating any other form of communications with any external party whatsoever. This information is correct as at 03/04/2016
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COURSE OBJECTIVES
To create awareness amongst agents and employees on Anti-Money Laundering and Counter Financing of Terrorism (AML/CFT) legislation and the regulatory guideline derived from it and appreciate its importance.
To create understanding of the AML/CFT framework that determines the AML/CFT policy and standards in the Company.
To create an understanding on the impact of money laundering and terrorist financing to the Company.
ANTI-MONEY LAUNDERING & COUNTER FINANCING OF TERRORISM (AML/CFT)
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SCOPE OF COVERAGE
Definitions of Money Laundering & Terrorist Financing (ML/TF)
The Anti-Money Laundering/Counter Financing of Terrorism (AML/CFT) Legislation & Bank Negara Malaysia (BNM) Guidelines
The AML/CFT Framework
Reporting Structure
Suspicious Cases – Modus Operandi
Other developments on AML/CFT
ANTI-MONEY LAUNDERING & COUNTER FINANCING OF TERRORISM (AML/CFT)
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A process whereby criminals attempt to hide & disguise the true origin and ownership of the proceeds derived from criminal activities to give it a legitimate appearance.
“This is a process to make illegitimate income appear legitimate thereby avoiding prosecution, conviction &
confiscation of the criminal funds.”
Definition of Money Laundering
ANTI-MONEY LAUNDERING & COUNTER FINANCING OF TERRORISM (AML/CFT)
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The definition of Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (“AMLA 2001”) states that Money laundering is the act of a person who: a) Engages, directly or indirectly, in a transaction that involves proceeds
from any unlawful activity.
b) Acquires, receives, possesses, disguises, transfers, converts, exchanges, carries, disposes, uses, removes from or brings into Malaysia 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 any unlawful activity.
Definition of Money Laundering Under
AML/CFT Legislation
ANTI-MONEY LAUNDERING & COUNTER FINANCING OF TERRORISM (AML/CFT)
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The typical characteristics of money launderers are:-
Focused on intent
Innovative / Knowledgeable
Rich
Prepared to lose some money
Who are the Money Launderers?
ANTI-MONEY LAUNDERING & COUNTER FINANCING OF TERRORISM (AML/CFT)
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Also called
“whitewashing”.
Conversion /
movements to
separate the illicit
proceeds from their
source
• To disguise
audit trail
• Provide an
appearance of
legitimacy
• Provide
anonymity
Introducing illegal profits into the financial system
After the Layering process, the money are then
reintroduced into the financial / business
system - for example: investments in business,
purchase of assets
Money Laundering Process
ANTI-MONEY LAUNDERING & COUNTER FINANCING OF TERRORISM (AML/CFT)
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Financing of terrorism generally refers to carrying out transactions involving funds that may or may not be owned by terrorist, or that have been, or are intended to be, used to assist the commission of terrorism. More detailed description of financing of terrorism includes :
1) providing or collecting properties for carrying out an act of
terrorism
2) providing services for terrorism purposes 3) arranging for the retention or control of terrorist properties or dealing with terrorist properties.
Definition of Financing of Terrorism
ANTI-MONEY LAUNDERING & COUNTER FINANCING OF TERRORISM (AML/CFT)
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Purpose : To ensure that insurance/takaful industry has a strong control and
initiative on anti-money laundering efforts.
Current AML/CFT Legislation and Regulation for insurance/takaful industry
include :
AML/CFT Legislation and Regulation
Note: The regulatory guideline was issued in accordance with the AMLA 2001 and Financial Action Task Force’s (FATF) 40 Recommendations for Implementation with effect from 15 September 2013. For more details on AML/CFT Legislation and Regulation, please visit: http://amlcft.bnm.gov.my/AMLCFT07.html
Anti-Money
Laundering, Anti-
Terrorism
Financing and
Proceeds of
Unlawful Activities
Act 2001 effective
on 15 /1/ 2002
(AMLA 2001)
previously known as
The Anti-Money
Laundering and Anti-
Terrorism Financing
Act 2001
1) JPI/GPI 27 -
Guidelines on Anti-
Money Laundering
Measures for the
Insurance Industry -
issued on
25/4/2001
2) JPI 20/2004 –
AMLA 2001
Verification
Procedures –
issued on
21/8/2004
1)
1)UPW/GP1 : Standard
Guidelines on Anti Money
Laundering and Counter
Financing of Terrorism
(AML/CFT).
2) UPW/GP1 [2]: Anti-
Money Laundering and
Counter Financing of
Terrorism (AML/CFT)
Sectorial Guidelines 2 for
Insurance and Takaful
Industries.
Originally Issued on
15/11/2006 and revision
on 3 /2/2009
1) BNM/RH/STD 029 –
1 Anti-Money
Laundering and
Counter Financing of
Terrorism (AML/CFT) –
Insurance and Takaful
(Sector 2)
Issued on 4/9/2013 and
took effect on
15/9/2013
New
Regulations Legislation
ANTI-MONEY LAUNDERING & COUNTER FINANCING OF TERRORISM (AML/CFT)
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Government Agencies
Regulator Reporting
Institutions
Insurers Insurers
National Coordination Committee: • Companies Commission of Malaysia
• Labuan Financial Services Authority
• Registrar of Societies
• Securities commission
• Inland Revenue Board
• Immigration Department
• MACC
• Royal Malaysian Customs
• Royal Malaysia Police
• Ministry of Finance
• Ministry of Foreign Affairs
• Home Ministry
• Ministry of Domestic Trade
Cooperatives & Consumerism
• Attorney-General Chambers
• Ministry of International Trade &
Industry
Bank Negara
Malaysia
(BNM)
Banks
Deposit-Taking
Institutions
Money Services
Business
Insurer
(Great Eastern)
Collaboration
* Full list in 1st schedule of AMLA
2001.
Competent Authority
appointed oversee the
enforcement of AMLA 2001
AMLA 2001 & the Governing Guideline
Governing Legislation and Regulation
ANTI-MONEY LAUNDERING & COUNTER FINANCING OF TERRORISM (AML/CFT)
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Defined as an illegal activity which is related, directly or indirectly to ML/TF: any of the serious offences specified in the Second Schedule of
AMLA 2001. An attempt to commit any of those offences, or Abetment of any of those offences.
The AMLA 2001 covers serious offences committed in Malaysia and offence committed in a foreign country which would also constitute a serious offence in Malaysia. The serious offences are as set out in the 2nd schedule of AMLA 2001, taken from 42 legislations.
What is a Serious Offence?
ANTI-MONEY LAUNDERING & COUNTER FINANCING OF TERRORISM (AML/CFT)
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2nd Schedule of AMLA 2001:
What is Serious Offence?
Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001. International Trade in Endangered Species Act 2008.
Anti-Trafficking in Persons and Anti-Smuggling of Migrants Act 2007. Islamic Financial Services Act 2013.
Betting Act 1953. Kidnapping Act 1961.
Capital Markets and Services Act 2007. Kootu Funds (Prohibition) Act 1971.
Child Act 2001. Labuan Financial Services and Securities Act 2010.
Common Gaming House Act 1953. Labuan Islamic Financial Services and Securities Act 2010.
Companies Act 1965. Malaysia Anti-Corruption Commission Act 2009.
Control of Supplies Act 1961. Malaysia Palm Oil Board (Licensing) Regulations 2005.
Control of Supplies Regulations 1974. Malaysian Timber Industry Board (Incorporation) Act 1973.
Copyright Act 1987. Moneylenders Act 1951.
Corrosive and Explosive Substances and Offensive Weapons Act 1958. Money Services Business Act 2011.
Customs Act 1967. Optical Discs Act 2000.
Dangerous Drugs Act 1952. Pawnbrokers Act 1972.
Dangerous Drugs (Forfeiture of Property) Act 1988. Penal Code.
Development Financial Institutions Act 2002. Sales Tax Act 1972.
Direct Sales and Anti-Pyramid Scheme Act 1993. Service Tax Act 1975.
Excise Act 1976. Strategic Trade 2010.
Explosives Act 1957. Strategic Trade (United Security Council Resolutions) Regulations 2010.
Financial Services Act 2013. Trade Descriptions Act 2011.
Firearms (Increased Penalties) Act 1971. Wildlife Conservation Act 2010.
Income Tax Act 1967. Malaysian Palm Oil Board Act 1998
ANTI-MONEY LAUNDERING & COUNTER FINANCING OF TERRORISM (AML/CFT)
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Some examples of serious offences include :
Corruption/ bribery.
Smuggling offences.
Trafficking in firearms/ drugs.
Unlawful gambling, deposit taking or investment schemes.
Robbery/ murder/ theft/ extortion/ kidnapping/ abduction.
Infringement of copyright.
Person living on or trading in prostitution.
Criminal breach of trust (CBT)/ cheating/ forgery.
Insider trading/ market manipulation.
Carrying on banking/FI/merchant banking/discount house/ money-broking, insurance, insurance broking, adjusting business, Takaful business without valid license.
What is Serious Offence?
ANTI-MONEY LAUNDERING & COUNTER FINANCING OF TERRORISM (AML/CFT)
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Key Provisions in AMLA 2001
Section 4
Description Implication
Any person who engages in or attempts to engage in, or abets the commission of money laundering, commits an offence
5 times the value of proceeds or RM5 million (whichever is higher), and 15 years imprisonment.
Section 20
Description Implication
The provision overrides any obligation as to secrecy or other restriction on the disclosure of information imposed by any written law or otherwise.
No institution under the law can withheld information of suspected person from investigating officer.
ANTI-MONEY LAUNDERING & COUNTER FINANCING OF TERRORISM (AML/CFT)
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Key Provisions in AMLA 2001
Section 24 – Protection Of Person Reporting
Description Implication
No civil, criminal or disciplinary proceedings shall be brought against a person who discloses or supplies any information unless it is done in bad faith.
Person who aids in the investigation by disclosing or supplying information will be protected by the law.
Section 22
Description Implication
Officer of a Reporting Institution shall take all reasonable steps to ensure compliance with AMLA 2001.
≤ RM1 million or ≤ 3 years imprisonment or both
• in the case of continuing offence, a further fine but < RM3K for each day or part thereof during which the offence continues to be committed.
ANTI-MONEY LAUNDERING & COUNTER FINANCING OF TERRORISM (AML/CFT)
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Key Provisions in AMLA 2001
Section 27
Description Implication
Failure to appear before the examiner ≤ RM3 million or ≤ 5 years imprisonment or both
Section 26
Description Implication
Failure to provide document or information requested by the examiner.
≤ RM3 million or ≤ 5 years imprisonment or both
ANTI-MONEY LAUNDERING & COUNTER FINANCING OF TERRORISM (AML/CFT)
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Key Provisions in AMLA 2001
Section 37 (3) – Failure to Deliver Property, Record, Report Or Document
Description Implication
Failure to provide any property/ record/ report/ document that is required by an investigating officer.
Liable upon conviction ≤ RM3 million or ≤ 5 years imprisonment or both
Section 35 – Tipping Off (Leakage of information)
Description Implication
If you disclose any information to anyone about a proposed investigation.
Liable upon conviction ≤ RM3 million or ≤ 5 years imprisonment or both
* in the case of continuing offence, a further fine but ≤ RM1K for each day during which the offence continues after conviction.
ANTI-MONEY LAUNDERING & COUNTER FINANCING OF TERRORISM (AML/CFT)
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Key Provisions in AMLA 2001
Section 41 – Investigation Officer May Arrest Without Warrant
Description Implication
Investigating officer may arrest without warrant a person whom he reasonably suspects to have committed or to be committing any offence under this Act.
This is not necessary done only by the police but agents from other law enforcement agencies like MACC.
Section 38 – Power To Seize Of Property, Record Or Documents
Description Implication
An investigation officer may seize, take possession of and retain for such duration as he deems necessary, any property, record, report or document produced before him in the course of an examination.
In previous cases, certain records, reports and documents has been requested by IOs from MACC where the original are taken & retain.
ANTI-MONEY LAUNDERING & COUNTER FINANCING OF TERRORISM (AML/CFT)
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Key Provisions in AMLA 2001
Section 86
Description Implication
For penalty that is not expressly
provided for any offences under AMLA
< RM1 million
Section 92
Description Implication
Further empowers BNM to compound
in cases of continuing offence
Compound rate of 50% of the
maximum fine amount
ANTI-MONEY LAUNDERING & COUNTER FINANCING OF TERRORISM (AML/CFT)
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Section 87 – Offence Committed By Any Person In An Official Capacity
Description Implication
Where an offence is committed by a corporation /
association, the director, controller, officer / partner /
person concerned in management is deemed guilty
unless he proves that :
The offence is committed without the consent or
connivance; and
He exercised such diligence to prevent the
commission of the offence as he ought to have
exercised, having regard to the nature of his function
in that capacity and to the circumstances.
For a company like
Great Eastern, the
liable person could be
the Compliance
Officer, Head of
Department and/or
persons responsible
for certain tasks
Key Provisions in AMLA 2001
ANTI-MONEY LAUNDERING & COUNTER FINANCING OF TERRORISM (AML/CFT)
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As Required by BNM’s AML/CFT Guidelines & Group
AML/CFT Policy:
Risk Based Approach Application
Customer Acceptance Standard
Customer Due Diligence Standard
On-Going Monitoring Standard
AML/CFT Training Standard
Record Keeping Practices
Suspicious Transaction Reporting
Combating The Financing Of Terrorism
The AML/CFT Framework
ANTI-MONEY LAUNDERING & COUNTER FINANCING OF TERRORISM (AML/CFT)
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Customer Acceptance Standard
Reporting Institutions are required to develop policy and procedures to
address the establishment of business relationship with the customer.
The objective is to address different risks posed by each type of customer
through profiling.
Risk profiling – Factors to consider:
the origin of the customers and location of business
background or profile of the customer
nature of the customer’s business
structure of ownership for a corporate customer
any other information suggesting that the customer is of higher risk
The AML/CFT Framework
ANTI-MONEY LAUNDERING & COUNTER FINANCING OF TERRORISM (AML/CFT)
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Customer Due Diligence Standard – Know Your Customers (KYC) Identification & Verification
Determine the true identity of prospect, to verify and be satisfied that:
Identity of customer is genuine. The Company shall not have any business dealings
with
i. anonymous person or any person using a fictitious name
ii. non-policy holder who does not transact in relation to an insurance policy issued
by the company
iii. financial institutions which do not have adequate controls against criminal
activities or shell banks
iv. any person and entities sanctioned/designated in the Monetary Authority of
Singapore (MAS) & BNM (Anti-terrorism Measures) regulations or other
applicable regulations issued by the relevant authorities.
Insurance/Takaful transaction to be undertaken is legitimate
Verify all parties to the contract – include any underlying principals that
policy/certificate owners are acting on behalf, all joint applicants to the contract,
principal shareholders and directors for group life policies/certificates and to include
verification of beneficiaries if they are not the policy/certificate owners.
The AML/CFT Framework
ANTI-MONEY LAUNDERING & COUNTER FINANCING OF TERRORISM (AML/CFT)
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The AML/CFT Framework
Generally, verification should be performed at the point of sale and via face-to-face contact.
Although the ultimate responsibility of CDD remains with the Insurance Company / Takaful
Operator, reliance is placed on agents/intermediaries as first point of contact to perform
Customer Due Diligence (CDD) at point of sale.
Amount of Premium Any amount (effective from 1 January 2014)
On who? Customer, its Beneficial Owner
and Natural Person appointed to
act on a customer’s behalf.
Beneficiary, Payee, Executors/
Administrators of an estate in
relation to death claims and
also to panel hospitals, panel
clinics and service provider
Identification When establishing business
relationship
At the point of nomination and
at the time of payout
Verification *When establishing business
relationship
Latest at the point of payout
Customer Due Diligence Standard – Know Your Customers (KYC)
ANTI-MONEY LAUNDERING & COUNTER FINANCING OF TERRORISM (AML/CFT)
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Current CDD Practices
Information and documents required to perform identification and verification
A.Individual Customers
Obtain at least the following information:
Full name
NRIC / passport number
Permanent and mailing address
Date and place of birth
Nationality
Occupation type
Name of employer & nature of business
To be substantiated / verified against :
NRIC for Malaysians/permanent residents
Passport for foreigners
A copy of the verified documents should be collected by agents/intermediaries and
retained by the insurer/takaful operator regardless of premium/contribution amount
(effective from 1 January 2014)
The AML/CFT Framework
Customer Due Diligence Standard – Know Your Customers (KYC)
ANTI-MONEY LAUNDERING & COUNTER FINANCING OF TERRORISM (AML/CFT)
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B. Corporate Customers
Understand the ownership and control structure in order to detect any unusual circumstances
concerning the changes to the company/business structure or ownership.
Furnish the following a copy of the following documents:
1) Memorandum/Article/Certificate of Incorporation/Partnership
2) Identification document of Directors/Shareholders/Partners (Form 24/Form 49,
may be accepted)
3) Board of Directors’/Directors’ Resolution
4) Authorisation for any person to represent the company/business
5) Identification document of authorised person
The AML/CFT Framework
Customer Due Diligence Standard – Know Your Customers (KYC)
ANTI-MONEY LAUNDERING & COUNTER FINANCING OF TERRORISM (AML/CFT)
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B. Corporate Customers (cont’d)
To identify the natural person(s) (directors/ shareholders) with equity interest of more than
25%. Where no natural person is identified, to identify relevant natural person who holds the
position of senior management of the corporation.
C. Clubs, Societies and Charities
Furnish the following documents:
relevant constituent documents (or other similar documents).
the identification of the office bearer.
authorisation for any person to represent the club, society or charity.
D. Legal Arrangements
Take reasonable measures to:
Understand the relationship among the relevant parties.
Obtain satisfactory evidence of its legal status the identity of the relevant parties.
The nature of their capacity and duties as trustee or nominee. (in Great Eastern,
we do not deal with Power of Attorney)
The AML/CFT Framework
Customer Due Diligence Standard – Know Your Customers (KYC)
ANTI-MONEY LAUNDERING & COUNTER FINANCING OF TERRORISM (AML/CFT)
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Know Your Customer (KYC)
For higher risk customers or in a more suspicious situation, further CDD measure known
as KYC is conducted. This is done through completion of the follow forms, depending on
the threshold of sum assured or annualized premium/contribution:
•Financial Questionnaire 1 – To be filled by agent on customer’s behalf. Details to be
completed includes purpose of insurance/takaful, proposer’s annual earned & unearned
income, and declaration of networth.
•Financial Questionnaire 2 – To be filled by customer. Details to be completed
includes, purpose of insurance/takaful, proposer’s annual earned & unearned income,
percentage of in company share (for company directors only), and relationship to life
assured/person covered (if different).
The AML/CFT Framework
Customer Due Diligence Standard – Know Your Customers (KYC)
ANTI-MONEY LAUNDERING & COUNTER FINANCING OF TERRORISM (AML/CFT)
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Customer Due Diligence Standard – ECDD
Enhanced Customer Due Diligence (ECDD)
The Company shall conduct enhanced due diligence on higher risk customers or
when establishing a business relationship with customers:
Whom are suspected of money laundering or financing of terrorism
Where there are doubts about the reliability or adequacy of previously
obtained information
An ECDD will include the following measures:
Obtaining more detailed information on the customer and through publicly available information, in particular, on the purpose of the transaction and source of funds and
Obtaining approval from the Senior Management before establishing any business relationship with the customer.
* Unwillingness of customer to cooperate may itself be a factor of suspicion. It is
the Company’s policy that underwriters shall not underwrite unless sufficient
identification evidence is provided.
The AML/CFT Framework
ANTI-MONEY LAUNDERING & COUNTER FINANCING OF TERRORISM (AML/CFT)
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POLITICALLY EXPOSED PERSON (PEP)
PEPs are foreign / domestic individuals being, or who have been, entrusted with prominent
public functions. E.g. heads of state or government, senior politicians, senior government
officials, judicial or military officials and senior executives of public organisations
The concern placed in dealing with PEPs lies with the possibility of such PEPs abusing their
public powers for their own illicit enrichment, especially in countries where corruption is
widespread
Agents are to inform/ disclose to the Company if the current or new customers are PEPs or
related to PEPs in the proposal form/agent’s confidential report
Company is required to take appropriate measures to establish the source of wealth and
source of funds of such person
The AML/CFT Framework
Customer Due Diligence Standard – ECDD
ANTI-MONEY LAUNDERING & COUNTER FINANCING OF TERRORISM (AML/CFT)
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AML/CFT Training Standard sets out the requirement for the Training & Awareness
Programme
Minimum training requirement includes:
New employees and agents. It is compulsory for all agents to undergo AML/CFT
Training within 2 years of joining the Company.
The Board of Directors and Senior Management team to ensure that there is
adequate training provided including promoting staff awareness on individual
AML/CFT obligations and penalties if they failed to discharge their duties properly
under the Act.
Refresher course will also be made available on regular basis for all staff (including
agents) who have attended the initial training.
Training Standard
The AML/CFT Framework
ANTI-MONEY LAUNDERING & COUNTER FINANCING OF TERRORISM (AML/CFT)
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Record Keeping Practices
• Records should be kept for a period of NOT LESS THAN 6 years from the
date an account has been closed or transaction has been completed or
terminated.
• Scope of record keeping extended to include accounts, business
correspondence and documents relating to an account, business
relationship, transaction or activity with a customer as well as result of any
analysis taken.
• Failing to comply, a fine of up to RM3 million or imprisonment to a term not
exceeding 5 years would be imposed.
• Agents are encouraged to inform the Company to update the customer’s
records when there are changes/updates in the customers’ personal
information including but not limited to their NRIC/passport number,
nationality, occupation/employment and nature of business.
The AML/CFT Framework
ANTI-MONEY LAUNDERING & COUNTER FINANCING OF TERRORISM (AML/CFT)
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Recognizing & Reporting Suspicious Transactions on ML/TF
(Section 14)
What is Suspicion? Subjective and there is no specific provision or definition in AMLA.
With effect from 9/3/2007, Reporting Institutions are also required to report any
ATTEMPTED transaction(s) that are suspicious (apart from reporting the completed transaction(s) that are suspicious).
Suspicious Transaction? What to Look Out For?
1. Transactions That Do Not Make Economic Sense
• Transactions in which the nature, size or frequency appears unusual.
• Transactions which are incompatible with the customer’s normal activity or beyond
the customer’s financial means.
The AML/CFT Framework
ANTI-MONEY LAUNDERING & COUNTER FINANCING OF TERRORISM (AML/CFT)
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2. Transactions Involving Unusual receipts or payment of funds
• Transactions whereby large or unusual premium/contribution payment in cash
is received from customer.
• Transactions which funds are paid or received through unrelated third party.
3. Others
• Abnormal patterns of top-ups and withdrawals for investment linked
policies/certificates.
Recognizing & Reporting Suspicious Transactions (Section 14)
The AML/CFT Framework
ANTI-MONEY LAUNDERING & COUNTER FINANCING OF TERRORISM (AML/CFT)
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Request for refund to be paid to unrelated 3rd party.
Change payment mode when requested to complete financial questionnaire.
Use of funds from 3rd
party (seemingly related) for Investment Linked top-up
and subsequently early cancellation/withdrawal.
Series of application of policy loans and repayments within a short time
period.
Unrealistic wealth compared with customer’s financial profile.
Staggered policies/certificate surrender (with small amount of surrender value
per policy/certificate, cumulatively, the surrender amount are huge) within
several months, with reason not satisfied with agent's services, which could
have been done in one occasion.
Large sum of cash premium/contribution payment.
Suspicious Cases – Modus Operandi
ANTI-MONEY LAUNDERING & COUNTER FINANCING OF TERRORISM (AML/CFT)
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Reporting Suspicious Transaction
BANK NEGARA MALAYSIA
Financial Intelligence Unit (FIU)
COMPLIANCE DEPARTMENT
Financial Crime Intervention Unit
KEY OPERATING DEPTS,
AGENTS & OTHER INTERMEDIARIES
Head Office or Branch Offices
In the event of any suspicious transactions detected, it is important to escalate to Compliance within 2 working days via the following communication channels:-
Email:
GELM/OACM: [email protected]
GETB : [email protected]
Fax: 03-48133798
Mail :
GELM & OACM
Compliance Dept, Level 10
Menara Great Eastern,
No. 303, Jalan Ampang,
50450 Kuala Lumpur.
The AML/CFT Framework
GETB
Compliance Dept, Level 3
Menara Great Eastern,
No. 303, Jalan Ampang,
50450 Kuala Lumpur.
ANTI-MONEY LAUNDERING & COUNTER FINANCING OF TERRORISM (AML/CFT)
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Sanction is a restriction or prohibition, imposed by one country or
group of countries forming an alliance (“sanctioning party”) to another
country, region, entity, vessel or an individual (“the sanctioned party”),
that is intended to coerce certain behaviours on the part of, or to
achieve a certain result with respect to, the sanctioned party.
There are various types of sanctions:
• Diplomatic
• Military
• Sports
• Trade
• Economic/Financial
Sanctions Compliance
ANTI-MONEY LAUNDERING & COUNTER FINANCING OF TERRORISM (AML/CFT)
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Diminishing the power and influence of regimes considered to be a
security threat or oppressive to their subjects
Cutting off international criminals, such as narcotics traffickers and
terrorists from the financial system
Preventing the proliferation of weapons of mass destruction
Economic/financial/trade sanctions aim to achieve domestic and
foreign policy goals set by national governments and international
bodies, including:
Sanctions Compliance
ANTI-MONEY LAUNDERING & COUNTER FINANCING OF TERRORISM (AML/CFT)
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• “Sanctioned Countries” refer to the countries which are subjected to a
comprehensive sanction program by the sanctioning party. Comprehensive
sanction generally prohibits all direct or indirect imports/exports, trade brokering,
financing or facilitating against most goods, technology and services.
• Currently, the following are deemed to be Sanctioned Countries (in line with
OCBC):
- Cuba;
- Crimea Region of Ukraine;
- Iran;
- Sudan;
- Democratic People’s Republic of Korea
(North Korea); and
- Syria
• “Sanctioned Person” refers to an individual or entity which is being sanctioned
by the sanctioning party, including the family members and close associates of
such individual or entity.
Sanctions Compliance
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Sanctioning Countries & Bodies
Apart from sanctions of United Nation Security Council (“UNSC”) which are
relating to terrorist financing and proliferation financing, sanctions from the
following countries and bodies shall also be observed and adhered to:
1. Bank Negara Malaysia (BNM) of any other relevant Malaysia government
agencies
2. Monetary Authority of Singapore (“MAS”) or any other relevant Singapore
government agencies
3. Office of Foreign Assets Control (“OFAC”) under US Treasury
4. European Union (“EU”)
Sanctions Compliance
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Sanctioning Countries & Bodies - Why OFAC and EU?
Although we may not be considered as “US Person” or “EU Member”, sanctions
imposed by OFAC and EU may apply extra-territorially and could have a bearing on
reputation and operations of Great Eastern if we are found violating the sanctions
either directly or indirectly.
Having said that, our parent company, OCBC, has operations in US, and any violation
by Great Eastern may have an adverse impact on OCBC. Furthermore, any
transaction that involves US dollars is by default subject to US jurisdiction as all US
dollar transactions must be cleared through the United States.
Therefore, we will not tolerate the use of our company for the conduct of criminal and
illicit activities.
The extra-territorial reach of sanctions from these bodies, e.g. OFAC or US
Government Agencies can be noticed from the various fines imposed on non-US
Banks.
Sanctions Compliance
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Sanctions Risk
Risk of violating financial and economic sanctions either directly or indirectly which
could have adverse impact to the company, including monetary fines, revocation of
business licence and designation as sanctioned entity.
Sanctions imposed by Malaysian government, Singapore government and
international bodies on certain countries, individuals or entities may expose a Great
Eastern Entity, the Great Eastern Group or even OCBC Group to sanctions risks if
we establish business relations with such countries, individuals or entities. [Direct]
In addition, individuals or entities whose activities contravene sanctions, embargoes
or similar measures imposed by Malaysian government, Singapore government and
international bodies may also expose a Great Eastern Entity, the Great Eastern
Group or even OCBC Group to sanctions risks if business relations are established
with such individuals or entities. [Indirect]
Sanctions Compliance
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Customers who are designated as terrorist or sanctioned by/under: UNSC; OFAC; EU; any other specified
terrorist or sanction list(s) as prescribed by BNM/MAS or the relevant local regulators. This would include
customers who are related or close associates (“RCA”) of the above persons. These are termed as “Designated
Persons”.
Natural customers, without valid residence status or permit issued by the government or authorities of the
host country of that GE Entity, who are from countries sanctioned by: UNSC; OFAC; EU; any other specified
sanction list(s) as prescribed by BNM/ MAS or the relevant local regulators.
Non-natural customers, not included under general licenses or exceptions, who are incorporated in
countries sanctioned by: UNSC; OFAC; EU; or any other specified sanction list(s) as prescribed by BNM/MAS
or the relevant local regulators.
Customers who are not from sanctioned countries but associated with parties who are sanctioned or from
sanctioned countries whose activities contravene sanctions, embargoes and similar measures imposed by:
UNSC; OFAC; EU; or any other specified sanction list(s) as prescribed by BNM/MAS or the relevant local
regulators
Sanction Compliance Program
Great Eastern Entity is not allowed to establish business relationship or have
any business dealings with the following sanctioned person. (Category A):
Sanctions Compliance
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Financial
Institution Provision of
financial services
Financial
Institution
Terrorists or
Sanctioned Persons
Provision of
financial services Terrorists or
Sanctioned Persons Clean
customers
Business
ties
Sanctions - Illustrations
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Breaching of US Sanctions
FINANCIAL INSTITUTION DATE OF FINE /
SETTLEMENT
FINE / SETTLEMENT
AMOUNT
VIOLATION
ABN AMRO May 2010 USD 673.5 Million Wire transfers violating Cuba, Iran, Libya, Sudan
sanctions
Barclays Bank
Aug 2010
USD 298 Million
Wire transfers violating Iran, Cuba, Sudan, Myanmar
sanctions
JP Morgan Chase Bank Aug 2011 USD 88.3 Million Wire transfers and gold bullion trades violating Iran,
Cuba, Sudan, Myanmar, WMD sanctions
ING Bank N.V. June 2012 USD 619 Million Wire transfers, Letters of credit violating Iran, Cuba,
Sudan, Myanmar sanctions
Standard Chartered Bank,
NY
Aug & Dec 2012 USD 667 Million Wire transfers, falsifying books and reports violating
Iran sanctions
HSBC Holdings Plc Dec 2012 USD 1.92 Billion Accusations that the bank transferred billions of
dollars for nations like Iran and enabled Mexican drug
cartels to move money illegally through its American
subsidiaries.
BNP Paribas July 2014 USD 9 Billion Allegedly breaking US Sanctions against trade with
Sudan, Iran and Cuba. Engaged in a complex and
pervasive scheme to illegally move billions through
US financial system.
Standard Chartered Bank,
NY
August 2014 USD300 Million Further penalty imposed for failing to tackle
compliance problems following the fine in 2012 .
Pricewaterhouse Coopers August 2014 USD25 Million and
suspended from some
consulting works.
Improperly altered a report on a Japanese bank’s
compliance with anti-money laundering laws.
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Group AML/CFT Policy
It is Great Eastern’s policy that we comply with the relevant requirements under
sanctions imposed by the following jurisdictions:
a) Monetary Authority of Singapore (“MAS”) or any other relevant Singapore
government agencies
b) Government or monetary authorities of the host countries where Great Eastern
operates in
c) United Nation Security Council (“UNSC”)
d) Office of Foreign Assets Control (“OFAC”) under US Treasury
e) European Union (“EU”)
• The above is in line with OCBC’s Sanctions Policy.
• Sanctioned persons shall be detected on a timely manner and there shall be no
business dealing with them.
Economic Sanctions
Other Developments on AML
ANTI-MONEY LAUNDERING & COUNTER FINANCING OF TERRORISM (AML/CFT)
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The Financial Action Task Force (FATF) (established in 1989) is an inter-
governmental body whose purpose is the development and promotion of
policies, both at national and international levels, to combat money laundering
and terrorist financing.
The Task Force is therefore a "policy-making body" which works to generate
the necessary political will to bring about national legislative and regulatory
reforms in these areas.
The FATF monitors members' progress in implementing necessary measures,
reviews money laundering and terrorist financing techniques and counter-
measures, and promotes the adoption and implementation of appropriate
measures globally.
AML WORLD BODY (FATF & APG)
Other Developments on AML
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Malaysia is a member of FATF and a member of Asia Pacific Group (APG) on money laundering. APG plays similar role as FATF but at a regional level.
FATF has established and revised 40 recommendations in 1996 for combating AML worldwide.
It has further introduced 9 special recommendations in 2001 to address financing of terrorism activities following Sept 11 incident.
In Feb 2012, FATF has revised its recommendations to 40 recommendations, to strengthen global safeguard and further protect the integrity of the financial system.
AML WORLD BODY (FATF & APG)
Other Developments on AML
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Need to be more vigilant.
Know the customer well.
Report to Compliance Secretariat if you
suspect or have reason to suspect that
transaction or attempted transaction
involved proceeds from an unlawful
activity or the customer is involved in
money laundering or financing of
terrorism.
What is Your Responsibility
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ANTI-MONEY LAUNDERING & COUNTER FINANCING OF TERRORISM (AML/CFT)