law amla presentation
TRANSCRIPT
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”
Reputation risk
Customer lose confidence, Adverse Publicity
Operational Risk
Direct / Indirect losses,
ConcentrationRisk
Sudden withdrawal, affecting liquidity
Legal Risk
Fine/Imprisonment or Both
Licensing Risk
Licence suspend/cancelled
Implication on Reporting Institutions
Legislative Framework
Anti-Money Laundering and Anti-Terrorism Financing Act 2001(AMLATFA 2001)
Reporting Requirement Section 14(a)Section 14(b)
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
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 ?
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)
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.
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)
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)
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)
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
Enhanced CDD for High Risk CustomersIndividuals
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
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
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
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
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
BNM STR Form
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
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 ”
AMLA Penalties
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
Failure to retain records for minimum 6 years from date
account closed or transaction has
been completed/ terminatedor
Tipping off to any otherperson of an investigation
that is likely to prejudice theinvestigation
Fine not exceeding RM1 million
or Imprisonment not exceeding 1 year
or BOTH
AMLA Penalties – Appendix 3
BANKS PENALIZED UNDER AMLA
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
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%
Conclusion1. 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
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
Disclaim NotesAll 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