Financial Crime World

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Financial Institutions Act: Guidelines for Compliance

Kuala Lumpur, Malaysia - The Financial Institutions Act (FIAMLA) has been amended to include guidelines for compliance with anti-money laundering and combating the financing of terrorism regulations.

Compliance Requirements

According to section 10(3) of the FIAMLA, any institution or person issued guidelines under subsection (2)(ba) or (c) shall comply with those guidelines. Failure to do so can result in a penalty not exceeding RM50,000 for each day on which such breach occurs, as from the date on which the breach is notified.

What is Money Laundering?

Money laundering is the process of concealing the source of illegally obtained funds through financial transactions and institutions. It involves three stages:

  • Placement: introducing illegal proceeds into the financial system
  • Layering: generating a series of financial transactions to separate these proceeds from their illegal source
  • Integration: reintroducing the illegal proceeds into the economy through legitimate-looking transactions

What is Terrorism Financing?

Terrorist financing refers to the act of providing funds or resources to support terrorist activities. Sources of terrorism financing can be:

  • Legitimate: donations from individuals or governments
  • Illegitimate: generating income through criminal activities

The methods used by terrorist organizations to obtain and move funds for their activities are similar to those used by criminal organizations to launder their funds.

Proliferation Financing

Proliferation of weapons of mass destruction involves the transfer or export of technology, goods, software, services, or expertise that can be used in programs involving nuclear, biological, or chemical weapons and their delivery systems. Proleration financing is a critical aspect of these activities, and international criminal networks may use the financial system to facilitate transactions and business deals.

Conclusion

These guidelines aim to ensure compliance with anti-money laundering and combating the financing of terrorism regulations, thereby maintaining the integrity of the financial system and preventing the misuse of funds for illegal purposes.