Financial Crime World

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Anti-Money Laundering and Counter-Terrorist Financing Measures in Malaysia

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Key Findings

The Financial Action Task Force (FATF) and Asia-Pacific Group on Money Laundering (APG) have conducted a comprehensive review of anti-money laundering (AML) and counter-terrorist financing (CFT) measures in Malaysia. Here are the key findings:

  • Customer Due Diligence (CDD):
    • RIs generally conduct list-based screening as part of their CDD, both when onboarding customers and at the time of transactions.
  • Sanctions Screening:
    • Supervised RIs subscribe to transaction and account monitoring systems to assist with sanctions screening, reflecting improved processes for targeted financial sanctions against terrorism.
  • Higher Risk Jurisdictions:
    • Supervisors have guided RIs regarding higher-risk jurisdictions identified by the FATF. Supervised RIs have procedures in place to limit services provided to particularly high-risk jurisdictions (Iran and DPRK).
  • Reporting Suspicious Transactions (STRs):
    • The FINS system supports timely and accurate reporting of STRs, with regular contact between RIs and the FIU on the quality of STRs.
  • Quality of Reports:
    • Malaysian authorities are broadly content with the number and quality of STRs made by FIs but wish to see improvements in the quality of reports filed by MSBs (MVTS and money changers).

Recommendations

To further strengthen AML/CFT measures, the following recommendations have been made:

  • Guidance on Higher Risk Jurisdictions: Further guidance is needed for RIs on identifying and mitigating risks from high-risk jurisdictions, going beyond off-boarding.
  • Identification of PEPs: More considered guidance is required for identifying family members and close associates of Politically Exposed Persons (PEPs).
  • Improvement of STR Quality: Improvements to the quality of STRs filed by MSBs (MVTS and money changers) are needed.

Conclusion

The report highlights a good standard of AML/CFT measures adopted in Malaysia, with some areas requiring further improvement. The FATF and APG will continue to monitor the implementation of these measures to ensure that they effectively prevent money laundering and terrorist financing.