Financial Crime World

Malaysian Financial Regulators Vow to Strengthen Measures Against Money Laundering and Terrorism Financing

Kuala Lumpur, [Date] - In an effort to address the significant challenges posed by money laundering and terrorism financing in Malaysia, Suruhanjaya Syarikat Malaysia (SSM) gathered industry experts to discuss the role of a robust anti-money laundering and counter-terrorism financing (AML/CTF) regime.

Challenges in the Malaysian AML/CFT Landscape

The National Risk Assessment 2020 identified fraud, corruption, smuggling, illicit drug trafficking, and organized crimes as the top risk areas. In his opening address, SSM acknowledged the staggering global cost of money laundering and terrorism financing, estimated at roughly $800 billion to $2 trillion each year. In Malaysia, scams and fraud posed the most substantial threat, resulting in losses exceeding RM5.15 billion in the past two years.

Corruption, an interconnected crime, has become systemic and facilitates other high-risk activities, such as human trafficking, forgery, and environmental crimes.

A Robust AML/CFT Regime is Essential in Combating Financial Crimes

Financial institutions and Designated Non-Financial Businesses and Professions (DNFBPs) serve as the first line of defense against money laundering and terrorism financing. By implementing rigorous customer due diligence, transaction monitoring, and Know Your Customer practices, these organizations protect the system from criminals’ exploitation.

Addressing the Challenges in the Fight Against Financial Crimes

The fight against financial crimes has become increasingly complex due to technology and borderless transactions.

  • Technology: Criminals mask their financial activities using anonymous virtual assets and online payment systems.
  • Transnational Crimes: Enforcement has a territorial limitation, presenting challenges when investigating complex crimes that cross borders.
  • Professional enablers: Lawyers, accountants, and company secretaries have increasingly become instrumental in hiding criminals’ identities.

Strengthening Relationships and Coordination Mechanisms

To address these challenges, Malaysia will strengthen its relationships and coordination mechanisms with regional and global authorities.

  • International Collaboration: The Malaysian FIU can exchange vital financial intelligence with over 160 foreign Financial Intelligence Units.
  • Company Secretaries: Due diligence practices, record-keeping, and information management systems have improved, but heightened vigilance and increased STR submissions from this sector are needed.

Refining AML/CFT Regimes

As the financial landscape evolves, it is essential to continuously refine AML/CFT regimes. Strengthening private sector capabilities through comprehensive training, robust compliance programs, and advanced technological solutions will help combat the exponential rate of financial crime activity. Policy reviews will adapt and accommodate emerging risks while ensuring alignment with international standards.

A Positive review from the FATF

In preparation for the Financial Action Task Force’s mutual evaluation review of Malaysia in 2024, the country aims to adopt effective AML/CFT measures. A positive evaluation from FATF would enhance Malaysia’s credibility as a reliable and trusted financial hub, stimulating foreign investments and ultimately bolstering economic growth.

Collaboration is Key

Industry leaders from various sectors, including CEOs, accountants, lawyers, and company secretaries, attended the event, emphasizing the importance of collaboration between regulators, law enforcement authorities, and reporting institutions. Effective detection, analysis, enforcement, knowledge-sharing, and capacity building are crucial components for unmasking financial crimes.