Anti-Money Laundering in Malaysia - Example

ANTI-MONEY LAUNDERING IN MALAYSIA ANTI MONEY LAUNDERING IN MALAYSIA The elements of the offence(s) of money laundering The various essential elements of Anti-Money Laundering structure in Malaysia are explained below. In addition, they are critical to the compliance of AMLA (CHATAIN 2009).  i. Internal controls, Strategies and Accountabilities.’ Members who report institutions that are under AMLA are needed to set up and maintain procedures, policies and controls that are in accordance to AMLA and that helps in preventing money laundering and make sure that all the money laundering situations, transactions and activities are recorded. In addition, the Act requires that member firms and public members are required to develop, adopt and implement policies, procedures, programmes, and controls that can help in guarding and detecting further offences. Moreover, these programmes shall encompasses the procedures for the establishment of high integrity standards of workers and the establishment of systems that can help in evaluating personal, financial and employment history of these workers. In the implementation of the internal controls procedures are policies, the clientele should review and assess the existing internal policies and standards to ascertain that the policies and standards meet the AMLA requirements (BANK NEGARA MALAYSIA 1983). . ii. Know your customer or client It involves client identification. According to AMLA, there is need to impose requirement for member firms and public members to ensure all measures are taken to obtain and record all the relevant information on the real identity of people that are in these transactions particularly individuals who do not undertake commercial, industrial and financial operation in other nations. Additionally, member firms are required to establish procedures and policies that provide sufficient and reliable information that are key to the determination of all clients identify when developing and providing services to clients. Moreover, formal recognition of all the clients should be found and recorded. iii. Education and Training The firms are required to take proper procedures in ascertaining appropriate employees undergo training on the entire required jurisdiction that pertains to AMLA. Moreover, the member companies are required to obtain information that concerns implication of the offences, the available preventive measures and matters that deals with handling apprehensive transactions. In addition, it is crucial that the relevant awareness and trainings for instance on the internal controls, procedures and policies that are implementable and all the members appreciate the nature and background of AMLA. Furthermore, training should regularly be conducted in particular intervals, and relevant updates are provided to the client. iv. Monitoring and Detection The AMLRO ensures that there are adequate and necessary arrangements to ensure that the staff are aware of the procedures involved in reporting suspicion and transactions that are criminality by nature. Furthermore, detection arises when a person suspects or has the knowledge concerning the extent of money laundering features. AMLA outlines how suspicion is subjective, therefore, a certain degree of satisfaction is needed to objectify the issues that relate to money laundering. v. Reporting Obligations and Processes The Financial Intelligence Unit is mandated to assist and coordinate the enforcement and implementation of AMLA countrywide. In addition, all the suspicious transactions that are recorded should be wired to the Bank Negara. The Financial Intelligence Unit has designed form known as the Standard Suspicious Transaction Report that is recommended to AMLROs when filing reports. vi. Record keeping AMLA outlines the importance of keeping records in respect of the transaction activities, client identification, internal procedures and policies, training records as well as compliance programmes. All the information and records need to be kept securely, and there should be capabilities of their retrieval without delay. Among the registers that are to be kept include, client account documentation, client identification documentation, transaction documents and supporting ledger records, AMLRO internal reports, reports submitted to authorities and their correspondence and all the monitoring and reviews undertaken. Furthermore, adequate, reliable records must be kept for a period of 6b years from the date of the transaction. vii. Compliance programme Member firms are mandated to cooperate and work closely with the Bank Negara that is competent and works under AMLA and many other authorities concerning anti-money laundering and other threats such as anti-terrorism financing appraisals. Moreover, internal policies that regard anti-money laundering should be established and employed in all the member firms. These policies should be disseminated to the staff and other member firms. These member firms should develop an audit model and functions that would help in the evaluation of policies, controls and procedures in testing the compliance with the measures of AMLA. There should be an ongoing update of and reviews of policies and practices that are expected in the member firms. Non-compliance with the obligation is an offence and is punishable by a fine. Commitment of offence of Money laundering According to AMLA, the crime of money laundering is committed when a person does the following. a. When an individual engages in the transaction that are unlawful either directly or indirectly, and the instrumentalities of offence are illegal. b. When a person acquires, possesses, receives, transfers, disguises, converts, carries, exchanges disposes and uses illegal activities proceeds of an offence. c. Occurs when a person brings or removes offence instrumentalities from Malaysia. d. Conceals impedes and disguises the establishment if a real nation, location, origin, disposition, movement, title of, ownership of, offences instrumentalities. The legislation Act 613 of the Malaysian Laws provides and explores the money laundering offence and anti-terrorism financing and relevant proceeds that applies for every unlawful activities, The measures that are to be taken for the prevention and avoidance of terrorist funding and money laundering offences and to offer penalties for the terrorism financing on property used money laundering and finances derived from money laundering and other terrorism offences, , proceeds of an unlawful activity, terrorist property and offence instrumentalities, and for incidental matters thereto and therewith (ADMINISTERED LEGISLATION. (n.d.). Retrieved March 31, 2015). In the money laundering act, there are various subsections that explore the legislation that concerns the issues and punishments that are applicable. The law outlines the description of the legal definition that explains the offence. In regard, the law contains sections such as Money Laundering Offences, Financial Intelligence, Reporting Obligation, Cross Border Movements, Investigation, Freezing, Seizure and Forfeiture, and Miscellaneous (MITSILEGAS 2003). . Examples of Money Laundering Cases Sentencing of the Texas men involved in Drug Distribution Conspiracy On 9 of February 2015, in Texas at Wichita Falls, Rodolfo Trevino, of was vindicated and is serving a sentence of 110 months.. In June of 2014, Trevino was found guilty of the offence of conspiracy to hold with the intention to dispense and issue cocaine base and crime of money laundering. In addition, Trevino was ordered to forfeit and surrender a residence, firearm, two vehicles, and an assortment of ammunition. In the mid of December 2014, defendant Rene Villastrigo, Jr. from Wichita Falls, was also sentenced to 2 years six months in prison. He was found guilty to a conspiracy to acquire with intent to distribute and issue cocaine. According to documents from the courts, in the beginning of 2012 and continuing up to April 18 f o2014, Villastrigo and Trevino and schemed with others to acquire with the objective to give out cocaine and cocaine base. Trevino frequently toured McAllen, where he employed another person to convey drugs to Wichita Falls from McAllen. Trevino also employed Villastrigo to lease a house in Wichita Falls to stock up and repackage the drugs for supply. Trevino placed the drug money he acquired into his bank accounts in Wichita Falls and later withdrew those deposits at McAllen area, aiming transactions to obscure his drug trafficking action. Sentencing of Two Men involved in Distribution Ring of Cross-Country Marijuana On 9 of March 2015 at Phoenix, in Arizona, two criminal defendants were criminalised for their positions in a cross-country networks in marijuana distribution ring. Darius Blackwell, was sentenced to 8 years 14 months in prison, Grady Blackwell, was convicted to 5 years in jail. Both defendants formerly were found guilty of the plot to hold marijuana with intention to issue and plan to assign money laundering. According to their appeal agreements, the Blackwells contributed in a conspiracy to release the marijuana through the Postal Service. Their group bought marijuana in Arizona, sent it through emails it right through the United States, mainly to Georgia, and then agreed for the money generated to be sent to Arizona. Shipping data and attacks show that more than 50 kilogrammes of marijuana were sent back in this fashion. Furthermore, seven additional bank accounts were operated in March 2012 for the reason of in receipt of and convey the proceeds of the plot. Almost $410,000 was transferred into these accounts, and more than $395,000 was withdrawn. Typologies of money laundering The illegal trade in charcoal The demand for charcoal is increasingly rising. The demand for charcoal in Africa has remained constant, though weak and absent controls, export and over production make it a lucrative and an irresistible source of funds used by terrorists, criminals and armed political factions alike. David Carlisle investigates the degree of the unlawful deforestation, which is accountable and countermeasures that may verify the effectiveness . Companies go into insolvency for sorts of reasons, frequently due to marketable mischance although at times after intentional mismanagement and misconduct by directors looking for to earnings at the cost of creditors. Insolvency practitioners ought to proceed carefully, thus, says Jonathan Fisher QC, bearing in mind their liability under the money laundering legislation. Black gold’s black market The fuel that controls the manufacturing universal economy, oil is a revenue target for both organised terrorists and crime. David Carlisle investigates discloses and diversions in the global supply chain, illustration from the experience and knowledge of three authority and proposes how concurrence practitioners may help in restricting the illegal flows (CHANG 2005). Consequences of Money Laundering to Firms and Individual Economic Distortions Money laundering damages the growth of the legal private segment through the delivery of products priced at fabrication cost, making it consequently difficult for legal actions to contend. Criminals always turn enterprises and companies which were initially dynamic and vibrant into sterilized ones to launder their funds causing ultimately to reduce the general production of the economy. Besides, the laundering of money can be capable of producing random changes in money demand and high instability and volatility in global capital flows and foreign exchange Individual and Financial Sector Erosions Although the financial segment is a critical element in the financing of the legal, financial system, it always a low-cost path for criminals who are interested to launder their funds. Consequently, these flows of an enormous amount of laundered funds poured from the financial institutions may weaken the stability and constancy of financial markets. Moreover, money laundering may damage the reputation of financial institutions involved in the scheming resulting in a loss of trust and goodwill with stakeholders. In worst case scenarios, money laundering may also lead to bank failures and financial crises (INTERNATIONAL MONETARY FUND & WORLD BANK 2013).  Socioeconomic Costs The socio-economic sound effects of money laundering are diverse for the reasons that as dirty money generated from illegal activities are laundered into legal funds; they are used to expand existing criminal operations and finance latest ones. Supplementary, money laundering might lead to the transfer of financial and monetary authority from the market, citizen to criminals, the government and abetting thus crimes and corruption and crimes (CHAIKIN & SHARMAN 2009). Circumstances There are various conditions to the commitment of money laundering. These circumstances involve Knowledge, Suspicion, and reasonable justification for suspicion. These details are explained below. Knowledge These involve actual knowledge that regards require shutting mind concerning the truth on an amount of knowledge. In the current criminal courts, it is the real knowledge that suffices. Suspicion The suspicion should be grounded firmly on particular facts although there have to exist a degree of satisfaction that should not necessarily amount to belief but extend beyond speculation. In addition, it should be able to create an alert on the members mind. A suspicious transaction should be inconsistent; legitimate to the business and personal, activities, Therefore there is a need to know enough regarding the clients or the clients business to identify the transaction as either unusual or illegal (DURRIEU 2013). The various warning signs for illegitimate transaction include the size and magnitude of transaction as to whether it is inconsistent with the ordinary activities of the business, patterns of transactions and if the transaction is irrational {MONEY LAUNDERING - FINANCIAL ACTION TASK FORCE (FATF). (n.d.). Retrieved March 31, 2015). Reasonable Jurisdiction for Suspicion It is the same as the suspicion only that its more objective. In this case, there are factual circumstances where a sensible and honest person who engages in business that is regulated infers knowledge or form suspicion that another individual has been engaging in money laundering Risk issues There are various risks that apply to the anti-money laundering process. These risks include the risk that is linked to the product, risk inherent as a result of the client relationship and the risk that are associated with the distribution network. Residual risks These risks indicates the vulnerability associated with the insurance contracts that are related to money laundering for instance repurchases possibilities, cancellation or advance payments duration and nature of the services offered, ease of adjustments or capitalization in stipulations of the cover. The procedures and process of Anti-money laundering should reflect the differences in characteristics between establishment of measures necessary to understand the scope of the risk and the product itself. Risks that is inherent in the client relationship These are risks that are associated with clients due diligence. Although the idea came from the Banking sector it has been absorbed by financial operators, organizations, banks and investments and insurance companies. As regard, commercial operators are faced with the transaction and atypical risks. Client’s professional environment and individual socio-professional profile ar the initial warning factors to an underwriting contracts. Insurance builds up a competitive environment by requesting information such as clients assets, tax situation as well as his broker. Therefore, there result in difficulties in proper balance of exhaustive and detailed knowledge of the customer or the client, regulatory obligation and the commercial respects (HERNÁNDEZ-COSS 2008). . Additionally the risks can be geopolitical or geographical. It may be related to the corporation and legal structures. There is a need to assess and understand all relevant risks that present in the bank and structure, design and implement procedures and policies incommensurate with the particular risks. In conducting inclusive risk assessments in evaluating risks the bank should consider residual and inherent risks in that country. For instance bank, business and sectoral relationship to determine the risk profile and the available mitigation. Proper governance agreement Practical risk needs proper governance agreements to oversee policies and procedures for risk management and compliance. Explicit responsibilities should be allocated considering the governance structure and the policies and procedures are effectively managed. Adequate monitoring systems A bank monitoring system should be an appropriate accordance to the size, activities, risks present and the complexity. International banks effective control is necessarily automated. The IT system should be a particular situation, and it should document all decisions and demonstrates all the information needed by the supervisors and the external auditors. Conclusion The global menace of money laundering poses exceptional challenges to the regulation enforcement society. To track the evidentiary shadow of a money launderer, law enforcement agencies must recognize and employ apparatus and techniques that can assist them when crossing global boundaries. Joint agreements that need participants to approve anti--laundering actions and the local and world unions that have encouraged and developed a consistent approach to dealing with laundering have contributed to the steps made in addressing the issues posed. References ADMINISTERED LEGISLATION. (n.d.). Retrieved March 31, 2015, from http://www.bnm.gov.my/index.php?ch=en_legislation&pg=en_legislation_act&ac=879 ANTI-MONEY LAUNDERING AMENDMENTS SHOULD TIGHTEN MONITORING OF POLITICALLY EXPOSED PERSONS. (n.d.). Retrieved March 31, 2015, from http://www.malaysiaedition.net/anti-money-laundering-amendments-tighten-monitoring-politically-exposed-persons/ BANK NEGARA MALAYSIA. (1983). Annual report. [Kuala Lumpur], Bank. BUSINESS PUNDIT. (n.d.). Retrieved March 31, 2015, from http://www.businesspundit.com/10-most-notorious-money-laundering-cases-of-the-20th-century/ CASH-BACK AND OUT - MACAO. (n.d.). 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