CURRENT SITUATION OF CORRUPTION AND MONEY LAUNDERING IN MALAYSIA COUNTRY REPORT ON CURRENT SITUATION OF CORRUPTION AND MONEY LAUNDERING IN MALAYSIA

Respondents Corruption : Malaysia Anti-Corruption Commission Money Laundering : Central Bank of Malaysia

Prevalence Of Corruption Moderate and widespread among the public sectors Slightly lower than previous years CPI does not fairly reflects the reality of corruption 2011 : score 4.3 / rank 60 2012 : score 49 / rank 54 GII does not fairly reflects the reality of corruption

Tolerant level Towards Corruption The country’s population moderately intolerant towards corruption Steps taken by the govt against corruption - strong Corruption as one of the 6 National key Result Area Enhance Enforcement agencies Combat grand corruption Transform Auditor General Reporting process; fast-tracking access to AG PA report (thrice yearly), Action Committee, Online dashboard, Putrajaya Inquisition Enhance govt procurement process; myporecurement portal Raise public support and enhance punlic education

Pattern Of Corruption Unpredictable Occur equally in public and private entities

Types Of Corruption Most prevalent : Petty, grand & corruption at enterprise level Most common types(1-9): CBT, bribery, kickback, abuse of position, influence peddling, nepotism, embezzlement, extortion, forgery Most corrupted sector(1-13) : Law enforcement, customs, state-owned enterprise, local govt, public service delivery, agriculture, environment, health, education, legislature, energy, judiciary, taxation Greatest probability of corruption occurring at the government level : Procurement contracts, licensing, public fund disbursement procedures, electoral irregularities, revenues(taxes) collection

Petty Corruption Prevalence : moderate Most likely involve rank and file employees

Grand Corruption Prevalence : Low Most likely people involved : specific business interest and / or political group

Corruption At Budgeting Level Corruption during bugdet formulation is primarily grand of political corruption : neither agree nor disagree Unchecked and excessive executive discretion in budget process tends to create opportunities for political corruption : agree Public Financial Management System weakness during budget formulation can increase the administrative corruption during budget execution : agree

Main Cause Of Corruption To become rich as quick as possible Unclear rules and loopholes for manipulation Culture, customs and habits of giving bribes to get things done Complicated and cumbersome administrative procedures Low salary levels Rapid population and economic growth Lack of financial rules and procedures Absence, weakness or failure in regulatory and legal system to combat corruption

Main Cause Of Corruption “ Actually the main cause of grand corruption and petty corruption is derivrd from the patronage-client system” Answer : Strongly agree “ Weak accounting practices, including lack of timely financial management are conditions favorable for corruption

Consequences of Corruption Damage done by corruption to the govt budget – Very serious Damage done by corruption to the private sector - Very serious Damage done by corruption to the citizens - Very serious

Corruption’s Proceed Mostly used to ; (1) Acquire assets (2) Invest in real estate (3) Bank deposits (4) Leisure, social activities (5) Stock investment

Enforcement by Anti-Corruption Agency In terms of monitoring, priority is always essential

Management of Complaints Complaints lodged with the agency is given highest priority Recognize the role of whistle blower as extremely important Whistle blowing a very effective avenue to lodge complaints of corruption

Current Situation of Money Laundering Manageable level Partially disagree : ML tends to increase in recent years Partly agree : ML tends to be more sophisticated

Pattern of Money Laundering Main pattern : Other The common methods for ML include placement in banking system, using nominees of family members, setting up front companies and use cash transactions to conceal money trails Segment having the highest risk of ML (i) Money service business (2) Finance, banking (3) Real estate

Pattern of Money Laundering Most common method of ML 1). Cash transaction 2). Money exchange 3). Remittance 4). Through financial institutions 5). Casino 6). Real estate Environment favorable for ML - International economic integrating - Use of cash and illegal money transfer

Offences Associated With Money Laundering Embezzlement Corruption Drugs Amount of monetary involved : More than USD100M

Root Cause of Money Laundering Avoiding prosecution Become legitimate Evade taxes Hide illegal accumulated wealth Increase profit

Consequences of Money Laundering Increase crime and corruption Weakened financial institutions Compromised economy and private sector Negative impact on foreign investment Reduce govt. tax revenue and weakened govt. control over the economy ML caused serious but manageable economic and social consequences Have serious impact on national security & national reputation

General Assessment of ML With effective Anti-Money laundering/Counter Financing of Terrorism (AML/CFT) framework and countermeasures in place, money laundering in Malaysia is currently at manageable levels.

Thank You