1 Malaysian FIU – Establishing an FIU, Issues and Resolutions By: Datuk Zamani Abdul Ghani Deputy Governor Bank Negara Malaysia 30 March 2005 International Seminar on Anti-Money Laundering

2Overview Establishing an FIU AMLA National Coordination Committee to Counter Money Laundering FIU in Bank Negara Malaysia Background Mission Organisational Structure Core partners of the FIU Issues and Resolutions Building Stakeholders’ Confidence Building Reporting Institutions’ Confidence in the FIU Ensuring Compliance among Reporting Institutions Building Expertise among Stakeholders Compliance with International Standards Challenges

FIU- Malaysian Experience 3 ANTI-MONEY LAUNDERING ACT 2001 (AMLA) April 2000   Inaugural meeting of National Co-ordinating Committee to Counter Money Laundering (NCC)   Malaysian Government approved AMLA concept paper   Dewan Rakyat (Lower House) passed AMLA   Dewan Negara (Upper House) passed AMLA   AMLA came into force October 2000 May 2001 June 2001 January 2002   AMLA (Amendment) Act 2003 gazetted as law December 2003

FIU- Malaysian Experience 4 National Coordinating Committee to Counter Money Laundering (NCC) Coordinate the implementation of the national anti-money laundering / combating the financing of terrorism (AML/CFT) programme Develop and ensure proper implementation of measures to counter money laundering based on internationally accepted standards Comprises 13 government Ministries and agencies Each agency is responsible to study, provide information, and report the development of any decision in the NCC meeting

FIU- Malaysian Experience 5 NCC Members Anti-Corruption Agency Attorney-General’s Chambers Companies Commission of Malaysia Inland Revenue Board Labuan Offshore Financial Services Authority Ministry of Domestic Trade and Consumers Affairs Bank Negara Malaysia Ministry of Finance Ministry of Foreign Affairs Ministry of Internal Security Royal Malaysian Customs Royal Malaysian Police Securities Commission

FIU- Malaysian Experience 6 FIU in Bank Negara Malaysia - Background Established in August 2001 FIU in Bank Negara Malaysia Established under the Anti-Money Laundering Act 2001 (AMLA) The Minister of Finance appointed Bank Negara Malaysia as Competent Authority under the AMLA on 15 January 2002 Powers and functions under the AMLA

FIU- Malaysian Experience 7 Powers accorded by AMLA To receive suspicious transaction reports and analyse information Share financial intelligence with enforcement agencies To compile statistics and records pertaining to compliance with AMLA Make recommendations to the relevant supervisory authorities, enforcement agencies and reporting institutions Create training requirements and provide training for reporting institutions

FIU- Malaysian Experience 8 Mission and PurposeMission Formulate and implement AML/CFT laws and measures to deter and detect financial crimes by gathering and sharing financial intelligencePurpose To facilitate the implementation and enforcement of the AMLA nationwide and to co-operate with other countries in the global fight against money laundering and serious crimes.

FIU- Malaysian Experience 9 Organisational Structure Deputy Director IntelligenceAnalysis Clerical Officers Senior Executives Strategic and Policy Compliance InvestigationSupport Relationship Management Deputy Director Director Managers Managers Managers Manager Manager Senior Executives Personal Assistant Admin. Assistant STRATEGIC DEVELOPMENT INTELLIGENCE MANAGEMENT

FIU- Malaysian Experience 10 Core functions To carry out roles and functions set out in the AMLA Spearhead national efforts in combating money laundering and serious crimes by providing value- added contributions to national and international supervisory/enforcement agencies Formulate and implement comprehensive national anti-money laundering regime Promote awareness of money laundering and terrorism financing issues and the AMLA Act as Secretariat to, and coordinate, the NCC’s initiatives

FIU- Malaysian Experience 11 Core partners of the FIU SUPERVISORY & REGULATORY AGENCIES Bank Negara Malaysia Securities Commission Labuan Offshore Financial Services Authority Companies Commission of Malaysia REPORTING INSTITUTIONS w.e.f. 15/01/2002 Commercial banks Merchant banks Finance companies Islamic banks w.e.f. 15./04/2002 Discount houses Insurers Insurance brokers Takaful operators Offshore banks Offshore insurers Offshore trust companies w.e.f 1/06/2002 Money changers w.e.f 15/01/2003 Pilgrims Fund Board Pos Malaysia Berhad Bank Simpanan Nasional Bank Kerjasama Rakyat Malaysia Berhad Licensed casino ENFORCEMENT AGENCIES Bank Negara Malaysia Royal Malaysian Police Royal Malaysian Custom Anti-Corruption Agency Companies Commission Of Malaysia Securities Commission FOREIGN FIUs FINANCIAL INTELLIGENCE UNIT FINANCE MINISTER w.e.f 31/03/2004 Stockbrokers Futures brokers w.e.f 30 September 2004 Lawyers Accountants Company Secretaries Bar Council Malaysian Institutes of Accountants Malaysian Institute of Chartered Secretaries and Administrators Other company secretaries bodies SELF-REGULATORY ORGANISATIONS

12 Issues and Resolutions

FIU- Malaysian Experience 13 Issue and Resolutions Issue: Building stakeholders’ confidence Resolutions: Regular consultation with the relevant supervisory and regulatory authorities Agreement sought on the implementation strategies Guidelines on AML/CFT issued by relevant regulatory and self-regulatory authorities AMLA briefing sessions Adequate manpower in the FIU

FIU- Malaysian Experience 14 Issues and Resolutions Issue: Building reporting institutions’ confidence in the FIU Resolutions: STR submitted in a highly confidential manner FIU deals directly with the compliance officer Compliance officers protected by civil, criminal or disciplinary actions under the AMLA for reporting STR Tipping off is an offence under the AMLA Financial Intelligence System (FINS) to ensure efficient and secure reporting

FIU- Malaysian Experience 15 Financial Intelligence System (FINS) To facilitate speedy and efficient submission of STRs or Account Statements (when the need arises) from the reporting institutions through secure online environment To ensure that submitted information is handled with high security and confidentiality without possible means of interruption throughout the transmission

FIU- Malaysian Experience 16 Intelligence Process Investigating Agencies Prosecuting Agency Data Submission Database Analysis Foreign FIUs Related Agencies Reporting Institution Information for prosecuting Exchange of information Provide input Analyses information FIU

FIU- Malaysian Experience 17 Inward Transfer BANK A BERHAD BANK Z OVERSEAS FIU Bank Negara Malaysia MR. JOHN DOE MR. RUDY FIASCO ROYAL MALAYSIAN POLICE BANK B BERHAD BANK C BERHAD MR. JOHN DOE MR. JOHNNY DOE ARRESTED BANK Y OVERSEAS MR. RUDY FIASCO Outward Transfer

FIU- Malaysian Experience 18 Issues and Resolutions Issue: Ensuring compliance among reporting institutions Resolutions: Establishing a comprehensive legal framework that consists of: regulatory/ supervisory compliance enforcement

FIU- Malaysian Experience 19 Ensuring Compliance LEGAL FRAMEWORK REGULATORY FRAMEWORK COMPLIANCE FRAMEWORK ENFORCEMENT FRAMEWORK Supervisory & Regulatory Agencies Reporting Institutions Enforcement Agencies GuidelinesGuidelines Supervisory FrameworkSupervisory Framework Informal Enforcement FrameworkInformal Enforcement Framework Compliance Programme AMLA Investigation Reference Guide

FIU- Malaysian Experience 20 Supervisory Framework Management Oversight Policies and Procedures Internal Control Human Resource and Training Management Information System

FIU- Malaysian Experience 21 Supervisory Framework Evaluate adequacy and effectiveness of AML/CFT policies, procedures, systems and controls Evaluate adequacy and effectiveness of AML/CFT programmes at FIs Determine compliance with AMLA Assess adequacy and comprehensiveness of AML/CFT training and education programmes Recommend corrective actions Assess AML risk management structure and highlight high risk areas to be reviewed

FIU- Malaysian Experience 22 Issues and Resolutions Issue: Building expertise among stakeholders Resolutions: Conduct regular briefing sessions Collaborate with training institutes Collaborate with international bodies for specialised training

FIU- Malaysian Experience 23 Building expertiseFIU Reporting Institutions SRAs, SROs and LEAs Awareness programmeAwareness programme Training in collaboration with training institutesTraining in collaboration with training institutes Awareness programmeAwareness programme Training in collaboration with training institutes and international bodiesTraining in collaboration with training institutes and international bodies ExternalInternal Specialised training programmesSpecialised training programmes Training in collaboration with international bodiesTraining in collaboration with international bodies International Orgns. (ASEM,APG)

FIU- Malaysian Experience 24 Issues and Resolutions Issue: Compliance with international standards Resolutions: Membership and participation in various international groups Benchmarking – compliance with FATF’s 40+9 Recommendations Information sharing (MoUs) Mutual legal assistance

25 Challenges

FIU- Malaysian Experience 26 Challenges Organisational effectiveness Implementation of FATF 40+9 Recommendations Timely response to emerging ML/TF trends