Combating Terrorism Financing 1 National Accountants Conference 2004, Kuala Lumpur “Combating Terrorism Financing” 13 October 2004 by Koid Swee Lian Financial Intelligence Unit

Combating Terrorism Financing 2 AGENDA What is Terrorism Financing? International Initiatives National Initiatives Regulators Expectations Challenges FATF’s 8 Special Recommendations

Combating Terrorism Financing 3 WHAT IS TERRORISM FINANCING?  Providing or collecting property for terrorist acts directly or indirectly reasonable grounds to believe that the property will be used  Providing services for terrorist purposes directly or indirectly reasonable grounds to believe that the services or facilities will be used  Arranging for retention or control of terrorist property knowingly enters into an arrangement facilitates the control by or on behalf of another person of terrorist property  Dealing with terrorist property Whoever knowingly deals, directly or indirectly, in any terrorist property

Combating Terrorism Financing 4 MONEY LAUNDERING VS. TERRORISM FINANCING APPARENTLY LEGITIMATE ASSETS Laundering Legitimate Funds Terrorist Network 150 Predicate Offences Criminal Proceeds TERRORIST ACTs

Combating Terrorism Financing 5 INTERNATIONAL INITIATIVES   12 UN Conventions on Terrorism International Convention for the Suppression of the Financing of Terrorism 1999   UN’s Consolidated List of Sanctioned Terrorists, Associated Entities and Individuals   Mutual Evaluation by the Asia-Pacific Group on Money Laundering (APG)   IMF/World Bank Assessment Methodology on AML/CFT Measures   FATF’S 8 Special Recommendations

Combating Terrorism Financing 6 NATIONAL INITIATIVES To enable Malaysia to accede to the U.N. Convention for the Suppression of the Financing of Terrorism, new provisions were incorporated into the following pieces of legislation:   Penal Code   Anti-Money Laundering Act 2001   Subordinate Courts Act 1948   Courts of Judicature Act 1964   Criminal Procedure Code

Combating Terrorism Financing 7 NATIONAL INITIATIVES UNSCR   Freeze all assets of certain persons/ entities in the UN List   Declare specified entity through gazette order   Circulate orders   Freeze all assets of specified persons/ entities Minister of Internal Security Regulatory / Supervisory Authority Reporting Institutions

Combating Terrorism Financing 8 NATIONAL INITIATIVES The new provisions added in the Penal Code to address the offence of terrorism financing are:   Providing or collecting property for terrorist acts   Providing services for terrorist purposes   Arranging for retention or control of terrorist property   Dealing with terrorist property Part VIA was added into the Anti-Money Laundering Act 2001, to provide for:   Declaration of specified entities as terrorist entities   Measures to give effect to U.N. Security Council resolutions   Minister’s power to obtain information   Guidelines on discharge of Government obligations

Combating Terrorism Financing 9 NATIONAL INITIATIVES Section 130 O of the Penal Code Providing services for terrorist purposes Whoever, directly or indirectly, provides or makes available financial services or facilities to terrorists or for the commission of a terrorist act shall be punished by death if the act results in death and in any other case, a term not less than 7 years but not exceeding 30 years Financial services include services and facilities offered by lawyers, accountants acting as nominees or agents for their clients

Combating Terrorism Financing 10 REGULATORS’ EXPECTATIONS   Record-keeping by reporting institutions to include: Identity and address of   Person conducting transaction   Beneficiary of transaction Accounts affected by transaction Type of transaction Where did the transaction occur Date, time and amount of transaction Other information as competent authority may specify in writing   Retention of records for 6 years

Combating Terrorism Financing 11 REGULATORS’ EXPECTATIONS   Compliance programme The development of internal policies, procedures and controls, including appropriate compliance management arrangements, and adequate screening procedures to ensure high standards when hiring employees An ongoing employees training programme Designate compliance officer at management level who will be in charge of the application of the internal programmes including maintenance of records and reporting of STRs

Combating Terrorism Financing 12 CHALLENGES   Maintain a sound and robust financial system   Detect and deter criminal abuse of the financial system   Sustain public confidence in the financial system and the criminal justice system   Enforcement action against criminals and terrorists   Banking secrecy is not absolute   Safety and security of information, documents and personnel

Combating Terrorism Financing 13 FATF’S 8 SPECIAL RECOMMENDATIONS 1. Ratification and implementation of UN Instruments 2. Criminalising financing of terrorism, terrorist acts and terrorist organisation 3. Freeze and confiscate terrorist assets 4. Reporting suspicious transactions linked to terrorism 5. 5.International Co-operation 6. 6.Alternative remittance 7. 7.Strengthen customers identification measures in wire transfers 8. Non-profit organisations not to be used to finance terrorism