Money Laundering and Banks

2008

Money laundering has been described by many as the lifeblood of crime and is a major threat to the economic and social well-being of societies. In recent years a number of countries have implemented laws to fight against money laundering and Malaysia is no exception. The Malaysian Anti Money Laundering Act (AMLA) was passed in 2001 and came into force in January 2002. It was amended in 2003 to include measures to combat against terrorism financing. Following the amendment, AMLA was renamed Anti-Money Laundering and Anti-Terrorism Financing Act 2001 (AMLATFA). AMLATFA not only criminalizes money laundering and terrorism financing, but also imposes various obligations on reporting institutions. It includes measures for the investigation of money laundering and terrorism financing offences and the freezing, seizure and forfeiture of criminal proceeds. Banks as the main reporting entities have borne the brunt of the measures introduced by AMLATFA. Despites its introduction in 2002, little academic research has been carried out on how the legislation impacts on banks in Malaysia. This study attempts to address that need. It will analyse how the relevant provisions of AMLATFA affect banks, their operations and relationships with outsiders, such as customers and other stakeholders. This study is divided into seven chapters. The first chapter gives an overview of money laundering. The second chapter looks at various international initiatives to combat money laundering. Chapter three examines the anti-money laundering laws of Malaysia with much of the emphasis on the relevant provisions of AMLATFA. Chapter four examines how the law impacts on the operations of banks. Chapters five focuses on the anti-money laundering measures in the Malaysian offshore financial centre. Chapter six looks at how the law impacts on the banks' relationship with outsiders. Chapter seven provides a survey of Australian anti-money laundering laws as a basis for comparison. ii This study draws a number of broad conclusions:  First, AMLATFA, by comparison with similar laws in other countries is comprehensive and up-to-date, but the regulatory authorities need to provide more guidelines to facilitate compliance;  Secondly, the legislation imposes a significant burden on banks and yet there is no way of gauging its effectiveness in the absence of any reliable statistics;  Thirdly, the legislation has not only altered the way banks deal with their customers and other banks, but also poses significant legal risks for non-compliant banks;  Finally, getting the right balance between the need to combat money laundering and the interests of bank is a difficult exercise.

2013

Money laundering has been described by many as the lifeblood of crime and is a major threat to the economic and social well-being of societies. It has been recognized that the banking system has long been the central element of money laundering. This is in part due to the complexity and confidentiality of the banking system itself. It is generally accepted that effective anti-money laundering (AML) measures adopted by banks will make it tougher for criminals to get their "dirty money" into the financial system. In fact, for law enforcement agencies, banks are considered to be an important source of valuable information for the detection of money laundering. However, from the banks- perspective, the main reason for their existence is to make as much profits as possible. Hence their cultural and commercial interests are totally distinct from that of the law enforcement authorities. Undoubtedly, AML laws create a major dilemma for banks as they produce a significant shift in ...

International Journal of Academic Research in Accounting, Finance and Management Sciences

Money laundering has now been designated as a global crime, requiring the development of global strategies and policies to combat it. As a result, global courts should be established to hear all money-laundering cases and make informed decisions on punishments and penalties. The objective of this research is to assess the effectiveness of anti-money laundering (AML) regulations in Malaysian commercial banks. Customer record-keeping, suspicious transaction reporting, and employee training are three predictors that have been expected to affect money-laundering activities. Simple random sampling was used to pick the respondents from bank employees in the Klang Valley area. A total of 94 (94%) questionnaires were returned, and the data were analysed using descriptive and multiple regression analysis. The results indicating that customer record keeping, suspicious transaction reporting, and employee training have a significant relationship on money laundering prevention. Money laundering activities could be curbed by concentrating on customer record keeping, suspicious transaction reporting, and employee training. The findings show how the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (AMLATFPUAA) has become a vital gap in combating money laundering. Similar research may be performed in other environments with different money laundering laws and regulations.

Asian Journal of Accounting and Governance

Money laundering is a global threat to financial institutions especially the banking industry since it may weaken and expose the institutions to serious risks such as operational, legal and reputational risks. Against this background, the objectives of the study are to analyse the current practice on the prevention of money laundering in selected banks in Malaysia, to investigate the barriers to the implementation of effective Anti-Money Laundering (AML) regulations and to identify the ways to improve the implementation of AML in Malaysia. The study was conducted using qualitative method via interviews with 6 respondents from 6 Islamic & Conventional banks in Malaysia. The preliminary findings showed that the banking institutions' current practice is fully complying with AML regulations under the AMLA 2001. The findings also demonstrated that the barriers to effective implementation of AML regulations are in line with those of previous study, which are lack of expert staff as the top factor together with an additional factor, which is lack of customers' education and awareness on money laundering. Hence, to improve the implementation of AML in Malaysia, this study suggested to firstly strengthen the collaboration with government and relevant authorities to ensure strong enforcement action is taken against the criminals. Secondly, collaboration of BNM with banks and local media to increase public awareness and education on financial crime. Thirdly, to invest on employee training, upgrading system management as well as sufficient resources in compliance unit and finally to intensify the "Three Lines of Defence" in Bank Risk Management.

2012

Money laundering may be defined as the process of cleaning 'dirty money' derived from criminal activities so that it appears t o have originated from legitimate sources. It helps distance criminals from the proceeds of the underlying crimes so that they can enjoy their ill-gotten gains without fear of prosecution and confiscation. As such, money laundering not only encourages crime, but if left unchecked, it can also pose devastating political, social and economic consequences for any countries. The underlying rationale behind anti-money laundering (AML) laws is that if money laundering is criminalized and criminal proceeds are confiscated, crime will no longer pay and there will be less motivation for criminals t o commit crimes. In fulfilling its international obligations and commitment in the war on money laundering, Malaysia passed Anti Money Laundering and Anti-Terrorism Financing Act (AMLATFA) in 2001. AMLATFA is implemented by multi-law enforcement authorities led by Bank Negara Malaysia. AMLATFA also provides more powerful and innovative measures which may facilitate the recovery of illegal proceeds from money laundering and any other serious crimes.This paper will focus on the provisions relating t o the investigation of money laundering and measures for the freezing, seizure and forfeiture of criminal proceeds under AMLATFA. It is hoped that this piece of information will provide a better insight for the law enforcement officialson some legal issues that have arisen in implementing the AML laws in Malaysia.lndeed, the AML laws should be allowed to operate effectively and efficiently to bring criminals t o justice.

International Journal of Economics and Management, 2016

Bank Negara Malaysia, as the central agency for the enforcement of the Anti-Money Laundering and Terrorist Financing Act (AMLATFA) 2001, has investigated many cases involving individuals and businesses, which have violated the Act. Although many anti-money laundering initiatives have been carried out by the regulators, the number of investigations and charges has risen over the years and some of the cases have been left unsettled. This study focuses on the examination of cases and chargers under AMLATFA 2001 by Bank Negara Malaysia. The data were collected from the Enforcement Action reports of Bank Negara Malaysia on the investigated cases charged under the AMLATFA. 80 cases were reported in the Bank Negara Malaysia website and were classified into industries, sources of cases, status of the cases, and the amount of money laundered. The findings provide an insight to the money laundering cases investigated by BNM and the seriousness of the money laundering issue in the country.

Journal of Financial Crime, 2016

Before the enactment of the Anti-Money Laundering and Anti-Terrorism Financing Act 2001 (AMLATFA), the fight against financial crime can be found in several statutes such as the Penal Code, Anti-Corruption Act 1997 and Companies Act 1965. It is generally accepted that by freezing and forfeiting the proceeds of crime, it would give significant impact on the fight against financial crime. However, under these legislations there were few shortcomings of the procedures on how the proceeds of crime could be seized and forfeited. As such, the enactment of AMLATFA is considered timely to overcome these problems. AMLATFA provides innovative tools for the law enforcement officials to follow the money trail which will eventually lead to those who committed the financial crime. It also provides authorities with more powerful seizure and forfeiture measures. This is seen as a new law enforcement strategy to combat financial crime. It is believed that this approach is more effective than the traditional approach which only punished the individual criminal but failed to diminish the criminal operations. This paper aims to examine how the anti-money laundering law could be utilized to combat financial crime in Malaysia. To achieve this aim, this paper will focus on the provisions relating to measures for freezing, seizure and forfeiture of proceeds of crime under AMLATFA.

Purpose -The purpose of this paper is to analyze banking secrecy laws against the background of the Malaysian anti-money laundering laws. It has been argued that the anti-money laundering law makes greater inroads into the banking secrecy rule when compared to the common law or other statutes. Banks can disclose customer's information on even grounds of suspicion of money laundering. Banking secrecy is a customer privilege, whereas combating money laundering is critical for public safety and security. Indeed, achieving a proper balance is a desirable goal. But how do we go about achieving such a balance is a question encountered by many law enforcement authorities. This paper looks into these issues. Design/methodology/approach -This paper mainly relies on statutes as its primary sources of information. As such, the relevant Malaysian laws that provide the banking secrecy rule will be identified and analyzed. It will be necessary to examine the banking secrecy rule in the Anti-Money Laundering and Anti-Terrorism Financing Act 2001 (AMLATFA) and other relevant statutes in detail, as these are the most important legislation for the purpose of this paper. Findings -On closer inspection, it is submitted that AMLATFA provides sufficient safeguards to ensure that the disclosure of customer's information is carried out in a manner that is not prejudicial to the interest of legitimate customers. This is a positive approach that could protect the innocent customers from being mistreated by the law. Ultimately, it can be said that the growing threat of global money laundering and terrorism makes the overriding of banking secrecy justified because without a flow of information from the banks, the effective prevention of the menace is not possible. Originality/value -This paper analyzes the inroads into the banking secrecy rule under the Malaysian anti-money laundering laws. It would provide some guidelines into this particular area for academics, banks, their legal advisers, practitioners and policy makers, not only in Malaysia but also elsewhere.

Journal of Money Laundering Control, 2008

PurposeThe aim of this paper is to highlight the importance of countering the dangers posed by money laundering activities and the measures taken to date by the Malaysian authorities in this respect.Design/methodology/approachThe paper achieves this by looking at the current money laundering trends in Malaysia, followed by a detailed account of the initiatives taken by the Malaysian authorities to curb such activities. These proactive initiatives range from the enactment and implementation of the Anti‐Money Laundering (AML) Act 2001, the establishment of the Financial Intelligence Unit of the Central Bank of Malaysia and the Southeast Asia Regional Centre for Counter‐Terrorism which work with international enforcement agencies, to the requirement of suspicious transaction reporting amongst professional accountants and lawyers and more.FindingsMalaysia continues to make a broad and sustained effort to combat money laundering and terrorist financing flows within its borders.Practical ...

Journal of Money Laundering Control, 2013

Purpose -The purpose of this paper is to give a better insight to the legal society, practitioners and legislators of the working mechanisms of money laundering activities, as well as the functionalities of the Anti-Money Laundering and Anti-terrorism Financing Act 2003 (AMLATFA) in Malaysia, in curbing money laundering and terrorism funding activities. At the same time, the paper provides an overview on the applicability and practicability of the enforcement mechanisms in Malaysia by exploring legislations from different jurisdictions that are more developed. Design/methodology/approach -The paper achieves this by having a cross-sectional analysis onto the legislation in Malaysia such as AMLATFA and also similar legislations found in countries such as the UK. A complete insight is further gained by having interviews with experts in the judiciary, Bank Negara, as well as the experts from the Attorney General's Chamber in Malaysia regarding their insight into the subject matter. Last but not least, the authors also surveyed into the different points of view from journal articles in Malaysia and globally. Findings -Malaysia has a legal framework for curbing money laundering but the current AMLATFA provisions are considered to have failed to be effectively enforced. A more comprehensive, specific and well elaborated legal framework will have to be laid down in order to create a better platform for the prosecutors to bring a good case against these money launderers. Practical implications -This paper will give a deeper insight to the legal society of the capability of AMLATFA and the lack of it, in curbing money laundering in Malaysia and, at the same time, creating awareness among policy makers of the difficulties faced by the enforcement bureaus in prosecuting these money launderers due to the lacunas in the current law. Originality/value -This paper could be useful source of information for practitioners, academics, policymakers and students and a guide for any possible future amendments to the current insufficiency.