Malaysia: Central Bank enhances laws on money laundering

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The Central Bank in Malaysia, Negara Malaysia (BNM) has strengthened its Anti-money laundering and Terrorism financing act as a measure to improve the effectiveness of the existing law. The new changes require insurance, takaful and Lembaga Tabung Haji (TH) branches to set up compliance officers within the bank that will be responsible for evaluating, reporting, and rejecting suspicious transactions. The new regulations concern every institution under the Central Bank framework and is developed to prevent further money laundering activities. The senior management is also accountable under the new regulations as their major role is to see to the appointment of compliance officers at the head office at the management level at each branch/subsidiary. The new development involving installing a monitoring system and compliance officers will increase the operational cost of all firms under the Central bank.

From 2020, the TH now have the obligation to report their deposit-taking activities to the central bank. The BNM said in the report that the Compliance officers will function in respect to the AML/CFT acts and must have sufficient authority and seniority to participate in management decision making that is concerned with AML and CFT. They will also be responsible for ensuring compliance with the act, and implementation of the requirements such as customer due diligence, record-keeping, suspicious transaction report etc. However, concerned institutions are allowed not to pursue the CDD process in situations where it could tipoff customers, they can as well carry out a simplified CDD for low-risk cases, but will need to obtain approval prior to the exercise.

Remittance transactions are pegged to RM30,000 for individuals, and RM5,000 monthly for foreign workers’ transactions and this applies absolutely to all politically exposed persons (PEPs), their family members and close relatives.