Anti-Money Laundering Mechanisms to Mitigate Financial Leakages
Research Projects
Not with standing this noble goal, Malaysia needs to recognize a key problem area which could potentially impact negatively on the satisfactory achievement of this goal; i.e. the high prevalence of leakages due to fraud. Organizations especially corporations, risk financial loss or suffer a tainted reputation or witness their sustainability adversely affected when the management, employees and external third parties commit fraud. The scenario becomes worse when measures and controls are absent or inadequate, thus depreciating the organization’s competitiveness or even endangering its position in the market. Latest trend of fraud involves money laundering offences. It is a truism that effective AML/CFT systems would be able to assist corporations and other entities in detecting the proceeds of financial crimes and terrorism financing and prevent the perpetrators of such crimes from enjoying the proceeds of their crimes. With the mounting pressure for regulatory compliance, the increasing incidence of financial crimes and the growing complexity of fraud and money laundering schemes, it is imperative that corporations, NPOs and wakaf organisations should upgrade their systems, streamline their processes and improve efficiencies within their organisations. Adopting an integrated and comprehensive approach to money laundering and its compliance program would not only ensure the return on risk and compliance investments and prevent financial leakages but also would enhance their business reputations in the long run.
Combating money laundering requires concerted efforts from the reporting institutions, enforcement authorities and the regulators. Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (AMLATPUA 2001) (the Act) mandated the reporting institutions to submit suspicious transactions reports (STRs) in the event of any suspected money laundering incidences. The Act provides for investigation action to be carried out in case of any corroborated evidence suggesting that the STRs are genuine. STRs, however, need to be diligently screened for validity as reporting institutions may resort to protective filing of STRs in order to evade regulatory liability. Financial institutions, for instance, are subjected to file STRs with Bank Negara Malaysia (BNM) and failure to adhere to the Act would render financial institutions to be liable for a fine of RM1.0 million or imprisonment for a term of not more than one year, or both. This could have resulted in filing of unsubstantiated STRs to avoid the regulatory action. From thousands of STRs filed daily across the financial institutions, it is of utmost important that an informed decision on which STRs should warrant for further investigation is exercised. Hence, provision of the Act need to be carefully understood in ensuring the investigation carried out is not a wasted effort and contribute towards controlling money laundering risk.
Anti-Money Laundering Mechanisms and Typologies to Mitigate Financial Leakages in Law Enforcement Agencies |
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Suspicious Transaction Reporting Investigation: Enhancing Anti-Money Laundering Compliance Assessment |
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Behavioral Implications on Risk assessment of Anti-Money Laundering and Financial Terrorism |
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