C9. Anti-Money Laundering and Anti-Terrorism Financing Flashcards
what is money laundering?
Money laundering is the process of converting money/property, derived from illegal activities to give it a legitimate appearance.
what are the 3 stages of money laundering?
There are three stages of money laundering, namely:
a) Placement: the physical disposal of cash proceeds derived from illegal activity.
b) Layering: separating illicit proceeds from their source by creating complex layers of financial transactions designed to disguise the audit trail and provide anonymity.
c) Integration: the process of converting the laundered illegal proceeds into ‘legitimate’ funds by investing or integrating into the real economy.
what are the penalties for money laundering offence?
i) fined up to a maximum MYR 5 million or
ii) fine of not less than 5 times the sum of the proceeds of an unlawful activity or instrumentalities of an offence at the time the offence was committed
iii) maximum 15 years imprisonment, or both fine and imprisonment.
how long should records be kept as per AMLA requirement?
The AMLA also stipulates that the records shall be kept for at least 6 years and the maintaining of the records should include the source documents for re-construction of transaction. The above requirements are specified under Sections 13 to 17 of the AMLA.
for record-keeping purposes by RIs, what details should the records include?
RIs are to record transactions in MYR/foreign currency exceeding specified amount. Such
records should include:
(i). Identity and address of person transacting
(ii). Identity and address of beneficiary/principal
(iii). Identity of accounts affected by transaction
(iv). Type of transaction involved, e.g. deposit, withdrawal, exchange of currency, cheque cashing, purchasing cashier’s cheques/money orders/other payments/transfer by/through to such RI
(v). Identity of RI where transaction occurred
(vi). Date, time and amount of transaction
in what scenario should RI’s report to authority?
RIs are to promptly report to competent authority any transaction:
(i). Exceeding amount specified
(ii). Identity of persons/transaction/circumstances causing suspicion that proceeds of unlawful activity are involved
when should RIs conduct Customer Due Diligence (CDD)?
This Policy document requires that the RIs must conduct CDD when establishing a business relationship with any customer, and where the customer carries out a cash transaction involving an amount equivalent to MYR 25,000 or more, whether in a single receipt transaction or several transactions in a day that appear to be linked.
should RIs conduct CDD consistently?
RIs are required to conduct ongoing CDD to ensure the transactions undertaken by the customers are consistent with the nature of the businesses and to report to the relevant authority of any suspicious transactions
in the case of money changing or wholesale currency exchange, should CDD be conducted?
Yes, RIs should verify the identity of its customer and beneficial owners for transactions involving amounts equivalent to MYR 10,000 and above.
where the ML/TF is assessed as low or verification is not possible at the point of establishing a business relationship, what should RIs do?
RIs may delay under the following conditions:
a) The verification should be done as soon as reasonably practicable (not longer than 10 working days or as specified by BNM)
b) The verification shall not cause interruption to RI’s conduct of normal business
c) The ML/TF risks are effectively managed
d) There is no suspicion of ML/TF risks
RIs are exempted from obtaining a copy of the Certificate of Incorporation or Constitution and from verifying the identity of directors and shareholders of the legal person for CDD if:
a) Public companies listed on Bursa Malaysia
b) Foreign public listed companies on recognised exchanges and not listed in higher risk countries
c) foreign financial institutions that are not from higher risk countries
d) an authorised person under the FSA and the IFSA (i.e. any person that has been granted a license or approval)
e) Persons licensed or registered under the CMSA 2007
f) Licensed entities under Labuan Financial Services and Securities Act
g) Prescribed institutions under the DFIA 2002
what details should RIs get when performing enhanced CDD?
a) Obtaining additional information on the customer and beneficial owner.
b) Inquiring sources of wealth or funds, in the case of Politically Exposed Persons (PEPs), both sources must be obtained.
c) Obtaining senior management’s approval before establishing (or continuing existing business). In the case of PEPs, Senior Management refers to senior management at the head office.
should enhanced CDD be performed on politically exposed persons?
RIs are required to put in place a risk management system to determine whether a customer or a beneficial owner is a PEP. Once determined, an enhanced CDD must be conducted.
PEPs also extend to the family members or close associates of all types of PEPs.
what are some examples of high-risk customers?
a) Non-resident customers
b) Customers from locations with high crime rate (e.g. drug producing, trafficking, smuggling)
c) Customers from or in countries or jurisdictions which do not or insufficiently apply FATF (Financial Action Task Force) Recommendations
d) PEPs and persons or companies related to them
e) Complex legal arrangements—unregistered or unregulated investment vehicles
f) Companies that have nominee shareholders
- Under AMLA 2001, the reporting institutions need to identify the account holder when establishing a business relationship. Which of the following are true?
I. Opening of new accounts or passbooks
II. Entering into a fiduciary transaction
III. Renting of safe deposit boxes
IV. Performing cash transactions of any amount
A. I, II, III and IV only
B. I, II and III only
C. II, III and IV only
D. III and IV only
B
