Staying abreast of financial regulations is crucial for Designated Non-Financial Businesses and Professions (DNFBPs). On February 5th, 2024, Bank Negara Malaysia updated the policy document on Anti-Money Laundering, Countering Financing of Terrorism, Countering Proliferation Financing and Targeted Financial Sanctions (AML/CFT/CPF/TFS) for DNFBPs effective February 6th, 2024. These updates align with FATF standards, expand coverage for proliferation financing, broaden institutional risk assessment and compliance programs, and introduce a group-wide program, enhancing the nation’s anti-money laundering and counter-terrorism financing framework.

Key Updates on the AML/CFT/CPF/TFS Policy Document and Regulations for DNFBPs

1. Expanded Scope for Financial Institutions

The policy document now includes provisions for Anti-Money Laundering (AML), Countering Financing of Terrorism (CFT), Countering Proliferation Financing (CPF), and Targeted Financial Sanctions (TFS) for financial institutions.
Reporting institutions must assess proliferation financing (PF) risks and implement appropriate mitigation measures to prevent abuse by designated individuals and entities.

2. Reporting Institutions’ Gazetted Activities

Accountants: Must comply when engaging in activities such as buying/selling property, managing client funds, and creating or managing legal entities.
Company Secretaries: Obligations include acting as formation agents for legal entities and providing registered office services.
Lawyers: Must follow regulations when involved in property transactions, managing client funds, and managing legal entities.

3. Definitions for Ownership, Risk Verification, DNFBP Group, and NRA

Accurate Information: Verification of beneficial owner information using reliable, independently sourced documents. The extent of verification varies based on the risk level.
Beneficial Owner: The natural person who ultimately owns or controls a customer, including indirect control through legal arrangements. This includes control exercised through a chain of ownership or other indirect means.
DNFBP Group: A parent company in Malaysia or any legal entity controlling and coordinating its branches or subsidiaries, all adhering to group-level AML/CFT policies and procedures.
National Risk Assessment (NRA): Includes sectoral, thematic, and emerging risk assessments.

4. Institutional Proliferation Financing (PF) Risk Assessment and Risk Mitigation Requirements

Institutions must identify, assess, and understand Proliferation Financing (PF) risks in relation to their business’s nature, size, and complexity.
Institutions should document PF risk assessments, keep them updated, and provide information to supervisory authorities.
Institutions must implement policies, procedures, and controls to manage PF risks.
Enhanced controls are required for higher PF risks, ensuring full implementation of targeted financial sanctions.

5. Introduction of DNFBP Group and Group-Wide Program

A vertical structure has been introduced between the parent company/head office and subsidiaries/branches. Reporting institutions that act as a parent company or head office for another reporting institution are now required to implement the following measures:

Establish a framework for AML/CFT/CPF compliance programs at the group level.
Appoint a Group Compliance Officer at the management level.
Develop policies and procedures for sharing information required for customer due diligence (CDD) and ML/TF/PF risk management.
Ensure the provision of customer, account, and transaction information from branches and subsidiaries when necessary for AML/CFT/CPF purposes.
Implement safeguards on the confidentiality and use of exchanged information.

These updates reflect Bank Negara Malaysia’s commitment to strengthening the financial system against evolving threats. Staying informed and compliant with these regulations is essential for professionals in the non-financial sector.

Leverage SentroWeb Screening Solutions to Effectively Fulfil Compliance with AML/CFT/CPF/TFS Requirements

As outlined in the AML/CFT/CPF/TFS Policy Document for Designated Non-Financial Businesses and Professions (DNFBPs), customer due diligence (CDD) and ongoing monitoring are crucial for verifying the identities of customers and beneficial owners. These processes are essential for identifying and mitigating AML/CFT/CPF/TFS risks. However, manual methods such as screening and ongoing monitoring can be labour-intensive and error-prone, exposing your business to potential risks.

Therefore, reporting institutions are encouraged to utilize commercial solutions or databases to enhance operational efficiency and streamline these processes.

SentroWeb® is specifically designed for DNFBPs to meet AML/CFT/CPF/TFS regulatory requirements. Key features include:

Name Screening Against Reputable Databases
SentroWeb® leverages Dow Jones and Acuris AML/CFT databases, which encompass global sanctions lists, Politically Exposed Persons (PEPs), and watchlists. This allows DNFBPs to effectively screen clients and verify identities during onboarding, periodic reviews, and ongoing monitoring.
Ongoing Monitoring of Searched Name
The system continuously monitors searched names by scanning and matching them against updated global sanctions lists and watchlists. Users receive alerts if there are any changes to a client’s status, enabling prompt action to mitigate potential risks.
Robust Customer Due Diligence (CDD)
The CDD module offers step-by-step guidance to help users record client information and conduct risk assessments with customizable risk factors.
Audit Trails and Reports
All screening and risk assessments are automatically recorded with timestamps, providing comprehensive audit trails for regulatory inspections.

Click here to learn more and discover how commercial A ML/CFT solutions like Se ntroWeb® can support your AML/CFT compliance needs.

This article is also published on Malaysian Institute of Accountants (MIA)’s Accountants Today platform.

About Ingenique Solutions

Ingenique Solutions Pte Ltd delivers Anti-Money Laundering & Know Your Customer (KYC) screening and due diligence solutions to help small businesses and large enterprises meet their AML/CFT compliance requirements. It is trusted by 1,600+ companies in Hong Kong, Singapore, Malaysia, China and Taiwan, including government Ministry/ Agency, public listed companies, and top leading firms in various sectors.

Recent Posts: