In Malaysia, some non-financial businesses and professions like lawyers, accountants, and company secretaries are required to comply with the Anti-Money Laundering/Countering Financing of Terrorism (AML/CFT) regulations imposed. Known as reporting institutions, these businesses and professions are expected to fulfil their regulatory obligations by conducting AML/CFT screenings on every potential client. Effective AML/CFT controls mitigate the detrimental effects of criminal economic activities while promoting integrity and stability in businesses. During this screening process, there are six steps to ensure the practice of due diligence and the compliance with the Anti Money Laundering audit report is taken
Step 1: Know Your Clients
The information used for verification must come from a reliable and independent source document, information, or data. If information is not accessible through these sources, you must obtain the necessary documentation from your client directly. If the client is unwilling to cooperate, immediately file a Suspicious Transaction Report (STR), and under no circumstances should you commence a business relationship with him/her.
Step 2: Screening
At this stage of the AML/CFT screening, you need to examine your potential client’s name against the Ministry of Home Affairs (MOHA) and the United Nations Security Council Resolutions (UNSCR) Sanctions Lists for Terrorism, Proliferation, and other UN-Sanctions Regimes for a possible positive name match. If there is a positive name match, conduct the following steps: freeze the client’s funds, block all transactions, and reject the client immediately.
Step 3: Risk Profiling
Risk profiling should be conducted based on the following risk factors: client, product/services, geographical location, and form of the delivery channel used. If no prior risk profiling has been done before, please refer to the Appendix 8 of Policy Document for Anti-Money Laundering, Countering Financing of Terrorism (AML/CFT) and Targeted Financial Sanctions for Designated Non-Financial Businesses and Professions (DNFBPs) & Non-Bank Financial Institutions (NBFIs) on how you can perform risk profiling.
Step 4: Enhanced Due Diligence
For clients that are of a higher risk, enhanced customer due diligence is needed for you to conduct meticulous checks on your customers. Information regarding their sources of income must be gathered. Afterwhich, you would need to seek approval from your senior management before commencing a business relationship with said client. If you get suspicious about your client during the term of your business relationship, please file a Suspicious Transaction Report (STR) immediately.
Step 5: Submit STR
If a STR needs to be filed, you can submit it through email or fax it to the relevant authorities at:
Fax: +603-2693 3625
Step 6: Record Keeping
Lastly, Bank Negara Malaysia may inspect reporting institutions for their compliance with the AML/CFT regulations and the Anti Money Laundering audit report would be examined. Therefore, it is crucial that you keep all KYC information, copies of ID, transaction details, and analyses done for STR (if any) submitted. If you currently do not do so, it is pivotal that you start cultivating this routine. You would also need to ensure that all of the information is easily accessible only to the relevant authorised persons as records have to be kept for a minimum of six years. If there are any changes to your client’s information, the AML/CFT screening process must be repeated for you to update the necessary information accurately. This process is done to ensure that your client complies with the Anti Money Laundering rules of Malaysia and fosters a sense of integrity and stability in the business community. If you require any assistance regarding the screening procedures, you can contact us at www.ingenique.net/contact-us.