Amla CF (Draft)
Amla CF (Draft)
Amla CF (Draft)
1
2. APPLICABILITY ............................................................................................................. 1
3. DEFINITION ................................................................................................................... 2
3.1. Money laundering............................................................................................... 2
3.2. Financing of terrorism ........................................................................................ 2
4. CUSTOMER ACCEPTANCE POLICY .......................................................................... 3
4.1. General............................................................................................................... 3
4.2. Risk Profiling ...................................................................................................... 3
5. CUSTOMER DUE DILIGENCE (CDD).......................................................................... 3
5.1. General............................................................................................................... 3
5.2. Individual Customers.......................................................................................... 4
5.3. Corporate Customers......................................................................................... 5
5.4. Clubs, Societies and Charities........................................................................... 6
5.5. Legal Arrangements........................................................................................... 6
5.6. Beneficial Ownership and Control ..................................................................... 6
5.7. Reliance on intermediaries for CDD .................................................................. 7
5.8. Non-face-to-face Business Relationship ........................................................... 7
5.9. Foreign Politically Exposed Persons (PEPs)..................................................... 8
5.10. Higher risk customers .................................................................................... 8
5.11. Existing customers ......................................................................................... 9
6. RECORD-KEEPING ...................................................................................................... 9
6.1. Retention Period................................................................................................. 9
6.2. Audit trail........................................................................................................... 10
6.3. Format .............................................................................................................. 10
7. ONGOING MONITORING ........................................................................................... 10
7.1. General............................................................................................................. 10
7.2. Management Information System.................................................................... 11
7.3. Special Attention .............................................................................................. 11
8. SUSPICIOUS TRANSACTION REPORTING ............................................................. 12
8.1. General............................................................................................................. 12
8.2. Reporting mechanisms .................................................................................... 12
8.3. Triggers for submission of suspicious transaction report................................ 14
8.4. Other issues ..................................................................................................... 14
9. COMBATING THE FINANCING OF TERRORISM..................................................... 14
10. AML/CFT COMPLIANCE PROGRAMME .................................................................. 15
10.1. Policies, Procedures and Controls.............................................................. 15
10.2. Staff Integrity ................................................................................................ 16
10.3. Compliance Officer....................................................................................... 17
10.4.Staff Training and Awareness Programmes................................................ 18
10.5. Independent Audit ........................................................................................ 19
11.NON-COMPLIANCE WITH PROVISIONS UNDER THE AMLA................................. 20
Appendix.................................................................................................................................. 22
1. INTRODUCTION
1.3. The Guidelines are drawn up in accordance with the AMLA and the
Financial Action Task Force on Money Laundering’s (FATF) Forty
Recommendations on Money Laundering and Nine Special
Recommendations on Terrorist Financing.
2. APPLICABILITY
2.2. Foreign branches and subsidiaries must comply with the Guidelines and
where there is conflict between the Guidelines and the regulatory
requirements of the host country, the more stringent requirement must be
adopted to the extent that is permitted by the host country’s laws and
regulations. In addition, reporting institution should pay special attention to
foreign branches or subsidiaries operating in countries which have
insufficiently implemented the internationally accepted AML/CFT
measures.
3.1.2. Section 3(1) of the AMLA, defines “money laundering” as the act of
a person who:
· engages, directly or indirectly, in a transaction that involves
proceeds of any unlawful activity;
· acquires, receives, possesses, disguises, transfers,
converts, exchanges, carries, disposes, uses, removes from
or brings into Philippine proceeds of any unlawful activity; or
· conceals, disguises or impedes the establishment of the true
nature, origin, location, movement, disposition, title of, rights
with respect to, or ownership of, proceeds of any unlawful
activity;
where –
· as may be inferred from objective factual circumstances, the
person knows or has reason to believe, that the property is
proceeds from any unlawful activity; or
· in respect of the conduct of a natural person, the person
without reasonable excuse fails to take reasonable steps to
ascertain whether or not the property is proceeds from any
unlawful activity.
4.1. General
5.1. General
5.1.1. The Institution must conduct customer due diligence and obtain
satisfactory evidence and properly establish in its
· passport number;
· permanent and mailing address;
· date of birth; and
· nationality.
5.2.3. Where there is any doubt, the reporting institution should request
the customer to produce other supporting identification
documents, preferably bearing a photograph of the customer,
issued by an official authority, to enable the customer’s identity to
be ascertained.
5.3.3. The reporting institution should also know the beneficial owners
and control structure of the corporate customers and determine
the source(s) of funds of the company/business in order to
ascertain any suspicion concerning the changes to the
company/business structure or ownership or the payment profile
of its account.
5.3.4. In the event, the reporting institution’s corporate customer is a
public company which is subjected to regulatory disclosure, it
would not be necessary for the reporting institution to identify or
verify the identity of any shareholder.
5.9.1. PEPs are foreign individuals being, or who have been, entrusted
with prominent public functions, such as heads of state or
government, senior politicians, senior government officials, judicial
or military officials and senior executives of public organisations.
5.9.2. The concern placed in dealing with PEPs lies with the possibility of
such PEPs abusing their public powers for their own illicit
enrichment, especially in countries where corruption is
widespread.
5.10.1. For higher risk customers, the reporting institution shall conduct
enhanced customer due diligence.
6. RECORD-KEEPING
6.1.1. The reporting institution should keep all records and documents of
transactions, in particular, those obtained during customer due
diligence procedures, for at least five years after the transaction
has been completed or after the business relations with the
customer have ended.
6.1.2. In situations where the records are subject to ongoing
investigations or prosecution in court, they shall be retained
beyond the stipulated retention period until it is confirmed by the
Financial Intelligence Unit in Bank Negara Malaysia, that such
records are no longer needed.
6.2.1. The reporting institution must ensure that the retained documents
and records are able to create an audit trail on individual
transactions that are traceable by Bank Negara Malaysia, the
relevant supervisory and law enforcement agencies.
6.2.2. In addition, the records kept must enable the reporting institution
to establish the history, circumstances and reconstruction of each
transaction. The records shall include at least:
· the identity of the customer;
· the identity of the beneficiary;
· the type of transaction(for example, deposit or withdrawal);
· the form of transaction (for example, by cash or by cheque);
· the instruction and the origin and destination of fund
transfers; and
· the amount and type of currency.
6.3. Format
6.3.1. The reporting institution should retain the relevant document in the
form that is acceptable under Section 3 of the Evidence Act 1950,
secure and retrievable, upon request, in a timely manner.
7. ONGOING
MONITORING 7.1.
General
7.3.2. The reporting institution should also conduct ongoing due diligence
o r monitoring of transactions with regards to business
relationships and transactions with individuals, businesses,
companies and financial institutions from countries which have
insufficiently implemented the internationally accepted AML/CFT
measures, such as the Non Cooperative Countries and Territories
(NCCT) published on the FATF website ( http://www.fatf-
gafi.org/NCCT_en.htm). Such business relationships a n d
transactions would require the reporting institution to make further
enquiries, as detail as possible, about their background and
purpose and to document the findings in writing. These findings
should be made available to the Financial Intelligence Unit in Bank
Negara Malaysia and the relevant supervisory authority.
8. SUSPICIOUS TRANSACTION REPORTING
8.1. General
8.2.1. The reporting institution should appoint one officer (or more) at the
Senior Management level to be the compliance officer responsible
for the submission of suspicious transaction reports to the
Financial Intelligence Unit in Bank Negara Malaysia. The
appointed compliance officer is the single point of reference for the
Financial Intelligence Unit in Bank Negara Malaysia with regards
to AML/CFT matters.
· Mail : Director
Financial Intelligence Unit
Bank Negara Malaysia
Jalan Dato’ Onn
50480 Kuala Lumpur
(To be opened by addressee only)
· Fax : +603-2693 3625
· E-mail : [email protected]
8.2.5. Where applicable and upon the advice of the Financial Intelligence
Unit in Bank Negara Malaysia, the compliance officer of a
reporting institution should submit its suspicious transaction
reports on-line:
· Website : https://bnmapp.bnm.gov.my/fins2
8.2.7. The reporting institution should ensure that its compliance officer is
authorised to cooperate with the Financial Intelligence Unit in Bank
Negara Malaysia in providing such additional information and
documentation as it may request and to respond promptly to any
further enquiries with regards to any suspicious transaction report.
8.4.1. The reporting institution must ensure that the compliance officer
maintains a complete file on all internally generated suspicious
transaction reports and any supporting documentary evidence
regardless that such reports have been submitted to the Financial
Intelligence Unit in Bank Negara Malaysia.
9.1. The reporting institution should ensure that the existing suspicious
transaction reporting system and mechanism for the identification of
suspicious transactions are extended to cover financing of terrorism.
9.2. The United Nations Security Council (UNSC) has passed various
resolutions pursuant to UNSC Resolution 1267 (1999) to require sanctions
against individuals and entities belonging or related to the Taliban, Usama
bin Laden and the Al-Qaida organisation and maintains a list of individuals
and entities (the Consolidated List) for this purpose. The updated and
consolidated UN List can be obtained at http://www.un.org/Docs/sc/
committees/1267/1267ListEng.htm.
9.5. The reporting institution should conduct regular checks on the names of
new and existing customers against the names in the database. If there is
any name match, the reporting institution should take reasonable and
appropriate measures to verify and confirm the identity of its customer. If
the customer’s name fully matches any name in the database, the
reporting institution should immediately:
a) inform the Financial Intelligence Unit in Bank Negara Malaysia,
Securities Commission or Labuan Offshore Financial Services
Authority, as the case may be;
b) reject the customer, if the transaction has not commenced; and
c) freeze the customer’s transaction, if it is an ongoing customer.
Where the reporting institution suspects that a transaction is terrorist-
related, it should make a suspicious transaction report to the Financial
Intelligence Unit in Bank Negara Malaysia.
10.1.3. The Board of Directors should ensure that the reporting institution
has, at the minimum, policies on AML/CFT procedures and
controls. For this purpose, the Senior Management will assist the
4
Board of Directors includes references to Partners and Sole-proprietors.
BNM/RH/GL 000-2 Financial Standard Guidelines on Anti-Money Laundering Page
Intelligence Unit and Counter Financing of Terrorism 16/23
10.1.4. The Board of Directors should set minimum standards and approve
the policies regarding AML/CFT measures within the reporting
institution, including those required for customer acceptance
policy, customer due diligence, record-keeping, ongoing
monitoring, reporting of suspicious transactions and combating the
financing of terrorism. The Senior Management in relation to this
must ensure that such procedures are formulated and effectively
implemented. For this purpose, the Board of Directors should
assess the implementation of the approved AML/CFT policies
through regular updates by the Senior Management and audits.
10.1.6. The Board of Directors should review and assess the AML/CFT
policies and procedures in line with changes and developments in
the reporting institution’s products and services, technology as
well as trends in money laundering and the financing of terrorism.
The Senior Management is responsible for implementing t h e
necessary changes to the AML/CFT policies and procedures with
the approval of the Board of Directors to ensure that the current
policies are sound and appropriate.
10.1.7. The Board of Directors and the Senior Management should ensure
that there is adequate AML/CFT training provided for their
institutions’ employees, including promoting employees’
awareness of their AML/CFT obligations.
10.2.1. The Senior Management must ensure the integrity of the reporting
institution’s employees at all times by establishing an appropriate
employee assessment system (commensurate with the size of
operations and risk exposure of the reporting institution to money
laundering and financing of terrorism), that is approved by the
Board of Directors to adequately screen its employees.
BNM/RH/GL 000-2 Financial Standard Guidelines on Anti-Money Laundering Page
Intelligence Unit and Counter Financing of Terrorism 17/23
10.3.3. The reporting institution should ensure that the roles and
responsibilities of the compliance officer are clearly defined and
documented. The compliance officer should ensure the following:
· the reporting institution’s compliance with the AML/CFT
requirements;
· implementation of the AML/CFT policies;
· the appropriate AML/CFT procedures, including customer
acceptance policy, customer due diligence, record-keeping,
ongoing monitoring, reporting of suspicious transactions and
combating the financing of terrorism are implemented
effectively;
· the AML/CFT mechanism is regularly assessed to ensure
that it is effective and sufficient to address any change in
money laundering and financing of terrorism trends;
· the channel of communication from the respective
employees to the branch/subsidiary compliance officer and
subsequently to the compliance officer is secured and that
information is kept confidential;
· all employees are aware of the reporting institution’s
AML/CFT measures, including policies, control mechanism
and the channel of reporting;
· internal generated suspicious transaction reports by the
branch/subsidiary compliance officers are appropriately
evaluated before submission to the Financial Intelligence
Unit in Bank Negara Malaysia; and
· the identification of money laundering and financing of
terrorism risks associated with new products or services or
arising from the reporting institution’s operational changes,
including the introduction of new technology and processes.
BNM/RH/GL 000-2 Financial Standard Guidelines on Anti-Money Laundering Page
Intelligence Unit and Counter Financing of Terrorism 18/23
10.4.3. In this regard, the reporting institution should make available its
AML/CFT measures for all employees and its documented
AML/CFT measures should at least contain the following:
· The relevant guidelines on AML/CFT issued by Bank Negara
Malaysia; and
· The reporting institution’s internal AML/CFT policies and
procedures.
· New Employees
Provide a general background on money laundering and
financing of terrorism, the requirement and obligation to
monitor and report suspicious transactions to the compliance
officer and the importance of the “Know Your Customer”
policy.
· "Front-Line" Employees
Employees who deal directly with the customers are the first
point of contact with potential money launderers and
BNM/RH/GL 000-2 Financial Standard Guidelines on Anti-Money Laundering Page
Intelligence Unit and Counter Financing of Terrorism 19/23
10.5.2. The Board of Directors should ensure that the roles and
responsibilities of the auditor are clearly defined and documented.
The roles and responsibilities of the auditor should at least
include:
· checking and testing the compliance with, and effectiveness
of, the AML/CFT policies, procedures and controls; and
· assessing whether current measures are in line with the
latest developments and changes of the relevant AML/CFT
requirements.
10.5.3. The auditor must submit a written report on the audit findings to
the Board of Directors, which should be used to highlight
inadequacies of any internal AML/CFT measures and controls and
the Board of Directors should ensure that necessary steps are
taken to rectify the inadequacies, if any.
10.5.4. The reporting institution should ensure that such audit findings and
reports are submitted to the Financial Intelligence Unit in Bank
Negara Malaysia within two weeks of their submission to its Board
of Directors.
11.1. Section 86 of the AMLA provides that any person who contravenes any
provision of the AMLA, or regulations made under the AMLA, or any
specification or requirement made, or any order in writing, direction,
instruction, or notice given, or any limit, term, condition or restriction
imposed, in the exercise of any power conferred under or pursuant to any
provision of the AMLA commits an offence and shall, on conviction, if no
penalty is expressly provided for the offence under the AMLA or the
regulations, be liable to a fine not exceeding RM250,000.
11.3. Notwithstanding any Court order, the Financial Intelligence Unit in Bank
Negara Malaysia may direct or enter into an agreement with the reporting
institution to implement any action plan to ensure compliance with Part IV
of the AMLA. Failure of an officer to take reasonable steps to ensure
compliance with Part IV of the AMLA, or failure of a reporting institution to
BNM/RH/GL 000-2 Financial Standard Guidelines on Anti-Money Laundering Page
Intelligence Unit and Counter Financing of Terrorism 21/23
11.4. In the case of a continuing offence, a further fine may be imposed on the
reporting institution not exceeding RM1,000 for each day during which the
offence continues after conviction. Section 92 of the AMLA further
empowers Bank Negara Malaysia to compound, with the consent of the
Public Prosecutor, any offence under the AMLA or its regulations by
accepting from the person reasonably suspected of having committed the
offence such amount not exceeding 50% of the amount of the maximum
fine for that offence, including the daily fine, if any, in the case of a
continuing offence.
11.5. Section 66E(5) of the AMLA provides that any institution that fails or
refuses to comply with or contravenes any direction or guidelines issued to
it by the relevant regulatory or supervisory authority; or discloses a
direction or guideline issued to it in contravention of Section 66 E(4),
commits an offence and shall on conviction be liable to a fine not
exceeding RM100,000.
BNM/RH/GL 000-2 Financial Standard Guidelines on Anti-Money Laundering Page
Intelligence Unit and Counter Financing of Terrorism 22/23
Appendix
GLOSSARY
beneficial Refers to any natural person(s) who ultimately owns or controls a
owner customer and/or the person on whose behalf a transaction is being
conducted. It also incorporates those persons who exercise
ultimate effective control over a legal person or arrangement.
property Means:
(a) assets of every kind, whether corporeal or incorporeal,
moveable or immovable, tangible or intangible, however
acquired; or
(b) legal documents or instruments in any form, including
electronic or digital, evidencing title to, or interest in, such
assets, including bank credits, traveller’s cheques, bank
cheques, money orders, shares, securities, bonds, drafts and
letters of credit.
390368946.docx Page 25 of 25