ID :
132154
Fri, 07/09/2010 - 14:52
Auther :
Shortlink :
https://oananews.org//node/132154
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MONEY-LAUNDERING AND TERRORIST FINANCING COMPLIANCE ISSUES
By Mohd Azhar Ibrahim
KUALA LUMPUR, July 9, (Bernama) -- The Institute of Bankers Malaysia (IBBM) and the Compliance Officers' Networking Group of Malaysia (CONG) will be hosting a two-day International Conference on Financial Crime and Terrorism Financing (IFCTF) 2010 from 19-20 July at a leading hotel here.
The IFCTF 2010, with the theme 'Strengthening Governance to Derive Value',
is organised jointly with the Asian Institute of Finance (AIF), the Securities
Industry Development Corporation (SIDC) and the Malaysian Insurance Institute
(MII), with support from Malaysia's central bank Bank Negara Malaysia.
The organisers have lined up eminent local and international speakers and
subject matter experts from the Financial Action Task Force (FATF), The World
Bank, US Treasury, Australian Federal Police, AUSTRAC, Asia Pacific Group on
Money Laundering (APG), international banks and consultancy firms, Bank Negara
Malaysia, Securities Commission, Anti-Corruption Commission (MACC) and Ministry
of International Trade and Industry (Miti)
Some of the key issues that will be deliberated upon are risk based measures
to deal with high risk customers and countries, money laundering and terrorism
financing risks in cross border transfers, trade financing and Islamic finance.
Other topics include corruption, human trafficking and ponzi schemes.
THE NEED FOR A SOUND COMPLIANCE SYSTEM
According to CONG chairman V. Maslamani, financial institutions operate in a
dynamic environment influenced by market globalisation, industry consolidation,
convergence of financial services, emerging technology - including the security
threats that come with it.
These forces combine to create inherent risk, and one of the key risks faced
by a financial institution is compliance risk. To mitigate risks and remain
competitive and profitable in such an environment, banks need to continuously
assess and modify their products, services and operational security measures in
the wake of new legislation to address developments in the marketplace.
"Regulators expect banks to have in place a robust risk management process
to manage all the risks inherent in banking business including compliance risk,"
said Maslamani to Bernama.
Banks must develop and maintain a sound compliance system that is integrated
into the risk management strategy of the organisation. The bank's compliance
management system must ensure adequate compliance to regulatory and internal
requirements.
To achieve these, financial institutions must judiciously invest in capacity
building and adequately trained manpower to assist in mitigating undue risk
facing these organisations.
CONG, an advisory committee of IBBM has been working on many initiatives to
inject professionalism and to enhance capacity building of the compliance
officers in Malaysia.
In pursuit of these objectives, CONG actively works with regulators and
learning institutions in Malaysia to raise the level of professionalism in the
compliance function and introduce capacity building programs in the banking
industry.
IFCTF 2010 is one such programme to raise the level of awareness in Malaysia
on the international best practices of Anti-Money Laundering and Counter
Financing of Terrorism measures.
"The IFCTF 2010 is the conduit for local financial institutions to learn
from the experts on the current and future requirements. The deliberation during
the conference will allow compliance officers to align and improve their AML/CFT
compliance program," Maslamani added.
THE CHALLENGE FACING BANKING INSTITUTIONS
The ever changing global regulatory and governance requirements pose a great
challenge for financial institutions to keep up. With regulatory reform and
consumer protection high on the agenda, banks endlessly face new pressures on
several fronts.
Failure to comply with laws, regulations, rules or code of conduct, or other
acceptable standards carries the weight of legal or regulatory sanctions that
inevitably would have an adverse impact to earnings, capital or reputation.
"The challenge for financial institutions is to keep pace with the external
developments. They need to invest in technology and manpower, develop education
programmes, and find technology solutions that will help protect them from
threats posed by criminals ranging from fraudsters, skimmers, money launderers
and terrorist financiers. These criminals operate under the cover of
legitimate-looking businesses that might not be suspected until it's too late,"
Maslamani explained.
RED FLAGS
The FATF is the international standard setter with respect to countering
money laundering and terrorism financing. The FATF '40+9 Recommendations'
currently sets the international standards for combating money laundering (ML)
and terrorist financing (TF), which must be adhered with by financial
institutions worldwide.
"Financial institutions must develop written programmes that identifies and
detects the relevant warning signs of financial crimes and terrorism
financing. Constant revision and sharing of the red flags will assist staff at
the frontline to detect financial crime and terrorism financing," Maslamani
revealed.
The Malaysian banking industry has made significant strides in money
laundering detection and prevention through the Anti-Money Laundering Act (AMLA)
2001 and Know Your Customer (KYC) Policy.
Subsequently, AMLA 2001 Act was updated in 2003 and is now known as the
Anti-Money Laundering and Anti-Terrorism Financing (AMLA-ATFA) Act 2001 to
include terrorist financing.
But with increasingly volatile political and economic developments, coupled
with recurring financial crisis in several parts of the globe, banks continue to
be vulnerable to money laundering and financing of terrorism.
Dubious organisations and individuals are exploiting vulnerabilities in the
international trade and banking systems to move money from illegal sources or
for illegal purposes.
The war against terrorism financing relies on international cooperation and
common accepted rules, objectives and motives. It requires new tools and new
methods.
COMPLYING WITH THE RULES
On April 5, 2010, Malaysia introduced the Strategic Trade Bill specifically
designed to provide control over the trade of materials like electronics,
avionics and software, which could be linked to WMD.
The Strategic Trade Bill deters individuals or corporations from using
Malaysia as a base for illegal arms deal.
More importantly, the Bill facilitates closer partnership between Malaysia
and the rest of the world in the global fight against terrorism and the
proliferation of nuclear, chemical and biological weapons.
Maslamani suggests that financial institution's Compliance Programme be
mandated and managed by the Board of Directors or senior management, and at the
very minimum, should include appropriate staff training as part and parcel of
managing compliance risks.
"Going forward, while compliance requirements should ideally be part of the
daily routine of management and employees of financial institutions, the
ultimate responsibility still rests with the Board of Directors. They can
delegate but not abdicate and the management must be responsible for ensuring
that the Board of Directors have an effective oversight," Maslamani reminded.
-- BERNAMA
KUALA LUMPUR, July 9, (Bernama) -- The Institute of Bankers Malaysia (IBBM) and the Compliance Officers' Networking Group of Malaysia (CONG) will be hosting a two-day International Conference on Financial Crime and Terrorism Financing (IFCTF) 2010 from 19-20 July at a leading hotel here.
The IFCTF 2010, with the theme 'Strengthening Governance to Derive Value',
is organised jointly with the Asian Institute of Finance (AIF), the Securities
Industry Development Corporation (SIDC) and the Malaysian Insurance Institute
(MII), with support from Malaysia's central bank Bank Negara Malaysia.
The organisers have lined up eminent local and international speakers and
subject matter experts from the Financial Action Task Force (FATF), The World
Bank, US Treasury, Australian Federal Police, AUSTRAC, Asia Pacific Group on
Money Laundering (APG), international banks and consultancy firms, Bank Negara
Malaysia, Securities Commission, Anti-Corruption Commission (MACC) and Ministry
of International Trade and Industry (Miti)
Some of the key issues that will be deliberated upon are risk based measures
to deal with high risk customers and countries, money laundering and terrorism
financing risks in cross border transfers, trade financing and Islamic finance.
Other topics include corruption, human trafficking and ponzi schemes.
THE NEED FOR A SOUND COMPLIANCE SYSTEM
According to CONG chairman V. Maslamani, financial institutions operate in a
dynamic environment influenced by market globalisation, industry consolidation,
convergence of financial services, emerging technology - including the security
threats that come with it.
These forces combine to create inherent risk, and one of the key risks faced
by a financial institution is compliance risk. To mitigate risks and remain
competitive and profitable in such an environment, banks need to continuously
assess and modify their products, services and operational security measures in
the wake of new legislation to address developments in the marketplace.
"Regulators expect banks to have in place a robust risk management process
to manage all the risks inherent in banking business including compliance risk,"
said Maslamani to Bernama.
Banks must develop and maintain a sound compliance system that is integrated
into the risk management strategy of the organisation. The bank's compliance
management system must ensure adequate compliance to regulatory and internal
requirements.
To achieve these, financial institutions must judiciously invest in capacity
building and adequately trained manpower to assist in mitigating undue risk
facing these organisations.
CONG, an advisory committee of IBBM has been working on many initiatives to
inject professionalism and to enhance capacity building of the compliance
officers in Malaysia.
In pursuit of these objectives, CONG actively works with regulators and
learning institutions in Malaysia to raise the level of professionalism in the
compliance function and introduce capacity building programs in the banking
industry.
IFCTF 2010 is one such programme to raise the level of awareness in Malaysia
on the international best practices of Anti-Money Laundering and Counter
Financing of Terrorism measures.
"The IFCTF 2010 is the conduit for local financial institutions to learn
from the experts on the current and future requirements. The deliberation during
the conference will allow compliance officers to align and improve their AML/CFT
compliance program," Maslamani added.
THE CHALLENGE FACING BANKING INSTITUTIONS
The ever changing global regulatory and governance requirements pose a great
challenge for financial institutions to keep up. With regulatory reform and
consumer protection high on the agenda, banks endlessly face new pressures on
several fronts.
Failure to comply with laws, regulations, rules or code of conduct, or other
acceptable standards carries the weight of legal or regulatory sanctions that
inevitably would have an adverse impact to earnings, capital or reputation.
"The challenge for financial institutions is to keep pace with the external
developments. They need to invest in technology and manpower, develop education
programmes, and find technology solutions that will help protect them from
threats posed by criminals ranging from fraudsters, skimmers, money launderers
and terrorist financiers. These criminals operate under the cover of
legitimate-looking businesses that might not be suspected until it's too late,"
Maslamani explained.
RED FLAGS
The FATF is the international standard setter with respect to countering
money laundering and terrorism financing. The FATF '40+9 Recommendations'
currently sets the international standards for combating money laundering (ML)
and terrorist financing (TF), which must be adhered with by financial
institutions worldwide.
"Financial institutions must develop written programmes that identifies and
detects the relevant warning signs of financial crimes and terrorism
financing. Constant revision and sharing of the red flags will assist staff at
the frontline to detect financial crime and terrorism financing," Maslamani
revealed.
The Malaysian banking industry has made significant strides in money
laundering detection and prevention through the Anti-Money Laundering Act (AMLA)
2001 and Know Your Customer (KYC) Policy.
Subsequently, AMLA 2001 Act was updated in 2003 and is now known as the
Anti-Money Laundering and Anti-Terrorism Financing (AMLA-ATFA) Act 2001 to
include terrorist financing.
But with increasingly volatile political and economic developments, coupled
with recurring financial crisis in several parts of the globe, banks continue to
be vulnerable to money laundering and financing of terrorism.
Dubious organisations and individuals are exploiting vulnerabilities in the
international trade and banking systems to move money from illegal sources or
for illegal purposes.
The war against terrorism financing relies on international cooperation and
common accepted rules, objectives and motives. It requires new tools and new
methods.
COMPLYING WITH THE RULES
On April 5, 2010, Malaysia introduced the Strategic Trade Bill specifically
designed to provide control over the trade of materials like electronics,
avionics and software, which could be linked to WMD.
The Strategic Trade Bill deters individuals or corporations from using
Malaysia as a base for illegal arms deal.
More importantly, the Bill facilitates closer partnership between Malaysia
and the rest of the world in the global fight against terrorism and the
proliferation of nuclear, chemical and biological weapons.
Maslamani suggests that financial institution's Compliance Programme be
mandated and managed by the Board of Directors or senior management, and at the
very minimum, should include appropriate staff training as part and parcel of
managing compliance risks.
"Going forward, while compliance requirements should ideally be part of the
daily routine of management and employees of financial institutions, the
ultimate responsibility still rests with the Board of Directors. They can
delegate but not abdicate and the management must be responsible for ensuring
that the Board of Directors have an effective oversight," Maslamani reminded.
-- BERNAMA
