Back in 2013, Bank Negara Malaysia (BNM) issued its Anti-Money Laundering/Countering Financing of Terrorism (AML/CFT) policy documents that was broken down into five (5) sectors, which were:
Banking and Deposit-Taking Institutions - (Sector 1)
Insurance and Takaful - (Sector 2)
Money Service Business - (Sector 3)
Electronic Money and Non-Bank Affiliated Charge and Credit Card - (Sector 4)
Designated Non-Financial Businesses and Professions (DNFBPs) and Other Non-Financial Sectors - (Sector 5)
A day before 2020, i.e., 31 December 2019, BNM announced on its website that it had issued revised policy documents on AML/CFT to replace the existing AML/CFT policy documents, which took into effect 1 January 2020 and supersedes the above-mentioned policy documents. The current Anti-Money Laundering/Countering Financing of Terrorism & Targeted Financial Sanctions policy document, collectively known as "AML/CFT & TFS", are divided into two (2), which are:
AML/CFT & TFS for Financial Institutions (FIs); and
AML/CFT & TFS for Designated Non-Financial Businesses and Professions (DNFBPs) and Non-Bank Financial Institutions (NBFIs).
Key Differences between Both Policy Documents
Understanding these differences is like distinguishing between a jungle adventure and a leisurely day at the beach – both exciting in their own way, but you ought to pack different gear for each. So, let's put on our metaphorical hiking boots and snorkelling flippers as we dive into the wild terrain of Malaysia's AML/CFT policy landscape, and see what makes these documents.
Although both policy documents (PDs) play vital roles in ensuring the effective implementation of Malaysia's AML/CFT regulations, the AML/CFT & TFS policy for FIs is notably more comprehensive compared to the AML/CFT & TFS policy for DNFBPs and NBFIs PD. This distinction arises from the heightened risk associated with FIs being more susceptible to facilitating money laundering (ML) and terrorist financing (TF) activities, collectively referred to as 'ML/TF' activities. Nevertheless, it is crucial to emphasise that the AML/CFT & TFS policy for DNFBPs and NBFIs PD still encompasses fundamental AML/CFT requirements.
Together, these documents form the dynamic duo, keeping the financial world of Malaysia on its toes, and ensuring that every coin and bill has a squeaky-clean backstory. So, let's dive right into understanding the key differences between the AML/CFT PDs!
Applicability
The respective AML/CFT & TFS policy documents contain requirements and guidelines that are relevant to a variety of reporting institutions engaged in diverse business activities.
Regulatory Authority
In the realm of AML/CFT, different regulatory authorities are responsible for overseeing distinct categories of institutions.
Financial Institutions (FIs): In the case of financial institutions, such as banks and insurance companies, the primary regulatory authority entrusted with AML/CFT oversight is the Central Bank of Malaysia (Bank Negara Malaysia), along with the Securities Commission Malaysia, which oversees capital market intermediaries. These regulatory bodies play a pivotal role in ensuring compliance with AML/CFT regulations within the financial sector.
Designated Non-Financial Businesses and Professions (DNFBs) and Non-Banking Financial Institutions (NBFIs): DNFBs and NBFIs encompass a diverse range of professionals, including lawyers, accountants, real estate agents, and dealers in precious metals and stones. Various professional bodies or associations, such as the Bar Council for lawyers and Ministry of Local Government Development (Kementerian Pembangunan Kerajaan Tempatan) for moneylenders, also play a part in supervising compliance.
Exemptions
Bank Negara Malaysia (BNM) provides varying exemptions to different categories of companies under the AML/CFT & TFS policy documents, reflecting a tailored approach to regulatory compliance.
Regulatory Expectations
BNM has set out varying regulatory expectations for FIs and DNFBPs & NBFIs in its respective AML/CFT & TFS policy documents. While both guidelines share common objectives of preventing financial crime and ensuring compliance with international AML/CFT standards, there are three (3) notable differences in the regulatory expectations imposed on thee two categories of entities.
Other Key Differences
Last but not least, let us touch on the other key differences noted between the two (2) AML/CFT & TFS policy documents. The AML/CFT & TFS policy document for FIs comprises of more AML/CFT requirements when compared against the AML/CFT & TFS policy document for DNFBPs & NBFIs. Nonetheless, the AML/CFT & TFS policy document for DNFBPs and NBFIs are supplemented with more guidance in the form of glossary, templates, forms and infographics.
And that's a wrap for our dive into AML/CFT & TFS policy docs in Malaysia!
We trust you had a blast reading this and have a clear picture of the contrasting features in these AML/CFT & TFS policies set forth by the awesome folks at BNM.
So, what's next? Well, keep your eyes peeled for our next article – it's all about the Risk-Based Approach ("RBA") to AML/CFT. Stay tuned for more financial fun! 😄📚
We hope you enjoyed the insights shared in this article. At Biji Deals, we are dedicated to providing solutions that not only inform but also empower you to take your AML/CFT compliance to the next level!
Ready to turn knowledge into action? Reach out to us today!
Our team of experts is poised to tailor solutions specifically for you, ensuring you're equipped to tackle challenges head-on and seize every opportunity that comes your way.
Comments