Five years back, Bank Negara Malaysia (BNM) bestowed upon us a New Year's treat wrapped in the guise of its AML/CFT and Targeted Financial Sanctions for Financial Institutions (FIs) and Designated Non-Financial Businesses and Professions (DNFBPs) & Non-Bank Financial Institutions (NBFIs) policy documents, playing the role of the ultimate 2020 surprise. Now, in the spirit of celebrating the mighty Year of the Dragon, they've once again treated us to the revised AML/CFT/CPF and TFS policy documents, ensuring our financial landscape remains as formidable as the dragon itself!
These revised policies come with significant changes aimed at enhancing our ability to combat money laundering (ML), terrorism financing (TF), and now, proliferation financing (PF). Here are the key changes from the previous policy documents issued on 31 December 2019:
Inclusion of Countering Proliferation Financing (CPF): The title and content now include Countering Proliferation Financing (CPF) as an integral part of the policy document, which was formerly known as AML/CFT & TFS but is now referred to as AML/CFT/CPF & TFS.
Addition of Required Information in Cash Threshold Reporting (CTR): The policy document now includes the required information in cash threshold reporting (CTR) in the appendix, streamlining reporting procedures.
Alignment with FATF's Action Plan: The background section is updated to align with FATF's efforts to strengthen responses to the growing threat of weapons of mass destruction, emphasising the assessment and mitigation of proliferation financing (PF) risks.
Amended/Expanded Applicability: For FIs, targeted financial sanctions requirements now include insurance and takaful broking and financial advisory businesses. For DNFBPs & NBFIs, the sequence of applicability has been rearranged alphabetically.
Updated Definitions: The 'Definition and Interpretation' section has been expanded to include additional terms such as National Risk Assessment (NRA), Nominator, Nominee Director and Shareholder, Up-to-date information, and Authorised Persons.
New Sections on Proliferation Financing Risk Assessment and Mitigation: Both financial and reporting institutions are now required to identify, assess, and understand proliferation financing risks, with requirements to also manage and mitigate these risks.
Enhanced Employee Screening Procedures: Comprehensive records of employee screening processes are now required to be maintained.
Expanded Training Scope for DNFBPs & NBFIs: The scope of training for junkets now includes identification and escalation of suspicious transactions, with clear reporting mechanisms to AML/CFT/CPF compliance officers.
Group-wide Compliance Requirements: Parent companies of financial/DNFBP groups are mandated to implement group-wide programs against ML/TF/PF, ensuring consistency in AML/CFT/CPF requirements across subsidiaries and branches.
Other DNFBP Structures Requirements: Reporting institutions (RIs) that operate under other DNFBP structures are required to have common AML/CFT/CPF policies and procedures that is consistent with the requirements in Malaysia. Should the AML/CFT/CPF requirements in the RI's host country is less stringent, the RI must apply Malaysia's AML/CFT/CPF requirements.
Requirements for Non-Face-To-Face CDD: Non-face-to-face customer due diligence requirements for FIs now align with electronic Know Your Customer (e-KYC) policies issued by BNM, ensuring secure digital onboarding processes.
Enhancements for Money Service Businesses (MSBs): CDD requirements for MSBs now include mandatory verification methods for non-face-to-face onboarding of new customers, along with additional verification methods for legal persons.
Specific Notices for DNFBPs and NBFIs: Registered Estate Agents, Moneylenders, and Pawnbrokers have received new notices regarding CDD requirements.
Updates in Reporting Links: Links for reporting cash threshold reports (CTRs), suspicious transaction reports (STRs), and accessing the Domestic list by the Ministry of Home Affairs Malaysia (MOHA) have been updated.
Enhanced Sanctions Screening: Requirements for sanctions screening now include screening customers and transactions regardless of thresholds and products/services, capturing essential identification details and maintaining comprehensive screening records.
Appendix Updates: Additional examples for business-based risk assessment (i.e., IRA/EWRA), more red flags, removal of STR forms, and inclusion of required information in cash threshold reports have been made in the appendix.
These revisions reflect Malaysia's commitment to combatting financial crimes effectively. It is imperative for all stakeholders to familiarise themselves with these changes to ensure compliance and contribute to a safer financial environment.
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