Issue #10 | June 2021
Here are the latest news and updates on Anti-Money Laundering, Counter Financing of Terrorism (“AML/CFT”) and sanctions for your knowledge.
Bank Negara Malaysia (“BNM”) issues revised Circular on AML/CFT Compliance Officer Appointment Notification Method and Targeted Financial Sanctions Reporting Forms
BNM has issued a revised circular on 3 May 2021 to inform Designated Non-Financial Businesses and Professions & Non-Bank Financial Institutions that the Compliance Officer Nomination Notification Form has been further amended for clarity and the notification to BNM of new appointment of Compliance Officers may now be submitted via an online form. Additionally, a new email address was made available for targeted sanction reporting.
A new e-platform was launched by BNM to host repository of awareness video materials including all the AML/CFT Webinar applicable to reporting institutions (“RIs”). However, access to the e-platform was restricted to compliance officers whose appointment have been notified to BNM.
Single mother of three charged with 19 counts of Money Laundering ("ML")
Malaysia sues Deutsche Bank, J.P. Morgan and Coutts over 1MDB
KPMG Insights
The revised circular of BNM on AML/CFT Compliance Officer Appointment Notification Method and Targeted Financial Sanctions Reporting Forms together with the new AML/CFT training e-platform is levelling the playing field for digitalisation of AML/CFT processes of traditional banks and the upcoming digital banks which will be licensed in 2022. The question for all RIs remains; whether resources are adequately upskilled to embrace digitalisation of AML/CFT processes.
A move away from physical processes is driven not only by technological advancement, but also by the effects of the Covid-19 pandemic, changes in demographics and the growing pervasiveness of digitalisation.
Hard-hitting questions need to be asked, such as:
- What is my level of exposure to ML/TF risks if I allow accounts to be opened through agents?
- What is the likelihood that scammers or “money mules” will open a digital bank account?
- How might the transaction channels I am offering be misused for ML/TF?
These pulse checks will help identify the control measures needed to mitigate such risks and allow digital banks to set their risk appetite.
It does not stop there. Applicants should thereafter outline the AML/CFT compliance programme to be implemented should they successfully receive a digital banking licence. Here, applicants need to prove they can and will mitigate ML/TF risks identified and comply with regulatory requirements. This includes but is not limited to:
- determining the governance and oversight functions as well as resources;
- drafting policies and procedures
- developing plans to identify customers such as via electronic-know-your-customer (“e-KYC”); and
- identifying user and system requirements for transaction monitoring and name screening systems.
The outline of the applicant’s AML/CFT compliance programme should be part of their proposal to BNM as an assurance that they have a thorough action place in place.
Hong Kong arrests seven in USD $810 million ML case
Sydney casinos to ban cash after ML scandal
The only two casinos in Sydney to make their gaming operations cashless in a bid to stamp out ML. A commitment by Crown to ban cash comes after an inquiry earlier in 2021 found it was likely for criminal activities to occur at casinos in other Australian cities.
United States ("U.S.") charges ex-Bolivian minister with bribery and ML
The U.S. arrested former cabinet minister in the interim government of Bolivia’s ex-President Jeanine Anez for receiving bribes paid by a U.S. company and individuals to secure a Bolivian government contract. The Americans were accused of paying USD $602,000 to the Bolivian officials to secure a USD $5.6 million contract to provide Bolivia’s defense ministry with tear gas and other non-lethal equipment.
Investigation on a Cayman Islands-domiciled cryptocurrency exchange platform for ML
The US Justice Department and Internal Revenue Service are investigating Binance Holdings Ltd. in efforts to root out illicit activity that thrived in the unregulated market. However, Binance’s Chief Executive Officer, Changpeng Zhao, has said that Binance closely follows U.S. rules and uses advanced technology to analyse transactions for signs of ML and other illicit activities.
G20 confirm their support for the Financial Action Task Force ("FATF") as the global standard-setter to prevent money laundering, terrorist financing and proliferation financing ("ML/TF & PF")
G20 Finance Ministers and Central Bank Governors have confirmed their commitment to tackling all sources, techniques and channels of money laundering and the financing of terrorism and proliferation. G20 Finance Ministers are committed to further strengthening the FATF’s Global Network of regional bodies to reinforce the effective implementation of the FATF standards.
Public consultation on FATF draft guidance on a risk-based approach to virtual assets and virtual asset service
The FATF is updating its Guidance on the risk-based approach to virtual assets (“VAs”) and virtual asset service providers (“VASPs”). The FATF originally published this Guidance in June 2019 when the FATF finalised changes to its standards to clearly place AML/CFT obligations on VAs and VASPs. In July 2020, the FATF committed to update this Guidance as set out in its 12-month review report and report to G20 on so-called stablecoins. The FATF is consulting private sector stakeholders before finalising the revisions to the Guidance.
NatWest faces criminal case over ML
For the first time, the Financial Conduct Authority (“FCA”) started criminal proceedings against NatWest Bank over allegedly failing to comply with ML rules, claiming cash deposits totalling to GBP £365 million were made into a United Kingdom (“U.K.”) account between 2011 to 2016. The FCA alleges NatWest’s systems and controls failed to adequately monitor and scrutinise this activity.
U.K. returns GBP £4.2 million stolen by ex-governor to Nigeria
The GBP £4.2 million recovered by U.K. agencies that was stolen by former Delta state governor, James Ibori and laundered in Britain have been returned to Nigeria. The GBP £4.2m has been recovered from Ibori’s wife, sister and fiduciary agent, who were also convicted of ML.
KPMG Insights
VAs and VASPs based on the financial services they provide will need to adopt risk-based approach according to FATF Standards in line with view of G20 approval of FATF as the standard-settler for preventing ML/TF & PF. VAs and VASPs will need to implement controls to identify how peer-to-peer transactions are being used and options to mitigate the aforementioned ML/TF risks. We believe countries will further tighten regulations on AML/CFT compliance on VAs and VASPs upon the finalisation of the above FATF Guidance.
For more information on our AML & Sanctions Services, please contact:
Regards,
About KPMG Forensic's AML & Sanctions Services
KPMG’s award-winning AML & Sanctions team assists our clients in protecting themselves against criminals and the increasingly aggressive actions of regulators. Whether designing and implementing new operating models, remediating problems of the past, designing and testing controls or transforming the culture and capability of the organization, our team operates globally with the largest financial institutions.
For more information please visit www.kpmg.com.my/Forensic/AML
kpmg.com/socialmedia KPMG Malaysia app:
Privacy | Legal
To manage your subscriptions, click here | To unsubscribe, click here
© 2021 KPMG Management & Risk Consulting Sdn. Bhd., a company incorporated under Malaysian law and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG refers to the global organization or to one or more of the member firms of KPMG International Limited (“KPMG International”), each of which is a separate legal entity. KPMG International Limited does not provide services to clients. For more detail about our structure please visit https://www.kpmg.com/governance
KPMG in Malaysia, KPMG Tower, 8 First Avenue, Bandar Utama, 47800 Petaling Jaya, Selangor, Malaysia