By MIA Professional Practices and Technical
This article recaps some of the salient learning points from an AMLA Awareness Workshop hosted by MIA in July 2021 which featured Ms Phoon Ru Yi, an analyst at the Designated Non-Financial Businesses & Professions (DNFBP) Division, Financial Intelligence and Enforcement Department (FIED) of Bank Negara Malaysia. The topics encompassed the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (AMLA), the Anti-Money Laundering/Combating Financing of Terrorism (AML/CFT) Policy Document, best practices in AML/CFT compliance programme for reporting institutions (RIs) in the accountancy sector and case studies on red flags involving accountants. The workshop was attended by 96 MIA members who are also the appointed AML/CFT compliance officers of their firms.
Members who hold valid practising certificates issued pursuant to Rule 9 of the Malaysian Institute of Accountants (Membership and Council) Rules 2001 are RIs under the AMLA and are subject to Part IV Reporting Obligations of the Act, when they carry out any of the gazetted activities (GAs) as follows:
- buying and selling of immovable property;
- managing of client’s money, securities or other property;
- managing of accounts including savings and securities accounts;
- organising of contributions for the creation, operation or management of companies; or
- creating, operating or managing of legal entities or arrangements and buying and selling of business entities
Some examples of services included in GAs are shown in Table 1 below:
Table 1 Gazetted Activities and Examples (Non-Exhaustive)
Accountants who only provide audit services which do not fall within any of the five GAs are not RIs under the AMLA. Notwithstanding, BNM and MIA are currently in the midst of conducting a review to map out the services provided by accountants with the GAs and will communicate the outcome to the accountancy sector accordingly.
AML/CFT Reporting Obligations
The AML/CFT Reporting Obligations under Part IV of the AMLA and AML/CFT are divided into two parts, namely (i) the key requirements, which are the fundamental requirements that all RIs must apply when they undertake GAs for their clients, and (ii) the AML/CFT Compliance Programme which forms a basis for successful AML/CFT infrastructure within the firm, as below:
The compliance programme portion of the revised Policy Document also introduced the application of differentiated approach for small-sized RIs, which is applicable for accounting firms with less than five practicing certificates, which include, among others, the application of policy and procedures, role of board/senior management, employee screening and training. Please see below the graphic:
Implementing AML/CFT Requirements
The following infographic summarises the AML/CFT requirements with simplified explanations for understanding and implementation by RIs:
The Guide explains the main requirements which all RIs must put in place in a step-by-step manner. Steps 1, 2 and 3 are the first steps used for all new and onboarding clients. Step 4 is to enquire for more information as part of Enhanced Due Diligence (EDD) for high-risk customers, either automatically or through risk assessment. Step 5 involves the reporting of Suspicious Transaction Reports (STR) depending on the review of the information obtained in the earlier steps. Step 6 requires proper record keeping to be maintained and kept manually or digitally, depending on the size and complexity of the RI. Last but not least, Step 7 On-going due diligence (ODD) involves periodically updating and monitoring transactions and information of customers.
Examples of good practices and common lapses that were found by BNM when they examined accountants on their compliance to AML/CFT requirements are summarised in the following infographic:
Case study and Red Flags
Accountants may face possible money laundering abuse scenarios as shown in the following case study involving the use of a third party and shell companies to conceal the involvement of Politically Exposed Persons (PEP):
In helping RI to identify suspicious transactions, possible red flags were also shared for RIs to reflect upon their own transactions that may give rise to suspicion as provided in the infographic below:
For accountants in particular, the following are the possible red flags that could be incorporated in the monitoring of transactions by accountants:
As part of a continuous effort to increase the AML/CFT awareness and understanding of RIs, RIs can look forward to more initiatives from MIA in collaboration with BNM in the near future. BNM is encouraging more industry-led efforts in AML/CFT compliance through joint initiatives with MIA such as the AML/CFT Train the Trainer programmes which aim to produce industry experts who are qualified to be AML/CFT trainers for the accounting sector. For further information on AML/CFT matters, you may visit BNM’s AML/CFT microsite at http://amlcft.bnm.gov.my.
Note : The workshop did not cover company secretarial services, which are also GAs that may be performed by MIA members.