By the MIA Practice Review Team
In recent years, the significance of the anti-money laundering (AML) framework has grown exponentially as a means of safeguarding the integrity of financial and professional sectors worldwide. In Malaysia, Bank Negara Malaysia (BNM) has been proactive in ensuring reporting institutions adhere to the stringent requirements outlined in the Anti-Money Laundering, Anti-Terrorism Financing, and Proceeds of Unlawful Activities Act 2001 (AMLA).
The Malaysian Institute of Accountants (MIA), the self-regulatory body for the accountancy profession, collaborates with Bank Negara Malaysia (BNM) to conduct joint supervision focused on compliance with the Anti-Money Laundering Act (AMLA) within the accountancy sector. This initiative plays a vital role in assessing the compliance status of reporting institutions (RIs) in Malaysia. Notably, this marks MIA’s third assessment under AMLA since its introduction, highlighting the profession’s ongoing commitment to rigorous oversight and continuous improvement.
Objectives of the Joint Supervision
The primary objectives of this joint supervision include:
The Process of the Joint Supervision:
Once a RI is selected for examination, MIA will send a written notification of review via registered post. The notification comprises the following:
- Requisition List – The purpose of this document is to serve as a guide in assisting reporting institutions in preparing for Anti-Money Laundering/ Countering the Financing of Terrorism/ Counter Proliferation Financing (AML/CFT/CPF) examination by BNM and MIA examiners. The reporting institution is expected to prepare and provide relevant documents (in soft copy via email) prior to the on-site assessment. The list of documents are based on requirements to be reviewed and assessed, such as Customer Due Diligence (CDD), Customer Risk Profiling (CRP), Terrorism Financing (TF), Proliferation Financing (PF) & Other UN Sanctions Regimes (OSR) Sanctions Screening, Enhanced Due Diligence (EDD) & Ongoing Due Diligence (ODD), Record Keeping, Management Information System (MIS), Suspicious Transaction Reporting (STR) and other compliance functions.
- Submission of Client List – The firm is required to prepare a complete client list in a prescribed format for services defined under the Gazetted Activities (GAs) as per the Policy Document (PD).
On 5 February 2024, BNM issued a revised Policy Document (PD) on AML/CFT/CPF and TFS for DNFBPS and NBFIs which was made effective on 6 February 2024. The link to the revised PD can be found below:
https://www.bnm.gov.my/documents/20124/13380097/pd-AMLCFTCPF-TFS-DNFBI-NBFI-Feb2024.pdf
Firms may also refer to the Practice Review Annual Report, which was recently published on 1 October 2024, for more details on AML/CFT and Accountants.
The completed AML/CFT Requisition List, along with all requested documents mentioned above, should be submitted to the Institute within ten (10) working days from the date of receipt of the notification.
Submission should be made through the Compliance Officer for Anti Money Laundering / Countering Financing of Terrorism (AML/CFT). The Compliance Officer can be the sole proprietor, the senior partner, or another partner of the firm who is being assigned responsibility for AMLA and must be registered with BNM.
1. Selection of Clients for Examination
Once the completed documents have been received from the selected RIs, the reviewer in charge will inform the RIs on the detailed documents for selected sample clients to be submitted. The RIs are given seven (7) days to submit these documents after the Reviewer has identified the clients selected for examination and specified the required documents, as listed below:
- Sample of completed Customer Application Form/Know Your Customer (KYC) form, and evidence of verifying customer information against reliable and independent documentation (e.g. National Registration Identity Card (NRIC), passport, Suruhanjaya Syarikat Malaysia (SSM) record etc.), electronic data and any other measures and make copies of the verified documents, where relevant.
- Documentation to show conduct of customer risk profiling assessment, considering multiple risk factors including customers, products and services, transactions, delivery channels, country or geographical and other information.
- Results of sanctions screening against TF, PF and OSR sanctions list
- EDD process and procedure for obtaining additional information on High-Risk customers and beneficial owners (e.g. the volume of assets and other information from commercial or public databases). The RI should assess the Source of Funds and/or Source of Wealth and obtain approval from Senior Management before establishing such a business relationship with the customer.
- Documentation on ODD conducted on customers including updating customer’s information and analysis of customer’s transaction and assess whether they are consistent with customers’ profiles.
2. Closing meeting with the RIs
A date will be set to communicate the results of the examination to the RIs, and a report card will be issued subsequent to the meeting.
During the closing meeting, the RIs will be required to give a short presentation on the firm’s structure, capacity building in the provision of services under the GAs, and the mechanisms in place to ensure compliance with the AMLA.
Three (3) possible results will be issued subsequent to the examination:
- Full Compliance: No further action required.
- Partial Compliance: Firms are required to submit a progress update report on rectifications within one (1) month from the date of the issuance of the report card.
- Serious Non-Compliance: This could lead to disciplinary action by BNM or MIA.
The reviewer will issue a report card based on their assessment and communicate the findings and rectification measures to the RI. The RI is required to acknowledge receipt and return the signed report card on the same day or the next working day.
Conclusion
While the MIA-BNM joint supervision primarily assesses specific AMLA requirements, RIs must comply with all regulatory obligations under AMLA and relevant subsidiary legislations, including the Policy Document.
The MIA -BNM joint supervision on the compliance status of Reporting Institutions (RIs) in the accountancy profession represents a critical step in assessing and enhancing the AML framework in Malaysia. While progress has been made, ongoing challenges and inconsistencies in compliance reveal the need for sustained efforts in training, resource allocation, and regulatory guidance. Through collaborative efforts, continuous improvement, and adherence to robust compliance practices, the accountancy profession can play a pivotal role in safeguarding the financial system against money laundering and terrorist financing threats, ultimately promoting greater transparency and integrity in Malaysia’s financial landscape.
