AMLA Malaysia is a hot topic, especially amongst financial institutions in Malaysia. This article explains what it is, the main and risks of non-compliance.
What is AMLA Malaysia?
Amla Malaysia is a framework to prevent money laundering and counter financing of terrorism activities in Malaysia. The main law is the Anti-Money Laundering, Anti-Terrorism Financing, and Proceeds of Unlawful Activities Act 2001 (‘AMLA’).
Being the primary piece of legislation, Section 4 of the AMLA makes money laundering a crime and defines it as 'the act of acquiring, possessing, using, hiding, or converting money or illegal proceeds made illegally.' It also makes it illegal to help, plan, or try to commit these offences.
Terrorist financing, on the other hand, means the supply or collection of funds to carry out terrorist acts or support terrorist organizations.
AMLA applies to various groups, including non-profit organisations, financial institutions, designated non-financial businesses, and professions. Under this law, these entities must do and comply with certain things which are further explained below.
Apart from AMLA, each industry has its laws on compliance such as banking and financial services have laws on financial regulation, capital market, and banking legislation that complement AMLA.
Main Obligations Under AMLA Act
There are several obligations that businesses, especially financial institutions and individuals must follow. Some of the most important obligations include:
Customer Due Diligence (CDD)
Under Section 16 of the AMLA, reporting institutions such as Malaysian financial institutions i.e. banks must do customer due diligence on their new customers to find out and verify their identities, understand the nature and purpose of the business relationship, and assess the risk of money laundering and terrorism financing.
Record-Keeping
Under section 17 of the AMLA, reporting institutions in the financial sector must maintain customer identification records and transaction documents for at least 6 years from when the business relationship ended or the transaction was completed. These records including details on bank accounts must be made available to the related authorities upon request.
Suspicious Transaction Reporting (STR)
Under section 14 of the AMLA, reporting institutions must promptly report any suspicious activity, financial activities or attempted transactions they suspect may be related to financial crimes, money laundering, terrorist financing, or proceeds of unlawful activities to the Financial Intelligence and Enforcement Agency.
Internal Controls and Compliance
Under section 19 of the AMLA, reporting institutions in our country must set up and maintain a robust internal control system and financial networks, including appointing a compliance officer to ensure compliance with AMLA Malaysia, as well as an ongoing employee training program on AML/CFT matters.
Potential Risks and Penalties for Non-Compliance
Businesses and people can face serious risks and fines if they don't follow the regulatory requirements of AMLA Malaysia. Some of the possible risks are:
Criminal Penalties
f you don't follow it, you can be charged with a crime and face imprisonment, fines, or the loss of your property.
Regulatory Sanctions
If an organisation doesn't follow the regulatory requirements and regulations, the financial regulators such as the Central Bank of Malaysia, or the Public Prosecutor under the Department of Attorney General Chambers could take action to make them do so. Enforcement actions include giving instructions, administrative fines, or revoking the licence.
Reputational Damage
Non-compliance can significantly harm the reputation of a business or individual, leading to loss of business, reduced investor confidence, and increased regulatory scrutiny.
What are Different Offences of Money Laundering?
Money laundering offences under AMLA Malaysia can be broadly categorized into three types:
Serious Offences
Serious offences, also known as predicate offences are criminal acts that generate illegal proceeds, which are then laundered through the financial systems. Some examples of predicate offences include drug trafficking, corruption, fraud, and tax evasion.
Money Laundering Offences
Money laundering offences involve the conversion, transfer, or concealment of property derived from predicate offences, with the intent to disguise the illicit origin of the property or to avoid prosecution. This includes the acquisition, possession, or use of such property.
Terrorist Financing Offences
Terrorist financing offences involve giving or getting money directly or indirectly to do terrorist acts or helping terrorist groups as under Section 130N, 130O, 130P, or 130Q of the Penal Code.
The Role of a Lawyer
A lawyer experienced with AMLA Malaysia can help businesses and individuals understand and comply with the related laws. Some of the list of services a lawyer can provide include:
Advising on AMLA Malaysia Requirements
A lawyer can give legal advice on the different obligations and requirements, which can help businesses and people understand their compliance responsibilities and meet them.
Developing and Implementing Compliance Programs
A lawyer can help a business or person develop and implement a complete AML/CFT compliance program, including policies, procedures, and internal controls, that fits their needs, risks, and challenges.
Helping with regulatory reporting and disclosures
A lawyer can guide businesses and individuals through preparing and submitting reports and disclosures required, such as suspicious transaction reports and customer due diligence information to be submitted to regulatory authority.
Representing a client in court
A lawyer can represent a client in court and look out for their best interests if there is an investigation or order by the government for criminal activities.
Tips for Choosing the Right Lawyer
When choosing a lawyer for AMLA Malaysia matters, businesses and individuals should consider the following factors:
Experience and Expertise
Look for a lawyer experienced in the area who understands the law requirements and provisions on anti-money laundering in Malaysia. Legal proceedings involving AMLA is sometimes commenced through court documents originating summons, and rarely through writ of summons.
Reputation and references
Ask coworkers or people in the same field for recommendations, and learn about the lawyer's reputation by reading client testimonials and online reviews.
Communication and responsiveness
Choose a lawyer who is quick to respond and good at communicating to keep you updated and involved in the compliance process.
Conclusion
AMLA Malaysia may be hard to understand for both businesses and individuals as it can look like a legal mystery.
If you need help with AMLA Malaysia compliance or are facing an investigation or enforcement action and looking for a law firm in Kuala Lumpur, do contact us to talk about your needs. Our experienced team can help you protect your interests.
Frequently Asked Questions
1. What is AMLA Malaysia?
Amla Malaysia is a policy to prevent money laundering and counter financing of terrorism activities in Malaysia. The main law is the Anti-Money Laundering, Anti-Terrorism Financing, and Proceeds of Unlawful Activities Act 2001 (‘AMLA’).
2. What is the penalty for AMLA in Malaysia?
Some of the penalties for non-compliance with the laws of AMLA Malaysia include fines and imprisonment. Proceeds from money laundering can also be forfeited.
3. What are the crimes under AMLA?
The crimes under AMLA include money laundering activities of acquiring and using money from illegal activities. It also includes attempts or assists in committing these offences.
