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df19bf65fd7347f8c3e1bf06fc06d03c39a7e8b67ae35a78c74ef147c3cd4fe2ac3f1367d2f4af01 5fd8f8eed3e1a7fc25a7c5975ab57aefed71fb307c64f8b1ff000505ff00825b7ed2fe04d1344d4b e1a7ec69e23fdadb5cf8b82ffc4765a57896fedbf680fd9ef50f833e11b6f03691730bc1addde8fa ddeb6b5e295d5f55f0d5adae871c27479f5fd526934eb228a0083fe0a49fb2378c7f6b7f18fec130 69ff000bfe1d7c55f85ffb3ffed81a57c7cf8dfe14f89d3f87aef45f11fc3ed3be107c59f86d2f87 f46f09f8934bd5f46f16f898eabf1234ff00105869de201a2e848ba0334bae5b5ebda94f9af46fd8 fbf6eefd98be0a7ed39fb10fece773e12f1dfecabf1220d5f4afd903e21dff00c4997c35f1a7f63c f02fc5ed5a683e2e7c2ed5acf5fd0ee6dfc7da07c26d1f5cf16f88ff00661f14c1e27d47c4b06aed e17f87de3d82dbc31651f8bb4128a3fafebfafc907e9fd7f5ff011da6a1ff04ded73f66ffdb73f63 0fdaa3f628d13596f08780be13fc45fd95ff006a3f00fc51fda13e2df8eb56d63f661d52c7c35af7 c1fd07e16de7c5ff0017fc47b5d22f7e0bfc4bf0f0d77c39e06d3750f0a7842f749d67c4ba72ea7a 2cf7b05ebb7e187c04fdb87e027ede7ff0542fda53c0df053e0ff8f7c13fb6a7883f665d53e1349e 24f8f577e0fd5fc3173fb3f7ecefa7fc17bcb9f1f787b4ff00861e2751a5f8835fd397c41611683e 20bcd493c3f2ac1770d96aa5ada228a00f69f0dfecc3f1934bff0082bffc4efdb4ef344d13fe1477 8c7f614f86ff00b2e68d756fe23b19bc5f178ebc17f19bc69f15351d7353f0dc90c2b6be0ebbd2fc 510e8d617967abdfeb6fadda37dafc3b6fa5cabaa41f2d7ed09ff0482f14fed2ff00b34fed4b7fe3 5f88171e15fdbd3e34fc64f157ed1ff0cbe207833e3dfed0307c06f865f183e19f8a6c53f630b89f c0d14ba3f837587f85df0a7e1cfc1cf879e32f1ede7c0ed43c56f25978bb59f0fd8cf2368b021450 07b2fdb3fe0bcbff00423ffc12bbff000ff7ed49ff00d08d451451fd6cbfc85f37f87f91ffd9}}}} } \pard\sb0\sl-240{\bkmkstart Pg1}{\bkmkend Pg1}\par\pard\ql \li1663\sb0\sl-480\sl mult0 \par\pard\ql\li1663\sb0\sl-480\slmult0 \par\pard\ql\li1663\sb0\sl-480\slmu lt0 \par\pard\ql\li1663\sb0\sl-480\slmult0 \par\pard\ql\li1663\ri1447\sb263\sl-4 80\slmult0\tx4024 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf2\f3\fs27 An A nalysis of the Malaysian Anti-Money Laundering Laws and their \line\tab \up0 \ex pndtw-3\charscalex100 Impact on Banking Institutions \par\pard\ql \li4658\sb0\sl -310\slmult0 \par\pard\ql\li4658\sb0\sl-310\slmult0 \par\pard\ql\li4658\sb0\sl-3 10\slmult0 \par\pard\ql\li4658\sb151\sl-310\slmult0 \up0 \expndtw-3\charscalex10 0 Aspalella A. Rahman \par\pard\ql \li3098\sb170\sl-310\slmult0 \up0 \expndtw-3\ charscalex100 LL.B (Hons) (IIUM) LL.M (University of Wales) \par\pard\ql \li1654 \sb0\sl-460\slmult0 \par\pard\ql\li1654\sb0\sl-460\slmult0 \par\pard\ql\li1654\s b0\sl-460\slmult0 \par\pard\ql\li1654\ri1440\sb87\sl-460\slmult0\tx4016 \up0 \ex pndtw-3\charscalex100 \ul0\nosupersub\cf3\f4\fs27 This thesis is presented for t he degree of Doctor of Philosophy of The \line\tab \up0 \expndtw-3\charscalex100 University of Western Australia \par\pard\ql \li5019\sb0\sl-310\slmult0 \par\pa rd\ql\li5019\sb0\sl-310\slmult0 \par\pard\ql\li5019\sb4\sl-310\slmult0 \up0 \exp ndtw-3\charscalex100 \ul0\nosupersub\cf2\f3\fs27 Faculty of Law \par\pard\ql \li 5631\sb0\sl-310\slmult0 \par\pard\ql\li5631\sb0\sl-310\slmult0 \par\pard\ql\li56 31\sb0\sl-310\slmult0 \par\pard\ql\li5631\sb0\sl-310\slmult0 \par\pard\ql\li5631 \sb0\sl-310\slmult0 \par\pard\ql\li5631\sb0\sl-310\slmult0 \par\pard\ql\li5631\s b0\sl-310\slmult0 \par\pard\ql\li5631\sb0\sl-310\slmult0 \par\pard\ql\li5631\sb0 \sl-310\slmult0 \par\pard\ql\li5631\sb0\sl-310\slmult0 \par\pard\ql\li5631\sb0\s l-310\slmult0 \par\pard\ql\li5631\sb0\sl-310\slmult0 \par\pard\ql\li5631\sb0\sl310\slmult0 \par\pard\ql\li5631\sb0\sl-310\slmult0 \par\pard\ql\li5631\sb90\sl-3 10\slmult0 \up0 \expndtw-3\charscalex100 2008 \par\pard\sect\sectd\fs24\paperw11 900\paperh16840\pard\sb0\sl-240{\bkmkstart Pg2}{\bkmkend Pg2}\par\pard\ql \li598 2\sb0\sl-218\slmult0 \par\pard\ql\li5982\sb0\sl-218\slmult0 \par\pard\ql\li5982\ sb0\sl-218\slmult0 \par\pard\ql\li5982\sb0\sl-218\slmult0 \par\pard\ql\li5982\sb 0\sl-218\slmult0 \par\pard\ql\li5982\sb0\sl-218\slmult0 \par\pard\ql\li5982\sb0\ sl-218\slmult0 \par\pard\ql\li5982\sb0\sl-218\slmult0 \par\pard\ql\li5982\sb95\s l-218\slmult0 \up0 \expndtw-4\charscalex100 \ul0\nosupersub\cf4\f5\fs23 A\ul0\no supersub\cf5\f6\fs18 BSTRACT \par\pard\qj \li2205\sb0\sl-402\slmult0 \par\pard\q j\li2205\ri914\sb88\sl-402\slmult0 \up0 \expndtw0\charscalex102 \ul0\nosupersub\ cf1\f2\fs23 Money laundering has been described by many as the lifeblood of crim e and is a major \line \up0 \expndtw0\charscalex104 threat to the economic and s ocial well-being of societies. In recent years a number of \line \up0 \expndtw0\ charscalex102 countries have implemented laws to fight against money laundering and Malaysia is no \line \up0 \expndtw0\charscalex100 exception. The Malaysian A nti Money Laundering Act (AMLA) was passed in 2001 and \line \up0 \expndtw0\char scalex100 came into force in January 2002. It was amended in 2003 to include mea

sures to combat \line \up0 \expndtw-1\charscalex100 against terrorism financing. Following the amendment, AMLA was renamed Anti-Money \line \up0 \expndtw0\chars calex100 Laundering and Anti-Terrorism Financing Act 2001 (AMLATFA). AMLATFA not only \line \up0 \expndtw0\charscalex102 criminalizes money laundering and t errorism financing, but also imposes various \line \up0 \expndtw0\charscale x100 obligations on reporting institutions. It includes measures for the investi gation of money \line \up0 \expndtw0\charscalex103 laundering and terrorism fina ncing offences and the freezing, seizure and forfeiture of \line \up0 \expndtw-5 \charscalex100 criminal proceeds. \par\pard\qj \li2205\ri914\sb398\sl-403\slmult 0 \up0 \expndtw0\charscalex100 Banks as the main reporting entities have borne t he brunt of the measures introduced by \line \up0 \expndtw-3\charscalex100 AMLAT FA. Despites its introduction in 2002, little academic research has been carried out \line \up0 \expndtw0\charscalex100 on how the legislation impacts on banks in Malaysia. This study attempts to address that \line \up0 \expndtw0\charscalex 108 need. It will analyse how the relevant provisions of AMLATFA affect banks, t heir \line \up0 \expndtw-3\charscalex100 operations and relationships with outsi ders, such as customers and other stakeholders. This \line \up0 \expndtw0\charsc alex108 study is divided into seven chapters. The first chapter gives an overvie w of money \line \up0 \expndtw-1\charscalex100 laundering. The second chapter lo oks at various international initiatives to combat money \line \up0 \expndtw-3\c harscalex100 laundering. Chapter three examines the anti-money laundering laws o f Malaysia with much \line \up0 \expndtw-2\charscalex100 of the emphasis on the relevant provisions of AMLATFA. Chapter four examines how the \line \up0 \expndt w-4\charscalex100 law impacts on the operations of banks. Chapters five focuses on the anti-money laundering \line \up0 \expndtw0\charscalex103 measures in the Malaysian offshore financial centre. Chapter six looks at how the law \line \up0 \expndtw0\charscalex104 impacts on the banks\u8217? relationship with outsiders . Chapter seven provides a survey of \line \up0 \expndtw-5\charscalex100 Austral ian anti-money laundering laws as a basis for comparison. \par\pard\ql \li10735\ sb0\sl-264\slmult0 \par\pard\ql\li10735\sb0\sl-264\slmult0 \par\pard\ql\li10735\ sb0\sl-264\slmult0 \par\pard\ql\li10735\sb0\sl-264\slmult0 \par\pard\ql\li10735\ sb0\sl-264\slmult0 \par\pard\ql\li10735\sb0\sl-264\slmult0 \par\pard\ql\li10735\ sb168\sl-264\slmult0 \up0 \expndtw-3\charscalex100 i \par\pard\sect\sectd\fs24\p aperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart Pg3}{\bkmkend Pg3}\par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\ li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li 2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb241\sl-264\slmult0 \up0 \expndtw-5 \charscalex100 \ul0\nosupersub\cf1\f2\fs23 This study draws a number of broad co nclusions: \par\pard\ql \li2555\ri917\sb44\sl-400\slmult0\tx2906\tx2906 \up0 \ex pndtw0\charscalex103 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2 \fs23 First, AMLATFA, by comparison with similar laws in other countr ies is \line\tab \up0 \expndtw-1\charscalex100 comprehensive and up-to-date, bu t the regulatory authorities need to provide more \line\tab \up0 \expndtw-2\char scalex100 guidelines to facilitate compliance; \par\pard\ql \li2555\ri913\sb11\s l-412\slmult0\tx2906\tx2906\tx2906 \up0 \expndtw-2\charscalex100 \u-3913?\ul0\no supersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 Secondly, the legislation im poses a significant burden on banks and yet there is no \line\tab \up0 \expndtw4\charscalex100 way of gauging its effectiveness in the absence of any reliable statistics; \line \up0 \expndtw-3\charscalex100 \u-3913?\ul0\nosupersub\cf6\f7\f s23 \ul0\nosupersub\cf1\f2\fs23 Thirdly, the legislation has not only altered the way banks deal with their customers \line\tab \up0 \expndtw-4\charscalex100 and other banks, but also poses significant legal risks for non-compliant banks ; \line \up0 \expndtw-3\charscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\ nosupersub\cf1\f2\fs23 Finally, getting the right balance between the need to combat money laundering and \line\tab \up0 \expndtw-4\charscalex100 the interest s of bank is a difficult exercise. \par\pard\ql \li10670\sb0\sl-264\slmult0 \par \pard\ql\li10670\sb0\sl-264\slmult0 \par\pard\ql\li10670\sb0\sl-264\slmult0 \par \pard\ql\li10670\sb0\sl-264\slmult0 \par\pard\ql\li10670\sb0\sl-264\slmult0 \par \pard\ql\li10670\sb0\sl-264\slmult0 \par\pard\ql\li10670\sb0\sl-264\slmult0 \par \pard\ql\li10670\sb0\sl-264\slmult0 \par\pard\ql\li10670\sb0\sl-264\slmult0 \par

\pard\ql\li10670\sb0\sl-264\slmult0 \par\pard\ql\li10670\sb0\sl-264\slmult0 \par \pard\ql\li10670\sb0\sl-264\slmult0 \par\pard\ql\li10670\sb0\sl-264\slmult0 \par \pard\ql\li10670\sb0\sl-264\slmult0 \par\pard\ql\li10670\sb0\sl-264\slmult0 \par \pard\ql\li10670\sb0\sl-264\slmult0 \par\pard\ql\li10670\sb0\sl-264\slmult0 \par \pard\ql\li10670\sb0\sl-264\slmult0 \par\pard\ql\li10670\sb0\sl-264\slmult0 \par \pard\ql\li10670\sb0\sl-264\slmult0 \par\pard\ql\li10670\sb0\sl-264\slmult0 \par \pard\ql\li10670\sb0\sl-264\slmult0 \par\pard\ql\li10670\sb0\sl-264\slmult0 \par \pard\ql\li10670\sb0\sl-264\slmult0 \par\pard\ql\li10670\sb0\sl-264\slmult0 \par \pard\ql\li10670\sb0\sl-264\slmult0 \par\pard\ql\li10670\sb0\sl-264\slmult0 \par \pard\ql\li10670\sb0\sl-264\slmult0 \par\pard\ql\li10670\sb0\sl-264\slmult0 \par \pard\ql\li10670\sb0\sl-264\slmult0 \par\pard\ql\li10670\sb0\sl-264\slmult0 \par \pard\ql\li10670\sb0\sl-264\slmult0 \par\pard\ql\li10670\sb0\sl-264\slmult0 \par \pard\ql\li10670\sb99\sl-264\slmult0 \up0 \expndtw-5\charscalex100 ii \par\pard\ sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart Pg4}{\bkmkend Pg4}\par\pard\ql \li4705\sb0\sl-264\slmult0 \par\pard\ql\li4705\sb0\sl-264\slmu lt0 \par\pard\ql\li4705\sb0\sl-264\slmult0 \par\pard\ql\li4705\sb0\sl-264\slmult 0 \par\pard\ql\li4705\sb0\sl-264\slmult0 \par\pard\ql\li4705\sb0\sl-264\slmult0 \par\pard\ql\li4705\sb0\sl-264\slmult0 \par\pard\ql\li4705\sb13\sl-264\slmult0 \ up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf4\f5\fs23 TABLE\ul0\nosupersub\cf 5\f6\fs18 \ul0\nosupersub\cf4\f5\fs23 OF\ul0\nosupersub\cf5\f6\fs18 \ul0\nosup ersub\cf4\f5\fs23 CONTENTS \par\pard\li1400\sb0\sl-264\slmult0\par\pard\li1400\s b0\sl-264\slmult0\par\pard\li1400\sb0\sl-264\slmult0\par\pard\li1400\sb162\sl-26 4\slmult0\fi0\tx9802 \up0 \expndtw-3\charscalex100 ABSTRACT\tab \up0 \expndtw-3\ charscalex100 i\par\pard\li1400\sb140\sl-264\slmult0\fi0\tx9803 \up0 \expndtw-3\ charscalex100 TABLE OF CONTENTS\tab \up0 \expndtw-3\charscalex100 iii\par\pard\l i1400\sb138\sl-264\slmult0\fi0\tx9803 \up0 \expndtw-3\charscalex100 ACKNOWLEDGEM ENTS\tab \up0 \expndtw-3\charscalex100 vi\par\pard\li1400\sb139\sl-264\slmult0\f i0\tx9802 \up0 \expndtw-3\charscalex100 STATEMENT OF CANDIDATE AUTHORSHIP\tab \u p0 \expndtw-3\charscalex100 vii\par\pard\li1400\sb139\sl-264\slmult0\fi0\tx9802 \up0 \expndtw-3\charscalex100 LIST OF PUBLICATIONS\tab \up0 \expndtw-3\charscale x100 viii\par\pard\li1400\sb138\sl-264\slmult0\fi0\tx9802 \up0 \expndtw-3\charsc alex100 INTRODUCTION\tab \up0 \expndtw-3\charscalex100 1\par\pard\li1400\sb0\sl264\slmult0\par\pard\li1400\sb0\sl-264\slmult0\par\pard\li1400\sb13\sl-264\slmul t0\fi0 \up0 \expndtw-3\charscalex100 CHAPTER ONE\par\pard\li1400\sb139\sl-264\sl mult0\fi0 \up0 \expndtw-3\charscalex100 MONEY LAUNDERING: AN OVERVIEW\par\pard\l i1400\sb136\sl-264\slmult0\fi0\tx2101\tx9802 \up0 \expndtw-3\charscalex100 \ul0\ nosupersub\cf1\f2\fs23 1.1\tab \up0 \expndtw-3\charscalex100 Introduction\tab \u p0 \expndtw-3\charscalex100 11\par\pard\li1400\sb139\sl-264\slmult0\fi0\tx2101\t x9802 \up0 \expndtw-3\charscalex100 1.2\tab \up0 \expndtw-3\charscalex100 Defini tion and Background to Money Laundering\tab \up0 \expndtw-3\charscalex100 11\par \pard\li1400\sb138\sl-264\slmult0\fi0\tx2101\tx9802 \up0 \expndtw-3\charscalex10 0 1.3\tab \up0 \expndtw-3\charscalex100 Stages and Methods of Money Laundering\t ab \up0 \expndtw-3\charscalex100 16\par\pard\li1400\sb139\sl-264\slmult0\fi0\tx2 101\tx9803 \up0 \expndtw-3\charscalex100 1.4\tab \up0 \expndtw-3\charscalex100 T he Impact of Money Laundering\tab \up0 \expndtw-3\charscalex100 26\par\pard\li14 00\sb138\sl-264\slmult0\fi0\tx2101\tx9802 \up0 \expndtw-3\charscalex100 1.5\tab \up0 \expndtw-3\charscalex100 Terrorism Financing\tab \up0 \expndtw-3\charscalex 100 29\par\pard\li1400\sb140\sl-264\slmult0\fi0\tx2101\tx9802 \up0 \expndtw-3\ch arscalex100 1.6\tab \up0 \expndtw-3\charscalex100 Summary\tab \up0 \expndtw-3\ch arscalex100 33\par\pard\li1400\sb0\sl-264\slmult0\par\pard\li1400\sb0\sl-264\slm ult0\par\pard\li1400\sb14\sl-264\slmult0\fi0 \up0 \expndtw-3\charscalex100 \ul0\ nosupersub\cf4\f5\fs23 CHAPTER TWO\par\pard\li1400\sb138\sl-264\slmult0\fi0 \up0 \expndtw-3\charscalex100 INTERNATIONAL INITIATIVES AND COUNTER-MEASURES\par\par d\li1400\sb137\sl-264\slmult0\fi0\tx2101\tx9802 \up0 \expndtw-3\charscalex100 \u l0\nosupersub\cf1\f2\fs23 2.1\tab \up0 \expndtw-3\charscalex100 Introduction\tab \up0 \expndtw-3\charscalex100 35\par\pard\li1400\sb138\sl-264\slmult0\fi0\tx210 1\tx9802 \up0 \expndtw-3\charscalex100 2.2\tab \up0 \expndtw-3\charscalex100 The United Nations Initiatives\tab \up0 \expndtw-3\charscalex100 35\par\pard\li1400 \sb139\sl-264\slmult0\fi0\tx2101\tx9804 \up0 \expndtw-3\charscalex100 2.3\tab \u p0 \expndtw-3\charscalex100 The Basle Committee on Banking Supervision\tab \up0

\expndtw-3\charscalex100 41\par\pard\li1400\sb138\sl-264\slmult0\fi0\tx2100\tx98 02 \up0 \expndtw-3\charscalex100 2.4\tab \up0 \expndtw-3\charscalex100 The Finan cial Action Task Force\tab \up0 \expndtw-3\charscalex100 44\par\pard\li1400\sb13 9\sl-264\slmult0\fi0\tx2101\tx9803 \up0 \expndtw-3\charscalex100 2.5\tab \up0 \e xpndtw-3\charscalex100 The Wolfsberg Group\tab \up0 \expndtw-3\charscalex100 52\ par\pard\li1400\sb138\sl-264\slmult0\fi0\tx2101\tx9803 \up0 \expndtw-3\charscale x100 2.6\tab \up0 \expndtw-3\charscalex100 The Asia/Pacific Group on Money Laund ering\tab \up0 \expndtw-3\charscalex100 54\par\pard\li1400\sb139\sl-264\slmult0\ fi0\tx2101\tx9802 \up0 \expndtw-3\charscalex100 2.7\tab \up0 \expndtw-3\charscal ex100 Summary\tab \up0 \expndtw-3\charscalex100 56\par\pard\ql \li10306\sb0\sl-2 64\slmult0 \par\pard\ql\li10306\sb0\sl-264\slmult0 \par\pard\ql\li10306\sb0\sl-2 64\slmult0 \par\pard\ql\li10306\sb0\sl-264\slmult0 \par\pard\ql\li10306\sb0\sl-2 64\slmult0 \par\pard\ql\li10306\sb38\sl-264\slmult0 \up0 \expndtw-4\charscalex10 0 iii \par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmksta rt Pg5}{\bkmkend Pg5}\par\pard\ql \li1400\sb0\sl-264\slmult0 \par\pard\ql\li1400 \sb0\sl-264\slmult0 \par\pard\ql\li1400\sb0\sl-264\slmult0 \par\pard\ql\li1400\s b0\sl-264\slmult0 \par\pard\ql\li1400\sb0\sl-264\slmult0 \par\pard\ql\li1400\sb0 \sl-264\slmult0 \par\pard\ql\li1400\sb0\sl-264\slmult0 \par\pard\ql\li1400\sb13\ sl-264\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf4\f5\fs23 CHAPTER THREE \par\pard\ql \li1400\sb136\sl-264\slmult0 \up0 \expndtw-3\charscalex100 A NTI-MONEY LAUNDERING LAWS IN MALAYSIA \par\pard\li1400\sb150\sl-264\slmult0\fi0\ tx2101\tx9802 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf1\f2\fs23 3.1\tab \up0 \expndtw-2\charscalex100 Introduction\tab \up0 \expndtw-2\charscalex100 58\ par\pard\li1400\sb139\sl-264\slmult0\fi0\tx2101\tx9802 \up0 \expndtw-2\charscale x100 3.2\tab \up0 \expndtw-2\charscalex100 Background to the Anti-Money Launderi ng Laws\tab \up0 \expndtw-2\charscalex100 59\par\pard\li1400\sb138\sl-264\slmult 0\fi0\tx2101\tx9802 \up0 \expndtw-2\charscalex100 3.3\tab \up0 \expndtw-2\charsc alex100 The Anti-Money Laundering and Anti-Terrorism Financing Act 2001\tab \up0 \expndtw-2\charscalex100 66\par\pard\li1400\sb139\sl-264\slmult0\fi0\tx2100\tx9 804 \up0 \expndtw-2\charscalex100 3.4\tab \up0 \expndtw-2\charscalex100 The Crim inalisation of Terrorism Financing\tab \up0 \expndtw-2\charscalex100 102\par\par d\li1400\sb138\sl-264\slmult0\fi0\tx2101\tx9802 \up0 \expndtw-2\charscalex100 3. 5\tab \up0 \expndtw-2\charscalex100 Summary\tab \up0 \expndtw-2\charscalex100 11 0\par\pard\li1400\sb0\sl-264\slmult0\par\pard\li1400\sb0\sl-264\slmult0\par\pard \li1400\sb16\sl-264\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf 4\f5\fs23 CHAPTER FOUR\par\pard\li1400\sb139\sl-264\slmult0\fi0 \up0 \expndtw-2\ charscalex100 THE IMPACT OF THE MALAYSIAN ANTI-MONEY LAUNDERING LAWS ON THE\par\ pard\li1400\sb138\sl-264\slmult0\fi0 \up0 \expndtw-2\charscalex100 OPERATIONS OF BANKS\par\pard\li1400\sb137\sl-264\slmult0\fi0\tx2101\tx9802 \up0 \expndtw-2\ch arscalex100 \ul0\nosupersub\cf1\f2\fs23 4.1\tab \up0 \expndtw-2\charscalex100 In troduction\tab \up0 \expndtw-2\charscalex100 112\par\pard\li1400\sb138\sl-264\sl mult0\fi0\tx2100\tx9803 \up0 \expndtw-2\charscalex100 4.2\tab \up0 \expndtw-2\ch arscalex100 Overview of the Banking System in Malaysia\tab \up0 \expndtw-2\chars calex100 113\par\pard\li1400\sb139\sl-264\slmult0\fi0\tx2101\tx9802 \up0 \expndt w-2\charscalex100 4.3\tab \up0 \expndtw-2\charscalex100 Anti-Money Laundering Me asures Prior to AMLATFA\tab \up0 \expndtw-2\charscalex100 118\par\pard\li1400\sb 138\sl-264\slmult0\fi0\tx2100\tx9804 \up0 \expndtw-2\charscalex100 4.4\tab \up0 \expndtw-2\charscalex100 AML/CTF Obligations and their Impact on the Operations of Banks\tab \up0 \expndtw-2\charscalex100 120\par\pard\li1400\sb139\sl-264\slmu lt0\fi0\tx2101\tx9802 \up0 \expndtw-2\charscalex100 4.5\tab \up0 \expndtw-2\char scalex100 Summary\tab \up0 \expndtw-2\charscalex100 167\par\pard\li1400\sb0\sl-2 64\slmult0\par\pard\li1400\sb0\sl-264\slmult0\par\pard\li1400\sb16\sl-264\slmult 0\fi0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf4\f5\fs23 CHAPTER FIVE\par \pard\li1400\sb137\sl-264\slmult0\fi0 \up0 \expndtw-2\charscalex100 ANTI-MONEY L AUNDERING MEASURES IN THE LABUAN INTERNATIONAL\par\pard\li1400\sb139\sl-264\slmu lt0\fi0 \up0 \expndtw-2\charscalex100 BUSINESS AND FINANCIAL CENTRE\par\pard\li1 400\sb136\sl-264\slmult0\fi0\tx2101\tx9802 \up0 \expndtw-2\charscalex100 \ul0\no supersub\cf1\f2\fs23 5.1\tab \up0 \expndtw-2\charscalex100 Introduction\tab \up0 \expndtw-2\charscalex100 170\par\pard\li1400\sb139\sl-264\slmult0\fi0\tx2101\tx 9803 \up0 \expndtw-2\charscalex100 5.2\tab \up0 \expndtw-2\charscalex100 Definit

ion of an Offshore Financial Centre\tab \up0 \expndtw-2\charscalex100 171\par\pa rd\li1400\sb138\sl-264\slmult0\fi0\tx2100\tx9803 \up0 \expndtw-2\charscalex100 5 .3\tab \up0 \expndtw-2\charscalex100 The Uses and Abuses of Offshore Financial C entre\tab \up0 \expndtw-2\charscalex100 173\par\pard\li1400\sb139\sl-264\slmult0 \fi0\tx2100\tx9803 \up0 \expndtw-2\charscalex100 5.4\tab \up0 \expndtw-2\charsca lex100 International Initiatives against Abuse of Offshore Financial Centres\tab \up0 \expndtw-2\charscalex100 176\par\pard\li1400\sb138\sl-264\slmult0\fi0\tx21 01\tx9804 \up0 \expndtw-2\charscalex100 5.5\tab \up0 \expndtw-2\charscalex100 La buan International Business and Financial Centre\tab \up0 \expndtw-2\charscalex1 00 181\par\pard\li1400\sb139\sl-264\slmult0\fi0\tx2100\tx9804 \up0 \expndtw-2\ch arscalex100 5.6\tab \up0 \expndtw-2\charscalex100 AML/CTF Obligations of the Off shore Banks\tab \up0 \expndtw-2\charscalex100 195\par\pard\li1400\sb138\sl-264\s lmult0\fi0\tx2101\tx9802 \up0 \expndtw-2\charscalex100 5.7\tab \up0 \expndtw-2\c harscalex100 Summary\tab \up0 \expndtw-2\charscalex100 214\par\pard\ql \li10319\ sb0\sl-264\slmult0 \par\pard\ql\li10319\sb0\sl-264\slmult0 \par\pard\ql\li10319\ sb0\sl-264\slmult0 \par\pard\ql\li10319\sb0\sl-264\slmult0 \par\pard\ql\li10319\ sb0\sl-264\slmult0 \par\pard\ql\li10319\sb0\sl-264\slmult0 \par\pard\ql\li10319\ sb177\sl-264\slmult0 \up0 \expndtw-3\charscalex100 iv \par\pard\sect\sectd\fs24\ paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart Pg6}{\bkmkend Pg6}\par\pard\q l \li1400\sb0\sl-264\slmult0 \par\pard\ql\li1400\sb0\sl-264\slmult0 \par\pard\ql \li1400\sb0\sl-264\slmult0 \par\pard\ql\li1400\sb0\sl-264\slmult0 \par\pard\ql\l i1400\sb0\sl-264\slmult0 \par\pard\ql\li1400\sb0\sl-264\slmult0 \par\pard\ql\li1 400\sb0\sl-264\slmult0 \par\pard\ql\li1400\sb13\sl-264\slmult0 \up0 \expndtw-3\c harscalex100 \ul0\nosupersub\cf4\f5\fs23 CHAPTER SIX \par\pard\qj \li1400\ri1211 \sb24\sl-400\slmult0 \up0 \expndtw-3\charscalex100 THE IMPACT OF THE MALAYSIAN A NTI-MONEY LAUNDERING LAWS ON THE \up0 \expndtw-3\charscalex100 BANKS\u8217? RELA TIONSHIP WITH OUTSIDERS \par\pard\li1400\sb130\sl-264\slmult0\fi0\tx2101\tx9802 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 6.1\tab \up0 \expndtw3\charscalex100 Introduction\tab \up0 \expndtw-3\charscalex100 216\par\pard\li14 00\sb138\sl-264\slmult0\fi0\tx2101\tx9802 \up0 \expndtw-3\charscalex100 6.2\tab \up0 \expndtw-3\charscalex100 Inroads into Banking Secrecy\tab \up0 \expndtw-3\c harscalex100 216\par\pard\li1400\sb139\sl-264\slmult0\fi0\tx2101\tx9801 \up0 \ex pndtw-3\charscalex100 6.3\tab \up0 \expndtw-3\charscalex100 Correspondent Bankin g Relationship\tab \up0 \expndtw-3\charscalex100 233\par\pard\li1400\sb138\sl-26 4\slmult0\fi0\tx2101\tx9805 \up0 \expndtw-3\charscalex100 6.4\tab \up0 \expndtw3\charscalex100 Liability of Bank as Constructive Trustee\tab \up0 \expndtw-3\ch arscalex100 242\par\pard\li1400\sb140\sl-264\slmult0\fi0\tx2101\tx9802 \up0 \exp ndtw-3\charscalex100 6.5\tab \up0 \expndtw-3\charscalex100 Summary\tab \up0 \exp ndtw-3\charscalex100 258\par\pard\li1400\sb0\sl-264\slmult0\par\pard\li1400\sb0\ sl-264\slmult0\par\pard\li1400\sb0\sl-264\slmult0\par\pard\li1400\sb153\sl-264\s lmult0\fi0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf4\f5\fs23 CHAPTER SEV EN\par\pard\li1400\sb139\sl-264\slmult0\fi0 \up0 \expndtw-3\charscalex100 ANTI-M ONEY LAUNDERING LAWS IN AUSTRALIA\par\pard\li1400\sb136\sl-264\slmult0\fi0\tx210 1\tx9802 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 7.1\tab \up0 \expndtw-3\charscalex100 Introduction\tab \up0 \expndtw-3\charscalex100 261\par\ pard\li1400\sb139\sl-264\slmult0\fi0\tx2100\tx9803 \up0 \expndtw-3\charscalex100 7.2\tab \up0 \expndtw-3\charscalex100 Money Laundering Offences\tab \up0 \expnd tw-3\charscalex100 262\par\pard\li1400\sb138\sl-264\slmult0\fi0\tx2100\tx9803 \u p0 \expndtw-3\charscalex100 7.3\tab \up0 \expndtw-3\charscalex100 Terrorism Fina ncing Offences\tab \up0 \expndtw-3\charscalex100 270\par\pard\li1400\sb139\sl-26 4\slmult0\fi0\tx2101\tx9802 \up0 \expndtw-3\charscalex100 7.4\tab \up0 \expndtw3\charscalex100 The Anti-Money Laundering and Counter Terrorism Financing Act 20 06\tab \up0 \expndtw-3\charscalex100 273\par\pard\li1400\sb138\sl-264\slmult0\fi 0\tx2101\tx9804 \up0 \expndtw-3\charscalex100 7.5\tab \up0 \expndtw-3\charscalex 100 The Proceeds of Crime Legislation\tab \up0 \expndtw-3\charscalex100 296\par\ pard\li1400\sb140\sl-264\slmult0\fi0\tx2101\tx9799 \up0 \expndtw-3\charscalex100 7.6\tab \up0 \expndtw-3\charscalex100 The Mutual Assistance in Criminal Matters Act 1987\tab \up0 \expndtw-3\charscalex100 306\par\pard\li1400\sb136\sl-264\slm ult0\fi0\tx2101\tx9803 \up0 \expndtw-3\charscalex100 7.7\tab \up0 \expndtw-3\cha rscalex100 Comparative Analysis\tab \up0 \expndtw-3\charscalex100 310\par\pard\l

i1400\sb140\sl-264\slmult0\fi0\tx2101\tx9802 \up0 \expndtw-3\charscalex100 7.8\t ab \up0 \expndtw-3\charscalex100 Summary\tab \up0 \expndtw-3\charscalex100 315\p ar\pard\li1400\sb0\sl-264\slmult0\par\pard\li1400\sb0\sl-264\slmult0\par\pard\li 1400\sb15\sl-264\slmult0\fi0\tx9802 \up0 \expndtw-3\charscalex100 \ul0\nosupersu b\cf4\f5\fs23 CONCLUSION\tab \up0 \expndtw-3\charscalex100 317\par\pard\li1400\s b138\sl-264\slmult0\fi0\tx9804 \up0 \expndtw-3\charscalex100 BIBLIOGRAPHY\tab \u p0 \expndtw-3\charscalex100 323\par\pard\li1400\sb139\sl-264\slmult0\fi0\tx9804 \up0 \expndtw-3\charscalex100 LIST OF ABBREVIATIONS\tab \up0 \expndtw-3\charscal ex100 344\par\pard\ql \li10384\sb0\sl-264\slmult0 \par\pard\ql\li10384\sb0\sl-26 4\slmult0 \par\pard\ql\li10384\sb0\sl-264\slmult0 \par\pard\ql\li10384\sb0\sl-26 4\slmult0 \par\pard\ql\li10384\sb0\sl-264\slmult0 \par\pard\ql\li10384\sb0\sl-26 4\slmult0 \par\pard\ql\li10384\sb0\sl-264\slmult0 \par\pard\ql\li10384\sb0\sl-26 4\slmult0 \par\pard\ql\li10384\sb0\sl-264\slmult0 \par\pard\ql\li10384\sb0\sl-26 4\slmult0 \par\pard\ql\li10384\sb0\sl-264\slmult0 \par\pard\ql\li10384\sb62\sl-2 64\slmult0 \up0 \expndtw-5\charscalex100 \ul0\nosupersub\cf1\f2\fs23 v \par\pard \sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart Pg7}{\bkmken d Pg7}\par\pard\ql \li5397\sb0\sl-218\slmult0 \par\pard\ql\li5397\sb0\sl-218\slm ult0 \par\pard\ql\li5397\sb0\sl-218\slmult0 \par\pard\ql\li5397\sb0\sl-218\slmul t0 \par\pard\ql\li5397\sb0\sl-218\slmult0 \par\pard\ql\li5397\sb0\sl-218\slmult0 \par\pard\ql\li5397\sb0\sl-218\slmult0 \par\pard\ql\li5397\sb0\sl-218\slmult0 \ par\pard\ql\li5397\sb95\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupe rsub\cf4\f5\fs23 A\ul0\nosupersub\cf5\f6\fs18 CKNOWLEDGEMENTS \par\pard\qj \li22 05\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri912\sb92\sl-400\slmult0 \up0 \expndt w-1\charscalex100 \ul0\nosupersub\cf7\f8\fs23 First and foremost, I thank the Lo rd for providing me with the strength and perseverance \up0 \expndtw0\charscalex 102 throughout my life here. There are a lot of individuals who have given me as sistance in \up0 \expndtw-1\charscalex100 completing this thesis. Firstly, I wou ld like to express my appreciation to the Government \up0 \expndtw-1\charscalex1 00 of Malaysia and Universiti Utara Malaysia for fully supporting my study. \par \pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri914\sb20\sl-400\slmult 0 \up0 \expndtw-2\charscalex100 Most importantly, I would like to express my gra titude and appreciation to my supervisor, \up0 \expndtw-2\charscalex100 Dr Rasia h Gengatharen who contributed much time, thought and encouragement. Without \up0 \expndtw-1\charscalex100 his guidance and assistance, this work would not have seen the light of day. I also remain \up0 \expndtw0\charscalex100 grateful for t he hospitality and courtesy extended by the members of the Faculty of Law, \up0 \expndtw-1\charscalex100 University of Western Australia. \par\pard\qj \li2205\s b0\sl-400\slmult0 \par\pard\qj\li2205\ri916\sb20\sl-400\slmult0 \up0 \expndtw-2\ charscalex100 Special thanks to my beloved mother, Bonda Atikah Jusoh, my brothe rs Zam and Aidi and \up0 \expndtw0\charscalex100 my sister Jihah for their uncon ditional love, prayers and encouragement. To my beloved \up0 \expndtw0\charscale x105 husband, Kiwamuddin and my beloved daughter Aqilah, thank you so much for y our \up0 \expndtw-5\charscalex100 endless support, patient and understanding thr oughout this endeavour. \par\pard\qj \li2205\ri917\sb400\sl-400\slmult0 \up0 \ex pndtw-2\charscalex100 I recall with gratitude the aid of my friends, Nazlida, Ch ik, Hani, Nana, Eda, Kak Nur and \line \up0 \expndtw0\charscalex107 not to forge t Kak Mimi and her family. Thank you very much for your kindness and \line \up0 \expndtw-5\charscalex100 friendship. \par\pard\qj \li2205\sb0\sl-400\slmult0 \pa r\pard\qj\li2205\ri916\sb20\sl-400\slmult0 \up0 \expndtw-2\charscalex100 Last bu t not least, this piece of work is dedicated to my late father, Al Marhum A. Rah man \up0 \expndtw0\charscalex100 Mat, who passed away just few months before I c ompleted this journey. I am so indebted \up0 \expndtw-2\charscalex100 for his li felong support, encouragement and sacrifice. My love and prayers are always for \up0 \expndtw-3\charscalex100 him and May he rests in peace. Al Fatihah. \par\pa rd\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb249\sl-264\slmult0 \up0 \ expndtw-5\charscalex100 Aspalella A. Rahman \par\pard\ql \li2205\sb136\sl-264\sl mult0 \up0 \expndtw-5\charscalex100 Perth \par\pard\ql \li2205\sb156\sl-264\slmu lt0 \up0 \expndtw-5\charscalex100 November, 2008. \par\pard\ql \li10617\sb0\sl-2 64\slmult0 \par\pard\ql\li10617\sb0\sl-264\slmult0 \par\pard\ql\li10617\sb28\sl264\slmult0 \up0 \expndtw-4\charscalex100 \ul0\nosupersub\cf1\f2\fs23 vi \par\pa

rd\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart Pg8}{\bkmk end Pg8}\par\pard\ql \li4514\sb0\sl-218\slmult0 \par\pard\ql\li4514\sb0\sl-218\s lmult0 \par\pard\ql\li4514\sb0\sl-218\slmult0 \par\pard\ql\li4514\sb0\sl-218\slm ult0 \par\pard\ql\li4514\sb0\sl-218\slmult0 \par\pard\ql\li4514\sb0\sl-218\slmul t0 \par\pard\ql\li4514\sb0\sl-218\slmult0 \par\pard\ql\li4514\sb73\sl-218\slmult 0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf4\f5\fs23 S\ul0\nosupersub\cf5 \f6\fs18 TATEMENT OF \ul0\nosupersub\cf4\f5\fs23 C\ul0\nosupersub\cf5\f6\fs18 AN DIDATE AUTHORSHIP \par\pard\qj \li2205\sb0\sl-405\slmult0 \par\pard\qj\li2205\ri 915\sb83\sl-405\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf1\f2\fs2 3 To the best of my knowledge and belief, the work presented in this thesis is m y own except \up0 \expndtw-2\charscalex100 where acknowledgement is given to the originating author. All sources used in this research \up0 \expndtw0\charscalex 106 have been cited and no attempt has been made to project the contributions of original \up0 \expndtw0\charscalex100 authors as my own. In addition, this the sis has not been submitted, either whole or in part, \up0 \expndtw-1\charscalex1 00 for a degree at any other institution. \par\pard\qj \li2205\ri917\sb400\sl-40 0\slmult0 \up0 \expndtw0\charscalex104 This thesis is copyrighted. No part of t his thesis may be printed, reproduced, stored or \up0 \expndtw0\charscalex100 tr ansmitted in any form or by any means without prior written consent of the autho r or the \up0 \expndtw-1\charscalex100 University of Western Australia. \par\par d\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard \ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb141\sl-264\slmult0 \up0 \exp ndtw-3\charscalex100 Aspalella A. Rahman \par\pard\ql \li2205\sb136\sl-264\slmul t0 \up0 \expndtw-3\charscalex100 Perth, 2008 \par\pard\ql \li10552\sb0\sl-264\sl mult0 \par\pard\ql\li10552\sb0\sl-264\slmult0 \par\pard\ql\li10552\sb0\sl-264\sl mult0 \par\pard\ql\li10552\sb0\sl-264\slmult0 \par\pard\ql\li10552\sb0\sl-264\sl mult0 \par\pard\ql\li10552\sb0\sl-264\slmult0 \par\pard\ql\li10552\sb0\sl-264\sl mult0 \par\pard\ql\li10552\sb0\sl-264\slmult0 \par\pard\ql\li10552\sb0\sl-264\sl mult0 \par\pard\ql\li10552\sb0\sl-264\slmult0 \par\pard\ql\li10552\sb0\sl-264\sl mult0 \par\pard\ql\li10552\sb0\sl-264\slmult0 \par\pard\ql\li10552\sb0\sl-264\sl mult0 \par\pard\ql\li10552\sb0\sl-264\slmult0 \par\pard\ql\li10552\sb0\sl-264\sl mult0 \par\pard\ql\li10552\sb0\sl-264\slmult0 \par\pard\ql\li10552\sb0\sl-264\sl mult0 \par\pard\ql\li10552\sb0\sl-264\slmult0 \par\pard\ql\li10552\sb0\sl-264\sl mult0 \par\pard\ql\li10552\sb0\sl-264\slmult0 \par\pard\ql\li10552\sb0\sl-264\sl mult0 \par\pard\ql\li10552\sb0\sl-264\slmult0 \par\pard\ql\li10552\sb0\sl-264\sl mult0 \par\pard\ql\li10552\sb0\sl-264\slmult0 \par\pard\ql\li10552\sb0\sl-264\sl mult0 \par\pard\ql\li10552\sb236\sl-264\slmult0 \up0 \expndtw-3\charscalex100 vi i \par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g9}{\bkmkend Pg9}\par\pard\ql \li4832\sb0\sl-218\slmult0 \par\pard\ql\li4832\sb0 \sl-218\slmult0 \par\pard\ql\li4832\sb0\sl-218\slmult0 \par\pard\ql\li4832\sb0\s l-218\slmult0 \par\pard\ql\li4832\sb0\sl-218\slmult0 \par\pard\ql\li4832\sb0\sl218\slmult0 \par\pard\ql\li4832\sb0\sl-218\slmult0 \par\pard\ql\li4832\sb0\sl-21 8\slmult0 \par\pard\ql\li4832\sb0\sl-218\slmult0 \par\pard\ql\li4832\sb177\sl-21 8\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf4\f5\fs23 L\ul0\nosupe rsub\cf5\f6\fs18 IST OF \ul0\nosupersub\cf4\f5\fs23 P\ul0\nosupersub\cf5\f6\fs18 UBLICATIONS \par\pard\qj \li2098\sb0\sl-400\slmult0 \par\pard\qj\li2098\ri1564\ sb112\sl-400\slmult0\tx2444 \up0 \expndtw0\charscalex102 \ul0\nosupersub\cf1\f2\ fs23 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 Aspalell a A. Rahman, \u8216?Money Laundering and Banking Secrecy in Malaysia\u8217? \lin e\tab \up0 \expndtw-5\charscalex100 (2007) 9 \ul0\nosupersub\cf7\f8\fs23 Current Law Journal\ul0\nosupersub\cf1\f2\fs23 (Supplementary Series) i. \par\pard\ql \li2098\ri1630\sb20\sl-400\slmult0\tx2444\tx2444 \up0 \expndtw-2\charscalex100 \ u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 Aspalella A. R ahman, \u8216?Money Laundering and the Banking Industry: Issues and \line\tab \u p0 \expndtw-4\charscalex100 Challenges\u8217? (Paper presented at the Law Confer ence 2007, Alor Star, 25-26 April \line\tab \up0 \expndtw-5\charscalex100 2007). \par\pard\qj \li2098\ri1564\sb20\sl-400\slmult0\tx2444 \up0 \expndtw0\charscale x100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 Aspalell a A. Rahman, \u8216?Anti-Money Laundering Law: The Enforcement Issues \line\tab \up0 \expndtw-4\charscalex100 and Challenges\u8217?(Paper presented at\ul0\nosup

ersub\cf7\f8\fs23 \ul0\nosupersub\cf1\f2\fs23 the Law Convention 2007, Kuala Lu mpur, 28-\par\pard\ql \li2444\sb113\sl-264\slmult0 \up0 \expndtw-5\charscalex100 29 August 2007). \par\pard\ql \li10852\sb0\sl-264\slmult0 \par\pard\ql\li10852\ sb0\sl-264\slmult0 \par\pard\ql\li10852\sb0\sl-264\slmult0 \par\pard\ql\li10852\ sb0\sl-264\slmult0 \par\pard\ql\li10852\sb0\sl-264\slmult0 \par\pard\ql\li10852\ sb0\sl-264\slmult0 \par\pard\ql\li10852\sb0\sl-264\slmult0 \par\pard\ql\li10852\ sb0\sl-264\slmult0 \par\pard\ql\li10852\sb0\sl-264\slmult0 \par\pard\ql\li10852\ sb0\sl-264\slmult0 \par\pard\ql\li10852\sb0\sl-264\slmult0 \par\pard\ql\li10852\ sb0\sl-264\slmult0 \par\pard\ql\li10852\sb0\sl-264\slmult0 \par\pard\ql\li10852\ sb0\sl-264\slmult0 \par\pard\ql\li10852\sb0\sl-264\slmult0 \par\pard\ql\li10852\ sb0\sl-264\slmult0 \par\pard\ql\li10852\sb0\sl-264\slmult0 \par\pard\ql\li10852\ sb0\sl-264\slmult0 \par\pard\ql\li10852\sb0\sl-264\slmult0 \par\pard\ql\li10852\ sb0\sl-264\slmult0 \par\pard\ql\li10852\sb0\sl-264\slmult0 \par\pard\ql\li10852\ sb0\sl-264\slmult0 \par\pard\ql\li10852\sb0\sl-264\slmult0 \par\pard\ql\li10852\ sb0\sl-264\slmult0 \par\pard\ql\li10852\sb0\sl-264\slmult0 \par\pard\ql\li10852\ sb0\sl-264\slmult0 \par\pard\ql\li10852\sb0\sl-264\slmult0 \par\pard\ql\li10852\ sb0\sl-264\slmult0 \par\pard\ql\li10852\sb0\sl-264\slmult0 \par\pard\ql\li10852\ sb0\sl-264\slmult0 \par\pard\ql\li10852\sb0\sl-264\slmult0 \par\pard\ql\li10852\ sb0\sl-264\slmult0 \par\pard\ql\li10852\sb0\sl-264\slmult0 \par\pard\ql\li10852\ sb24\sl-264\slmult0 \up0 \expndtw-4\charscalex100 viii \par\pard\sect\sectd\fs24 \paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart Pg10}{\bkmkend Pg10}\par\par d\li2205\sb0\sl-264\slmult0\par\pard\li2205\sb0\sl-264\slmult0\par\pard\li2205\s b0\sl-264\slmult0\par\pard\li2205\sb0\sl-264\slmult0\par\pard\li2205\sb0\sl-264\ slmult0\par\pard\li2205\sb0\sl-264\slmult0\par\pard\li2205\sb223\sl-264\slmult0\ fi3392 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf4\f5\fs23 INTRODUCTION\pa r\pard\li2205\sb0\sl-264\slmult0\par\pard\li2205\sb0\sl-264\slmult0\par\pard\li2 205\sb72\sl-264\slmult0\fi0 \up0 \expndtw-3\charscalex100 Background to the stud y\par\pard\qj \li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205\ri914\sb10\sl-402\s lmult0 \up0 \expndtw0\charscalex108 \ul0\nosupersub\cf1\f2\fs23 Money laundering is not a new phenomenon, but has been around for a long time. \line \up0 \expnd tw0\charscalex102 Throughout the ages, criminals have tried to disguise the true origin of the proceeds of \line \up0 \expndtw-2\charscalex100 crimes. Money lau ndering may be defined as a process of cleaning \u8216?dirty money\u8217? which is \line \up0 \expndtw0\charscalex104 normally derived from criminal activities, so that it appears to have originated from a \line \up0 \expndtw0\charscalex106 legitimate source. The process of money laundering normally involves three stag es, \line \up0 \expndtw0\charscalex100 namely, placement, layering and integrati on. Placement involves the physical disposal of \line \up0 \expndtw0\charscalex1 02 the cash proceeds derived from illegal activities into the local or internati onal financial \line \up0 \expndtw0\charscalex106 systems. Layering is the separ ation of the illicit proceeds from their original sources \line \up0 \expndtw0\c harscalex100 through the creation of complex layers of financial transactions to disguise the audit trail \line \up0 \expndtw0\charscalex100 and provide anonymi ty. Integration, the final stage, is where criminally derived wealth is \line \u p0 \expndtw0\charscalex100 converted into legitimate funds with no provable link s to criminal activities. \par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\l i2205\ri913\sb20\sl-400\slmult0 \up0 \expndtw-3\charscalex100 Effective money la undering obscures the original source of the illegal funds and the money \up0 \e xpndtw0\charscalex105 can be accessed legitimately and used freely by criminals. Therefore, the underlying \up0 \expndtw-1\charscalex100 rationale behind anti-m oney laundering laws is that prosecution would distance criminals \up0 \expndtw1\charscalex100 from the criminal activities. Likewise confiscation of the proce eds of crime would reduce \up0 \expndtw-3\charscalex100 the motivation for crimi nals to reinvest the profits in future criminal activities or legitimate \up0 \e xpndtw0\charscalex100 business. As such, the anti-money laundering regime can be considered as a new tool in \up0 \expndtw0\charscalex100 controlling crimes, pa rticularly the predicate offences. \par\pard\qj \li2205\sb0\sl-403\slmult0 \par\ pard\qj\li2205\ri915\sb15\sl-403\slmult0 \up0 \expndtw-1\charscalex100 While in the past money laundering activities have been associated with drugs trafficking \line \up0 \expndtw0\charscalex100 and organized crime, the September 11, 2001

event highlighted the link between money \line \up0 \expndtw-4\charscalex100 lau ndering and terrorism activities. It should be noted that this phenomenon has af fected the \line \up0 \expndtw0\charscalex100 traditional model of money launder ing which starts with the placement of \u8216?dirty\u8217? money \line \up0 \exp ndtw-2\charscalex100 into the banking system. For terrorism financing however, t he source of funds may well be \line \up0 \expndtw0\charscalex103 legitimate. Ac cordingly, the money laundering model is effectively reversed, as funds \line \u p0 \expndtw0\charscalex103 become \u8216?dirty\u8217? only at the end of the pro cess when funds are used to finance terrorist \par\pard\ql \li10683\sb0\sl-264\s lmult0 \par\pard\ql\li10683\sb0\sl-264\slmult0 \par\pard\ql\li10683\sb24\sl-264\ slmult0 \up0 \expndtw-5\charscalex100 1 \par\pard\sect\sectd\fs24\paperw11900\pa perh16840\pard\sb0\sl-240{\bkmkstart Pg11}{\bkmkend Pg11}\par\pard\qj \li2205\sb 0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\ sl-400\slmult0 \par\pard\qj\li2205\ri915\sb249\sl-400\slmult0 \up0 \expndtw0\cha rscalex102 \ul0\nosupersub\cf1\f2\fs23 activities. Clearly, the relationship bet ween money laundering and terrorism financing is \up0 \expndtw0\charscalex102 in direct and presents a tremendous paradigm shift. \par\pard\qj \li2205\ri913\sb39 7\sl-404\slmult0\fi0 \up0 \expndtw-3\charscalex100 The International Monetary Fu nd has estimated that the value of money laundered globally \line \up0 \expndtw3\charscalex100 to be between US$600 million and US$1.5 trillion, which is betwe en two to five percent of \line \up0 \expndtw0\charscalex107 the world\u8217?s G DP.\ul0\super\cf8\f9\fs23 1\ul0\nosupersub\cf1\f2\fs23 It has been recognized t hat money laundering is the third largest \line \up0 \expndtw-2\charscalex100 bu siness after petroleum and currency trading.\ul0\super\cf8\f9\fs23 2\ul0\nosuper sub\cf1\f2\fs23 Money laundering is a global problem and \line \up0 \expndtw0\c harscalex100 it can pose devastating economic, social and political cons equences for countries, \line \up0 \expndtw0\charscalex100 especially for the developing countries and those countries with fragile financial systems. \par\pa rd\qj \li2205\ri914\sb396\sl-404\slmult0\fi0 \up0 \expndtw-1\charscalex100 Money laundering has a negative effect on the global economic and financial growth as it \up0 \expndtw-3\charscalex100 diverts resources to unproductive activities a nd facilitates corruption and crimes. Therefore, \up0 \expndtw0\charscalex106 it could restrain legitimate business and destabilize banks and financial institut ions. \up0 \expndtw-1\charscalex100 Experience has shown that banks exposed to m oney laundering would suffer reputational \up0 \expndtw0\charscalex100 risk. To make matters worse, money laundering could increase the prospects of internal \u p0 \expndtw-4\charscalex100 fraud and other criminal activities resulting in the risk of financial failure. \par\pard\qj \li2205\ri914\sb396\sl-404\slmult0 \up0 \expndtw0\charscalex104 In response to the problem, there have been widespread calls for comprehensive anti\up0 \expndtw-2\charscalex100 money laundering laws. As a consequence, many countries have implemented laws which \up0 \expndtw-3\ch arscalex100 are based on the international standards issued by the Financial Act ion Task Force (FATF). \up0 \expndtw-3\charscalex100 It is generally accepted th at the FATF 40 Recommendations on anti-money laundering and \up0 \expndtw-3\char scalex100 the Nine Special Recommendations on anti-terrorism financing contain c omprehensive and \up0 \expndtw-4\charscalex100 consistent framework to combat th e menace. \par\pard\qj \li2205\ri914\sb396\sl-405\slmult0 \up0 \expndtw0\charsca lex100 The FATF 40 Recommendations cover the criminal justice system and law enf orcement, \line \up0 \expndtw0\charscalex102 the financial system and its regula tion and international cooperation. The Nine Special \line \up0 \expndtw-3\chars calex100 Recommendations criminalize the financing of terrorism and include meas ures for freezing \line \up0 \expndtw-4\charscalex100 and confiscating terrorist s\u8217? assets. The recommendations also extend anti-money laundering \line \up 0 \expndtw-4\charscalex100 requirements to alternative remittance system and to non-profits organizations. \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\ li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li 2205\sb196\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ ul0\super\cf9\f10\fs18 1\ul0\nosupersub\cf10\f11\fs19 Peter Reuter and Edwin M. Truman, \ul0\nosupersub\cf11\f12\fs19 Chasing Dirty Money: The Fight against Mo ney Laundering\ul0\nosupersub\cf10\f11\fs19 (2004) 16. \par\pard\ql \li2205\sb2

\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 2\ul0\nosu persub\cf10\f11\fs19 N.A. \u8216?Call for banks to report suspicious dealings\u 8217? \ul0\nosupersub\cf11\f12\fs19 New Straits Times\ul0\nosupersub\cf10\f11\fs 19 7 June 2001. \par\pard\ql \li10683\sb0\sl-264\slmult0 \par\pard\ql\li10683\s b100\sl-264\slmult0 \up0 \expndtw-5\charscalex100 \ul0\nosupersub\cf1\f2\fs23 2 {\shp {\*\shpinst\shpleft2205\shptop13983\shpright5006\shpbottom14003\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz181\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g12}{\bkmkend Pg12}\par\pard\qj \li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205\s b0\sl-402\slmult0 \par\pard\qj\li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205\ri9 14\sb241\sl-402\slmult0\fi0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf1\f2 \fs23 It has been recognised that effective implementation of the anti-money lau ndering laws is \up0 \expndtw-3\charscalex100 vital to protect the financial sys tems from being abused by criminals and money launderers. \up0 \expndtw0\charsca lex100 In contrast, deficient laws will not only affect the relevant financial i nstitutions, but also \up0 \expndtw-2\charscalex100 place the country\u8217?s re putation and financial well-being at risk. This is because a sound and \up0 \exp ndtw0\charscalex100 strong financial system is vital for bringing confidence to investors to invest in a country \up0 \expndtw0\charscalex100 and therefore crea te wealth, incomes and employment. On the contrary, any abuse of the \up0 \expnd tw-2\charscalex100 financial system by money launderers would undermine public c onfidence in the financial \up0 \expndtw-3\charscalex100 system with all its neg ative consequences. \par\pard\qj \li2205\ri914\sb398\sl-402\slmult0 \up0 \expndt w0\charscalex104 However, despite the positive impact of the anti-money launderi ng laws, the existing \up0 \expndtw0\charscalex107 literature shows that the law s have various negative repercussions on the banks and \up0 \expndtw0\charscalex 104 financial institutions. It was suggested that the laws have put legal and ad ministrative \up0 \expndtw-2\charscalex100 burdens on banks which are onerous an d may involve serious legal and other liabilities for \up0 \expndtw0\charscalex1 00 deficient compliance. \ul0\super\cf8\f9\fs23 3\ul0\nosupersub\cf1\f2\fs23 Th e laws also produce significant shift in the ways banks interact \up0 \expndtw-1 \charscalex100 with their existing and potential customers.\ul0\super\cf8\f9\fs2 3 4\ul0\nosupersub\cf1\f2\fs23 As a result, they have a tremendous effect on \u p0 \expndtw-3\charscalex100 the banks\u8217? normal business operation.\ul0\supe r\cf8\f9\fs23 5\ul0\nosupersub\cf1\f2\fs23 Yet it is not possible to say that t hese laws have had \up0 \expndtw-4\charscalex100 any great effect on reducing mo ney laundering.\ul0\super\cf8\f9\fs23 6 \par\pard\qj \li2205\ri914\sb397\sl-404\ slmult0 \up0 \expndtw-4\charscalex100 \ul0\nosupersub\cf1\f2\fs23 It has also be en argued that the laws threaten the principles of banking secrecy.\ul0\super\cf 8\f9\fs23 7\ul0\nosupersub\cf1\f2\fs23 This is true \up0 \expndtw-3\charscalex1 00 only to some extent because under the existing laws, banks may disclose infor mation when \up0 \expndtw0\charscalex100 compelled by law.\ul0\super\cf8\f9\fs23 8\ul0\nosupersub\cf1\f2\fs23 In Malaysia for instance, there are various statu tory exceptions to the \up0 \expndtw0\charscalex100 secrecy rule. The exceptions allow some information to be disclosed in order to facilitate \up0 \expndtw-3\c harscalex100 police investigation. This rule is a powerful tool in investigation s involving malpractices in \up0 \expndtw-4\charscalex100 the banking sector\ul0 \super\cf8\f9\fs23 9\ul0\nosupersub\cf1\f2\fs23 including money laundering case s. \par\pard\qj \li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult 0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\ri933\sb88\sl-220\slm

ult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs1 8 3\ul0\nosupersub\cf10\f11\fs19 B A K Rider, \u8216?The Limits of the Law: An Analysis of the Interrelationship of the Criminal and Civil Law in \up0 \expndtw -2\charscalex100 the Control of Money Laundering.\u8217? (1999) 2(3) \ul0\nosupe rsub\cf11\f12\fs19 Journal of Money Laundering Control\ul0\nosupersub\cf10\f11\f s19 209. \par\pard\ql \li2205\sb22\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 4\ul0\nosupersub\cf10\f11\fs19 Foong Tow ML et al, \u8 216?Money Laundering and Banking Practices\u8217? (2001) \ul0\nosupersub\cf11\f1 2\fs19 Singapore Management Review\ul0\nosupersub\cf10\f11\fs19 1. \par\pard\qj \li2205\ri945\sb1\sl-220\slmult0 \up0 \expndtw-1\charscalex100 \ul0\super\cf9\f 10\fs18 5\ul0\nosupersub\cf10\f11\fs19 Manney R, \u8216?Money Laundering: The G lobal Threat to the Integrity of Financial Systems.\u8217? (2001) 8(8) \ul0\nosu persub\cf11\f12\fs19 The \up0 \expndtw-2\charscalex100 Investment Lawyer\ul0\nos upersub\cf10\f11\fs19 13. \par\pard\qj \li2205\ri943\sb0\sl-220\slmult0 \up0 \e xpndtw-3\charscalex100 \ul0\super\cf9\f10\fs18 6\ul0\nosupersub\cf10\f11\fs19 W adsley J, \u8216?Banks in a Bind: The Implications of the Money Laundering Legis lation.\u8217? (2001) 16(5) \ul0\nosupersub\cf11\f12\fs19 Journal \up0 \expndtw3\charscalex100 of International Banking Law\ul0\nosupersub\cf10\f11\fs19 125. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super \cf9\f10\fs18 7\ul0\nosupersub\cf10\f11\fs19 Lawson HD, \u8216?Bank Secrecy and Money Laundering\u8217? (2002) 17 \ul0\nosupersub\cf11\f12\fs19 Banking and Fin ancial Law Review\ul0\nosupersub\cf10\f11\fs19 145. \par\pard\ql \li2205\sb22\s l-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 8\ul0\nosupe rsub\cf10\f11\fs19 See Parry-Jones v Law Society [1969] 1 Ch1 at 9, per Lord Di plock. \par\pard\qj \li2205\ri936\sb1\sl-220\slmult0 \up0 \expndtw-1\charscalex1 00 \ul0\super\cf9\f10\fs18 9\ul0\nosupersub\cf10\f11\fs19 Eusoff Chin, \u8216?B ank Secrecy and Confidentiality Laws: Their Impact on the Control of Economic Cr ime in \up0 \expndtw-1\charscalex100 the Modern World\u8217? \ul0\nosupersub\cf1 1\f12\fs19 Economic Symposium\ul0\nosupersub\cf10\f11\fs19 (Cambridge Universit y, 10 September 1995). \par\pard\ql \li10683\sb24\sl-264\slmult0 \up0 \expndtw-5 \charscalex100 \ul0\nosupersub\cf1\f2\fs23 3 {\shp {\*\shpinst\shpleft2205\shptop12307\shpright5006\shpbottom12327\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz197\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g13}{\bkmkend Pg13}\par\pard\qj \li2205\sb0\sl-403\slmult0 \par\pard\qj\li2205\s b0\sl-403\slmult0 \par\pard\qj\li2205\sb0\sl-403\slmult0 \par\pard\qj\li2205\ri9 15\sb238\sl-403\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf1\f2\fs2 3 It has been pointed out that the anti-money laundering laws place a serious ob stacle to the \line \up0 \expndtw0\charscalex103 development of correspondent ba nking relationships.\ul0\super\cf8\f9\fs23 10\ul0\nosupersub\cf1\f2\fs23 Furthe rmore, from the banking \line \up0 \expndtw-3\charscalex100 industry\u8217?s per spective, the anti-money laundering laws are also very difficult to implement. \ line \up0 \expndtw0\charscalex105 For example, banks have to report and monitor suspicious transactions. But the laws \line \up0 \expndtw0\charscalex102 general ly do not provide adequate guidance on how banks should determine suspicious \li ne \up0 \expndtw-1\charscalex100 transactions.\ul0\super\cf8\f9\fs23 11\ul0\nosu persub\cf1\f2\fs23 It appears that each bank must interpret the regulations in the context of its \line \up0 \expndtw-1\charscalex100 business and then determi ne what type of anti-money laundering system to be utilized.\ul0\super\cf8\f9\fs 23 12 \par\pard\qj \li2205\ri913\sb398\sl-402\slmult0\fi0 \up0 \expndtw-1\charsc alex100 \ul0\nosupersub\cf1\f2\fs23 Besides, banks have to adopt new procedures

to detect and deter money laundering which \line \up0 \expndtw-3\charscalex100 a re not only costly but also time-consuming.\ul0\super\cf8\f9\fs23 13\ul0\nosuper sub\cf1\f2\fs23 The Know Your Customer policy (KYC), for \line \up0 \expndtw-2\c harscalex100 instance, is difficult to implement because there is no obvious end point to the information \line \up0 \expndtw-1\charscalex100 that would be usef ul to a bank manager to prevent money laundering.\ul0\super\cf8\f9\fs23 14\ul0\n osupersub\cf1\f2\fs23 From the banking \line \up0 \expndtw0\charscalex103 indus try\u8217?s perspective, the lack of flexibility within the KYC policy can have negative \line \up0 \expndtw0\charscalex100 implications on the banking busi ness as it can alienate their established clients.\ul0\super\cf8\f9\fs23 15 \line \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs23 Furthermore, r ecord-keeping requirements are perceived as the biggest challenge for the \line \up0 \expndtw-1\charscalex100 banking industry.\ul0\super\cf8\f9\fs23 16 \par\pa rd\qj \li2205\ri914\sb395\sl-406\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosu persub\cf1\f2\fs23 Moreover, in complying with the anti-money laundering laws, b anks have to establish on\up0 \expndtw-3\charscalex100 going training programs f or their staff. However, the empirical evidence suggests that there \up0 \expndt w0\charscalex100 is a serious deficiency of training programs by the UK\ul0\supe r\cf8\f9\fs23 17\ul0\nosupersub\cf1\f2\fs23 and Australian\ul0\super\cf8\f9\fs2 3 18\ul0\nosupersub\cf1\f2\fs23 banks and that \up0 \expndtw0\charscalex100 mor e training is essential if the anti-money laundering laws are to be effective. \ par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \p ar\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb136\sl-218\slmult0 \u p0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 10\ul 0\nosupersub\cf10\f11\fs19 Burt S, \u8216?Correspondent Banking: The Latest BSA Examination Target\u8217? (2004) \par\pard\ql \li2205\sb2\sl-219\slmult0 \up0 \e xpndtw-2\charscalex100 <{\field{\*\fldinst {HYPERLINK "http://www.compliancehead quarters.com/aml/aml_articles/8_25_04.html" }}{\fldrslt {\ul0\nosupersub\cf29\f3 0\fs19\ul http://www.complianceheadquarters.com/AML/AML_Articles/8_25_04.html}}} \ul0\nosupersub\cf10\f11\fs19 > at 9 February 2005. \par\pard\qj \li2205\ri941\s b1\sl-220\slmult0 \up0 \expndtw-3\charscalex100 \ul0\super\cf9\f10\fs18 11\ul0\n osupersub\cf10\f11\fs19 Nicholas Clark, The Impact of Recent Money Laundering l egislation on Financial Intermediaries (1996) 14 \up0 \expndtw-3\charscalex100 \ ul0\nosupersub\cf11\f12\fs19 Dickinson Journal of International Law\ul0\nosupers ub\cf10\f11\fs19 467. \par\pard\qj \li2205\ri946\sb0\sl-240\slmult0 \up0 \expnd tw-3\charscalex100 \ul0\super\cf9\f10\fs18 12\ul0\nosupersub\cf10\f11\fs19 Mc G uire B, \u8216?Money Laundering: Addressing Serious Compliance Risk with Serious Banking Technology\u8217? \line \up0 \expndtw-4\charscalex100 (2001) \par\pard\ ql \li2205\sb1\sl-196\slmult0 \up0 \expndtw-2\charscalex100 < {\field{\*\fldinst {HYPERLINK "http://www.towegroup.com/" }}{\fldrslt {\ul0\nosupersub\cf29\f30\fs 19\ul http://www.towegroup.com}}}\ul0\nosupersub\cf10\f11\fs19 > at 18 June 2001 . \par\pard\qj \li2205\ri936\sb5\sl-220\slmult0 \up0 \expndtw-1\charscalex100 \u l0\super\cf9\f10\fs18 13\ul0\nosupersub\cf10\f11\fs19 Laurence Webb, \u8216?A S urvey of Money Laundering Reporting Officers and their Attitudes towards Money \ up0 \expndtw-1\charscalex100 Laundering Regulations.\u8217? (2004) 7(4) \ul0\nos upersub\cf11\f12\fs19 Journal of Money laundering Control\ul0\nosupersub\cf10\f1 1\fs19 367. \par\pard\qj \li2205\ri940\sb0\sl-220\slmult0 \up0 \expndtw0\charsc alex100 \ul0\super\cf9\f10\fs18 14\ul0\nosupersub\cf10\f11\fs19 Andrew Jackson, \u8216?Recognizing and Reporting Money Laundering: How Well Should You Know You r \up0 \expndtw0\charscalex100 Customer?\u8217? (2000) 3(4) \ul0\nosupersub\cf11 \f12\fs19 Journal of Money Laundering Control\ul0\nosupersub\cf10\f11\fs19 317. \par\pard\qj \li2205\ri941\sb20\sl-220\slmult0 \up0 \expndtw-2\charscalex100 \u l0\super\cf9\f10\fs18 15\ul0\nosupersub\cf10\f11\fs19 M Gill and G Taylor, \u82 16?Preventing Money Laundering or Obstructing Business\u8217? (2004) 44(4) \ul0\ nosupersub\cf11\f12\fs19 British Journal \up0 \expndtw-2\charscalex100 of Crimin ology \ul0\nosupersub\cf10\f11\fs19 582. \par\pard\ql \li2205\sb14\sl-252\slmult 0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 16\ul0\nosupersub\cf10\f 11\fs19 Spikes S, \u8216?Banks Increase Spending to Fight Money Laundering.\u82 17? (2004) \ul0\nosupersub\cf11\f12\fs19 The Wall Street Journal\ul0\nosupersub\ cf10\f11\fs19 18\ul0\nosupersub\cf1\f2\fs23 . \par\pard\qj \li2205\ri931\sb0\sl

-240\slmult0 \up0 \expndtw0\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\ f10\fs18 17\ul0\nosupersub\cf10\f11\fs19 Bosworth-Davies R, \u8216?Living with the law: A survey of Money Laundering Reporting Officers and their \line \up0 \e xpndtw0\charscalex100 attitudes towards the Money Laundering Regulations.\u8217? (1998) 1(3) \ul0\nosupersub\cf11\f12\fs19 Journal of Money Laundering Contro\ul0 \nosupersub\cf10\f11\fs19 l 245. \par\pard\qj \li2205\ri943\sb0\sl-220\slmult0 \ up0 \expndtw-3\charscalex100 \ul0\super\cf9\f10\fs18 18\ul0\nosupersub\cf10\f11\ fs19 Jackie Johnson, \u8216?Fighting Money Laundering: Are Australian Financial Institutions Doing Enough?\u8217? (2000) \up0 \expndtw-4\charscalex100 44(3) \u l0\nosupersub\cf11\f12\fs19 Journal of Banking and Financial Service\ul0\nosuper sub\cf10\f11\fs19 8. \par\pard\ql \li10683\sb13\sl-247\slmult0 \up0 \expndtw-5\ charscalex100 \ul0\nosupersub\cf1\f2\fs23 4 {\shp {\*\shpinst\shpleft2205\shptop10696\shpright5006\shpbottom10716\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz193\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g14}{\bkmkend Pg14}\par\pard\qj \li2205\sb0\sl-405\slmult0 \par\pard\qj\li2205\s b0\sl-405\slmult0 \par\pard\qj\li2205\sb0\sl-405\slmult0 \par\pard\qj\li2205\ri9 12\sb230\sl-405\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf1\f2\fs2 3 Anti-money laundering laws also create a major dilemma for banks. On one hand, failure to \up0 \expndtw-1\charscalex100 report suspicious transactions is an o ffence under the laws. On the other hand, if they report \up0 \expndtw-1\charsca lex100 the transaction, they may breach their duty of confidentiality to their c ustomer or could risk \up0 \expndtw-1\charscalex100 being liable for tipping off the suspected customer.\ul0\super\cf8\f9\fs23 19\ul0\nosupersub\cf1\f2\fs23 Th e banks also could be held liable as \up0 \expndtw-2\charscalex100 constructive trustee for the rightful owner of the corrupted funds.\ul0\super\cf8\f9\fs23 20 \par\pard\qj \li2205\ri916\sb396\sl-404\slmult0\fi0 \up0 \expndtw0\charscalex110 \ul0\nosupersub\cf1\f2\fs23 Despite the considerable effort and money invested in complying with anti-money \up0 \expndtw0\charscalex100 laundering laws, the e ffectiveness of the laws is still doubtful. To compound the problem \up0 \expndt w0\charscalex106 there is no uniformity in laws. Countries have been free to def ine what they regard as \up0 \expndtw0\charscalex107 illegal sources of money. F or instance, while France considers tax evasion as money \up0 \expndtw0\charscal ex100 laundering, Switzerland thinks otherwise.\ul0\super\cf8\f9\fs23 21\ul0\nos upersub\cf1\f2\fs23 Therefore, the money launderers will continue \up0 \expndtw -1\charscalex100 manipulating these loopholes for their own benefit. \par\pard\q j \li2205\ri914\sb397\sl-403\slmult0 \up0 \expndtw-2\charscalex100 Malaysia pass ed the Anti-Money Laundering Act in 2001. The Act was amended in 2003 to \up0 \e xpndtw-1\charscalex100 bring terrorism financing within the ambit of the anti-mo ney laundering regulatory regime. \up0 \expndtw0\charscalex106 Consequently, the Act was renamed the Anti-Money Laundering and Anti-Terrorism \up0 \expndtw0\cha rscalex102 Financing Act 2001 (AMLATFA). The legal framework under AMLATFA provi des for \up0 \expndtw0\charscalex100 multi-agency implementation by the Financia l Intelligence Unit in Bank Negara Malaysia, \up0 \expndtw0\charscalex108 the re gulatory and supervisory authorities of the regulated institutions as well as th e \up0 \expndtw-3\charscalex100 relevant law enforcement agencies. \par\pard\qj \li2205\ri915\sb400\sl-400\slmult0 \up0 \expndtw0\charscalex103 AMLATFA crimina lizes money laundering and terrorism financing and introduces \line \up0 \expndtw0\charscalex106 mechanisms for investigation and financial intelligence. The legislation also provides \line \up0 \expndtw0\charscalex100 measures for t he freezing, seizure and forfeiture of property involved in, or derived from, \l

ine \up0 \expndtw0\charscalex104 money laundering and terrorism financing activi ties. More importantly, it also imposes \line \up0 \expndtw-1\charscalex100 vari ous preventive measures to be undertaken by the regulated institutions, which co mprise \line \up0 \expndtw-1\charscalex100 banks and non-bank financial institut ions. The preventive measures include the obligation \par\pard\qj \li2205\sb0\sl -220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-2 20\slmult0 \par\pard\qj\li2205\ri945\sb109\sl-220\slmult0 \up0 \expndtw-3\charsc alex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 19\ul0\nosupersub\cf10\f1 1\fs19 Michael Isaacs, \u8216?Money Laundering: Dilemmas for Banks.\u8217? (200 4) 8 \ul0\nosupersub\cf11\f12\fs19 Journal of International Banking Law \up0 \ex pndtw-4\charscalex100 and Regulations\ul0\nosupersub\cf10\f11\fs19 284. \par\pa rd\qj \li2205\ri939\sb20\sl-220\slmult0 \up0 \expndtw-3\charscalex100 \ul0\super \cf9\f10\fs18 20\ul0\nosupersub\cf10\f11\fs19 Michael Brindle, \u8216?The Liabi lities of Financial Intermediaries and Their Advisers for Handling the Proceeds \up0 \expndtw-3\charscalex100 of Crime\u8217? (2002) 9(3) \ul0\nosupersub\cf11\f 12\fs19 Journal of Financial Crime\ul0\nosupersub\cf10\f11\fs19 227. \par\pard\ qj \li2205\ri935\sb0\sl-220\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9 \f10\fs18 21\ul0\nosupersub\cf10\f11\fs19 Rais Yatim,\u8216?Speech during the O fficial Opening of the Seminar on the Anti-Money Laundering Act 2001\u8217? \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf11\f12\fs19 Seminar on the Anti-Mone y Laundering Act 2001\ul0\nosupersub\cf10\f11\fs19 (Kuala Lumpur, 21 August 200 1) \par\pard\ql \li10683\sb0\sl-264\slmult0 \par\pard\ql\li10683\sb100\sl-264\sl mult0 \up0 \expndtw-5\charscalex100 \ul0\nosupersub\cf1\f2\fs23 5 {\shp {\*\shpinst\shpleft2205\shptop13089\shpright5006\shpbottom13109\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz185\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g15}{\bkmkend Pg15}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\s b0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri9 17\sb249\sl-400\slmult0 \up0 \expndtw0\charscalex103 \ul0\nosupersub\cf1\f2\fs23 to report cash transactions and suspicious transactions, keep records, identify and verify \up0 \expndtw0\charscalex103 customers and establish compliance prog ram. \par\pard\qj \li2205\ri914\sb397\sl-404\slmult0 \up0 \expndtw0\charscalex10 6 It is clear that measures to combat money laundering introduced by AMLATFA hav e \up0 \expndtw0\charscalex102 concentrated on the procedures adopted by banks a nd other regulated institutions. This is \up0 \expndtw0\charscalex100 vital beca use experience has shown that the complexity and confidentiality of the banking \up0 \expndtw0\charscalex104 system have been manipulated by criminals to launde r their ill-gotten gains. The BCCI \up0 \expndtw0\charscalex105 collapse in 1991 , the Bank of New York and Riggs Bank scandals have uncovered the \up0 \expndtw3\charscalex100 dangers posed by money laundering to the banking institutions. \ par\pard\qj \li2205\ri912\sb396\sl-404\slmult0 \up0 \expndtw-4\charscalex100 For this reason, banks are required to put in place effective anti-money laundering measures \up0 \expndtw0\charscalex102 to guard against the flow of \u8216?dirty money\u8217? into the financial system. As a consequence, \up0 \expndtw0\charsc alex102 banks are considered to be an important source of valuable inf ormation for law \up0 \expndtw0\charscalex104 enforcement agencies to detect m oney laundering and more importantly to follow the \up0 \expndtw0\charscalex100 money trail of criminal organization which thereby would lead to the prosecution of the \up0 \expndtw0\charscalex100 perpetrator who has enjoyed their illicit p rofits for a long time. \par\pard\qj \li2205\ri911\sb397\sl-403\slmult0 \up0 \ex pndtw0\charscalex103 However, from the banks\u8217? perspective, they exist to m

ake as much profits as possible. \up0 \expndtw-1\charscalex100 Hence, their cult ural and commercial interests are totally distinct from the interests of the \up 0 \expndtw0\charscalex103 law enforcement authorities. It is widely accepted tha t the anti-money laundering laws \up0 \expndtw0\charscalex104 create a major dil emma for banks as they produce a significant shift in the way banks \up0 \expndt w-4\charscalex100 interact with their customers as well as other banks. Furtherm ore, the implementation of the \up0 \expndtw-2\charscalex100 laws not only creat es significant compliance problems for banks, but also has the potential \up0 \e xpndtw-3\charscalex100 to adversely affect the internal operations of banks. \pa r\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb248\sl-264\slmult0\tx 7110 \up0 \expndtw0\charscalex104 As mentioned earlier, following the September \tab \up0 \expndtw0\charscalex107 11 tragedy, the fight against money \par\pard\ qj \li2205\ri913\sb21\sl-404\slmult0 \up0 \expndtw-1\charscalex100 laundering ha s been extended to include terrorism financing. This development has made \up0 \ expndtw-3\charscalex100 the problems faced by banks more acute as the detection of terrorism financing activities is \up0 \expndtw-3\charscalex100 even more dif ficult. This is due to the differences between money laundering and terrorism \ up0 \expndtw0\charscalex103 financing. For example, the financing of terrorism n ormally originates from legitimate \up0 \expndtw0\charscalex106 sources and invo lves relatively small amount of money, where as money laundering \up0 \expndtw-4 \charscalex100 normally involves large sums of money originating from illicit so urces. \par\pard\ql \li10683\sb0\sl-264\slmult0 \par\pard\ql\li10683\sb188\sl-26 4\slmult0 \up0 \expndtw-5\charscalex100 6 \par\pard\sect\sectd\fs24\paperw11900\ paperh16840\pard\sb0\sl-240{\bkmkstart Pg16}{\bkmkend Pg16}\par\pard\ql \li2205\ sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb 0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0\ sl-264\slmult0 \par\pard\ql\li2205\sb241\sl-264\slmult0 \up0 \expndtw-3\charscal ex100 \ul0\nosupersub\cf4\f5\fs23 Scope of the study \par\pard\qj \li2205\sb0\sl -404\slmult0 \par\pard\qj\li2205\ri914\sb17\sl-404\slmult0 \up0 \expndtw0\charsc alex102 \ul0\nosupersub\cf1\f2\fs23 The study will examine the Malaysian anti-mo ney laundering laws and their impact on \line \up0 \expndtw0\charscalex100 banki ng institutions. As such, it will focus primarily on AMLATFA, its regulations an d \line \up0 \expndtw0\charscalex103 guidelines. Since Malaysia has its own inte rnational offshore financial centre, Labuan \line \up0 \expndtw-1\charscalex100 International Business and Financial Centre (IBFC), the study will also examine the anti-\line \up0 \expndtw-1\charscalex100 money laundering laws, regulations and practices applicable to the centre, particularly its \line \up0 \expndtw-2\c harscalex100 offshore banking sector. \par\pard\qj \li2205\ri915\sb396\sl-404\sl mult0 \up0 \expndtw0\charscalex100 The study will examine the relevant provision s of AMLATFA that directly affect banks, \up0 \expndtw0\charscalex100 and analys e how they affect the operation of banks and their relationship with outsiders, \up0 \expndtw0\charscalex100 such as customers and other banks. Particular atten tion will be paid the issues relating to \up0 \expndtw0\charscalex100 compliance problems, banking secrecy, the liability of banks and correspondent banking \up 0 \expndtw-2\charscalex100 relationships. It will also undertake a brief survey of the Australian anti-money laundering \up0 \expndtw-3\charscalex100 laws for c omparison purposes. \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\ sb248\sl-264\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf4\f5\fs23 L imitation of the study \par\pard\qj \li2205\sb0\sl-402\slmult0 \par\pard\qj\li22 05\ri914\sb20\sl-402\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf1\f 2\fs23 As anti-money laundering law is comparatively new in Malaysia, there is h ardly any legal \up0 \expndtw0\charscalex100 literature on how the law affects b anks. At the time of writing, there have been only two \up0 \expndtw-1\charscale x100 cases involving money laundering offence, and in both cases, the defendants had pleaded \up0 \expndtw-2\charscalex100 guilty to the charges. Furthermore, c ases on money laundering in Malaysia are adjudicated \up0 \expndtw0\charscalex10 4 in the Sessions Court and the Session Court Judge is not obliged to produce a written \up0 \expndtw-3\charscalex100 judgment. There is therefore little judici al guidance on how the major provisions of the law \up0 \expndtw-2\charscalex100 will be interpreted. For this reason, the discussion that follows is based on t

he experiences \up0 \expndtw-3\charscalex100 of other countries with comparable legislation. \par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri914\s b20\sl-400\slmult0 \up0 \expndtw0\charscalex100 The author has also encountered some problems while working on the study because the \up0 \expndtw-4\charscalex1 00 law has undergone significant amendments, making it difficult to keep track o f the changes. \up0 \expndtw-1\charscalex100 It has also been difficult gatherin g primary data from the Malaysian authorities in view of \up0 \expndtw0\charscal ex100 their strict laws relating to the release of information on money launderi ng and terrorism \up0 \expndtw-1\charscalex100 financing. The law is stated as a t 1 November 2008. \par\pard\ql \li10683\sb0\sl-264\slmult0 \par\pard\ql\li10683 \sb189\sl-264\slmult0 \up0 \expndtw-5\charscalex100 7 \par\pard\sect\sectd\fs24\ paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart Pg17}{\bkmkend Pg17}\par\pard \ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb241\sl-264\slmult0 \up0 \expndt w-3\charscalex100 \ul0\nosupersub\cf4\f5\fs23 Significance of the study \par\par d\qj \li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205\ri914\sb20\sl-402\slmult0\fi 0 \up0 \expndtw0\charscalex103 \ul0\nosupersub\cf1\f2\fs23 Although much has bee n written about the impact of anti-money laundering laws on the \line \up0 \expn dtw0\charscalex104 banking industry, yet most of the existing literature focuses on either the experience of \line \up0 \expndtw-1\charscalex100 Western banks, or how the laws affect specific aspects of banking. For example, there have \lin e \up0 \expndtw0\charscalex104 been many studies on how the laws affect banking secrecy, correspondent banking and \line \up0 \expndtw0\charscalex100 electronic banking. Numerous studies have been carried out on how the US laws affect US \l ine \up0 \expndtw-2\charscalex100 and other European banks. There is, however, l ittle literature on how the laws impact on the \line \up0 \expndtw0\charscalex10 0 entire operations of banks, or how they affect the Malaysian banking industry. Apart from \line \up0 \expndtw0\charscalex100 one excellent text\ul0\super\cf8\ f9\fs23 22\ul0\nosupersub\cf1\f2\fs23 on the Malaysian anti-money laundering la ws, there is relatively little \line \up0 \expndtw0\charscalex100 academic liter ature on the subject. \par\pard\qj \li2205\sb0\sl-402\slmult0 \par\pard\qj\li220 5\ri914\sb16\sl-402\slmult0 \up0 \expndtw0\charscalex100 While there are signifi cant similarities between the Malaysian anti-money laundering laws \line \up0 \e xpndtw0\charscalex104 and those of the developed western countries, Malaysian ba nks are at different stage of \line \up0 \expndtw0\charscalex100 development. Ma ny Malaysian banks are still rationalizing their operations and attempting \line \up0 \expndtw0\charscalex100 to strengthen their systems in the aftermath of th e 1997 Asian financial crisis. It is unclear \line \up0 \expndtw0\charscalex104 at this stage whether banks in Malaysia are able to cope with the onerous requir ements \line \up0 \expndtw0\charscalex100 imposed by the anti-money laundering l aws. Therefore, it would be timely to examine the \line \up0 \expndtw0\charscale x100 impact of the existing laws on the Malaysian banking industry before more c omplex laws \line \up0 \expndtw0\charscalex102 are passed. It is vital that the laws do not create any significant compliance problems for \line \up0 \expndtw0\ charscalex102 banks. \par\pard\qj \li2205\ri915\sb397\sl-404\slmult0 \up0 \expnd tw0\charscalex100 The study, as far as the author is aware, is the first of its kind to provide a comprehensive \line \up0 \expndtw0\charscalex100 examination o f the impact of anti-money laundering laws on Malaysian banks. It is hoped \line \up0 \expndtw0\charscalex103 that the study would provide some insight into thi s particular area for academics, banks, \line \up0 \expndtw0\charscalex110 their legal advisers, practitioners and policy makers, not only in Malaysia but also \line \up0 \expndtw0\charscalex100 elsewhere. In view of the international natur e of money laundering and banking, there will \line \up0 \expndtw0\charscalex100 be significant interest in how the Malaysian laws affect banks operating in Mal aysia. \par\pard\qj \li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\sl mult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmu lt0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult 0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\ri945\sb48\sl-220\s lmult0 \up0 \expndtw0\charscalex106 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs

18 22\ul0\nosupersub\cf10\f11\fs19 Norhashimah Mohd Yasin, \ul0\nosupersub\cf11 \f12\fs19 Legal Aspects of Money Laundering in Malaysia from the Common Law \up0 \expndtw-2\charscalex100 Perspective\ul0\nosupersub\cf10\f11\fs19 (2007). \par \pard\ql \li10683\sb24\sl-264\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosuper sub\cf1\f2\fs23 8 {\shp {\*\shpinst\shpleft2205\shptop14319\shpright5006\shpbottom14339\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz188\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g18}{\bkmkend Pg18}\par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\s b0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0 \sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb241 \sl-264\slmult0 \up0 \expndtw-5\charscalex100 \ul0\nosupersub\cf4\f5\fs23 Method ology of the study \par\pard\qj \li2205\sb0\sl-404\slmult0 \par\pard\qj\li2205\r i915\sb17\sl-404\slmult0\fi0 \up0 \expndtw0\charscalex104 \ul0\nosupersub\cf1\f2 \fs23 Like most legal research, the study will rely on legal cases and statutes as its primary \up0 \expndtw0\charscalex102 sources of information. The relevant Malaysian anti-money laundering laws that affect \up0 \expndtw0\charscalex109 b anks will be identified and analyzed. It will be necessary to examine not just t he \up0 \expndtw0\charscalex100 provisions of AMLATFA, but also its regulations and guidelines\ul0\nosupersub\cf4\f5\fs23 \ul0\nosupersub\cf1\f2\fs23 which aff ect banks, in \up0 \expndtw0\charscalex112 detail as this is the most important legislation for the purpose of the study. Any \up0 \expndtw-5\charscalex100 shor tcomings and gaps in the law will be considered in depth. \par\pard\qj \li2205\r i913\sb398\sl-402\slmult0 \up0 \expndtw0\charscalex104 Although money laundering is a relatively new legal term in Malaysia, the concept of \line \up0 \expndtw1\charscalex100 concealing the origin of illegal funds is not new. Many sections of AMLATFA have been \line \up0 \expndtw0\charscalex106 drawn from other Malays ian legislation such as the \ul0\nosupersub\cf7\f8\fs23 Dangerous Drugs (Forfeit ure of \line \up0 \expndtw-3\charscalex100 Property) Act 1988, Anti- Corruption Act 1997 and Banking and Financial Institutions Act \line \up0 \expndtw-1\charsc alex100 1989.\ul0\nosupersub\cf1\f2\fs23 Therefore cases under those Acts will provide useful guidance on the interpretation \line \up0 \expndtw0\charscalex104 of AMLATFA. Also, cases and statutes from other common law jurisdictions such a s \line \up0 \expndtw0\charscalex106 Australia, the UK and the US that deal with money laundering will be examined for \line \up0 \expndtw0\charscalex102 compar ison purposes.\ul0\nosupersub\cf4\f5\fs23 \ul0\nosupersub\cf1\f2\fs23 Wherever appropriate, recommendations for legal reform will be \line \up0 \expndtw0\chars calex102 made. \par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri915 \sb20\sl-400\slmult0 \up0 \expndtw0\charscalex104 Furthermore, data from primary sources will be supplemented with information from \line \up0 \expndtw0\charsca lex102 secondary sources such as legal journals, legal encyclopaedias and books. Other useful \line \up0 \expndtw0\charscalex104 secondary sources of informatio n include studies, guidelines and reports produced by \line \up0 \expndtw0\chars calex103 various international bodies like the Financial Action Task Force (FATF ), The United \line \up0 \expndtw-2\charscalex100 Nations, the Basle Committee o n Banking Regulations and Supervisory Practices and also \line \up0 \expndtw0\ch arscalex106 the Wolfsberg Principles. Additionally, the regulations and guidelin es issued by the \line \up0 \expndtw0\charscalex100 Malaysian Central Bank (Bank Negara Malaysia) and other relevant bodies will be taken \line \up0 \expndtw-1\ charscalex100 into consideration as well. \par\pard\qj \li2205\sb0\sl-400\slmult 0 \par\pard\qj\li2205\ri915\sb20\sl-400\slmult0 \up0 \expndtw-1\charscalex100 Th

e author also engaged in discussions with various officials from the Malaysian C entral \line \up0 \expndtw-2\charscalex100 Bank and members of the Malaysian ban king community to gain a better insight into some \line \up0 \expndtw-4\charscal ex100 legal issues and problems that have arisen in implementing the anti-money laundering laws. \line \up0 \expndtw-4\charscalex100 For this reason, the author made two field trips to Malaysia between 2005 and 2006. These \par\pard\ql \li1 0683\sb0\sl-264\slmult0 \par\pard\ql\li10683\sb189\sl-264\slmult0 \up0 \expndtw5\charscalex100 9 \par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl240{\bkmkstart Pg19}{\bkmkend Pg19}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\ pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pa rd\qj\li2205\ri916\sb249\sl-400\slmult0 \up0 \expndtw0\charscalex104 \ul0\nosupe rsub\cf1\f2\fs23 field trips were necessary because of the relative scarcity of materials on the subject in \up0 \expndtw-3\charscalex100 Western Australia. \pa r\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par \pard\ql\li2205\sb5\sl-264\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub \cf4\f5\fs23 Organisation of the study \par\pard\qj \li2205\sb0\sl-402\slmult0 \ par\pard\qj\li2205\ri914\sb20\sl-402\slmult0 \up0 \expndtw0\charscalex105 \ul0\n osupersub\cf1\f2\fs23 The study is divided into seven chapters. Chapter one prov ides an overview of money \line \up0 \expndtw0\charscalex106 laundering, its pro cess and impact. In chapter two, the study looks at the international \line \up0 \expndtw0\charscalex102 response to the money laundering problem. Particular at tention is paid to the roles of the \line \up0 \expndtw0\charscalex100 United Na tions, the Basle Committee on Banking Supervision, the Financial Action Task \li ne \up0 \expndtw0\charscalex100 Force and the Asia Pacific Group on Money Launde ring. Chapter three examines the anti-\line \up0 \expndtw0\charscalex100 money l aundering laws of Malaysia with much of the emphasis on the relevant provisions \line \up0 \expndtw0\charscalex108 of AMLATFA. Chapter four looks at how complia nce with the AML/CTF laws can \line \up0 \expndtw0\charscalex100 increase the co sts and complexity of banking operations. Chapter five focuses on the anti-\line \up0 \expndtw0\charscalex109 money laundering measures in the Malaysian offshor e financial centre. Chapter six \line \up0 \expndtw-2\charscalex100 explores how the AML/CTF laws have altered the way Malaysian banks deal with outsiders \line \up0 \expndtw0\charscalex107 and the problems they face trying to strike a bala nce between discharging their legal \line \up0 \expndtw0\charscalex104 obligatio ns and servicing their customers. It will also deal with banking secr ecy, \line \up0 \expndtw0\charscalex103 correspondent banking and constructive t rusteeship. Chapter seven provides a survey of \line \up0 \expndtw-1\charscalex1 00 Australian anti-money laundering laws as a basis for comparison. The broad fi ndings of the \line \up0 \expndtw-2\charscalex100 study are presented in the con clusion. \par\pard\ql \li10567\sb0\sl-264\slmult0 \par\pard\ql\li10567\sb0\sl-26 4\slmult0 \par\pard\ql\li10567\sb0\sl-264\slmult0 \par\pard\ql\li10567\sb0\sl-26 4\slmult0 \par\pard\ql\li10567\sb0\sl-264\slmult0 \par\pard\ql\li10567\sb0\sl-26 4\slmult0 \par\pard\ql\li10567\sb0\sl-264\slmult0 \par\pard\ql\li10567\sb0\sl-26 4\slmult0 \par\pard\ql\li10567\sb0\sl-264\slmult0 \par\pard\ql\li10567\sb0\sl-26 4\slmult0 \par\pard\ql\li10567\sb0\sl-264\slmult0 \par\pard\ql\li10567\sb0\sl-26 4\slmult0 \par\pard\ql\li10567\sb0\sl-264\slmult0 \par\pard\ql\li10567\sb0\sl-26 4\slmult0 \par\pard\ql\li10567\sb0\sl-264\slmult0 \par\pard\ql\li10567\sb0\sl-26 4\slmult0 \par\pard\ql\li10567\sb0\sl-264\slmult0 \par\pard\ql\li10567\sb0\sl-26 4\slmult0 \par\pard\ql\li10567\sb0\sl-264\slmult0 \par\pard\ql\li10567\sb256\sl264\slmult0 \up0 \expndtw-3\charscalex100 10 \par\pard\sect\sectd\fs24\paperw119 00\paperh16840\pard\sb0\sl-240{\bkmkstart Pg20}{\bkmkend Pg20}\par\pard\ql \li56 49\sb0\sl-264\slmult0 \par\pard\ql\li5649\sb0\sl-264\slmult0 \par\pard\ql\li5649 \sb0\sl-264\slmult0 \par\pard\ql\li5649\sb0\sl-264\slmult0 \par\pard\ql\li5649\s b0\sl-264\slmult0 \par\pard\ql\li5649\sb0\sl-264\slmult0 \par\pard\ql\li5649\sb2 17\sl-264\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf4\f5\fs23 CHAP TER ONE \par\pard\ql \li4301\sb0\sl-264\slmult0 \par\pard\ql\li4301\sb112\sl-264 \slmult0 \up0 \expndtw-3\charscalex100 MONEY LAUNDERING: AN OVERVIEW \par\pard\l i2205\sb0\sl-264\slmult0\par\pard\li2205\sb0\sl-264\slmult0\par\pard\li2205\sb0\ sl-264\slmult0\par\pard\li2205\sb44\sl-264\slmult0\fi0\tx2905 \up0 \expndtw-3\ch arscalex100 1.1\tab \up0 \expndtw-3\charscalex100 Introduction\par\pard\qj \li22

05\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri914\sb84\sl-400\slmult0 \up0 \expndt w0\charscalex104 \ul0\nosupersub\cf1\f2\fs23 This chapter provides an overview o f money laundering. As such, it will focus on the \up0 \expndtw-2\charscalex100 definition of money laundering, its process and its impact, particularly on the banking and \up0 \expndtw-3\charscalex100 financial systems. This chapter will a lso highlight the links between money laundering and \up0 \expndtw-1\charscalex1 00 terrorism financing. Both terms are distinct, but share a number of similar c haracteristics. \up0 \expndtw-4\charscalex100 Many of the measures adopted to fi ght money laundering can also be used to fight terrorism \up0 \expndtw0\charscal ex109 financing. As such, no discussion of money laundering can be complete with out a \up0 \expndtw-5\charscalex100 discussion of terrorism financing. \par\pard \ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb89\sl-264\slmult0\tx2906 \u p0 \expndtw-5\charscalex100 \ul0\nosupersub\cf4\f5\fs23 1.2 \tab \up0 \expndtw-3 \charscalex100 Definition and Background to Money Laundering \par\pard\qj \li220 5\sb0\sl-402\slmult0 \par\pard\qj\li2205\ri913\sb80\sl-402\slmult0 \up0 \expndtw -2\charscalex100 \ul0\nosupersub\cf1\f2\fs23 Money laundering is not a new pheno menon and has existed for centuries. It is the process \line \up0 \expndtw0\char scalex103 by which criminals try to disguise the true origins of the proceeds of crimes. There are \line \up0 \expndtw0\charscalex102 suggestions that the term \u8216?money laundering\u8217? was first used in the 1920s by the United \line \ up0 \expndtw0\charscalex102 States law enforcement agencies to refer to the acti vities of criminals using self-service \line \up0 \expndtw0\charscalex100 launde rettes as a means of giving a legitimate appearance to the large amounts of \u82 16?dirty\u8217? \line \up0 \expndtw-1\charscalex100 money they amassed from boot legging, gambling and prostitution. By declaring the illicit \line \up0 \expndtw -1\charscalex100 proceeds as profits gained through operation of the launderette s, they were able to escape \line \up0 \expndtw0\charscalex100 detection.\ul0\su per\cf8\f9\fs23 1\ul0\nosupersub\cf1\f2\fs23 As self-service launderettes are e ssentially cash businesses, the earnings from \line \up0 \expndtw0\charscalex106 illegal activities can easily be mixed with the revenue from the operation of l aundry \line \up0 \expndtw-3\charscalex100 businesses. \par\pard\qj \li2205\sb0\ sl-400\slmult0 \par\pard\qj\li2205\ri915\sb20\sl-400\slmult0 \up0 \expndtw0\char scalex104 A number of commentators here attempted to define money laundering. Ac cording to \line \up0 \expndtw0\charscalex104 Reuter and Truman, \u8216?money la undering is the conversion of criminal incomes into the \par\pard\li2205\sb0\sl218\slmult0\par\pard\li2205\sb0\sl-218\slmult0\par\pard\li2205\sb0\sl-218\slmult 0\par\pard\li2205\sb0\sl-218\slmult0\par\pard\li2205\sb138\sl-218\slmult0\fi0 \u p0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 1\ul0 \nosupersub\cf10\f11\fs19 Guy Stessens\ul0\nosupersub\cf11\f12\fs19 , Money Lau ndering: A New International Law Enforcement Model\ul0\nosupersub\cf10\f11\fs19 (2000) 85.\par\pard\li2205\sb127\sl-264\slmult0\fi8361 \up0 \expndtw-3\charscal ex100 \ul0\nosupersub\cf1\f2\fs23 11 {\shp {\*\shpinst\shpleft2205\shptop14432\shpright5006\shpbottom14452\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz150\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g21}{\bkmkend Pg21}\par\pard\qj \li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205\s b0\sl-402\slmult0 \par\pard\qj\li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205\ri9 14\sb241\sl-402\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf1\f2 \fs23 assets that cannot be traced back to the underlying crimes.\u8217?\ul0\sup er\cf8\f9\fs23 2\ul0\nosupersub\cf1\f2\fs23 Lee defines money laundering \line \up0 \expndtw0\charscalex105 \u8216?as a process by which criminals attempt to c

onceal the origin of the proceeds and to \line \up0 \expndtw-4\charscalex100 pro vide a legitimate cover for their money by various means.\u8217?\ul0\super\cf8\f 9\fs23 3\ul0\nosupersub\cf1\f2\fs23 Another definition of money \line \up0 \exp ndtw-1\charscalex100 laundering is \u8216?the techniques for hiding proceeds of crime including transporting cash out \line \up0 \expndtw-3\charscalex100 of the country, purchasing businesses through which funds can be channeled, buying eas ily \line \up0 \expndtw0\charscalex102 transportable valuables, transfer pricing , and using underground banks.\u8217?\ul0\super\cf8\f9\fs23 4\ul0\nosupersub\cf1 \f2\fs23 According to \line \up0 \expndtw-4\charscalex100 McDonnell, money laun dering is \u8216?the process of converting cash, or other property which is \lin e \up0 \expndtw-3\charscalex100 derived from criminal activity, so as to give it the appearance of having been obtained from \line \up0 \expndtw-2\charscalex100 a legitimate source.\u8217?\ul0\super\cf8\f9\fs23 5\ul0\nosupersub\cf1\f2\fs23 From the various definitions of money laundering, it is clear that the \line \u p0 \expndtw0\charscalex107 act of conversion and concealment of criminal proceed s is considered crucial to the \line \up0 \expndtw-5\charscalex100 laundering pr ocess. \par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri913\sb20\sl -400\slmult0 \up0 \expndtw0\charscalex100 One of the first formal definitions of money laundering is that found in the 1988 Vienna \up0 \expndtw0\charscalex100 Convention. Article 3(1) (b) of the Convention states that money laundering refe rs to: \par\pard\qj \li2757\ri1479\sb7\sl-368\slmult0 \up0 \expndtw-2\charscalex 100 \ul0\nosupersub\cf13\f14\fs21 (i) The conversion or transfer of property, kn owing that such property is derived from \up0 \expndtw0\charscalex104 any offenc e or offences established in accordance with sub-paragraph (a)\ul0\super\cf14\f1 5\fs20 6\ul0\nosupersub\cf13\f14\fs21 of this \up0 \expndtw-3\charscalex100 par agraph, or from an act of participation in such offence or offences for the purp ose of \up0 \expndtw-3\charscalex100 concealing or disguising the illicit origin of the property or of assisting any person who \up0 \expndtw0\charscalex111 is involved in the commission of such offence or offences to evade the legal \up0 \ expndtw-4\charscalex100 consequences of his actions. \par\pard\qj \li2757\sb0\sl -370\slmult0 \par\pard\qj\li2757\ri1482\sb1\sl-370\slmult0 \up0 \expndtw0\charsc alex106 (ii) The concealment or disguise of the true nature, source, location, d isposition, \line \up0 \expndtw-3\charscalex100 movement, rights with respect to , or ownership of property knowing that such property \line \up0 \expndtw-3\char scalex100 is derived from an offence or offences established in accordance with sub-paragraph \par\pard\ql \li2757\sb117\sl-241\slmult0 \up0 \expndtw-4\charscal ex100 (a)\u8230?or from an act of participation in such offence or offences. \pa r\pard\qj \li2205\ri917\sb368\sl-400\slmult0 \up0 \expndtw-1\charscalex100 \ul0\ nosupersub\cf1\f2\fs23 It is important to note that Article 3(1)(b) specifically deals with establishing drug related \up0 \expndtw-2\charscalex100 money launde ring as a criminal offence. \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\l i2205\sb17\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ ul0\super\cf9\f10\fs18 2\ul0\nosupersub\cf10\f11\fs19 P Reuter and E M Truman, \ul0\nosupersub\cf11\f12\fs19 Chasing Dirty Money: The Fight Against Money Laund ering\ul0\nosupersub\cf10\f11\fs19 (2004) 1. \par\pard\qj \li2205\ri947\sb1\sl220\slmult0 \up0 \expndtw-1\charscalex100 \ul0\super\cf9\f10\fs18 3\ul0\nosupers ub\cf10\f11\fs19 Marina Lee Foong Tow et al, \u8216?Money Laundering and Bankin g Practices\u8217? (2001) \ul0\nosupersub\cf11\f12\fs19 Singapore Management \li ne \up0 \expndtw-2\charscalex100 Review \ul0\nosupersub\cf10\f11\fs19 2. \par\pa rd\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f1 0\fs18 4\ul0\nosupersub\cf10\f11\fs19 Michael Levi and Peter Reuter, \u8216?Mon ey Laundering\u8217? (2006) 34 \ul0\nosupersub\cf11\f12\fs19 Crime & Justice\ul0 \nosupersub\cf10\f11\fs19 289. \par\pard\qj \li2205\ri942\sb0\sl-230\slmult0\fi 0 \up0 \expndtw0\charscalex100 \ul0\super\cf9\f10\fs18 5\ul0\nosupersub\cf10\f11 \fs19 Rick McDonnell, \u8216?Money Laundering Methodologies and International a nd Regional Counter-Measure\u8217? \up0 \expndtw-3\charscalex100 (Paper presente d at the Conference on Gambling, Technology and Society: Regulatory Challenges f or the 21\ul0\super\cf9\f10\fs18 st \up0 \expndtw-4\charscalex100 \ul0\nosupersu b\cf10\f11\fs19 Century,\ul0\nosupersub\cf11\f12\fs19 \ul0\nosupersub\cf10\f11\

fs19 Sydney, 7-8 May 1998). \par\pard\ql \li2205\sb1\sl-209\slmult0 \up0 \expndt w-2\charscalex100 \ul0\super\cf9\f10\fs18 6\ul0\nosupersub\cf10\f11\fs19 Sub-pa ra (a) criminalizes the various aspects of illicit traffic in narcotic drugs and psychotropic substances. \par\pard\ql \li10567\sb26\sl-264\slmult0 \up0 \expndt w-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 12 {\shp {\*\shpinst\shpleft2205\shptop12978\shpright5006\shpbottom12998\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz180\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g22}{\bkmkend Pg22}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\s b0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0 \sl-400\slmult0 \par\pard\qj\li2205\ri915\sb249\sl-400\slmult0 \up0 \expndtw-1\c harscalex100 \ul0\nosupersub\cf1\f2\fs23 Another formal definition of money laun dering is found in Article 1 of the 1990 Council of \up0 \expndtw-2\charscalex10 0 Europe Convention: \par\pard\qj \li2757\sb0\sl-370\slmult0 \par\pard\qj\li2757 \ri1479\sb15\sl-370\slmult0 \up0 \expndtw0\charscalex102 \ul0\nosupersub\cf13\f1 4\fs21 [T]he conversion or transfer of property, knowing that such property is d erived from \line \up0 \expndtw0\charscalex103 criminal activity, for the purpos e of concealing or disguising the illicit origin of the \line \up0 \expndtw0\cha rscalex100 property or of assisting any person who is involved in the commission of such activity \line \up0 \expndtw0\charscalex100 to evade the legal conseque nces of his action; the concealment or disguise of the true \line \up0 \expndtw0 \charscalex100 nature, source, location, disposition, movement, rights with resp ect to or ownership of \line \up0 \expndtw-1\charscalex100 property, knowing tha t such property is derived from criminal activity or from an act of \line \up0 \ expndtw-1\charscalex100 participation in such activity; the acquisition, possess ion or use of property, knowing at \line \up0 \expndtw-1\charscalex100 the time of receipt, that such property was derived from criminal activity or from an act \line \up0 \expndtw0\charscalex100 of participation in such activity; participa tion in the association to commit, attempts to \line \up0 \expndtw0\charscalex10 2 commit and aiding, abetting, facilitating and counseling in commission of any of the \line \up0 \expndtw-2\charscalex100 actions mentioned in the foregoing pa ragraphs. \par\pard\qj \li2205\ri913\sb386\sl-400\slmult0 \up0 \expndtw0\charsca lex103 \ul0\nosupersub\cf1\f2\fs23 It appears that the definition of money laund ering in Article 1 follows the pattern of the \up0 \expndtw-1\charscalex100 Vien na Convention. However its scope has been extended to cover not only the proceed s of \up0 \expndtw-2\charscalex100 drug trafficking but also any other serious c rimes. \par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri919\sb20\sl -400\slmult0 \up0 \expndtw0\charscalex106 Perhaps, an even more comprehensive de finition can be found in the Commonwealth \up0 \expndtw-3\charscalex100 Model La w which defines money laundering as: \par\pard\li2555\sb119\sl-241\slmult0\fi0\t x2906 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf13\f14\fs21 (a)\tab \up0 \ expndtw-1\charscalex100 (i) engaging, directly or indirectly, in a transaction t hat involves property that is proceeds of\par\pard\li2555\sb129\sl-241\slmult0\f i350 \up0 \expndtw-2\charscalex100 crime; or\par\pard\qj \li2906\ri932\sb24\sl-3 60\slmult0 \up0 \expndtw0\charscalex104 (ii) receiving, possessing, concealing, disguising, transferring, converting, disposing of, \line \up0 \expndtw-2\charsc alex100 removing from or bringing into the (territory) any property that is pro ceeds of crime; and \par\pard\ql \li2555\ri933\sb20\sl-360\slmult0\tx2906 \up0 \ expndtw0\charscalex104 (b)\ul0\nosupersub\cf15\f16\fs21 \ul0\nosupersub\cf13\f1 4\fs21 (i) knowing, or having reasonable grounds for suspecting that the propert y is derived or \line\tab \up0 \expndtw-1\charscalex100 realized, directly or in

directly, from some form of unlawful activity; or \par\pard\qj \li2906\ri932\sb1 2\sl-370\slmult0 \up0 \expndtw0\charscalex100 [(ii) where the conduct is conduct of a natural person, without reasonable excuse failing to \up0 \expndtw-1\chars calex100 take reasonable steps to ascertain whether or not the property is deriv ed or realized, directly \up0 \expndtw-2\charscalex100 or indirectly, from some form of unlawful activity;] or \par\pard\ql \li10567\sb0\sl-264\slmult0 \par\par d\ql\li10567\sb0\sl-264\slmult0 \par\pard\ql\li10567\sb0\sl-264\slmult0 \par\par d\ql\li10567\sb0\sl-264\slmult0 \par\pard\ql\li10567\sb0\sl-264\slmult0 \par\par d\ql\li10567\sb218\sl-264\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\ cf1\f2\fs23 13 \par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240 {\bkmkstart Pg23}{\bkmkend Pg23}\par\pard\qj \li2906\sb0\sl-380\slmult0 \par\par d\qj\li2906\sb0\sl-380\slmult0 \par\pard\qj\li2906\sb0\sl-380\slmult0 \par\pard\ qj\li2906\ri933\sb306\sl-380\slmult0 \up0 \expndtw0\charscalex102 \ul0\nosupersu b\cf13\f14\fs21 (iii) where the conduct is conduct of a financial institution, f ailing to implement or apply \up0 \expndtw0\charscalex102 procedures and control to combat money laundering.\ul0\super\cf14\f15\fs20 7 \par\pard\qj \li2205\ri91 5\sb384\sl-400\slmult0 \up0 \expndtw0\charscalex109 \ul0\nosupersub\cf1\f2\fs23 It is important to note that a number of countries including Malaysia have used the \up0 \expndtw0\charscalex102 definition of money laundering found in the Com monwealth Model Law as the basis for \up0 \expndtw0\charscalex102 formulating th eir legal definition of money laundering. \par\pard\qj \li2205\sb0\sl-402\slmult 0 \par\pard\qj\li2205\ri913\sb17\sl-402\slmult0 \up0 \expndtw0\charscalex105 Wha t is clear from the many definitions is that money laundering encompasses a wide \line \up0 \expndtw0\charscalex108 range of activities which aim to hide or dis guise the proceeds of crime. As such, the \line \up0 \expndtw-1\charscalex100 pr oceeds of drug trafficking, corruption and any other form of serious crimes are within the \line \up0 \expndtw0\charscalex106 scope of the law on money launderi ng. According to the Financial Action Task Force \line \up0 \expndtw0\charscalex 103 report, drugs trafficking remain the single largest source of criminal proce eds. The next \line \up0 \expndtw-1\charscalex100 largest sources of criminal pr oceeds are the various types of frauds followed by smuggling, \line \up0 \expndt w0\charscalex113 casino gambling and human trafficking. Tax evasion is also a mo tive for money \line \up0 \expndtw-3\charscalex100 laundering.\ul0\super\cf8\f9\ fs23 8 \par\pard\qj \li2205\ri915\sb398\sl-402\slmult0 \up0 \expndtw0\charscalex 107 \ul0\nosupersub\cf1\f2\fs23 Although most countries have similar criminal of fences, they have adopted different \line \up0 \expndtw0\charscalex105 approache s to what constitutes a predicate offence, that is, the criminal offence which \ line \up0 \expndtw0\charscalex104 generated the proceeds of crime. As such, pred icate offences for the purpose of money \line \up0 \expndtw0\charscalex100 laund ering offences vary from one country to another. Indeed, this phenomenon provide s \line \up0 \expndtw0\charscalex100 loopholes that can be manipulated by money launderers, thereby hampering international \line \up0 \expndtw0\charscalex100 c ooperation in combating money laundering. As such, it is critical to establish u niformity \line \up0 \expndtw0\charscalex103 across the world relating to the ra nge of predicate offences. Another important aspect of \line \up0 \expndtw-1\cha rscalex100 money laundering is that it is not only an offence to launder money, but also to assist in the \line \up0 \expndtw-2\charscalex100 laundering of mone y. \par\pard\qj \li2205\ri916\sb400\sl-400\slmult0 \up0 \expndtw0\charscalex100 Money laundering is the lifeblood of most criminal activities because effective laundering \line \up0 \expndtw0\charscalex100 enables the criminals to hide, use and invest their ill-gotten gains without fear of being \par\pard\li2205\sb0\sl -218\slmult0\par\pard\li2205\sb0\sl-218\slmult0\par\pard\li2205\sb0\sl-218\slmul t0\par\pard\li2205\sb0\sl-218\slmult0\par\pard\li2205\sb134\sl-218\slmult0\fi0\t x2784 \up0 \expndtw0\charscalex105 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs1 8 7\ul0\nosupersub\cf10\f11\fs19 Part\tab \up0 \expndtw0\charscalex106 1 of the Commonwealth Model Law for the Prohibition of Money Laundering and Supporting\p ar\pard\li2205\sb6\sl-218\slmult0\fi0 \up0 \expndtw0\charscalex105 Documentation 1996.\par\pard\ql \li2254\sb3\sl-218\slmult0 \up0 \expndtw-2\charscalex100 <{\f ield{\*\fldinst {HYPERLINK "http://www.imolin.org/pdf/imolin/comsecml.pdf/" }}{\ fldrslt {\ul0\nosupersub\cf29\f30\fs19\ul http://www.imolin.org/pdf/imolin/Comse

cml.pdf}}}\ul0\nosupersub\cf10\f11\fs19 > at 4 July 2005. \par\pard\qj \li2205\r i946\sb1\sl-220\slmult0 \up0 \expndtw0\charscalex100 \ul0\super\cf9\f10\fs18 8\u l0\nosupersub\cf10\f11\fs19 Financial Action Task Force on Money Laundering, \u l0\nosupersub\cf11\f12\fs19 Report on Money Laundering Typologies 1998-1999 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf10\f11\fs19 (1999) 11. \par\pard\ql \ li10567\sb24\sl-264\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2 \fs23 14 {\shp {\*\shpinst\shpleft2205\shptop13648\shpright5006\shpbottom13668\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz148\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g24}{\bkmkend Pg24}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\s b0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri9 17\sb249\sl-400\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs23 caught and prosecuted by the enforcement agencies. More specifically, successfu l money \up0 \expndtw0\charscalex100 laundering enables criminals to: \par\pard\ ql \li2556\ri913\sb20\sl-400\slmult0\tx2906 \up0 \expndtw0\charscalex100 \u-3913 ?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 Remove or distance t hemselves from the criminal activity generating the profits, \line\tab \up0 \exp ndtw0\charscalex100 thus making it more difficult to prosecute them; \par\pard\q l \li2556\ri915\sb20\sl-400\slmult0\tx2906 \up0 \expndtw0\charscalex102 \u-3913? \ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 Distance profits from the criminal activity, thereby preventing them from being \line\tab \up0 \expnd tw-5\charscalex100 confiscated by the law enforcement authorities; \par\pard\ql \li2556\ri904\sb12\sl-410\slmult0\tx2906 \up0 \expndtw-2\charscalex100 \u-3913?\ ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 Enjoy the benefits of the illicit profits without bringing attention to themselves; and \line \up0 \ex pndtw0\charscalex109 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2 \fs23 Reinvest the illicit profits in future criminal activities or even in le gitimate \line\tab \up0 \expndtw-5\charscalex100 business.\ul0\super\cf8\f9\fs23 9 \par\pard\qj \li2205\sb0\sl-403\slmult0 \par\pard\qj\li2205\ri914\sb13\sl-403 \slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs23 Clearly, money laundering is a menace and if left unchecked, it could cause many social \up0 \ expndtw0\charscalex107 and financial problems. As such it is critical to establi sh money laundering counter \up0 \expndtw0\charscalex106 measures that could sto p the criminals from enjoying their ill-gotten gains and more \up0 \expndtw-2\ch arscalex100 importantly to prevent them from reinvesting their funds in future c riminal activities. The \up0 \expndtw0\charscalex104 measures also could provid e law enforcement with innovative tools to detect criminal \up0 \expndtw-3\chars calex100 activities through the paper trail and to provide an evidentiary link f or prosecution purposes \up0 \expndtw-4\charscalex100 between criminal acts and major organizers.\ul0\super\cf8\f9\fs23 10 \par\pard\qj \li2205\ri914\sb397\sl-4 03\slmult0\fi0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 For thi s reason, the fight against money laundering consists of two important legal dev ices, \line \up0 \expndtw0\charscalex100 namely the criminalization of money lau ndering and the confiscation of the proceeds of \line \up0 \expndtw0\charscalex1 07 crime.\ul0\super\cf8\f9\fs23 11\ul0\nosupersub\cf1\f2\fs23 Obviously, this a pproach emphasises the financial elements of crimes. It is \line \up0 \expndtw0\ charscalex100 believed that by attacking the financial structures of criminal or ganizations, it would be \line \up0 \expndtw0\charscalex100 possible to prevent criminals from enjoying their illegal profits and more importantly to \line \up0 \expndtw0\charscalex108 prevent them from building capital for future crimes. A

s such, this approach has a \line \up0 \expndtw-4\charscalex100 significant impa ct on the fight against crimes, particularly organised crimes. \par\pard\qj \li2 205\ri913\sb400\sl-400\slmult0 \up0 \expndtw-2\charscalex100 Apart from criminal izing money laundering and confiscating the proceeds of crimes, anti-\line \up0 \expndtw0\charscalex100 money laundering laws also aim to prevent criminals from taking advantage of financial \line \up0 \expndtw0\charscalex100 institutions a nd their systems for laundering their ill-gotten gains. This is vital if we wish to \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmul t0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb39\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\supe r\cf9\f10\fs19\ul0\super\cf9\f10\fs18 9\ul0\nosupersub\cf10\f11\fs19 McDonell, above n 5, 2. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex 100 \ul0\super\cf9\f10\fs18 10\ul0\nosupersub\cf10\f11\fs19 Ibid. \par\pard\li2 205\sb11\sl-218\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs1 8 11\ul0\nosupersub\cf10\f11\fs19 Stessens\ul0\nosupersub\cf11\f12\fs19 , \ul0\ nosupersub\cf10\f11\fs19 above n 1, 3.\par\pard\li2205\sb17\sl-264\slmult0\fi836 1 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 15 {\shp {\*\shpinst\shpleft2205\shptop14096\shpright5006\shpbottom14116\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz191\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g25}{\bkmkend Pg25}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\s b0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri9 16\sb249\sl-400\slmult0 \up0 \expndtw0\charscalex107 \ul0\nosupersub\cf1\f2\fs23 preserve the integrity of the financial systems, which play a significant role in global \up0 \expndtw-3\charscalex100 economic and financial growth. \par\pard \ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb89\sl-264\slmult0\tx2906 \u p0 \expndtw-3\charscalex100 \ul0\nosupersub\cf4\f5\fs23 1.3 \tab \up0 \expndtw-3 \charscalex100 Stages and Methods of Money Laundering \par\pard\qj \li2205\sb0\s l-402\slmult0 \par\pard\qj\li2205\ri914\sb80\sl-402\slmult0 \up0 \expndtw0\chars calex102 \ul0\nosupersub\cf1\f2\fs23 A better understanding of money laundering activities could be gained by considering its \line \up0 \expndtw-1\charscalex10 0 process. It is widely accepted that the process of money laundering normally i nvolves three \line \up0 \expndtw0\charscalex107 stages, namely, placement, laye ring and integration. Placement involves the physical \line \up0 \expndtw0\chars calex102 disposal of the cash proceeds derived from illegal activities into the local or international \line \up0 \expndtw0\charscalex108 financial systems. Thi s might be accomplished through depositing illegal funds in a \line \up0 \expndt w0\charscalex100 domestic or off-shore financial institution, or the use of such funds to purchase expensive \line \up0 \expndtw-2\charscalex100 goods, such as paintings, real estate and precious metals. The placement stage appears to be \l ine \up0 \expndtw0\charscalex104 the proven weak link in the money laundering pr ocess.\ul0\super\cf8\f9\fs23 12\ul0\nosupersub\cf1\f2\fs23 As such, it continue s to be the \line \up0 \expndtw-3\charscalex100 focus of money laundering detect ion. \par\pard\qj \li2205\ri914\sb398\sl-402\slmult0 \up0 \expndtw0\charscalex10 2 The next stage in money laundering is layering. It is the separation of the il licit proceeds \up0 \expndtw0\charscalex100 from their original sources through the creation of complex layers of financial transactions \up0 \expndtw0\charscal ex100 to disguise the audit trail and provide anonymity. The purpose of layering is to convolute \up0 \expndtw0\charscalex100 the source of funds through a comp lex web of transactions so that it disguises and destroys \up0 \expndtw0\charsca lex102 the audit trail. This is often accomplished through a series of wire tran

sfers into different \up0 \expndtw0\charscalex100 accounts or trading in the fin ancial markets or through investment in shell operations. For \up0 \expndtw0\cha rscalex100 instance, in the Bank of New York scandal, it was reported that about US$7.5 million was \up0 \expndtw-1\charscalex100 laundered through 87,000 elect ronic transfers into one account.\ul0\super\cf8\f9\fs23 13 \par\pard\qj \li2205\ sb0\sl-400\slmult0 \par\pard\qj\li2205\ri914\sb20\sl-400\slmult0 \up0 \expndtw-2 \charscalex100 \ul0\nosupersub\cf1\f2\fs23 It has been argued that layering may become easier if the money can be transferred between \line \up0 \expndtw-2\char scalex100 banks that deal with electronic money (E-money). The anonymity feature s of E-money may \line \up0 \expndtw-1\charscalex100 make the source of funds vi rtually untraceable.\ul0\super\cf8\f9\fs23 14\ul0\nosupersub\cf1\f2\fs23 Money laundering has the greatest impact \line \up0 \expndtw0\charscalex100 on the ban ks and financial institutions during the placement and layering stages, where th e \line \up0 \expndtw0\charscalex100 illicit funds are being laundered but have not yet been fully integrated into the economy. \par\pard\qj \li2205\sb0\sl-220\ slmult0 \par\pard\qj\li2205\ri941\sb189\sl-220\slmult0\fi0 \up0 \expndtw0\charsc alex102 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 12\ul0\nosupersub\cf10\f1 1\fs19 Harjit S Sandhu, \u8216?The Global Detection and Deterrence of Money Lau ndering\u8217? (2000) 3(4) \ul0\nosupersub\cf11\f12\fs19 Journal of \up0 \expndt w0\charscalex102 Money Laundering Control \ul0\nosupersub\cf10\f11\fs19 336, 337 . \par\pard\qj \li2205\ri948\sb0\sl-240\slmult0\fi0 \up0 \expndtw0\charscalex100 \ul0\super\cf9\f10\fs18 13\ul0\nosupersub\cf10\f11\fs19 P S Russel, \u8216?Mon ey Laundering: A Global Challenge\u8217? (2004) \ul0\nosupersub\cf11\f12\fs19 Jo urnal of American Academy of Business \line \up0 \expndtw-1\charscalex100 \ul0\n osupersub\cf10\f11\fs19 259. \par\pard\qj \li2205\ri944\sb0\sl-220\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 14\ul0\nosupersub\cf10\f11\fs19 Steven Philippsohn, \u8216?The Dangers of New Technology-Laundering on the Int ernet\u8217? (2001) 5(1) \ul0\nosupersub\cf11\f12\fs19 Journal of \up0 \expndtw3\charscalex100 Money Laundering Control \ul0\nosupersub\cf10\f11\fs19 87. \par\ pard\ql \li10567\sb14\sl-253\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupers ub\cf1\f2\fs23 16 {\shp {\*\shpinst\shpleft2205\shptop13424\shpright5006\shpbottom13444\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz189\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g26}{\bkmkend Pg26}\par\pard\qj \li2205\sb0\sl-405\slmult0 \par\pard\qj\li2205\s b0\sl-405\slmult0 \par\pard\qj\li2205\sb0\sl-405\slmult0 \par\pard\qj\li2205\sb0 \sl-405\slmult0 \par\pard\qj\li2205\ri914\sb225\sl-405\slmult0 \up0 \expndtw0\ch arscalex100 \ul0\nosupersub\cf1\f2\fs23 Integration, the final stage, is where c riminally derived wealth is converted into legitimate \up0 \expndtw0\charscalex1 02 funds with no provable links to criminal activities. When criminals reach thi s stage, they \up0 \expndtw0\charscalex104 can integrate illegal funds into the legitimate financial systems and thus have access to \up0 \expndtw-1\charscalex1 00 these funds freely and legitimately. Once the money is integrated it is extre mely difficult to \up0 \expndtw-2\charscalex100 trace the source or to prosecute the launderers. \par\pard\qj \li2205\ri912\sb395\sl-405\slmult0 \up0 \expndtw-1 \charscalex100 In summary, money laundering involves conversion of property (mai nly cash) into another \up0 \expndtw-2\charscalex100 form of assets, concealment of the true ownership of the property and finally the creation of \up0 \expndtw 0\charscalex100 apparent legitimacy of the ownership of the property. Money laun dering is one of the most \up0 \expndtw0\charscalex103 difficult crimes to detec t, investigate and prosecute because its process involves various \up0 \expndtw0

\charscalex103 complex methods, techniques and mechanisms. \par\pard\qj \li2205\ ri913\sb398\sl-402\slmult0 \up0 \expndtw0\charscalex100 There are a number of fa ctors that affect the money laundering method used by criminals. \line \up0 \exp ndtw0\charscalex105 These include the amount of money which requires to be laund ered; the availability of \line \up0 \expndtw0\charscalex111 professional servic es to be involved in money laundering; the amount of fear and \line \up0 \expnd tw0\charscalex108 intimidation a criminal enterprise can generate; the degree to which members of the \line \up0 \expndtw-2\charscalex100 financial services sec tor can be corrupted to cooperate in laundering scheme; the geography \line \up0 \expndtw-1\charscalex100 of where the acquisitive crime was committed; the abil ity to travel to another jurisdiction to \line \up0 \expndtw0\charscalex102 make financial arrangements; the network of trusted relationships available to the p erson \line \up0 \expndtw0\charscalex103 with criminal proceeds; the extent to w hich the obvious accumulation of wealth become \line \up0 \expndtw-2\charscalex1 00 problematic; the type of crime which has been committed; and the educational, professional \line \up0 \expndtw-3\charscalex100 and business background of the criminal.\ul0\super\cf8\f9\fs23 15 \par\pard\qj \li2205\ri914\sb396\sl-405\slmu lt0 \up0 \expndtw0\charscalex110 \ul0\nosupersub\cf1\f2\fs23 The methods employe d by money launderers range from the simplest to the most \line \up0 \expndtw-3\ charscalex100 sophisticated and what matters is that the money appears clean at the end of the process. In \line \up0 \expndtw-2\charscalex100 the simple method , \u8216?dirty money\u8217? is laundered, for instance, by feeding the money thr ough \line \up0 \expndtw-2\charscalex100 casinos or other gambling arrangements, buying luxury goods, and promoting events such \line \up0 \expndtw-3\charscalex 100 as sporting events.\ul0\super\cf8\f9\fs23 16 \par\pard\qj \li2205\sb0\sl-240 \slmult0 \par\pard\qj\li2205\sb0\sl-240\slmult0 \par\pard\qj\li2205\ri941\sb232\ sl-240\slmult0 \up0 \expndtw-1\charscalex100 \ul0\super\cf9\f10\fs18 15\ul0\nosu persub\cf10\f11\fs19 Anthony Kennedy, \u8216?Dead Fish Across the Trail: Illust rations of Money Laundering Methods\u8217? (2005) 8(4) \up0 \expndtw-2\charscale x100 \ul0\nosupersub\cf11\f12\fs19 Journal of Money Laundering Control\ul0\nosup ersub\cf10\f11\fs19 305, 317. \par\pard\qj \li2205\ri943\sb0\sl-220\slmult0 \up 0 \expndtw-3\charscalex100 \ul0\super\cf9\f10\fs18 16\ul0\nosupersub\cf10\f11\fs 19 Andrew Haynes, \u8216?Money Laundering and Changes in International Banking Regulation\u8217? (1993) 11 \ul0\nosupersub\cf11\f12\fs19 Journal \up0 \expndtw3\charscalex100 of International Banking Law\ul0\nosupersub\cf10\f11\fs19 455. \par\pard\ql \li10567\sb21\sl-264\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nos upersub\cf1\f2\fs23 17 {\shp {\*\shpinst\shpleft2205\shptop13872\shpright5006\shpbottom13892\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz165\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g27}{\bkmkend Pg27}\par\pard\qj \li2205\sb0\sl-404\slmult0 \par\pard\qj\li2205\s b0\sl-404\slmult0 \par\pard\qj\li2205\sb0\sl-404\slmult0 \par\pard\qj\li2205\sb0 \sl-404\slmult0 \par\pard\qj\li2205\ri913\sb230\sl-404\slmult0 \up0 \expndtw-1\c harscalex100 \ul0\nosupersub\cf1\f2\fs23 To date, currency smuggling across bord ers remains a common laundering method because \up0 \expndtw0\charscalex100 it i s frequently easy to carry out, inexpensive and relatively low risk. The vast in creases in \up0 \expndtw0\charscalex104 world trade make it impossible to examin e the cargo crossing frontiers. Therefore, this \up0 \expndtw0\charscalex110 mea ns of money laundering will continue and is still relevant. Generally money is \ up0 \expndtw0\charscalex104 smuggled out of countries with strict financial regu lations for deposit into the countries \up0 \expndtw-3\charscalex100 with lesser

regulated financial systems. \par\pard\qj \li2205\ri915\sb396\sl-405\slmult0 \u p0 \expndtw-1\charscalex100 As law enforcement agencies become more skilful at d etection, criminals need to find more \up0 \expndtw-2\charscalex100 complex and sophisticated techniques to disguise their ill-gotten gains. Therefore, criminal s \up0 \expndtw-1\charscalex100 are now taking advantage of new technology to hi de their illicit profits instantaneously and \up0 \expndtw-1\charscalex100 anony mously without an audit trail. This will certainly create problems of investigat ion and \up0 \expndtw-2\charscalex100 tracing the proceeds of crime. \par\pard\q j \li2205\ri914\sb398\sl-402\slmult0\fi0 \up0 \expndtw0\charscalex104 The bankin g system remains one of the most important vehicles for money launderers. \up0 \ expndtw0\charscalex105 Banks are attractive to money launderers because they pro vide three major advantages \up0 \expndtw0\charscalex100 when compared to other avenues of money laundering, namely, convenience, accessibility \up0 \expndtw0\c harscalex104 and security. By utilizing banks, criminals can gain access to the international payment \up0 \expndtw0\charscalex102 system and have the convenien ce of being able to move money electronically rather than \up0 \expndtw-1\charsc alex100 transporting physical currency.\ul0\super\cf8\f9\fs23 17\ul0\nosupersub\ cf1\f2\fs23 At present, professional money launderer make use of the \up0 \expn dtw0\charscalex104 whole range of modern international financial services rangin g from international wire \up0 \expndtw-3\charscalex100 transfers to private ban king and correspondent banking. \par\pard\qj \li2205\ri914\sb396\sl-405\slmult0 \up0 \expndtw0\charscalex100 Wire transfers remain a crucial tool for all three stages of the laundering process. They are \line \up0 \expndtw0\charscalex100 es pecially favored for the layering of funds. Given the large number of daily wire transfers \line \up0 \expndtw0\charscalex109 and the relatively little informat ion disclosed on these transactions, they provide an \line \up0 \expndtw0\charsc alex102 effective way for launderers to move their dirty funds. The sophisticat ed system of wire \line \up0 \expndtw0\charscalex102 transfers in use today enab les money launderers to access financial systems globally, \par\pard\qj \li2205\ sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb 0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\ sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl -220\slmult0 \par\pard\qj\li2205\ri936\sb48\sl-220\slmult0 \up0 \expndtw0\charsc alex102 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 17\ul0\nosupersub\cf10\f1 1\fs19 Jackie Johnson and Desmond Lim, \u8216?Money Laundering: Has the Financi al Action Task Force Made a \up0 \expndtw0\charscalex102 Difference?\u8217? (200 2) 10(1) \ul0\nosupersub\cf11\f12\fs19 Journal of Financial Crime \ul0\nosupersu b\cf10\f11\fs19 8. \par\pard\ql \li10567\sb24\sl-264\slmult0 \up0 \expndtw-3\cha rscalex100 \ul0\nosupersub\cf1\f2\fs23 18 {\shp {\*\shpinst\shpleft2205\shptop14319\shpright5006\shpbottom14339\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz166\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g28}{\bkmkend Pg28}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\s b0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri9 17\sb249\sl-400\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf1\f2\fs2 3 making it easy for illegal funds to be moved from one account to another accou nt until their \up0 \expndtw-3\charscalex100 origins are obscured.\ul0\super\cf8 \f9\fs23 18 \par\pard\qj \li2205\ri913\sb398\sl-403\slmult0 \up0 \expndtw-2\char scalex100 \ul0\nosupersub\cf1\f2\fs23 Private banking which specializes in furni shing financial services to affluent individuals is \line \up0 \expndtw0\charsca lex100 also vulnerable to money laundering. Normally, to open an account at a pr

ivate bank, the \line \up0 \expndtw-3\charscalex100 prospective client must depo sit a substantial amount of money, usually $1 million or more. \line \up0 \expnd tw0\charscalex102 After the account is opened, the private bank assigns a relati onship manager to act as a \line \up0 \expndtw-4\charscalex100 liaison between t he client and the bank. The private banker will help to facilitate the client\u8 217?s \line \up0 \expndtw-3\charscalex100 use of the bank\u8217?s services and f inancial products, including global wealth management, tax \line \up0 \expndtw0\ charscalex100 and estate planning. Private banking is vulnerable to money launde ring for a number of \line \up0 \expndtw-3\charscalex100 reasons. First, the cli ents are typically wealthy, powerful which make banks reluctant to ask \line \up 0 \expndtw-2\charscalex100 hard questions. Secondly, private banks often conduct business in jurisdictions which have \line \up0 \expndtw-2\charscalex100 strict banking secrecy laws and thirdly, there is a culture of secrecy in private bank s. It has \line \up0 \expndtw0\charscalex102 been suggested that private banks r outinely help to create shell companies and trusts to \line \up0 \expndtw0\chars calex103 shield the identity of the beneficial owner of an account.\ul0\super\cf 8\f9\fs23 19\ul0\nosupersub\cf1\f2\fs23 Also, private bankers often \line \up0 \expndtw-5\charscalex100 develop a very close personal relationship with their c lients.\ul0\super\cf8\f9\fs23 20 \par\pard\qj \li2205\ri914\sb398\sl-402\slmult0 \fi0 \up0 \expndtw0\charscalex103 \ul0\nosupersub\cf1\f2\fs23 While corresponden t banking is crucial to the international payment system because it \line \up0 \ expndtw-2\charscalex100 enables banks to conduct business and provide services f or their customers in jurisdictions \line \up0 \expndtw0\charscalex102 where the y have no physical presence, they are also used as a tool for laundering illicit \line \up0 \expndtw0\charscalex100 funds. For money launderers, an important fe ature of correspondent relationships is that \line \up0 \expndtw0\charscalex100 they provide access to international transfer systems.\ul0\super\cf8\f9\fs23 21\ ul0\nosupersub\cf1\f2\fs23 In 2001, it was reported that U.S \line \up0 \expndt w-4\charscalex100 banks had generally failed to take adequate steps to prevent m oney laundering through their \line \up0 \expndtw0\charscalex105 correspondent b anks accounts.\ul0\super\cf8\f9\fs23 22\ul0\nosupersub\cf1\f2\fs23 Therefore, t he risk posed by correspondent banking \line \up0 \expndtw0\charscalex102 servic es, particularly where a respondent bank is in a jurisdiction which has inadequa te \line \up0 \expndtw0\charscalex107 anti-money laundering measures, is someth ing which should be taken into account \line \up0 \expndtw-5\charscalex100 serio usly by the banking industry. \par\pard\qj \li2205\sb0\sl-220\slmult0 \par\pard\ qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj \li2205\ri942\sb9\sl-220\slmult0 \up0 \expndtw-1\charscalex100 \ul0\super\cf9\f1 0\fs19\ul0\super\cf9\f10\fs18 18\ul0\nosupersub\cf10\f11\fs19 Louis V Csoka,\u8 216?Combating Money Laundering: A Primer for Financial Services Professionals\u8 217? (2001) 20 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf11\f12\fs19 Annua l Review of Banking Law\ul0\nosupersub\cf10\f11\fs19 332. \par\pard\ql \li2205\ sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 19\ul0\ nosupersub\cf10\f11\fs19 Ibid. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \ex pndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 20\ul0\nosupersub\cf10\f11\fs19 I bid 338. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ ul0\super\cf9\f10\fs18 21\ul0\nosupersub\cf10\f11\fs19 J Petras, US Banks and t he Dirty Money Empire (2001). \par\pard\ql \li2205\sb22\sl-218\slmult0 \up0 \exp ndtw-2\charscalex100 <{\field{\*\fldinst {HYPERLINK "http://www.thirdworldtravel .com/banks/dirtymoneyempire.html" }}{\fldrslt {\ul0\nosupersub\cf29\f30\fs19\ul http://www.thirdworldtravel.com/Banks/DirtyMoneyEmpire.html}}}\ul0\nosupersub\cf 10\f11\fs19 > at 28 June 2005. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \exp ndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 22\ul0\nosupersub\cf10\f11\fs19 S Burt, \ul0\nosupersub\cf11\f12\fs19 Correspondent Banking: The Latest BSA Examin ation Target \ul0\nosupersub\cf10\f11\fs19 (2004). \par\pard\ql \li2205\sb2\sl219\slmult0 \up0 \expndtw-2\charscalex100 <{\field{\*\fldinst {HYPERLINK "http:/ /www.complianceheadquarters.com/aml/aml_articles/8_25_04.html /" }}{\fldrslt {\u l0\nosupersub\cf29\f30\fs19\ul http://www.complianceheadquarters.com/AML/AML_Art icles/8_25_04.html\ul0\nosupersub\cf10\f11\fs19 }}}\ul0\nosupersub\cf10\f11\fs1 9 > at 9 February 2005. \par\pard\ql \li10567\sb24\sl-264\slmult0 \up0 \expndtw-

3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 19 {\shp {\*\shpinst\shpleft2205\shptop12978\shpright5006\shpbottom12998\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz195\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g29}{\bkmkend Pg29}\par\pard\qj \li2205\sb0\sl-403\slmult0 \par\pard\qj\li2205\s b0\sl-403\slmult0 \par\pard\qj\li2205\sb0\sl-403\slmult0 \par\pard\qj\li2205\sb0 \sl-403\slmult0 \par\pard\qj\li2205\ri914\sb235\sl-403\slmult0 \up0 \expndtw0\ch arscalex109 \ul0\nosupersub\cf1\f2\fs23 Obviously, the manipulation of the banki ng systems is vital for a successful money \line \up0 \expndtw0\charscalex104 la undering operation. As such, for criminals, the best method of laundering is to own a \line \up0 \expndtw0\charscalex108 bank. In some extreme cases, the money launderers establish their own rogue bank, \line \up0 \expndtw0\charscalex104 ty pically a wholly-owned offshore bank, or engage in financial transactions throug h an \line \up0 \expndtw0\charscalex102 unregulated offshore banking entity. Normally, offshore jurisdictions have minimal \line \up0 \expndtw0\charscal ex107 banking supervision. The most common deficiency related to offshore bankin g is the \line \up0 \expndtw-2\charscalex100 unavailability of documentation on beneficial ownership to the law enforcement agencies.\ul0\super\cf8\f9\fs23 23 \ par\pard\qj \li2205\ri914\sb397\sl-404\slmult0 \up0 \expndtw0\charscalex109 \ul0 \nosupersub\cf1\f2\fs23 Another more recent method of money laundering is cyberlaundering which poses \up0 \expndtw0\charscalex106 considerable challenges to l aw enforcement agencies. It has been pointed out that this \up0 \expndtw0\charsc alex100 method is attractive because of the inability to identify and authentica te parties; the lack or \up0 \expndtw0\charscalex106 inadequacy of audit trails, record keeping and suspicious reporting by the technology \up0 \expndtw0\charsc alex100 provider; the use of higher level encryption to block out law enforcemen t; and transactions \up0 \expndtw-1\charscalex100 that fall outside the existing regulatory definitions.\ul0\super\cf8\f9\fs23 24 \par\pard\qj \li2205\ri913\sb3 97\sl-403\slmult0 \up0 \expndtw0\charscalex106 \ul0\nosupersub\cf1\f2\fs23 Cyber -laundering involves the use of E-money, internet banks and internet casino. E-\ line \up0 \expndtw0\charscalex109 money is considered a new payment method which includes a variety of innovative \line \up0 \expndtw0\charscalex102 products th at involve new ways of initiating payments through or extending the reach of \li ne \up0 \expndtw0\charscalex102 traditional retail electronic payment systems. I t also includes products that do not rely on \line \up0 \expndtw0\charscalex104 traditional payment systems to transfer value between individuals or organizatio ns, for \line \up0 \expndtw0\charscalex100 example, prepaid cards, electronic pu rses, mobile payments, internet payment services and \line \up0 \expndtw-1\chars calex100 digital precious metals.\ul0\super\cf8\f9\fs23 25 \par\pard\qj \li2205\ ri912\sb396\sl-405\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf1\f2\ fs23 E-money has a number of special characteristics that greatly attract money launderers. First, \line \up0 \expndtw-2\charscalex100 the bulkiness of traditio nal currency can be replaced with E-money. For instance, one smart \line \up0 \e xpndtw-2\charscalex100 card or computer can store huge amount of E-money. Second ly, E-money is easy to transfer \line \up0 \expndtw0\charscalex107 quickly. With the help of wire transfer, E-money can be channeled globally in a split \line \ up0 \expndtw-2\charscalex100 second. Thirdly, E-money is much more anonymous tha n traditional currency.\ul0\super\cf8\f9\fs23 26 \par\pard\ql \li2205\sb0\sl-218 \slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb74\sl-218\ slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 23\ul0\nosupersub\ cf10\f11\fs19 Csoka, above n 18, 339. \par\pard\ql \li2205\sb2\sl-218\slmult0 \

up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 24\ul0\nosupersub\cf10\f11\ fs19 Philippsohn, above n 14, 88. \par\pard\ql \li2205\sb22\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 25\ul0\nosupersub\cf10\f11\fs1 9 Financial Action Task Force on Money Laundering, \ul0\nosupersub\cf11\f12\fs1 9 Report on New Payment Methods\ul0\nosupersub\cf10\f11\fs19 (2006) 4. \par\par d\qj \li2205\ri945\sb1\sl-220\slmult0\fi0 \up0 \expndtw-1\charscalex100 \ul0\sup er\cf9\f10\fs18 26\ul0\nosupersub\cf10\f11\fs19 He Ping, \u8216?New Trends in M oney Laundering-From the Real World to Cyberspace\u8217? (2004)\ul0\nosupersub\c f11\f12\fs19 \ul0\nosupersub\cf10\f11\fs19 8(1) \ul0\nosupersub\cf11\f12\fs19 J ournal of \up0 \expndtw-2\charscalex100 Money Laundering Control\ul0\nosupersub\ cf10\f11\fs19 50. \par\pard\ql \li10567\sb24\sl-264\slmult0 \up0 \expndtw-3\cha rscalex100 \ul0\nosupersub\cf1\f2\fs23 20 {\shp {\*\shpinst\shpleft2205\shptop13648\shpright5006\shpbottom13668\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz175\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g30}{\bkmkend Pg30}\par\pard\qj \li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205\s b0\sl-402\slmult0 \par\pard\qj\li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205\sb0 \sl-402\slmult0 \par\pard\qj\li2205\ri913\sb239\sl-402\slmult0\fi0 \up0 \expndtw 0\charscalex103 \ul0\nosupersub\cf1\f2\fs23 The anonymity and high speed of E-mo ney not only offer great convenience to money \line \up0 \expndtw0\charscalex108 launderers, but it also creates problems for the existing money laundering coun ter-\line \up0 \expndtw0\charscalex104 measures. Traditionally, enforcement agen cies rely on the intermediation of financial \line \up0 \expndtw-2\charscalex100 institutions as choke points to collect data about funds movement.\ul0\super\cf 8\f9\fs23 27\ul0\nosupersub\cf1\f2\fs23 The primary danger of \line \up0 \expnd tw-1\charscalex100 E-money system is that it is extremely difficult to know bank s\u8217? customers. The advantage \line \up0 \expndtw0\charscalex102 of E-money to the launderers goes beyond the elimination of the audit trail. In fact, the \ line \up0 \expndtw0\charscalex100 money launderer can reduce the risk of suspici ous transaction report being made against \line \up0 \expndtw-1\charscalex100 th em.\ul0\super\cf8\f9\fs23 28 \par\pard\qj \li2205\ri914\sb398\sl-403\slmult0 \up 0 \expndtw-2\charscalex100 \ul0\nosupersub\cf1\f2\fs23 Internet banks have also had a great impact on the effort to counter money laundering. An \line \up0 \exp ndtw-2\charscalex100 internet bank is a virtual bank which can offer all kinds o f financial services anywhere and \line \up0 \expndtw-2\charscalex100 at anytime via the internet. It was reported that the range of financial services availabl e on \line \up0 \expndtw0\charscalex105 the internet appears to be growing. Thes e financial services include direct payments, \line \up0 \expndtw0\charscalex104 electronic funds transfers, issuance of cheques, purchase of securities and ope ning or \line \up0 \expndtw0\charscalex105 closing of accounts. The special feat ures of internet banks, namely, their speediness, \line \up0 \expndtw0\charscale x104 anonymity and capacity to extend beyond national borders, appear to be attr active for \line \up0 \expndtw0\charscalex100 money launderers because it is so difficult for the enforcement agencies to identify their \line \up0 \expndtw-3\c harscalex100 clients and their financial transactions records. Furthermore, beca use of the nature of cyber-\line \up0 \expndtw0\charscalex106 laundering, it is very difficult to determine the location of the crime. Also, it is very \line \u p0 \expndtw0\charscalex100 confusing to determine which authority has the jurisd iction to investigate and prosecute \line \up0 \expndtw-5\charscalex100 transnat ional crime.\ul0\super\cf8\f9\fs23 29 \par\pard\qj \li2205\ri914\sb397\sl-404\sl mult0 \up0 \expndtw0\charscalex104 \ul0\nosupersub\cf1\f2\fs23 Internet casinos

have flourished because traditional casinos are subject to anti-money \line \up0 \expndtw-2\charscalex100 laundering laws. At present, hundreds of casinos websi tes have been established in the tax \line \up0 \expndtw-3\charscalex100 haven j urisdictions, such as the Caribbean Islands. Surprisingly, many of these website s are \line \up0 \expndtw0\charscalex103 not regulated at all. Some of them even do not ask for the customer\u8217?s identity. All this \line \up0 \expndtw0\cha rscalex100 provides criminals with money laundering opportunities. With an accou nt on the internet \line \up0 \expndtw0\charscalex100 website, criminals can tra nsfer money freely and as a result large amounts of \u8216?dirty\u8217? money \p ar\pard\qj \li2205\sb0\sl-240\slmult0 \par\pard\qj\li2205\sb0\sl-240\slmult0 \pa r\pard\qj\li2205\ri932\sb232\sl-240\slmult0 \up0 \expndtw0\charscalex105 \ul0\su per\cf9\f10\fs19\ul0\super\cf9\f10\fs18 27\ul0\nosupersub\cf10\f11\fs19 Michael F Zeldin and Carlo V di Florio, \u8216?Strengthening Laws and Financial Institu tions to Combat \up0 \expndtw-2\charscalex100 Emerging Trends in Money Launderin g\u8217? (1999) 2(4) \ul0\nosupersub\cf11\f12\fs19 Journal of Money Laundering C ontrol\ul0\nosupersub\cf10\f11\fs19 303. \par\pard\ql \li2205\sb1\sl-215\slmult 0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 28\ul0\nosupersub\cf10\f 11\fs19 Philippsohn, above n 14, 89. \par\pard\ql \li2205\sb3\sl-218\slmult0 \u p0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 29\ul0\nosupersub\cf10\f11\f s19 Ibid. \par\pard\ql \li10567\sb24\sl-264\slmult0 \up0 \expndtw-3\charscalex1 00 \ul0\nosupersub\cf1\f2\fs23 21 {\shp {\*\shpinst\shpleft2205\shptop13872\shpright5006\shpbottom13892\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz167\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g31}{\bkmkend Pg31}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\s b0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri9 16\sb249\sl-400\slmult0 \up0 \expndtw0\charscalex107 \ul0\nosupersub\cf1\f2\fs23 have been laundered easily. These activities will certainly pose a threat to th e global \up0 \expndtw-3\charscalex100 financial systems.\ul0\super\cf8\f9\fs23 30 \par\pard\qj \li2205\ri915\sb397\sl-404\slmult0\fi0 \up0 \expndtw0\charscalex 105 \ul0\nosupersub\cf1\f2\fs23 Besides the manipulation of the banking systems and new technologies, there is also \up0 \expndtw-2\charscalex100 increasing use of alternative remittance systems in laundering the illegal proceeds. One of \u p0 \expndtw-4\charscalex100 the most popular alternative remittance systems is t he so-called \ul0\nosupersub\cf7\f8\fs23 \u8216?hawala\u8217?\ul0\nosupersub\cf1 \f2\fs23 or \ul0\nosupersub\cf7\f8\fs23 \u8216?hundi\u8217?\ul0\nosupersub\cf1\ f2\fs23 system. \up0 \expndtw-3\charscalex100 Since \ul0\nosupersub\cf7\f8\fs23 hawala\ul0\nosupersub\cf1\f2\fs23 is so prevalent in Malaysia,\ul0\super\cf8\f 9\fs23 31\ul0\nosupersub\cf1\f2\fs23 it would be worthwhile to have a more deta iled \up0 \expndtw0\charscalex104 presentation on \ul0\nosupersub\cf7\f8\fs23 ha wala\ul0\nosupersub\cf1\f2\fs23 , its operations and its role in money launderin g. According to \up0 \expndtw-2\charscalex100 Nikko Passas, \ul0\nosupersub\cf7\ f8\fs23 hawala\ul0\nosupersub\cf1\f2\fs23 was developed more than a century ago , when the Indian immigrant \up0 \expndtw0\charscalex100 communities in Africa a nd South East Asia devised it as a means of settling accounts.\ul0\super\cf8\f9\ fs23 32 \up0 \expndtw0\charscalex102 \ul0\nosupersub\cf7\f8\fs23 Hawala\ul0\nosu persub\cf1\f2\fs23 operations are parallel to the traditional banking channels. The components of \up0 \expndtw0\charscalex103 \ul0\nosupersub\cf7\f8\fs23 hawa la\ul0\nosupersub\cf1\f2\fs23 that distinguish it from other remittance system are; trust and extensive use of \up0 \expndtw-5\charscalex100 connections such a s family relationships or regional affiliations. \par\pard\qj \li2205\ri915\sb39

9\sl-401\slmult0 \up0 \expndtw-3\charscalex100 The \ul0\nosupersub\cf7\f8\fs23 h awala \ul0\nosupersub\cf1\f2\fs23 system involves the transfer of currency value without physically moving it. A \line \up0 \expndtw-1\charscalex100 customer ap proaches a \ul0\nosupersub\cf7\f8\fs23 Hawaladars\ul0\nosupersub\cf1\f2\fs23 or a \ul0\nosupersub\cf7\f8\fs23 hawala\ul0\nosupersub\cf1\f2\fs23 broker and giv es him a sum of money to \line \up0 \expndtw0\charscalex109 be transferred to a beneficiary in another country. The \ul0\nosupersub\cf7\f8\fs23 hawala\ul0\nosup ersub\cf1\f2\fs23 broker often runs a \line \up0 \expndtw-4\charscalex100 legit imate business, in addition to the financial services he offers; he has a busine ss contact, \line \up0 \expndtw-1\charscalex100 a friend or a relative in his co untry. The \ul0\nosupersub\cf7\f8\fs23 hawala\ul0\nosupersub\cf1\f2\fs23 broker contacts his \ul0\nosupersub\cf7\f8\fs23 hawala\ul0\nosupersub\cf1\f2\fs23 par tner in the \line \up0 \expndtw0\charscalex104 recipient\u8217?s country by phon e, fax or email. The \ul0\nosupersub\cf7\f8\fs23 hawala\ul0\nosupersub\cf1\f2\fs 23 broker instructs the partner to \line \up0 \expndtw0\charscalex106 deliver t he funds to the beneficiary, providing amount, name, address and telephone \line \up0 \expndtw-1\charscalex100 number of the recipient and promises to settle th e debt at a later stage. The customer does \line \up0 \expndtw-2\charscalex100 n ot necessarily receive a receipt but is given an identification code for the tra nsaction. The \line \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf7\f8\fs23 ha wala \ul0\nosupersub\cf1\f2\fs23 broker in the recipient\u8217?s country contact s the beneficiary and delivers the funds. No \line \up0 \expndtw0\charscalex103 records are produced of individual transactions which are entirely secured by th e trust \line \up0 \expndtw-5\charscalex100 between the two parties. \par\pard\q l \li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\l i2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb201\sl-218\slmult0 \up0 \expndtw2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 30\ul0\nosupersub \cf10\f11\fs19 Ibid. \par\pard\qj \li2205\ri935\sb1\sl-220\slmult0 \up0 \expndt w0\charscalex100 \ul0\super\cf9\f10\fs18 31\ul0\nosupersub\cf10\f11\fs19 Accord ing to Bala Shanmugam, the major hawala operators in Malaysia are money changers which are \up0 \expndtw-2\charscalex100 licensed and regulated by Bank Negara M alaysia (see Bala Shanmugam, \u8216?Hawala and Money Laundering: A \up0 \expndtw -2\charscalex100 Malaysian Perspective\u8217? (2004) 8(1) \ul0\nosupersub\cf11\ f12\fs19 Journal of Money Laundering Control\ul0\nosupersub\cf10\f11\fs19 37, 4 3.). \par\pard\qj \li2205\ri946\sb20\sl-220\slmult0\fi0 \up0 \expndtw0\charscale x105 \ul0\super\cf9\f10\fs18 32\ul0\nosupersub\cf10\f11\fs19 Nikos Passas, \ul0 \nosupersub\cf11\f12\fs19 Informal Value Transfer Systems and Criminal Organizat ion: A Study into so-called \line \up0 \expndtw-2\charscalex100 Underground Bank ing Networks \ul0\nosupersub\cf10\f11\fs19 (1999) 13 <{\field{\*\fldinst {HYPERL INK "http://usinfo.state.gov/eap/img/assets/4756/ivts.pdf /" }}{\fldrslt {\ul0\n osupersub\cf29\f30\fs19\ul http://usinfo.state.gov/eap/img/assets/4756/ivts.pdf\ ul0\nosupersub\cf10\f11\fs19 }}}\ul0\nosupersub\cf10\f11\fs19 > at 1 April \lin e \up0 \expndtw-2\charscalex100 2009 \par\pard\ql \li10567\sb24\sl-264\slmult0 \ up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 22 {\shp {\*\shpinst\shpleft2205\shptop13201\shpright5006\shpbottom13221\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz299\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g32}{\bkmkend Pg32}\par\pard\qj \li2205\sb0\sl-403\slmult0 \par\pard\qj\li2205\s b0\sl-403\slmult0 \par\pard\qj\li2205\sb0\sl-403\slmult0 \par\pard\qj\li2205\ri9 14\sb238\sl-403\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf7\f8\fs2

3 Hawala\ul0\nosupersub\cf1\f2\fs23 is attractive to customers because the syst em is cost effective. \ul0\nosupersub\cf7\f8\fs23 Hawala\ul0\nosupersub\cf1\f2\f s23 brokers take \line \up0 \expndtw0\charscalex100 a small commission and usua lly offer more advantageous exchange rates than the official \line \up0 \expndtw 0\charscalex108 rates. They have low overheads, and generate profits through sma ll commission and \line \up0 \expndtw0\charscalex100 exchange rate speculations. The system is safe, efficient and reliable, as it is based on trust \line \up0 \expndtw-1\charscalex100 and there are no reported of instances customers being cheated in the literature. A breach of \line \up0 \expndtw-1\charscalex100 trust would keep the customers away. The system is also flexible and not bureaucratic . The \line \up0 \expndtw0\charscalex110 informal nature of the transactions mak es \ul0\nosupersub\cf7\f8\fs23 hawala\ul0\nosupersub\cf1\f2\fs23 very attractiv e to users with tax, \line \up0 \expndtw-2\charscalex100 immigration or other le gal concerns. The system is anonymous and leaves no paper trail. As \line \up0 \ expndtw0\charscalex100 it is rare that \ul0\nosupersub\cf7\f8\fs23 hawala\ul0\no supersub\cf1\f2\fs23 brokers keep records after the transaction is completed, i t is unlikely \line \up0 \expndtw0\charscalex102 that the transaction will be id entified or detected. The system is also culture friendly. For \line \up0 \expnd tw0\charscalex111 migrant workers, ethnic or kinship ties with the \ul0\nosupers ub\cf7\f8\fs23 hawala\ul0\nosupersub\cf1\f2\fs23 brokers make this system \line \up0 \expndtw-3\charscalex100 particularly convenient and easy to use. \par\par d\qj \li2205\ri915\sb397\sl-403\slmult0\fi0 \up0 \expndtw0\charscalex105 While t he \ul0\nosupersub\cf7\f8\fs23 hawala \ul0\nosupersub\cf1\f2\fs23 system may ser ve legitimate purposes for migrant workers and poor \line \up0 \expndtw0\charsca lex100 people, its specific features makes it vulnerable to offences such as mon ey laundering and \line \up0 \expndtw0\charscalex108 terrorist financing.\ul0\su per\cf8\f9\fs23 33\ul0\nosupersub\cf1\f2\fs23 It is widely accepted that the \u l0\nosupersub\cf7\f8\fs23 hawala\ul0\nosupersub\cf1\f2\fs23 remittance system h as the \line \up0 \expndtw0\charscalex106 potential to facilitate all stages of money laundering process. The system provides an \line \up0 \expndtw0\charscalex 103 effective means of placement, as in most cases, the \ul0\nosupersub\cf7\f8\f s23 hawala \ul0\nosupersub\cf1\f2\fs23 broker can make deposits at \line \up0 \e xpndtw-2\charscalex100 banks that are justified by its other legitimate business activities. He or she may also use the \line \up0 \expndtw-2\charscalex100 cash received to meet business related costs, thus reducing cash deposits at the ban k. \par\pard\qj \li2205\ri914\sb398\sl-402\slmult0\fi0 \up0 \expndtw-1\charscale x100 Furthermore, the \ul0\nosupersub\cf7\f8\fs23 hawala\ul0\nosupersub\cf1\f2\f s23 system constitutes an alternative relatively \u8216?safe layer\u8217? in mo ney \line \up0 \expndtw-4\charscalex100 laundering schemes. In the absence of pa per trails or records of money transactions, \ul0\nosupersub\cf7\f8\fs23 hawala \line \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf1\f2\fs23 transfers are di fficult to trace and be tied-up to the original source of money. Layering can \l ine \up0 \expndtw-3\charscalex100 be done by using the \ul0\nosupersub\cf7\f8\fs 23 hawala\ul0\nosupersub\cf1\f2\fs23 brokers in several countries and distribut ing the transfers over \line \up0 \expndtw0\charscalex105 time. Integration of c riminal proceeds shares common features with the \ul0\nosupersub\cf7\f8\fs23 haw ala\ul0\nosupersub\cf1\f2\fs23 debt \line \up0 \expndtw0\charscalex100 settleme nt process and can be accomplished through investment in a legitimate business, \line \up0 \expndtw-3\charscalex100 the purchase of bonds or property, or an imp ort/ export invoice. Besides money laundering, \line \up0 \expndtw0\charscalex10 0 there has been growing concern on the potential use of \ul0\nosupersub\cf7\f8\ fs23 hawala\ul0\nosupersub\cf1\f2\fs23 as a conduit for terrorist \line \up0 \e xpndtw0\charscalex100 financing. According to the 9/11 Commission report, Osama Bin Laden relied largely on \par\pard\qj \li2205\sb0\sl-220\slmult0 \par\pard\qj \li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\l i2205\ri946\sb129\sl-220\slmult0 \up0 \expndtw-1\charscalex100 \ul0\super\cf9\f1 0\fs19\ul0\super\cf9\f10\fs18 33\ul0\nosupersub\cf10\f11\fs19 Financial Action Task Force on Money Laundering, \ul0\nosupersub\cf11\f12\fs19 Report on Money La undering Typologies 1999-2000 \line \up0 \expndtw-2\charscalex100 \ul0\nosupersu b\cf10\f11\fs19 (2000) 4. \par\pard\ql \li10567\sb24\sl-264\slmult0 \up0 \expndt

w-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 23 {\shp {\*\shpinst\shpleft2205\shptop14319\shpright5006\shpbottom14339\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz288\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g33}{\bkmkend Pg33}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\s b0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri9 16\sb249\sl-400\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs23 the established \ul0\nosupersub\cf7\f8\fs23 hawala \ul0\nosupersub\cf1\f2\fs23 networks operating in Pakistan, Dubai and throughout the Middle \up0 \expndtw0\c harscalex100 East to finance terrorism.\ul0\super\cf8\f9\fs23 34 \par\pard\qj \l i2205\ri913\sb397\sl-404\slmult0 \up0 \expndtw0\charscalex103 \ul0\nosupersub\cf 1\f2\fs23 Apart from alternative remittance systems, there are a number of non-f inancial business \line \up0 \expndtw0\charscalex100 activities which are vulner able to exploitation by money launderers. These include the real \line \up0 \exp ndtw-1\charscalex100 estate businesses, lawyers, notaries and accountants.\ul0\s uper\cf8\f9\fs23 35\ul0\nosupersub\cf1\f2\fs23 Real estate investment has becom e a \line \up0 \expndtw0\charscalex108 popular laundering vehicle and some of th e techniques used include the purchase of \line \up0 \expndtw0\charscalex106 res idential or business properties with the proceeds of criminal activities. The mo ney \line \up0 \expndtw0\charscalex103 launderers often establish private compan ies so that a legitimate business may cover the \line \up0 \expndtw-1\charscalex 100 fraud involved. The proceeds of any criminal activities can also be laundere d through stock \line \up0 \expndtw0\charscalex100 exchanges. Cash can be transf ormed into alternate financial investments and ownership of \line \up0 \expndtw0 \charscalex105 stocks and brokerage firms can function as deposit-taking institu tions in such a way to \line \up0 \expndtw-3\charscalex100 disguise the illegiti macy of the money.\ul0\super\cf8\f9\fs23 36 \par\pard\qj \li2205\ri914\sb396\sl404\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf1\f2\fs23 Lawyers, n otaries and accountants are vulnerable to money laundering activities because of \up0 \expndtw0\charscalex102 the nature of their professions. For instance, the y have specialized professional expertise \up0 \expndtw0\charscalex103 needed by money launderers and they perform a wide range of services in the economic \up0 \expndtw0\charscalex100 sphere. They also hold a respectable position in societ y which arouses little suspicion that \up0 \expndtw0\charscalex105 they are in volved in money laundering activities. More importantly, professional \up 0 \expndtw-3\charscalex100 confidentiality is generally available in almost ever y county.\ul0\super\cf8\f9\fs23 37 \par\pard\qj \li2205\ri914\sb400\sl-400\slmul t0 \up0 \expndtw0\charscalex102 \ul0\nosupersub\cf1\f2\fs23 In recent years, mor e complex money laundering methods have been identified. There is \line \up0 \ex pndtw-2\charscalex100 evidence to suggest that the international trade system ha ve been exploited by criminals and \line \up0 \expndtw0\charscalex100 terrorists . This arises from the enormous volume of trade flows, which obscures individual \line \up0 \expndtw0\charscalex109 transactions; the complexities associated wi th the use of multiple foreign exchange \line \up0 \expndtw0\charscalex100 trans actions and diverse trade financing arrangements; the commingling of legitimate and \par\pard\qj \li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmul t0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\ri938\sb189\sl-220\s lmult0 \up0 \expndtw-1\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\f s18 34\ul0\nosupersub\cf10\f11\fs19 Rob McCuster, \u8216?Underground Banking: L egitimate Remittance Network or Money Laundering System?\u8217? \up0 \expndtw-2\

charscalex100 (2005) \ul0\nosupersub\cf11\f12\fs19 Trends & Issues in Crime and Criminal Justice\ul0\nosupersub\cf10\f11\fs19 , 3. \par\pard\qj \li2205\ri946\sb 0\sl-220\slmult0 \up0 \expndtw-1\charscalex100 \ul0\super\cf9\f10\fs18 35\ul0\no supersub\cf10\f11\fs19 Financial Action Task Force on Money Laundering, \ul0\no supersub\cf11\f12\fs19 Report on Money Laundering Typologies 1997-1998 \line \up 0 \expndtw-2\charscalex100 \ul0\nosupersub\cf10\f11\fs19 (1998) 8. \par\pard\ql \li2205\sb22\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs1 8 36\ul0\nosupersub\cf10\f11\fs19 Ibid 12. \par\pard\li2205\sb8\sl-218\slmult0\ fi0\tx3298\tx8225\tx8855 \up0 \expndtw0\charscalex103 \ul0\super\cf9\f10\fs18 37 \ul0\nosupersub\cf10\f11\fs19 He Ping,\tab \up0 \expndtw0\charscalex103 \u8216? Lawyers, Notaries, Accountants and Money Laundering\u8217?\tab \up0 \expndtw-2\c harscalex100 (2006)\tab \up0 \expndtw0\charscalex103 9(1) \ul0\nosupersub\cf11\f 12\fs19 Journal of Money\par\pard\li2205\sb6\sl-218\slmult0\fi0 \up0 \expndtw0\c harscalex103 Laundering Control\ul0\nosupersub\cf10\f11\fs19 62, 70.\par\pard\q l \li10567\sb14\sl-264\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1 \f2\fs23 24 {\shp {\*\shpinst\shpleft2205\shptop13201\shpright5006\shpbottom13221\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz196\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g34}{\bkmkend Pg34}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\s b0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri9 15\sb249\sl-400\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf1\f2\fs2 3 illicit funds; and the limited resources that most customers agencies have ava ilable to detect \up0 \expndtw-3\charscalex100 suspicious trade transactions.\ul 0\super\cf8\f9\fs23 38 \par\pard\qj \li2205\ri914\sb398\sl-403\slmult0\fi0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs23 It is generally recognized t hat trade-based money laundering activities vary in complexity. \up0 \expndtw0\c harscalex100 The most basic schemes are fraudulent trade practices, such as unde r or over invoicing of \up0 \expndtw0\charscalex100 goods and services, while th e more complex schemes integrate these fraudulent practices \up0 \expndtw-2\char scalex100 into a web of complex transaction, such as the movement of value throu gh the financial and \up0 \expndtw0\charscalex100 international trade systems. T he use of such complex systems complicates the detection of \up0 \expndtw0\chars calex104 illegal money trails.\ul0\super\cf8\f9\fs23 39\ul0\nosupersub\cf1\f2\fs 23 As such, it is critical for the government to establish measures to \up0 \ex pndtw-3\charscalex100 combat money laundering associated with this kind of crime . \par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri916\sb20\sl-400\ slmult0 \up0 \expndtw0\charscalex103 Furthermore, despite the important and legi timate role played by corporate entities, they \up0 \expndtw0\charscalex100 may, under certain conditions, be abused by criminals to conceal the source of their illicit \up0 \expndtw0\charscalex103 profits. For instance, by setting up a com plex, multi-jurisdictional structure of corporate \up0 \expndtw0\charscalex100 e ntities and trust, the seemingly logical money flow between these entities may b e used to \up0 \expndtw-1\charscalex100 move and launder criminal money.\ul0\sup er\cf8\f9\fs23 40 \par\pard\qj \li2205\ri915\sb399\sl-402\slmult0\fi0 \up0 \expn dtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs23 Most recently, it has been identi fied that the value added (VAT) carousel fraud has been \line \up0 \expndtw0\cha rscalex100 used by serious criminal organizations either to raise funds or to la under the proceeds of \line \up0 \expndtw0\charscalex102 crime.\ul0\super\cf8\f9 \fs23 41\ul0\nosupersub\cf1\f2\fs23 Normally, in VAT carousel fraud, goods are apparently exported, thus making \line \up0 \expndtw-2\charscalex100 them exempt

from VAT, but the export does not actually takes place. The transaction may \li ne \up0 \expndtw0\charscalex102 then be reversed in the \u8216?receiving country \u8217?, thus doubling the fraud while leaving stock \line \up0 \expndtw-1\chars calex100 levels in both countries unaffected. VAT carousel fraud is not a form o f tax evasion, but a \line \up0 \expndtw-2\charscalex100 deliberate, systematic attack on government revenues. It is believed that billions of dollars \line \up 0 \expndtw-2\charscalex100 from VAT carousel fraud are moving through the intern ational banking system.\ul0\super\cf8\f9\fs23 42 \par\pard\ql \li2205\sb0\sl-218 \slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\s lmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slm ult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb162\sl-218\slm ult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 38\ul0\nosupersub\cf1 0\f11\fs19 Financial Action Task Force on Money Laundering , \ul0\nosupersub\cf 11\f12\fs19 Trade Based Money Laundering\ul0\nosupersub\cf10\f11\fs19 (2006) 3. \par\pard\ql \li2205\sb2\sl-218\slmult0\tx6470 \up0 \expndtw0\charscalex104 \ul 0\super\cf9\f10\fs18 39\ul0\nosupersub\cf10\f11\fs19 Haemala Thanasegaran and B ala Shanmugam, \tab \up0 \expndtw0\charscalex102 \u8216?International Trade-Base d Money Laundering: The \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\ charscalex100 Malaysian Perspective\u8217? (2007) 10(4) \ul0\nosupersub\cf11\f12 \fs19 Journal of Money Laundering Control\ul0\nosupersub\cf10\f11\fs19 429, 437 . \par\pard\qj \li2205\ri943\sb1\sl-220\slmult0 \up0 \expndtw-2\charscalex100 \u l0\super\cf9\f10\fs18 40\ul0\nosupersub\cf10\f11\fs19 Financial Action Task For ce on Money Laundering,\ul0\nosupersub\cf11\f12\fs19 The Misuse of Corporate Ve hicle, Including Trust and \up0 \expndtw-3\charscalex100 Company Service Provide rs\ul0\nosupersub\cf10\f11\fs19 (2006) 3. \par\pard\qj \li2205\ri947\sb20\sl-22 0\slmult0 \up0 \expndtw0\charscalex100 \ul0\super\cf9\f10\fs18 41\ul0\nosupersub \cf10\f11\fs19 Financial Action Task Force on Money Laundering, \ul0\nosupersub \cf11\f12\fs19 Laundering the Proceeds of VAT Carousel Fraud \line \up0 \expndtw 0\charscalex100 \ul0\nosupersub\cf10\f11\fs19 (2007) 2. \par\pard\li2205\sb11\sl -218\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 42\ul0\no supersub\cf10\f11\fs19 Ibid 4.\par\pard\li2205\sb17\sl-264\slmult0\fi8361 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 25 {\shp {\*\shpinst\shpleft2205\shptop12978\shpright5006\shpbottom12998\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz189\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g35}{\bkmkend Pg35}\par\pard\qj \li2205\sb0\sl-404\slmult0 \par\pard\qj\li2205\s b0\sl-404\slmult0 \par\pard\qj\li2205\sb0\sl-404\slmult0 \par\pard\qj\li2205\ri9 14\sb234\sl-404\slmult0\fi0 \up0 \expndtw0\charscalex103 \ul0\nosupersub\cf1\f2\ fs23 Clearly, criminals will often employ multiple methods, which involve the ab use of the \up0 \expndtw0\charscalex100 financial and international trade system s, to launder their illicit gains. It has been argued \up0 \expndtw-4\charscalex 100 that money laundering activities are a combination of the launderer\u8217?s imagination, networks \up0 \expndtw-3\charscalex100 of contact and professional expertise.\ul0\super\cf8\f9\fs23 43\ul0\nosupersub\cf1\f2\fs23 Undoubtedly, cri minals have been very inventive in \up0 \expndtw-4\charscalex100 finding ways to launder their tainted funds. As a result, the responsible authorities are under \up0 \expndtw-5\charscalex100 increasing pressure to detect and deter the menac e. \par\pard\li2205\sb0\sl-264\slmult0\par\pard\li2205\sb91\sl-264\slmult0\fi0\t x2906 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf4\f5\fs23 1.4\tab \up0 \ex pndtw-3\charscalex100 The Impact of Money Laundering\par\pard\qj \li2205\sb0\sl400\slmult0 \par\pard\qj\li2205\ri915\sb81\sl-400\slmult0 \up0 \expndtw-3\charsc

alex100 \ul0\nosupersub\cf1\f2\fs23 It is widely acknowledged that money launder ing can have devastating political, social and \up0 \expndtw0\charscalex100 econ omic consequences for countries, especially for developing countries and countr ies \up0 \expndtw-3\charscalex100 with fragile financial systems. Criminal organ izations have often used their illicit profits to \up0 \expndtw0\charscalex103 b ribe individuals or governments. Over time, this can seriously undermine democra tic \up0 \expndtw0\charscalex100 institutions and threaten good governance by promoting public corruption through \up0 \expndtw0\charscalex103 kickback s, bribery, illegal campaign contributions, collection of referral fees and \up0 \expndtw-5\charscalex100 misappropriation of corporate taxes and licen ce fees.\ul0\super\cf8\f9\fs23 44 \par\pard\qj \li2205\sb0\sl-400\slmult0 \par\p ard\qj\li2205\ri912\sb20\sl-400\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupe rsub\cf1\f2\fs23 Furthermore, unabated money laundering has an enormous impact o n the basic values of \line \up0 \expndtw0\charscalex109 society because it indi cates that crime does indeed pay.\ul0\super\cf8\f9\fs23 45\ul0\nosupersub\cf1\f2 \fs23 In the meantime, money \line \up0 \expndtw-3\charscalex100 laundering inc reases the threat posed by serious crime, by facilitating the underlying crimes \line \up0 \expndtw0\charscalex103 and providing funds for reinvestment that all ow the criminal enterprise to continue its \line \up0 \expndtw-2\charscalex100 o perations. For this reason, money laundering must be criminalized and criminal p roceeds \line \up0 \expndtw0\charscalex100 must be disrupted so that crimes will no longer pay and there will be less motivation for \line \up0 \expndtw0\charsc alex100 criminals to commit crimes. \par\pard\qj \li2205\sb0\sl-400\slmult0 \par \pard\qj\li2205\ri914\sb20\sl-400\slmult0 \up0 \expndtw0\charscalex109 Money lau ndering can threaten national economies and private sector. It has been \line \u p0 \expndtw0\charscalex104 recognized that criminals use their profits to infilt rate or acquire control of legitimate \line \up0 \expndtw-1\charscalex100 busine ss and to put legal competitors out of business. In fact, legitimate business is useful \line \up0 \expndtw-1\charscalex100 for criminal organizations as a cove r for their activities. The operation of such business is \par\pard\qj \li2205\s b0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\ri9 46\sb189\sl-220\slmult0\fi0 \up0 \expndtw0\charscalex103 \ul0\super\cf9\f10\fs19 \ul0\super\cf9\f10\fs18 43\ul0\nosupersub\cf10\f11\fs19 W Gilmore \u8216?Intern ational Initiatives\u8217?, in Parlour, \ul0\nosupersub\cf11\f12\fs19 Internatio nal Guide to Money Laundering Law and \up0 \expndtw-2\charscalex100 Practice\ul0 \nosupersub\cf10\f11\fs19 (1995) 12. \par\pard\qj \li2205\ri941\sb20\sl-220\slm ult0 \up0 \expndtw-1\charscalex100 \ul0\super\cf9\f10\fs18 44\ul0\nosupersub\cf1 0\f11\fs19 William R Schroeder, \u8216?Money Laundering: A Global Threat and the International Community Response\u8217? \up0 \expndtw-1\charscalex100 (2001) 70 (5) \ul0\nosupersub\cf11\f12\fs19 FBI Law Enforcement Bulletin\ul0\nosupersub\cf 10\f11\fs19 2. \par\pard\li2205\sb11\sl-218\slmult0\fi0 \up0 \expndtw-2\charsca lex100 \ul0\super\cf9\f10\fs18 45\ul0\nosupersub\cf10\f11\fs19 Siong Thye Tan, \u8216?Money Laundering and E-Commerce\u8217? (2002) 9(3) \ul0\nosupersub\cf11\f 12\fs19 Journal of Financial Crime \ul0\nosupersub\cf10\f11\fs19 277.\par\pard\l i2205\sb17\sl-264\slmult0\fi8361 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\c f1\f2\fs23 26 {\shp {\*\shpinst\shpleft2205\shptop13648\shpright5006\shpbottom13668\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz192\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g36}{\bkmkend Pg36}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\s b0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri9

16\sb249\sl-400\slmult0 \up0 \expndtw0\charscalex102 \ul0\nosupersub\cf1\f2\fs23 for the purpose of laundering illicit proceeds rather than as profit maximising enterprises \up0 \expndtw0\charscalex102 responsive to consumer demand and wort hy of legitimate investment capital.\ul0\super\cf8\f9\fs23 46 \par\pard\qj \li22 05\ri914\sb397\sl-404\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f 2\fs23 Money laundered through legitimate business is often placed in investment s that generate \up0 \expndtw0\charscalex105 little additional productivity for the broader economy such as real estate, art, antiques, \up0 \expndtw0\charscale x106 jewellery, and luxury automobiles. The diversion of such resources to less productive \up0 \expndtw0\charscalex100 domestic assets or luxury imports is a s erious detriment to economic growth especially for \up0 \expndtw0\charscalex100 developing countries. Also it can distort the international trade and capital fl ows for long\up0 \expndtw0\charscalex100 term economic development.\ul0\super\cf 8\f9\fs23 47 \par\pard\qj \li2205\ri914\sb398\sl-402\slmult0\fi0 \up0 \expndtw-3 \charscalex100 \ul0\nosupersub\cf1\f2\fs23 Furthermore, money laundering activit y through offshore financial centres (OFC) channels \line \up0 \expndtw-3\charsc alex100 could affect the developing countries\u8217? strategies to establish OFC s as vehicle for economic \line \up0 \expndtw-3\charscalex100 development.\ul0\s uper\cf8\f9\fs23 48\ul0\nosupersub\cf1\f2\fs23 It has been argued that when dev eloping countries attract \u8216?dirty money\u8217? as a \line \up0 \expndtw0\ch arscalex100 short term engine of growth, they can find it difficult to attract a solid long-term foreign \line \up0 \expndtw0\charscalex100 direct investment th at seeks stable conditions and good governance which can help them \line \up0 \e xpndtw-2\charscalex100 sustain development and promote long-term growth.\ul0\sup er\cf8\f9\fs23 49\ul0\nosupersub\cf1\f2\fs23 The flow of large amounts of funds \line \up0 \expndtw0\charscalex102 from laundering could also significantly imp act on exchange rates and interest rates, or \line \up0 \expndtw0\charscalex103 create artificial demand and affect pricing in the particular area and a good ex ample is \line \up0 \expndtw-3\charscalex100 housing and land.\ul0\super\cf8\f9\ fs23 50 \par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri913\sb20\s l-400\slmult0\fi0 \up0 \expndtw0\charscalex102 \ul0\nosupersub\cf1\f2\fs23 More importantly, money laundering could compromise the stability, transparency and \ up0 \expndtw-3\charscalex100 efficiency of the global financial systems.\ul0\sup er\cf8\f9\fs23 51\ul0\nosupersub\cf1\f2\fs23 The September 11 tragedy, the Ban k of Credit \up0 \expndtw-1\charscalex100 and Commerce International (BCCI) coll apse in 1991, the Citibank and the Bank of New \up0 \expndtw0\charscalex103 York scandals in 1999 have all exposed the dangers posed by money laundering to the \up0 \expndtw0\charscalex103 banks and financial systems. \par\pard\qj \li2205\s b0\sl-240\slmult0 \par\pard\qj\li2205\sb0\sl-240\slmult0 \par\pard\qj\li2205\sb0 \sl-240\slmult0 \par\pard\qj\li2205\sb0\sl-240\slmult0 \par\pard\qj\li2205\ri946 \sb33\sl-240\slmult0 \up0 \expndtw0\charscalex100 \ul0\super\cf9\f10\fs19\ul0\su per\cf9\f10\fs18 46\ul0\nosupersub\cf10\f11\fs19 B L Bartlett, \u8216?The Negat ive Effects of Money Laundering on Economic Development\u8217? (2002) \ul0\nosup ersub\cf11\f12\fs19 Platypus \up0 \expndtw0\charscalex100 Magazine\ul0\nosupersu b\cf10\f11\fs19 18, 19. \par\pard\ql \li2205\sb1\sl-215\slmult0 \up0 \expndtw-2 \charscalex100 \ul0\super\cf9\f10\fs18 47\ul0\nosupersub\cf10\f11\fs19 Ibid. \p ar\pard\ql \li2205\sb3\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\c f9\f10\fs18 48\ul0\nosupersub\cf10\f11\fs19 Ibid. \par\pard\ql \li2205\sb2\sl-2 18\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 49\ul0\nosupers ub\cf10\f11\fs19 L Verwoerd, \ul0\nosupersub\cf11\f12\fs19 Money Laundering and Economic and Financial Development\ul0\nosupersub\cf10\f11\fs19 (2005) \par\pa rd\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 <{\field{\*\fldin st {HYPERLINK "http://www.austrac.gov.au/text/publications/moneylaundering/11.ht ml" }}{\fldrslt {\ul0\nosupersub\cf29\f30\fs19\ul http://www.austrac.gov.au/text /publications/moneylaundering/11.html}}}\ul0\nosupersub\cf10\f11\fs19 > at 5 Jul y 2005. \par\pard\qj \li2205\ri942\sb0\sl-240\slmult0\fi0 \up0 \expndtw0\charsca lex102 \ul0\super\cf9\f10\fs18 50\ul0\nosupersub\cf10\f11\fs19 Anu Arora,\u8217 ?The Evaluation of International Money Laundering Regulation\u8217? in Iwan Davi es, \ul0\nosupersub\cf11\f12\fs19 Issues in \up0 \expndtw0\charscalex102 Interna tional Commercial Law\ul0\nosupersub\cf10\f11\fs19 (2005) 174. \par\pard\qj \li

2205\ri945\sb0\sl-220\slmult0\fi0 \up0 \expndtw0\charscalex100 \ul0\super\cf9\f1 0\fs18 51\ul0\nosupersub\cf10\f11\fs19 Ian Kaminski, \u8216?International Banki ng and Money Laundering\u8217? (2004) 23 \ul0\nosupersub\cf11\f12\fs19 Annual Re view of Banking and \up0 \expndtw-1\charscalex100 Financial Law\ul0\nosupersub\c f10\f11\fs19 210. \par\pard\ql \li10567\sb14\sl-253\slmult0 \up0 \expndtw-3\cha rscalex100 \ul0\nosupersub\cf1\f2\fs23 27 {\shp {\*\shpinst\shpleft2205\shptop12531\shpright5006\shpbottom12551\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz180\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g37}{\bkmkend Pg37}\par\pard\qj \li2205\sb0\sl-404\slmult0 \par\pard\qj\li2205\s b0\sl-404\slmult0 \par\pard\qj\li2205\sb0\sl-404\slmult0 \par\pard\qj\li2205\ri9 14\sb234\sl-404\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf1\f2\fs2 3 The September 11 tragedy highlighted the association of money laundering with terrorism, \line \up0 \expndtw0\charscalex104 while the BBCI debacle exposed the use of banking secrecy to disguise the illegitimate \line \up0 \expndtw0\charsc alex103 sources of money. As a consequence, the duty of confidentiality has now been replaced \line \up0 \expndtw0\charscalex106 with a duty of disclosure. Also , it has become immensely important for the banks and \line \up0 \expndtw0\chars calex105 financial institutions to provide an effective system to deal with any suspicious \line \up0 \expndtw-3\charscalex100 transactions. \par\par d\qj \li2205\ri912\sb396\sl-404\slmult0 \up0 \expndtw0\charscalex106 Furthermore , the Citibank and Bank of New York scandals in 1999 have revealed the \line \up 0 \expndtw0\charscalex102 extent of manipulation of private banking and correspo ndent banking services to launder \line \up0 \expndtw0\charscalex100 the illicit profits of criminal organizations and major political swindlers. As a result, b anks \line \up0 \expndtw0\charscalex106 are required to put in place rigorous an ti-money laundering measures for their private \line \up0 \expndtw0\charscalex10 0 banking and correspondent banking services. It is now clear that banks have to satisfy the \line \up0 \expndtw0\charscalex100 principles of safe and sound ban king practice in order to be a clean place to do business. \par\pard\qj \li2205\ ri911\sb398\sl-402\slmult0 \up0 \expndtw0\charscalex104 The continuing occurrenc e of money laundering scandals show that even many of the \line \up0 \expndtw0\c harscalex100 world\u8217?s best known banks have become the central elements of money laundering. More \line \up0 \expndtw-2\charscalex100 importantly, it highl ights that the vulnerability of the banking system to the menace which \line \up 0 \expndtw-2\charscalex100 still exists despite the fact that the anti-money lau ndering framework has been in place for \line \up0 \expndtw0\charscalex106 years . Therefore, it is clear that without effective implementation of the anti-money \line \up0 \expndtw0\charscalex102 laundering measures, banks may find themselv es directly or indirectly assisting money \line \up0 \expndtw0\charscalex108 lau nderers. To make matters worse, where the institutions are actively involved in \line \up0 \expndtw-2\charscalex100 laundering process, the illicit funds can ge t into the financial system unchallenged. \par\pard\qj \li2205\ri914\sb398\sl-40 2\slmult0 \up0 \expndtw0\charscalex100 This scenario will seriously affect the c ustomers\u8217? confidence in the integrity of the banks \up0 \expndtw0\charscal ex100 and financial institutions. Also, it becomes a threat to honest financial institutions which \up0 \expndtw0\charscalex103 have to prove their good standin g and credibility. It goes without saying that customer \up0 \expndtw-4\charscal ex100 confidence is fundamental to the growth of sound financial institutions. B anks and financial \up0 \expndtw-4\charscalex100 institutions rely heavily on a good reputation to build business. Therefore, banks exposed to \up0 \expndtw0\ch

arscalex100 money laundering would suffer reputational risk. To make mat ters worse, money \up0 \expndtw0\charscalex106 laundering could increase the p rospect of internal fraud and other criminal activities \up0 \expndtw-5\charscal ex100 resulting in the risk of financial failure.\ul0\super\cf8\f9\fs23 52 \par\ pard\ql \li2205\sb0\sl-280\slmult0 \par\pard\ql\li2205\ri932\sb279\sl-280\slmult 0\tx10567 \up0 \expndtw0\charscalex103 \ul0\super\cf9\f10\fs18 52\ul0\nosupersub \cf10\f11\fs19 Zeti Akhtar Aziz, \u8216?Governor\u8217?s Opening Remarks at the ASEAN Anti-Money Laundering Workshop\u8217? \line\tab \up0 \expndtw0\charscalex 103 \ul0\nosupersub\cf1\f2\fs23 28 {\shp {\*\shpinst\shpleft2205\shptop14542\shpright5006\shpbottom14562\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz168\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g38}{\bkmkend Pg38}\par\pard\qj \li2205\sb0\sl-405\slmult0 \par\pard\qj\li2205\s b0\sl-405\slmult0 \par\pard\qj\li2205\sb0\sl-405\slmult0 \par\pard\qj\li2205\sb0 \sl-405\slmult0 \par\pard\qj\li2205\ri915\sb225\sl-405\slmult0 \up0 \expndtw0\ch arscalex105 \ul0\nosupersub\cf1\f2\fs23 As such, banks and financial institution s play a major role in instituting effective anti-\line \up0 \expndtw-1\charscal ex100 money laundering strategies. Apart from combating the menace, these measur es are vital to \line \up0 \expndtw0\charscalex104 preserve the integrity of the financial systems. However, experience has shown that the \line \up0 \expndtw-1 \charscalex100 implementation of anti-money laundering measures not only creates significant compliance \line \up0 \expndtw-1\charscalex100 burden for banks, bu t also has the potential to adversely affect the operations of banks. \par\pard\ li2205\sb0\sl-264\slmult0\par\pard\li2205\sb0\sl-264\slmult0\par\pard\li2205\sb2 29\sl-264\slmult0\fi0\tx2906 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf4\f 5\fs23 1.5\tab \up0 \expndtw-3\charscalex100 Terrorism Financing\par\pard\qj \li 2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri914\sb79\sl-400\slmult0 \up0 \expn dtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs23 While in the past money launderin g activities had been associated with drugs trafficking \line \up0 \expndtw0\cha rscalex100 and organized crime, the September 11 tragedy has highlighted the lin k between money \line \up0 \expndtw0\charscalex106 laundering and terrorism fina ncing activities. It has been argued that the tragedy has \line \up0 \expndtw-2\ charscalex100 essentially strengthened and expanded the international community\u8217?s anti-money \line \up0 \expndtw-2\charscalex100 laundering net.\ul0\super\cf8\f9\fs23 53 \par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\ qj\li2205\ri914\sb20\sl-400\slmult0 \up0 \expndtw0\charscalex106 \ul0\nosupersub \cf1\f2\fs23 It has been recognized that the anti-money laundering framework is also a critically \up0 \expndtw0\charscalex103 important component in the war ag ainst terrorism. Disrupting the financial element of \up0 \expndtw-3\charscalex1 00 terrorist organizations could prevent terrorists from raising, moving and usi ng the funds for \up0 \expndtw-3\charscalex100 terrorist operations. More import antly, it will protect the vulnerable sectors, particularly the \up0 \expndtw-4\ charscalex100 financial, charitable and cash couriers sectors from criminal abus e.\ul0\super\cf8\f9\fs23 54 \par\pard\qj \li2205\ri913\sb397\sl-404\slmult0 \up0 \expndtw0\charscalex103 \ul0\nosupersub\cf1\f2\fs23 It is important to note tha t terrorism and organized crime are different in their ultimate \line \up0 \expn dtw0\charscalex106 motives. Terrorism is typically driven by ideological, religi ous or political motives, \line \up0 \expndtw0\charscalex100 whereas organized c rime is driven predominantly by financial gains. However, although \line \up0 \e xpndtw-2\charscalex100 terrorism is not motivated by financial gain, terrorist g roups still require financial support in \line \up0 \expndtw0\charscalex107 orde

r to achieve their aims. As such, it is critical for terrorist groups to develop and \line \up0 \expndtw0\charscalex100 maintain an effective financial infrastr ucture.\ul0\super\cf8\f9\fs23 55\ul0\nosupersub\cf1\f2\fs23 Despite their diffe rent motives, terrorism \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\li2 205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb154\sl-218\slmult0 \up0 \expndtw-2\ charscalex100 \ul0\nosupersub\cf10\f11\fs19 (Paper presented at the ASEAN Anti-M oney Laundering Workshop\ul0\nosupersub\cf11\f12\fs19 , \ul0\nosupersub\cf10\f11 \fs19 Kuala Lumpur, 28 July 2003). \par\pard\qj \li2205\ri945\sb1\sl-220\slmult0 \up0 \expndtw0\charscalex100 \ul0\super\cf9\f10\fs18 53\ul0\nosupersub\cf10\f11 \fs19 Alison S Bachus, \u8216?From Drugs to Terrorism: The Focus Shift in the I nternational Fight against Money \line \up0 \expndtw0\charscalex100 Laundering After September 11, 2001\u8217? (2004) 21 \ul0\nosupersub\cf11\f12\fs19 Arizona Journal of International and Comparative Law \line \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf10\f11\fs19 835, 870. \par\pard\ql \li2205\sb22\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 54\ul0\nosupersub\cf10\f1 1\fs19 Financial Action Task Force on Money Laundering, \ul0\nosupersub\cf11\f1 2\fs19 Terrorist Financing\ul0\nosupersub\cf10\f11\fs19 (2008) 27. \par\pard\qj \li2205\ri946\sb1\sl-220\slmult0 \up0 \expndtw-1\charscalex100 \ul0\super\cf9\f 10\fs18 55\ul0\nosupersub\cf10\f11\fs19 Financial Action Task Force on Money La undering, \ul0\nosupersub\cf11\f12\fs19 Report on Money Laundering Typologies 20 01-2002 \line \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf10\f11\fs19 (2002) 2. \par\pard\ql \li10567\sb24\sl-264\slmult0 \up0 \expndtw-3\charscalex100 \ul0 \nosupersub\cf1\f2\fs23 29 {\shp {\*\shpinst\shpleft2205\shptop13201\shpright10800\shpbottom13221\shpfhdr0\ shpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz171\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 8595}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(8595,20);(8595,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g39}{\bkmkend Pg39}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\s b0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri9 13\sb249\sl-400\slmult0 \up0 \expndtw0\charscalex105 \ul0\nosupersub\cf1\f2\fs23 financing shares multiple characteristics with money laundering in terms of sou rces of \up0 \expndtw0\charscalex100 funding, laundering techniques and risks po sed to the financial systems. Clearly, both are \up0 \expndtw0\charscalex100 cri minal activities attempting to disguise the sources and destination of funds and need to \up0 \expndtw0\charscalex100 use the financial intermediaries to mobili ze and channel their funds.\ul0\super\cf8\f9\fs23 56 \par\pard\qj \li2205\sb0\sl -401\slmult0 \par\pard\qj\li2205\ri914\sb19\sl-401\slmult0\fi0 \up0 \expndtw-2\c harscalex100 \ul0\nosupersub\cf1\f2\fs23 According to FATF, terrorism financing comes from two primary sources. The first source \line \up0 \expndtw-3\charscale x100 is the financial support provided by states or specific entities. However, this type of support \line \up0 \expndtw-3\charscalex100 has declined in recent years and has increasingly been replaced by wealthy individuals. For \line \up0 \expndtw-2\charscalex100 instance, it is believed that Osama bin Laden has been the main supporter of the Al-Qaeda \line \up0 \expndtw0\charscalex103 terrorist network.\ul0\super\cf8\f9\fs23 57\ul0\nosupersub\cf1\f2\fs23 The second major s ource of terrorist funds is derived from various \line \up0 \expndtw-1\charscale x100 revenue-generating activities. Notably, this type of support may be classif ied as legal and \line \up0 \expndtw-2\charscalex100 illegal. Legal sources of f inancing include personal donations, profits from businesses and \line \up0 \exp ndtw-4\charscalex100 funds from charitable organizations. Like money laundering, the illegal sources of terrorism \line \up0 \expndtw-1\charscalex100 financing include drug trafficking, the smuggling of weapons and other goods, credit card

\line \up0 \expndtw0\charscalex106 fraud, kidnapping and extortion.\ul0\super\cf 8\f9\fs23 58\ul0\nosupersub\cf1\f2\fs23 It has been argued that deficiencies in democratic \line \up0 \expndtw-2\charscalex100 development, a weak state, a lac k of civil society and the absence of economic institutions \line \up0 \expndtw2\charscalex100 are the key factors that facilitate the raising of terrorist fun ds through criminal activities.\ul0\super\cf8\f9\fs23 59 \par\pard\qj \li2205\ri 914\sb398\sl-403\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf1\f2\fs 23 Evidence suggests that there are little differences in relation to the method s used by terrorist \line \up0 \expndtw0\charscalex100 organizations to generate funds from illegal sources and the methods used by organized \line \up0 \expndt w0\charscalex107 crime groups. Similar methods includes cash smuggling; structu red deposits to, or \line \up0 \expndtw-1\charscalex100 withdrawals from, bank a ccounts; purchase of various types of monetary instruments; use \line \up0 \expn dtw-2\charscalex100 of credit cards or debit cards and wire transfers.\ul0\super \cf8\f9\fs23 60\ul0\nosupersub\cf1\f2\fs23 However, the specific methods normal ly \line \up0 \expndtw-2\charscalex100 used by terrorist group are alternative r emittance systems, particularly the \ul0\nosupersub\cf7\f8\fs23 hawala\ul0\nosup ersub\cf1\f2\fs23 system, \line \up0 \expndtw-2\charscalex100 charities, cash c ouriers and the movement of goods through the trade system. In fact, the \par\pa rd\qj \li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\par d\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\ qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj \li2205\ri945\sb149\sl-220\slmult0 \up0 \expndtw0\charscalex100 \ul0\super\cf9\f 10\fs19\ul0\super\cf9\f10\fs18 56\ul0\nosupersub\cf10\f11\fs19 R Barry Johston and Oana M Nedelescu, \u8216?The Impact of Terrorism on Financial Markets\u8217? (2006) 13(1) \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf11\f12\fs19 Journal of Financial Crime\ul0\nosupersub\cf10\f11\fs19 7, 18. \par\pard\qj \li2205\ri 943\sb0\sl-220\slmult0 \up0 \expndtw0\charscalex103 \ul0\super\cf9\f10\fs18 57\u l0\nosupersub\cf10\f11\fs19 Financial Action Task Force on Money Laundering, \u l0\nosupersub\cf11\f12\fs19 Guidance for Financial Institutions in Detecting \up 0 \expndtw0\charscalex103 Terrorist Financing\ul0\nosupersub\cf10\f11\fs19 (200 2) 4. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0 \super\cf9\f10\fs18 58\ul0\nosupersub\cf10\f11\fs19 Ibid. \par\pard\qj \li2205\ ri943\sb21\sl-220\slmult0 \up0 \expndtw0\charscalex100 \ul0\super\cf9\f10\fs18 5 9\ul0\nosupersub\cf10\f11\fs19 Patrick Hardouin, \u8216?Terrorist Fund Raising Through Criminal Activities\u8217? (2006) 9(3)\ul0\nosupersub\cf11\f12\fs19 Jou rnal of Money \up0 \expndtw0\charscalex100 Laundering Control \ul0\nosupersub\cf 10\f11\fs19 303, 308. \par\pard\li2205\sb11\sl-218\slmult0\fi0 \up0 \expndtw-2\c harscalex100 \ul0\super\cf9\f10\fs18 60\ul0\nosupersub\cf10\f11\fs19 Financial Action Task Force on Money Laundering, above n 54, 5.\par\pard\li2205\sb17\sl-26 4\slmult0\fi8361 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 30 {\shp {\*\shpinst\shpleft2205\shptop12978\shpright5006\shpbottom12998\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz176\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g40}{\bkmkend Pg40}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\s b0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri9 15\sb249\sl-400\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs23 adaptability and opportunism shown by terrorist organizations suggest that all the methods \up0 \expndtw0\charscalex100 that exist to move money around the glo be are to some extent at risk.\ul0\super\cf8\f9\fs23 61 \par\pard\qj \li2205\ri9 15\sb396\sl-405\slmult0\fi0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\

fs23 It has been argued that the anonymity feature of alternative remittance sys tem and the lack \up0 \expndtw0\charscalex105 of official scrutiny make it vulne rable to abuse for terrorism financing.\ul0\super\cf8\f9\fs23 62\ul0\nosupersub\ cf1\f2\fs23 Furthermore, \up0 \expndtw-1\charscalex100 alternative remittance s ystems are robust in jurisdictions where the formal banking sector is \up0 \expn dtw0\charscalex100 absent or weak, or where important distortions exist in payme nt systems as well as foreign \up0 \expndtw0\charscalex109 exchange and other fi nancial markets.\ul0\super\cf8\f9\fs23 63\ul0\nosupersub\cf1\f2\fs23 In the lig ht of the above circumstances, the \up0 \expndtw0\charscalex103 alternative remi ttance systems cannot be completely eliminated. Instead, the authorities \up0 \e xpndtw-1\charscalex100 must register and improve the level of transparency of th e systems, by bringing them closer \up0 \expndtw0\charscalex103 to the formal ba nking systems. More importantly, the weaknesses in the formal banking \up0 \expn dtw0\charscalex103 systems must be addressed efficiently.\ul0\super\cf8\f9\fs23 64 \par\pard\qj \li2205\ri914\sb400\sl-400\slmult0\fi0 \up0 \expndtw0\charscalex 100 \ul0\nosupersub\cf1\f2\fs23 Charities or non-profit organisations have many characteristics that make them vulnerable \line \up0 \expndtw0\charscalex100 to abuse for terrorism financing. These include the public trust, their considerabl e sources \line \up0 \expndtw0\charscalex104 of funds, their cash-intensive natu re and their global presence.\ul0\super\cf8\f9\fs23 65\ul0\nosupersub\cf1\f2\fs2 3 Evidence suggests that \line \up0 \expndtw0\charscalex102 some charities have served either as a direct source of income or as a cover for terrorism \line \u p0 \expndtw0\charscalex102 financing activities.\ul0\super\cf8\f9\fs23 66 \par\p ard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri911\sb20\sl-400\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs23 The nature of terrorist funds makes it difficult to apply anti-money laundering measures to \line \up0 \expndtw0\charscalex109 terrorism financing. The apparent legal source of terror ist funds makes detection of \line \up0 \expndtw-1\charscalex100 terrorism finan cing more difficult because of the lack of indicators that can be traced by the \line \up0 \expndtw0\charscalex109 anti-money laundering systems. It can be said that the relationship between money \line \up0 \expndtw-1\charscalex100 launder ing and terrorism financing is indirect because in terrorism financing it appear s that \line \up0 \expndtw-1\charscalex100 the clean money is transformed into c riminal money when it is used for terrorism purposes. \par\pard\ql \li2205\sb0\s l-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb139\sl218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\ f10\fs18 61\ul0\nosupersub\cf10\f11\fs19 Ibid. \par\pard\qj \li2205\ri936\sb21\ sl-220\slmult0 \up0 \expndtw0\charscalex100 \ul0\super\cf9\f10\fs18 62\ul0\nosup ersub\cf10\f11\fs19 R B Johnston, \ul0\nosupersub\cf11\f12\fs19 Work of the IMF in Informal Funds Transfer System-Regulatory Frameworks for Hawala \up0 \expndt w0\charscalex100 and Other Remittance Systems, Monetary and Financial Systems\ul 0\nosupersub\cf10\f11\fs19 (2005) 2. \par\pard\qj \li2205\ri942\sb0\sl-220\slmu lt0 \up0 \expndtw0\charscalex102 \ul0\super\cf9\f10\fs18 63\ul0\nosupersub\cf10\ f11\fs19 Bruce Zagaris, \u8216?Problems Applying Traditional Anti-Money Launder ing Procedures to Non-Financial \up0 \expndtw0\charscalex100 Transactions, \u822 0?Parallel Banking Systems\u8221? and Islamic Financial Systems\u8217? (2007) 10 (2) \ul0\nosupersub\cf11\f12\fs19 Journal of Money \up0 \expndtw0\charscalex100 Laundering Control\ul0\nosupersub\cf10\f11\fs19 157, 167. \par\pard\ql \li2205\ sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 64\ul0\ nosupersub\cf10\f11\fs19 Ibid. \par\pard\qj \li2205\ri946\sb21\sl-220\slmult0 \ up0 \expndtw-1\charscalex100 \ul0\super\cf9\f10\fs18 65\ul0\nosupersub\cf10\f11\ fs19 Financial Action Task Force on Money Laundering, \ul0\nosupersub\cf11\f12\ fs19 Report on Money Laundering Typologies 2003-2004 \line \up0 \expndtw-2\chars calex100 \ul0\nosupersub\cf10\f11\fs19 (2004) 8. \par\pard\li2205\sb11\sl-218\sl mult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 66\ul0\nosupersu b\cf10\f11\fs19 Financial Action Task Force on Money Laundering, above n 54, 25 .\par\pard\li2205\sb17\sl-264\slmult0\fi8361 \up0 \expndtw-3\charscalex100 \ul0\ nosupersub\cf1\f2\fs23 31

{\shp {\*\shpinst\shpleft2205\shptop12531\shpright5006\shpbottom12551\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz164\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g41}{\bkmkend Pg41}\par\pard\qj \li2205\sb0\sl-403\slmult0 \par\pard\qj\li2205\s b0\sl-403\slmult0 \par\pard\qj\li2205\sb0\sl-403\slmult0 \par\pard\qj\li2205\ri9 15\sb238\sl-403\slmult0\fi0 \up0 \expndtw0\charscalex104 \ul0\nosupersub\cf1\f2\ fs23 For this reason, funds need to be analysed for the crime they are about to finance in the \up0 \expndtw-1\charscalex100 future rather than the crime with w hich they may have been associated in the past. As such, \up0 \expndtw0\charscal ex100 the application of traditional anti-money laundering measures to terrorism financing is not \up0 \expndtw0\charscalex104 an effective solution because the measures are designed to focus on the origins of dirty \up0 \expndtw0\charscale x106 money. They are not able to identify legitimate funds passing through for i llegitimate \up0 \expndtw0\charscalex105 purposes in the future.\ul0\super\cf8\f 9\fs23 67\ul0\nosupersub\cf1\f2\fs23 Therefore, it is vital to develop a new, c ooperative model that \up0 \expndtw-3\charscalex100 would address the issue more effectively.\ul0\super\cf8\f9\fs23 68 \par\pard\qj \li2205\ri913\sb397\sl-403\s lmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf1\f2\fs23 Another importa nt aspect of terrorism financing that make its detection more difficult is the \ up0 \expndtw0\charscalex103 size of the transactions involved. Financial flows l inked to terrorist operations are often \up0 \expndtw0\charscalex100 very small and remain below the thresholds of anti-money laundering measures. As such, \up0 \expndtw0\charscalex106 terrorism financing may be relatively easy to conceal, compared to traditional money \up0 \expndtw0\charscalex102 laundering. For examp le, it has been suggested that the sums that circulated between the \up0 \expndt w-1\charscalex100 September 11 hijackers and their overseas accounts amounted to less than USD10,000, and \up0 \expndtw-2\charscalex100 in most cases, the opera tions were simple wire transfers.\ul0\super\cf8\f9\fs23 69 \par\pard\qj \li2205\ ri913\sb398\sl-402\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf1\f2\ fs23 Clearly, detecting terrorist funds is a very daunting task. As such, to ef fectively combating \line \up0 \expndtw0\charscalex100 terrorism financing, legi slators and regulators need to plug gaps in the existing anti-money \line \up0 \ expndtw-1\charscalex100 laundering regime.\ul0\super\cf8\f9\fs23 70\ul0\nosupers ub\cf1\f2\fs23 Consequently, alternative remittance systems, wire transfers, ch arities \line \up0 \expndtw-1\charscalex100 and cash couriers need to be effecti vely regulated. The efforts to disrupt terrorist funds also \line \up0 \expndtw1\charscalex100 require extensive international cooperation, an extraordinary di splay of civic responsibility \line \up0 \expndtw0\charscalex105 by the world ba nking community and efficient regulatory regimes.\ul0\super\cf8\f9\fs23 71\ul0\n osupersub\cf1\f2\fs23 Furthermore, it is \line \up0 \expndtw0\charscalex102 evi dent that sharing identified terrorist vulnerabilities and information with the regulated \line \up0 \expndtw0\charscalex102 institutions constitutes a first li ne defence against terrorism financing.\ul0\super\cf8\f9\fs23 72 \par\pard\qj \l i2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2 205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li220 5\sb0\sl-220\slmult0 \par\pard\qj\li2205\ri945\sb89\sl-220\slmult0 \up0 \expndtw -1\charscalex100 \ul0\super\cf9\f10\fs18 67\ul0\nosupersub\cf10\f11\fs19 Omar E lagab, \u8216?Control of Terrorist Funds and the Banking System\u8217? (2006) 21 (1) \ul0\nosupersub\cf11\f12\fs19 Journal of International \up0 \expndtw-2\chars calex100 Banking Law Review\ul0\nosupersub\cf10\f11\fs19 38, 44. \par\pard\li22 05\sb22\sl-218\slmult0\fi0\tx3821 \up0 \expndtw0\charscalex103 \ul0\super\cf9\f1 0\fs18 68\ul0\nosupersub\cf10\f11\fs19 Alyssa Phillips,\tab \up0 \expndtw0\char

scalex104 \u8216?Terrorists Financing Laws Won\u8217?t Wash. It Ain\u8217?t Mone y laundering\u8217? (2004) 23(1)\par\pard\li2205\sb7\sl-218\slmult0\fi0 \up0 \ex pndtw0\charscalex103 \ul0\nosupersub\cf11\f12\fs19 University of Queensland Law Journal\ul0\nosupersub\cf10\f11\fs19 81, 101.\par\pard\ql \li2205\sb1\sl-214\sl mult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 69\ul0\nosupersub\cf 10\f11\fs19 Financial Action Task Force on Money Laundering, above n 54, 6. \pa r\pard\qj \li2205\ri939\sb2\sl-220\slmult0 \up0 \expndtw-1\charscalex100 \ul0\su per\cf9\f10\fs18 70\ul0\nosupersub\cf10\f11\fs19 Courtney J Linn, \u8216?How Te rrorists Exploit Gaps in US Anti-Money Laundering Laws to Secrete Plunder\u8217? \up0 \expndtw-1\charscalex100 (20050 8(3) \ul0\nosupersub\cf11\f12\fs19 Journal of Money Laundering Control\ul0\nosupersub\cf10\f11\fs19 200, 215. \par\pard\q j \li2205\ri946\sb0\sl-240\slmult0 \up0 \expndtw-3\charscalex100 \ul0\super\cf9\ f10\fs18 71\ul0\nosupersub\cf10\f11\fs19 David D Aufhauser, \u8216?Terrorist Fi nancing: Foxes Run to Ground\u8217? (2003) 6(4) \ul0\nosupersub\cf11\f12\fs19 Jo urnal of Money Laundering \up0 \expndtw-4\charscalex100 Control \ul0\nosupersub\ cf10\f11\fs19 301. \par\pard\qj \li2205\ri937\sb0\sl-220\slmult0 \up0 \expndtw0\ charscalex100 \ul0\super\cf9\f10\fs18 72\ul0\nosupersub\cf10\f11\fs19 Marcy M F orman, \u8216?Combating Terrorist Financing and Other Financial Crimes Through P rivate Sector \up0 \expndtw0\charscalex100 Partnerships\u8217? (2006) 9(1) \ul0\ nosupersub\cf11\f12\fs19 Journal of Money Laundering Control\ul0\nosupersub\cf10 \f11\fs19 112, 118. \par\pard\ql \li10567\sb14\sl-253\slmult0 \up0 \expndtw-3\c harscalex100 \ul0\nosupersub\cf1\f2\fs23 32 {\shp {\*\shpinst\shpleft2205\shptop12307\shpright5006\shpbottom12327\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz178\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g42}{\bkmkend Pg42}\par\pard\qj \li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205\s b0\sl-402\slmult0 \par\pard\qj\li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205\ri9 14\sb241\sl-402\slmult0 \up0 \expndtw0\charscalex102 \ul0\nosupersub\cf1\f2\fs23 Specifically, it has been identified that suspicious transaction reporting mech anism has a \up0 \expndtw0\charscalex100 central role in identifying terrorism f inancing and the movement of terrorist funds through \up0 \expndtw0\charscalex10 6 the financial systems. Even though it is generally not possible for banks and financial \up0 \expndtw0\charscalex102 institutions to draw the link between the suspicious activity and terrorism, it appears that \up0 \expndtw0\charscalex103 the financial information gathered from the mechanism would provide law enforce ment \up0 \expndtw0\charscalex100 with information on terrorist activity. Furthe rmore, financial information when combined \up0 \expndtw0\charscalex100 with cou nter-terrorist intelligence would constitute an effective tool for disrupting te rrorist \up0 \expndtw0\charscalex108 operations.\ul0\super\cf8\f9\fs23 73\ul0\no supersub\cf1\f2\fs23 Ultimately, respect for the rule of law, both internationa l and domestic \up0 \expndtw-3\charscalex100 constitutional law, is an essential element of the war on terror.\ul0\super\cf8\f9\fs23 74 \par\pard\li2205\sb0\sl264\slmult0\par\pard\li2205\sb98\sl-264\slmult0\fi0\tx2906 \up0 \expndtw-3\chars calex100 \ul0\nosupersub\cf4\f5\fs23 1.6\tab \up0 \expndtw-3\charscalex100 Summa ry\par\pard\qj \li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205\ri913\sb70\sl-402\ slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs23 Money launderin g is the life blood of criminal organizations. It helps distance criminals \line \up0 \expndtw0\charscalex102 from the proceeds of the underlying crimes so that they can enjoy their ill-gotten gains \line \up0 \expndtw0\charscalex100 withou t fear of prosecution and confiscation\ul0\nosupersub\cf7\f8\fs23 . \ul0\nosuper sub\cf1\f2\fs23 The criminalization of money laundering is \line \up0 \expndtw0\

charscalex100 considered a new tool in the fight against criminal activities. Ef fective investigation and \line \up0 \expndtw0\charscalex103 prosecution of the launderers and the confiscation of the funds in the possession of the \line \up0 \expndtw-3\charscalex100 launderers can have significant impact on the criminal organizations finances. The rationale \line \up0 \expndtw-3\charscalex100 behin d this approach is that it would not only reduce the ability of criminal organiz ations to \line \up0 \expndtw0\charscalex106 finance further criminal operations but also lead to the successful prosecution of the \line \up0 \expndtw-5\charsc alex100 perpetrators. \par\pard\qj \li2205\ri916\sb398\sl-403\slmult0 \up0 \expn dtw-2\charscalex100 Criminals have been very inventive in finding ways to launde r their tainted funds. In most \up0 \expndtw-1\charscalex100 cases, the modern c ommunication technology and the complexity of the financial systems \up0 \expndt w0\charscalex110 have greatly assisted the laundering process. In response to th is problem, the law \up0 \expndtw0\charscalex106 enforcement and supervisory aut horities as well as the regulated institutions need to \up0 \expndtw-1\charscale x100 increase their awareness of money laundering methods, particularly current and emerging \up0 \expndtw0\charscalex100 trends. This will provide them with a better picture of the vulnerabilities of the financial \up0 \expndtw0\charscalex 100 system to exploitation by criminals and terrorists. \par\pard\ql \li2205\sb0 \sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\s l-218\slmult0 \par\pard\ql\li2205\sb196\sl-218\slmult0 \up0 \expndtw-2\charscale x100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 73\ul0\nosupersub\cf10\f11\f s19 Financial Action Task Force on Money Laundering, above n 54, 30. \par\pard\ qj \li2205\ri946\sb21\sl-220\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf 9\f10\fs18 74\ul0\nosupersub\cf10\f11\fs19 Fletcher N Baldwin and Theresa A Di Perna, \u8216?The Rule of Law- An Essential Component of the Financial \line \up 0 \expndtw-2\charscalex100 War Against Organized Crime and Terrorism in the Amer icas\u8217? (2007) 14(4) \ul0\nosupersub\cf11\f12\fs19 Journal of Financial Crim e\ul0\nosupersub\cf10\f11\fs19 405, \line \up0 \expndtw-3\charscalex100 437. \p ar\pard\ql \li10567\sb24\sl-264\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosup ersub\cf1\f2\fs23 33 {\shp {\*\shpinst\shpleft2205\shptop13872\shpright5006\shpbottom13892\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz207\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g43}{\bkmkend Pg43}\par\pard\qj \li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205\s b0\sl-402\slmult0 \par\pard\qj\li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205\ri9 13\sb241\sl-402\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs23 Combating money laundering is not just a matter of fighting crime but also pres erving the \up0 \expndtw0\charscalex107 integrity of banks and financial institu tions from being abused by money launderers. \up0 \expndtw0\charscalex106 Theref ore, many of the efforts to combat the menace have concentrated on banks and \up 0 \expndtw0\charscalex102 financial institutions. However, money laundering coun ter-measures have put significant \up0 \expndtw0\charscalex100 regulatory and co mpliance burdens on the institutions involved. These measures have not \up0 \exp ndtw0\charscalex105 only affected the business operations of banks and financial institutions, but also their \up0 \expndtw0\charscalex103 relationship with the ir customers and other stakeholders. Thus, it is vital to create a well \up0 \ex pndtw0\charscalex103 balanced and workable anti-money laundering regime. \par\pa rd\qj \li2205\ri914\sb397\sl-404\slmult0 \up0 \expndtw0\charscalex100 While in t he past money laundering activities had been associated with drugs trafficking \ line \up0 \expndtw0\charscalex100 and organized crime, the event of September 11

, 2001 has highlighted the link between \line \up0 \expndtw-1\charscalex100 mone y laundering and terrorism financing. It should be noted that terrorism financin g has \line \up0 \expndtw0\charscalex103 affected the traditional model of money laundering which starts with the placement of \line \up0 \expndtw0\charscalex10 3 \u8216?dirty money\u8217? into the banking system. For terrorism financing how ever, the source of \line \up0 \expndtw0\charscalex103 funds may well be legitim ate. Accordingly, the traditional money laundering model is \line \up0 \expndtw2\charscalex100 effectively reversed, as funds become \u8216?dirty\u8217? only a t the end of the process when funds are \line \up0 \expndtw-3\charscalex100 used to finance terrorist operations. Therefore, despite their similarities, terrori sm financing \line \up0 \expndtw-4\charscalex100 and money laundering are distin ct activities. The nature of terrorist funds and the size of the \line \up0 \exp ndtw0\charscalex107 transactions involved make it difficult to apply anti-money laundering measures to \line \up0 \expndtw-5\charscalex100 terrorism financing. \par\pard\ql \li10567\sb0\sl-264\slmult0 \par\pard\ql\li10567\sb0\sl-264\slmult0 \par\pard\ql\li10567\sb0\sl-264\slmult0 \par\pard\ql\li10567\sb0\sl-264\slmult0 \par\pard\ql\li10567\sb0\sl-264\slmult0 \par\pard\ql\li10567\sb0\sl-264\slmult0 \par\pard\ql\li10567\sb0\sl-264\slmult0 \par\pard\ql\li10567\sb0\sl-264\slmult0 \par\pard\ql\li10567\sb0\sl-264\slmult0 \par\pard\ql\li10567\sb0\sl-264\slmult0 \par\pard\ql\li10567\sb0\sl-264\slmult0 \par\pard\ql\li10567\sb0\sl-264\slmult0 \par\pard\ql\li10567\sb0\sl-264\slmult0 \par\pard\ql\li10567\sb0\sl-264\slmult0 \par\pard\ql\li10567\sb0\sl-264\slmult0 \par\pard\ql\li10567\sb0\sl-264\slmult0 \par\pard\ql\li10567\sb0\sl-264\slmult0 \par\pard\ql\li10567\sb0\sl-264\slmult0 \par\pard\ql\li10567\sb0\sl-264\slmult0 \par\pard\ql\li10567\sb256\sl-264\slmul t0 \up0 \expndtw-3\charscalex100 34 \par\pard\sect\sectd\fs24\paperw11900\paperh 16840\pard\sb0\sl-240{\bkmkstart Pg44}{\bkmkend Pg44}\par\pard\ql \li5617\sb0\sl -264\slmult0 \par\pard\ql\li5617\sb0\sl-264\slmult0 \par\pard\ql\li5617\sb0\sl-2 64\slmult0 \par\pard\ql\li5617\sb0\sl-264\slmult0 \par\pard\ql\li5617\sb0\sl-264 \slmult0 \par\pard\ql\li5617\sb0\sl-264\slmult0 \par\pard\ql\li5617\sb217\sl-264 \slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf4\f5\fs23 CHAPTER TWO \ par\pard\ql \li3169\sb0\sl-264\slmult0 \par\pard\ql\li3169\sb112\sl-264\slmult0 \up0 \expndtw-3\charscalex100 INTERNATIONAL INITIATIVES AND COUNTER MEASURES \pa r\pard\li2205\sb0\sl-264\slmult0\par\pard\li2205\sb0\sl-264\slmult0\par\pard\li2 205\sb0\sl-264\slmult0\par\pard\li2205\sb44\sl-264\slmult0\fi0\tx2906 \up0 \expn dtw-3\charscalex100 2.1\tab \up0 \expndtw-3\charscalex100 Introduction\par\pard\ qj \li2205\sb0\sl-401\slmult0 \par\pard\qj\li2205\ri915\sb82\sl-401\slmult0\fi0 \up0 \expndtw0\charscalex102 \ul0\nosupersub\cf1\f2\fs23 Pressure to combat mone y laundering, and more recently terrorism financing, have come \up0 \expndtw0\ch arscalex103 from various quarters, including international agencies, multination al organizations and \up0 \expndtw0\charscalex100 national regulatory agencies. This is not surprising considering the international nature of \up0 \expndtw0\ch arscalex105 money laundering and its potential to undermine not just financial i nstitutions but also \up0 \expndtw0\charscalex100 legitimate economies and the s overeignty of nation states. It is widely acknowledged that \up0 \expndtw0\chars calex111 money laundering can only be dealt with effectively with the full coope ration and \up0 \expndtw0\charscalex104 assistance of the entire international c ommunity. This chapter will examine the various \up0 \expndtw0\charscalex100 ini tiatives undertaken by agencies such as the United Nations, the Council of Europ e, the \up0 \expndtw0\charscalex100 Basle Committee on Banking Regulation and Su pervisory Practices, the Financial Action \up0 \expndtw0\charscalex100 Task Forc e, the Wolfsberg Group and the Asian Pacific Group. Many countries, including \u p0 \expndtw0\charscalex100 Malaysia, have adopted the measures proposed by these agencies and this accounts for the \up0 \expndtw-1\charscalex100 relative unifo rmity of anti-money laundering laws globally. \par\pard\li2205\sb0\sl-264\slmult 0\par\pard\li2205\sb0\sl-264\slmult0\par\pard\li2205\sb234\sl-264\slmult0\fi0\tx 2907 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf4\f5\fs23 2.2\tab \up0 \exp ndtw-3\charscalex100 The United Nations Initiatives\par\pard\qj \li2205\sb0\sl-4 00\slmult0 \par\pard\qj\li2205\ri916\sb75\sl-400\slmult0 \up0 \expndtw0\charscal ex102 \ul0\nosupersub\cf1\f2\fs23 It can be said that the United Nations (UN) is the lead multilateral institution in the fight \up0 \expndtw0\charscalex102 aga

inst money laundering. For the purpose of this study, the discussion will focus on the \up0 \expndtw0\charscalex102 1998 Vienna Convention which address the int ernational drug trafficking issues and also \up0 \expndtw0\charscalex102 the 200 0 Palermo Convention to combat transnational organized crime. \par\pard\qj \li22 05\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri913\sb20\sl-400\slmult0 \up0 \expndt w0\charscalex102 Before discussing those two Conventions, it would be worthwhile to briefly mention the \line \up0 \expndtw-1\charscalex100 roles of the United Nation Drugs Control Program (UNDCP) and the Crime Prevention and \line \up0 \ex pndtw0\charscalex107 Criminal Justice Branch, which have been given specific man dates to combat money \line \up0 \expndtw-1\charscalex100 laundering. The action taken by UNDCP so far has mostly been in the form of provision of \par\pard\ql \li10565\sb133\sl-264\slmult0 \up0 \expndtw-3\charscalex100 35 \par\pard\sect\se ctd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart Pg45}{\bkmkend Pg45} \par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \ par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri918\sb249\sl-400\slm ult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs23 advice and assista nce regarding legislation on money laundering and assisting countries to \up0 \e xpndtw-1\charscalex100 develop appropriate laws and legal systems.\ul0\super\cf8 \f9\fs23 1 \par\pard\qj \li2205\ri914\sb397\sl-404\slmult0 \up0 \expndtw-1\chars calex100 \ul0\nosupersub\cf1\f2\fs23 In connection with this, the UNDCP has deve loped model legislation on money laundering \line \up0 \expndtw0\charscalex103 a nd confiscation and concentrated on raising awareness among the member states of the \line \up0 \expndtw0\charscalex104 urgent need for effective action against money laundering. The UNDCP in cooperation \line \up0 \expndtw0\charscalex100 w ith the Crime Prevention and Criminal Justice Branch also provides technical ass istance \line \up0 \expndtw0\charscalex104 in the training of judicial and inves tigative personnel and the prevention and control of \line \up0 \expndtw-3\chars calex100 money laundering. \par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\ li2205\ri915\sb20\sl-400\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\c f4\f5\fs23 2.2.1 The UN Convention against Illicit Traffic in Narcotic Drugs a nd Psychotropic \up0 \expndtw-2\charscalex100 Substances 1988 (Vienna Convention ) \par\pard\qj \li2205\ri915\sb400\sl-400\slmult0\fi0 \up0 \expndtw-4\charscalex 100 \ul0\nosupersub\cf1\f2\fs23 This was the first major breakthrough in the eff ort to address money laundering problems at \up0 \expndtw0\charscalex100 the int ernational level.\ul0\super\cf8\f9\fs23 2\ul0\nosupersub\cf1\f2\fs23 The Conven tion was concluded in Vienna, Austria in December \up0 \expndtw0\charscalex100 1 988. To date, it has had a major influence on subsequent initiatives. It has bee n widely \up0 \expndtw0\charscalex102 viewed as constituting the minimum standar d of conduct required of each participating \up0 \expndtw-5\charscalex100 countr y in the criminalization of money laundering activities. \par\pard\qj \li2205\sb 0\sl-400\slmult0 \par\pard\qj\li2205\ri915\sb20\sl-400\slmult0 \up0 \expndtw0\ch arscalex100 As is explained in the Preamble, the Convention recognizes that the strong link between \line \up0 \expndtw0\charscalex100 illicit traffic and other related organized criminal activities demands urgent attention and \line \up0 \ expndtw0\charscalex104 the highest priority among the international community. T he outcomes of the Vienna \line \up0 \expndtw0\charscalex104 Convention are refl ected in Article \up0 \expndtw0\charscalex107 3(1) which is considered the corne rstone of the \par\pard\qj \li2205\ri917\sb0\sl-400\slmult0 \up0 \expndtw-3\char scalex100 Convention. By virtue of Article 3(1) (a), each participating country is required to legislate \up0 \expndtw-3\charscalex100 as necessary to establish a modern code of criminal offences relating to illicit trafficking in \up0 \exp ndtw-4\charscalex100 all its different aspects.\ul0\super\cf8\f9\fs23 3 \par\par d\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard \ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\q l\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\ li2205\sb143\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs1 8 1\ul0\nosupersub\cf10\f11\fs19 See {\field{\*\fldinst {HYPERLINK "http://www. undcp.org/" }}{\fldrslt {\ul0\nosupersub\cf29\f30\fs19\ul http://www.undcp.org}} } \par\pard\qj \li2205\ri937\sb0\sl-240\slmult0 \up0 \expndtw-3\charscalex100 \u l0\super\cf9\f10\fs18 2\ul0\nosupersub\cf10\f11\fs19 The Vienna Convention was

formulated to improve the coverage of the 1961 Single Convention on Narcotic \up 0 \expndtw-4\charscalex100 Drugs and the 1971 Pyschotropic Substances Convention . \par\pard\li2205\sb1\sl-204\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\sup er\cf9\f10\fs18 3\ul0\nosupersub\cf10\f11\fs19 See Article 3(1)(a) of the Vienn a Convention.\par\pard\li2205\sb117\sl-264\slmult0\fi8360 \up0 \expndtw-3\charsc alex100 \ul0\nosupersub\cf1\f2\fs23 36 {\shp {\*\shpinst\shpleft2205\shptop13369\shpright5006\shpbottom13389\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz166\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g46}{\bkmkend Pg46}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\s b0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri9 19\sb249\sl-400\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs23 It should be noted that sub-paragraph (b) specifically deals with establishing drug related \up0 \expndtw0\charscalex100 money laundering as a criminal offence . Article 3(1) (b) refers to: \par\pard\ql \li2556\sb113\sl-264\slmult0\tx3255 \ up0 \expndtw-3\charscalex100 (i) \tab \up0 \expndtw0\charscalex102 The conversio n or transfer of property, knowing that such property is derived \par\pard\qj \l i3255\ri916\sb20\sl-405\slmult0 \up0 \expndtw0\charscalex100 from any offence or offences established in accordance with sub-paragraph (a)\ul0\super\cf8\f9\fs23 4 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs23 of this paragraph, o r from an act of participation in such offence or offences for \up0 \expndtw0\ch arscalex104 the purpose of concealing or disguising the illicit origin of the pr operty or of \up0 \expndtw0\charscalex107 assisting any person who is involved i n the commission of such offence or \up0 \expndtw-3\charscalex100 offences to ev ade the legal consequences of his actions. \par\pard\ql \li2556\sb112\sl-264\slm ult0\tx3255 \up0 \expndtw-3\charscalex100 (ii) \tab \up0 \expndtw0\charscalex104 The concealment or disguise of the true nature, source, location, disposition, \par\pard\qj \li3255\ri917\sb16\sl-410\slmult0 \up0 \expndtw0\charscalex100 move ment, rights with respect to, or ownership of property knowing that such \line \ up0 \expndtw-1\charscalex100 property is derived from an offence or offences est ablished in accordance with \line \up0 \expndtw-1\charscalex100 sub-paragraph (a )\u8230?or from an act of participation in such offence or offences. \par\pard\q j \li2205\ri913\sb397\sl-402\slmult0\fi0 \up0 \expndtw-3\charscalex100 Furthermo re, the Convention also obliges all participating countries to establish as crim inal \line \up0 \expndtw-2\charscalex100 offences under their domestic laws acti vities which constitute money laundering including \line \up0 \expndtw-1\charsca lex100 the \u8216?acquisition, possession or use of property, knowing at the tim e of receipt\u8217?\ul0\super\cf8\f9\fs23 5\ul0\nosupersub\cf1\f2\fs23 , provide d \line \up0 \expndtw-1\charscalex100 that it is not contrary to their constitut ional principles and the basic concepts of their legal \line \up0 \expndtw-3\cha rscalex100 systems. It should be emphasized that this is an important innovation which ensures that all \line \up0 \expndtw0\charscalex100 the participating sta tes have money laundering offences in their statute books. Therefore, \line \up0 \expndtw-2\charscalex100 the lack of relevant legislation would not be availabl e as an excuse when requests for legal \line \up0 \expndtw0\charscalex104 assist ance are made. The Convention also requires that laws be passed on conspiracy, \ line \up0 \expndtw0\charscalex106 aiding and abetting or otherwise assistin g money laundering and other similar \line \up0 \expndtw-3\charscalex100 ar rangements.\ul0\super\cf8\f9\fs23 6 \par\pard\qj \li2205\ri915\sb400\sl-400\slmu lt0 \up0 \expndtw0\charscalex106 \ul0\nosupersub\cf1\f2\fs23 A second major appr oach taken by the Convention relates to the confiscation of the \line \up0 \expn

dtw0\charscalex100 proceeds held by money launderers and drug traffickers. The C onvention addresses both \line \up0 \expndtw0\charscalex100 the measures to be t aken at the national level, as well as the necessary mechanism to affect \par\pa rd\qj \li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\par d\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\ qj\li2205\ri942\sb69\sl-220\slmult0 \up0 \expndtw-3\charscalex100 \ul0\super\cf9 \f10\fs19\ul0\super\cf9\f10\fs18 4\ul0\nosupersub\cf10\f11\fs19 Sub-paragraph ( a) of Article 3 of the Vienna Convention requires each participating countries t o criminalize \up0 \expndtw-2\charscalex100 drug-related activities. This includ es the production, manufacture, distribution and sale of any narcotic drugs \up0 \expndtw-3\charscalex100 or any psychotropic substances. \par\pard\ql \li2205\s b2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 5\ul0\no supersub\cf10\f11\fs19 See Article 3(1)(c)(i). \par\pard\li2205\sb20\sl-218\slm ult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 6\ul0\nosupersub\ cf10\f11\fs19 See Article 3(1)(c)(iv).\par\pard\li2205\sb3\sl-264\slmult0\fi836 0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 37 {\shp {\*\shpinst\shpleft2205\shptop13256\shpright5006\shpbottom13276\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz184\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g47}{\bkmkend Pg47}\par\pard\qj \li2205\sb0\sl-405\slmult0 \par\pard\qj\li2205\s b0\sl-405\slmult0 \par\pard\qj\li2205\sb0\sl-405\slmult0 \par\pard\qj\li2205\ri9 15\sb230\sl-405\slmult0\fi0 \up0 \expndtw0\charscalex110 \ul0\nosupersub\cf1\f2\ fs23 the international cooperation in this area.\ul0\super\cf8\f9\fs23 7\ul0\nos upersub\cf1\f2\fs23 The confiscation measures are aimed at \line \up0 \expndtw0 \charscalex106 incapacitating criminals who continue to engage in the illegal co nduct and to prevent \line \up0 \expndtw0\charscalex104 offenders from unjustly enriching themselves. Perhaps, this measure will eliminate the \line \up0 \expnd tw-1\charscalex100 benefits gained and will undermine the ultimate profitability in order to protect the stability \line \up0 \expndtw-2\charscalex100 of legal economies. \par\pard\qj \li2205\ri914\sb398\sl-402\slmult0 \up0 \expndtw0\charsc alex100 It has long been recognized that the banking secrecy laws and customer c onfidentiality are \line \up0 \expndtw0\charscalex100 one of the biggest problem s in the struggle against money laundering. The solution for this \line \up0 \ex pndtw0\charscalex108 problem lies in Paragraph 3 of Article 5 which requires all participating countries to \line \up0 \expndtw0\charscalex112 empower their cou rts or other relevant authorities to order that bank, financial or \line \up0 \e xpndtw0\charscalex100 commercial records be made available. This means banks and financial institutions have a \line \up0 \expndtw0\charscalex104 duty to disclo se relevant information in certain circumstances. This is another measure \line \up0 \expndtw0\charscalex105 which puts banks and financial institutions in a se rious bind cooperating in the war on \line \up0 \expndtw-3\charscalex100 money l aundering. \par\pard\qj \li2205\ri915\sb400\sl-400\slmult0 \up0 \expndtw0\charsc alex102 It is important to note that actions at the level of domestic law undert aken on a unilateral \up0 \expndtw-1\charscalex100 basis are unlikely to be suff icient to combat money laundering activities. Therefore there is \up0 \expndtw0\ charscalex104 a critical need for effective international cooperation. The Conve ntion provides several \up0 \expndtw-3\charscalex100 approaches to securing the cooperation of one state to another.\ul0\super\cf8\f9\fs23 8 \par\pard\qj \li220 5\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri915\sb20\sl-400\slmult0\fi0 \up0 \exp ndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs23 One of the objectives of the Vie nna Convention is to improve international cooperation in \up0 \expndtw0\charsca

lex100 the fight against money laundering. In this respect, member states are re quired to establish \up0 \expndtw0\charscalex100 mutual legal assistance in rela tion to investigations, prosecutions and judicial proceedings \up0 \expndtw0\cha rscalex102 relating to money laundering and other serious criminal activities.\u l0\super\cf8\f9\fs23 9\ul0\nosupersub\cf1\f2\fs23 It can be said that the \up0 \expndtw0\charscalex109 concept of mutual legal assistance is a major contributi on to the war against money \up0 \expndtw0\charscalex109 laundering because it i s one of the key elements to unlocking the barriers to money \up0 \expndtw-3\cha rscalex100 laundering investigation and confiscation of criminal proceeds. \par\ pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\p ard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\par d\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ ql\li2205\sb83\sl-218\slmult0 \up0 \expndtw-3\charscalex100 \ul0\super\cf9\f10\f s19\ul0\super\cf9\f10\fs18 7\ul0\nosupersub\cf10\f11\fs19 See Article 5. \par\p ard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f 10\fs18 8\ul0\nosupersub\cf10\f11\fs19 See Paragraph 4(a) of Article 5. \par\pa rd\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-3\charscalex100 \ul0\super\cf9\f1 0\fs18 9\ul0\nosupersub\cf10\f11\fs19 See Article 7. \par\pard\ql \li10565\sb15 \sl-251\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 38 {\shp {\*\shpinst\shpleft2205\shptop13704\shpright5006\shpbottom13724\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz174\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g48}{\bkmkend Pg48}\par\pard\qj \li2205\sb0\sl-404\slmult0 \par\pard\qj\li2205\s b0\sl-404\slmult0 \par\pard\qj\li2205\sb0\sl-404\slmult0 \par\pard\qj\li2205\ri9 16\sb234\sl-404\slmult0\fi0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\ fs23 Equal attention also has been given to another method of cooperation, namel y, extradition. \up0 \expndtw0\charscalex100 Article 6 of the Convention require s that the domestic criminal offences which give effect \up0 \expndtw0\charscale x104 to the obligations of the Convention shall be deemed to be extraditable off ences in any \up0 \expndtw0\charscalex103 existing extradition treaty between th e parties.\ul0\super\cf8\f9\fs23 10\ul0\nosupersub\cf1\f2\fs23 This obligation is restricted to the more \up0 \expndtw0\charscalex103 serious offences, includi ng money laundering provided for in Article 3(1). Additionally, \up0 \expndtw0\c harscalex103 Article 9 provides other forms of cooperation and training. \par\pa rd\qj \li2205\ri914\sb397\sl-403\slmult0\fi0 \up0 \expndtw0\charscalex105 While the Vienna Convention remains a benchmark for identifying money laundering \line \up0 \expndtw0\charscalex106 counter-measures on an international level, it doe s not criminalize money laundering. \line \up0 \expndtw-1\charscalex100 Rather, it obligates the signatories to adopt domestic legislation that makes laundering drug \line \up0 \expndtw0\charscalex106 proceeds a crime. As late as 2001, 38 s ignatories to the Vienna Convention had yet to \line \up0 \expndtw0\charscalex10 0 criminalize the laundering of drug proceeds.\ul0\super\cf8\f9\fs23 11\ul0\nosu persub\cf1\f2\fs23 Additionally, the fact that the treaty defined \line \up0 \e xpndtw0\charscalex102 money laundering as a crime predicated on drug trafficking has limited its effectiveness. \line \up0 \expndtw0\charscalex102 For example, fraud and corruption are also important sources of illicit funds. \par\pard\qj \ li2205\ri918\sb400\sl-400\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\ cf4\f5\fs23 2.2.2 The United Nations Convention against Transnational Organize d Crime 2000 \up0 \expndtw-2\charscalex100 (The Palermo Convention) \par\pard\qj \li2205\ri914\sb398\sl-403\slmult0\fi0 \up0 \expndtw0\charscalex107 \ul0\nosupe rsub\cf1\f2\fs23 In December 2000, the United Nations adopted the first internat

ional treaty against \line \up0 \expndtw0\charscalex105 transnational organized crime. It was reported that more than 120 nations signed this \line \up0 \expndt w0\charscalex102 convention which was held in Palermo, Italy.\ul0\super\cf8\f9\f s23 12\ul0\nosupersub\cf1\f2\fs23 The Convention addresses international \line \up0 \expndtw0\charscalex106 concern on the growing power of criminal groups and their involvement in new and \line \up0 \expndtw-3\charscalex100 exploitative c rimes. Its purpose is to promote international cooperation in the prevention of \line \up0 \expndtw0\charscalex103 transnational organized crime ranging from mo ney laundering to trafficking in human \line \up0 \expndtw-5\charscalex100 being s. \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult 0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \p ar\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb4\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 10\ul0\ nosupersub\cf10\f11\fs19 See Article 6. \par\pard\qj \li2205\ri940\sb1\sl-220\s lmult0 \up0 \expndtw0\charscalex102 \ul0\super\cf9\f10\fs18 11\ul0\nosupersub\cf 10\f11\fs19 W R Schroeder, \u8216?Money Laundering: A Global Threat and the In ternational Community\u8217?s Response\u8217? \up0 \expndtw0\charscalex102 (2001 ) 70(5) \ul0\nosupersub\cf11\f12\fs19 FBI Law Enforcement Bulletin\ul0\nosupersu b\cf10\f11\fs19 6. \par\pard\li2205\sb13\sl-218\slmult0\fi0 \up0 \expndtw-2\cha rscalex100 \ul0\super\cf9\f10\fs18 12\ul0\nosupersub\cf10\f11\fs19 See {\field{ \*\fldinst {HYPERLINK "http://www.unis.unvienna.org/unis/pressrels/2000/cp392.ht ml./" }}{\fldrslt {\ul0\nosupersub\cf29\f30\fs19\ul http://www.unis.unvienna.org /unis/pressrels/2000/cp392.html\ul0\nosupersub\cf10\f11\fs19 .}}}\par\pard\li220 5\sb0\sl-264\slmult0\par\pard\li2205\sb186\sl-264\slmult0\fi8360 \up0 \expndtw-3 \charscalex100 \ul0\nosupersub\cf1\f2\fs23 39 {\shp {\*\shpinst\shpleft2205\shptop13033\shpright5006\shpbottom13053\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz161\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g49}{\bkmkend Pg49}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\s b0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri9 13\sb249\sl-400\slmult0 \up0 \expndtw0\charscalex107 \ul0\nosupersub\cf1\f2\fs23 This Convention provides a powerful global weapon in the war against transnatio nal \up0 \expndtw0\charscalex106 organized crime and has been welcomed by the wo rld community. Pino Arlacchi has \up0 \expndtw-3\charscalex100 described the Con vention in the following terms: \par\pard\qj \li2730\ri1307\sb29\sl-365\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf13\f14\fs21 \u8220?First, it wil l help eliminate the inconsistencies among states that criminal networks are \up 0 \expndtw-1\charscalex100 currently exploiting. Second, it brings together the best practices in combating criminal \up0 \expndtw-2\charscalex100 powers develo ped in several parts of the globe. And third, it contains the most advanced \up0 \expndtw0\charscalex104 toolkit to ever be made available to policy makers, inv estigators and civil society to \up0 \expndtw-4\charscalex100 prevent large scal e crimes.\u8221?\ul0\super\cf14\f15\fs20 13 \par\pard\qj \li2205\ri1292\sb363\sl -404\slmult0\fi0 \up0 \expndtw0\charscalex106 \ul0\nosupersub\cf1\f2\fs23 Genera lly, this Convention requires states to adopt legislative and other relevant \up 0 \expndtw-1\charscalex100 measures to criminalize participation in an organized criminal group.\ul0\super\cf8\f9\fs23 14\ul0\nosupersub\cf1\f2\fs23 Article 6( 1) of \up0 \expndtw-2\charscalex100 the Convention prescribes the definition of money laundering contained in the Vienna \up0 \expndtw0\charscalex104 Convention . More importantly, Article 6(2) requires states to include as predicate \up0 \e

xpndtw-2\charscalex100 offences all serious crime as defined in Article 2 of thi s Convention\ul0\super\cf8\f9\fs23 15\ul0\nosupersub\cf1\f2\fs23 and the offenc es \up0 \expndtw-4\charscalex100 established in accordance with article 5, 8 and 23 of this Convention.\ul0\super\cf8\f9\fs23 16 \par\pard\qj \li2205\ri1290\sb3 56\sl-405\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf1\f2\fs23 Furt hermore, Article 7 sets out comprehensive measures to combat money laundering \u p0 \expndtw0\charscalex105 which comprise customer identification, record-keepin g and reporting suspicious \up0 \expndtw-1\charscalex100 transactions requiremen ts. Interestingly, besides banks and non-financial institutions, \up0 \expndtw0\ charscalex102 these measures also apply to other bodies susceptible to money lau ndering, such as \up0 \expndtw-5\charscalex100 lawyers, accountants and real est ate agents. \par\pard\qj \li2205\ri917\sb343\sl-420\slmult0 \up0 \expndtw-1\char scalex100 It has been recognized that the law enforcement cooperation is one of the most significant \up0 \expndtw-1\charscalex100 tool to fight transnational o rganized crime. Therefore member states are required: \par\pard\ql \li2556\ri129 1\sb0\sl-400\slmult0\tx2906 \up0 \expndtw-3\charscalex100 (a)\ul0\nosupersub\cf6 \f7\fs23 \ul0\nosupersub\cf1\f2\fs23 to establish channels of communication bet ween their competent authorities and \line\tab \up0 \expndtw-4\charscalex100 law enforcement agencies. \par\pard\ql \li2555\ri1292\sb0\sl-400\slmult0\tx2906 \up 0 \expndtw0\charscalex107 (b)\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2 \fs23 to cooperate with other states in conducting inquiries with respect to the \line\tab \up0 \expndtw-3\charscalex100 offences covered by this Convention. \p ar\pard\qj \li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \pa r\pard\qj\li2205\ri938\sb146\sl-220\slmult0 \up0 \expndtw-3\charscalex100 \ul0\s uper\cf9\f10\fs19\ul0\super\cf9\f10\fs18 13\ul0\nosupersub\cf10\f11\fs19 Remark s by Pino Arlacchi, UN Under Secretary General, Executive Director, Office for D rugs Control and \up0 \expndtw-3\charscalex100 Crime Prevention, at the signing of the Palermo Convention, 12 December 2000. \par\pard\ql \li2205\sb2\sl-218\slm ult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 14\ul0\nosupersub\cf1 0\f11\fs19 See Article 5 UN Convention Against Transnational Organized Crime. \ par\pard\qj \li2205\ri941\sb1\sl-220\slmult0 \up0 \expndtw-2\charscalex100 \ul0\ super\cf9\f10\fs18 15\ul0\nosupersub\cf10\f11\fs19 Article 2 defines \u8220?ser ious crime\u8221? as conduct constituting an offence punishable by a maximum dep rivation \up0 \expndtw-3\charscalex100 of liberty of at least four years or a mo re serious penalty. \par\pard\li2205\sb20\sl-218\slmult0\fi0 \up0 \expndtw-2\cha rscalex100 \ul0\super\cf9\f10\fs18 16\ul0\nosupersub\cf10\f11\fs19 Offences rel ating to participation in an organized criminal group, corruption and obstructio n of justice.\par\pard\li2205\sb3\sl-264\slmult0\fi8360 \up0 \expndtw-3\charscal ex100 \ul0\nosupersub\cf1\f2\fs23 40 {\shp {\*\shpinst\shpleft2205\shptop13033\shpright5006\shpbottom13053\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz183\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g50}{\bkmkend Pg50}\par\pard\ql \li2556\sb0\sl-264\slmult0 \par\pard\ql\li2556\s b0\sl-264\slmult0 \par\pard\ql\li2556\sb0\sl-264\slmult0 \par\pard\ql\li2556\sb0 \sl-264\slmult0 \par\pard\ql\li2556\sb0\sl-264\slmult0 \par\pard\ql\li2556\sb241 \sl-264\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf1\f2\fs23 (c)\ul 0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 to provide items for inves tigative purposes. \par\pard\ql \li2555\ri1292\sb24\sl-400\slmult0\tx2906 \up0 \ expndtw0\charscalex105 (d)\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs 23 to facilitate effective coordination between competent authorities and other \line\tab \up0 \expndtw-3\charscalex100 relevant agencies. \par\pard\ql \li2555\

ri1291\sb0\sl-420\slmult0\tx2906 \up0 \expndtw0\charscalex107 (e)\ul0\nosupersub \cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 to exchange information regarding the method used by organized criminal \line\tab \up0 \expndtw-3\charscalex100 groups . \par\pard\ql \li2555\ri1293\sb0\sl-400\slmult0\tx2906\tx2906 \up0 \expndtw0\ch arscalex103 (f)\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 to excha nge information and coordinate administrative and other appropriate \line\tab \u p0 \expndtw0\charscalex108 measures for the purpose of identification of the off ences covered by this \line\tab \up0 \expndtw-3\charscalex100 Convention.\ul0\su per\cf8\f9\fs23 17 \par\pard\qj \li2205\ri916\sb377\sl-405\slmult0\fi0 \up0 \exp ndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs23 Without going into the details, other provisions of this Convention deal with international \line \up0 \expndtw0 \charscalex103 cooperation for the purpose of confiscation of proceeds of crime\ ul0\super\cf8\f9\fs23 18\ul0\nosupersub\cf1\f2\fs23 , extradition\ul0\super\cf8\ f9\fs23 19\ul0\nosupersub\cf1\f2\fs23 , mutual \line \up0 \expndtw0\charscalex10 0 legal assistance\ul0\super\cf8\f9\fs23 20\ul0\nosupersub\cf1\f2\fs23 , prevent ion of transnational organized crime\ul0\super\cf8\f9\fs23 21\ul0\nosupersub\cf1 \f2\fs23 , settlement of disputes\ul0\super\cf8\f9\fs23 22\ul0\nosupersub\cf1\f2 \fs23 , \line \up0 \expndtw0\charscalex105 signature, ratification, acceptance, approval and accession\ul0\super\cf8\f9\fs23 23\ul0\nosupersub\cf1\f2\fs23 and denunciation\ul0\super\cf8\f9\fs23 24\ul0\nosupersub\cf1\f2\fs23 of this \line \up0 \expndtw-3\charscalex100 Convention. \par\pard\ql \li2205\sb0\sl-264\slmult 0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb224\sl-264\slmult 0\tx2906 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf4\f5\fs23 2.3 \tab \up0 \expndtw-3\charscalex100 The Basle Committee on Banking Supervision \par\pard\q j \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri914\sb84\sl-400\slmult0 \up0 \expndtw0\charscalex102 \ul0\nosupersub\cf1\f2\fs23 The Basle Committee is made up of the representatives of central banks and supervisory \up0 \expndtw0\charsc alex104 authorities of Belgium, Canada, Germany, Italy, Japan, the Nethe rlands, Sweden, \up0 \expndtw-2\charscalex100 Switzerland, the United Kingdom, the United States and Luxembourg.\ul0\super\cf8\f9\fs23 25\ul0\nosupersub\cf1\f2 \fs23 In December 1988, \up0 \expndtw0\charscalex106 the Committee issued a Sta tement of Principles on \ul0\nosupersub\cf7\f8\fs23 Prevention of Criminal Use o f the \up0 \expndtw0\charscalex100 Banking System for the Purpose of Money Laund ering\ul0\nosupersub\cf1\f2\fs23 . The Preamble outlines how banks \up0 \expndtw 0\charscalex100 are used to launder money: \par\pard\qj \li2731\ri1307\sb34\sl-3 60\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf13\f14\fs21 Criminals and their associates use the financial system to make payments and transfers of \line \up0 \expndtw-1\charscalex100 funds from one account to another, to hide the source and beneficial ownership of money, \par\pard\ql \li2205\sb0\sl-218\sl mult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb182\sl-218\sl mult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs 18 17\ul0\nosupersub\cf10\f11\fs19 See Article 27. \par\pard\ql \li2205\sb2\sl218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 18\ul0\nosuper sub\cf10\f11\fs19 See Article 13. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 19\ul0\nosupersub\cf10\f11\fs19 See Article 16. \par\pard\ql \li2205\sb22\sl-218\slmult0 \up0 \expndtw-2\chars calex100 \ul0\super\cf9\f10\fs18 20\ul0\nosupersub\cf10\f11\fs19 See Article 18 . \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\sup er\cf9\f10\fs18 21\ul0\nosupersub\cf10\f11\fs19 See Article 31. \par\pard\ql \l i2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 2 2\ul0\nosupersub\cf10\f11\fs19 See Article 35. \par\pard\ql \li2205\sb2\sl-218\ slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 23\ul0\nosupersub\ cf10\f11\fs19 See Article 39. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \exp ndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 24\ul0\nosupersub\cf10\f11\fs19 Se e Article 40. \par\pard\li2205\sb20\sl-218\slmult0\fi0 \up0 \expndtw-2\charscale x100 \ul0\super\cf9\f10\fs18 25\ul0\nosupersub\cf10\f11\fs19 The Committee was established by the Central Bank Governors of the Group Ten countries in 1975.\pa r\pard\li2205\sb3\sl-264\slmult0\fi8360 \up0 \expndtw-3\charscalex100 \ul0\nosup ersub\cf1\f2\fs23 41

{\shp {\*\shpinst\shpleft2205\shptop12362\shpright5006\shpbottom12382\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz250\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g51}{\bkmkend Pg51}\par\pard\qj \li2731\sb0\sl-380\slmult0 \par\pard\qj\li2731\s b0\sl-380\slmult0 \par\pard\qj\li2731\sb0\sl-380\slmult0 \par\pard\qj\li2731\ri1 307\sb306\sl-380\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf13\f14\f s21 and to provide storage for bank notes through a safe deposit facility. These activities are \up0 \expndtw-2\charscalex100 commonly referred to as money laun dering. \par\pard\qj \li2205\ri913\sb341\sl-403\slmult0 \up0 \expndtw0\charscale x100 \ul0\nosupersub\cf1\f2\fs23 Therefore, banks and financial institutions as well as their supervisors, have an important \line \up0 \expndtw0\charscalex109 role in the deterrence and control of money laundering. The Committee agreed tha t \line \up0 \expndtw0\charscalex100 governmental banking supervisors have a res ponsibility to encourage ethical standards of \line \up0 \expndtw0\charscalex100 conduct among banks and other financial institutions. Therefore, the principal objective of \line \up0 \expndtw0\charscalex106 the Statement of Principles is t o encourage the management of banks to establish and \line \up0 \expndtw0\charsc alex100 maintain effective identification procedures, to prevent any illegitimat e transactions and to \line \up0 \expndtw0\charscalex100 demonstrate its opennes s to cooperation with the law enforcement authorities. \par\pard\qj \li2205\ri91 7\sb383\sl-420\slmult0 \up0 \expndtw0\charscalex103 It is appropriate at this ju ncture to make a brief mention of the essential elements of the \up0 \expndtw-2\ charscalex100 Statement of Principles which financial institutions are expected to adhere. \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb245\sl264\slmult0 \up0 \expndtw-3\charscalex100 i) Customer identification \par\pard\q j \li2205\ri915\sb24\sl-400\slmult0 \up0 \expndtw0\charscalex107 A bank should u ndertake reasonable efforts to determine the true identification of all \up0 \ex pndtw0\charscalex100 customers requesting its services, especially account holde rs and those using safe-custody \up0 \expndtw0\charscalex104 facilities. It was recommended that banks refrain from significant business transactions \up0 \expn dtw-3\charscalex100 where customers fail to provide evidence of identity.\ul0\su per\cf8\f9\fs23 26 \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\s b0\sl-264\slmult0 \par\pard\ql\li2205\sb5\sl-264\slmult0 \up0 \expndtw-3\charsca lex100 \ul0\nosupersub\cf1\f2\fs23 ii) Compliance with laws \par\pard\qj \li2205 \ri917\sb24\sl-400\slmult0 \up0 \expndtw0\charscalex100 The Committee had emphas ized that banks should not set out to offer services or provide \up0 \expndtw0\c harscalex103 active assistance in transactions which they have good reason to su ppose are associated \up0 \expndtw-3\charscalex100 with money laundering activit ies.\ul0\super\cf8\f9\fs23 27 \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ ql\li2205\sb249\sl-264\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1 \f2\fs23 iii) Cooperation with law enforcement agencies \par\pard\qj \li2205\ri9 14\sb16\sl-410\slmult0 \up0 \expndtw0\charscalex105 It was recommended that bank s should cooperate fully with national law enforcement \line \up0 \expndtw0\char scalex109 authorities to the extent permitted by specific local regulations rela ting to customer \line \up0 \expndtw0\charscalex109 confidentiality. Where there are reasonable grounds for suspecting money laundering, \par\pard\ql \li2205\sb 0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\ sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb17\s l-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf 9\f10\fs18 26\ul0\nosupersub\cf10\f11\fs19 See Statement II. \par\pard\li2205\s b20\sl-218\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 27\ ul0\nosupersub\cf10\f11\fs19 See Statement III.\par\pard\li2205\sb3\sl-264\slmu

lt0\fi8360 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 42 {\shp {\*\shpinst\shpleft2205\shptop13928\shpright5006\shpbottom13948\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz160\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g52}{\bkmkend Pg52}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\s b0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri9 14\sb249\sl-400\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs23 banks should take appropriate measures which are consistent with the law.\ul0\s uper\cf8\f9\fs23 28\ul0\nosupersub\cf1\f2\fs23 It can be said \line \up0 \expnd tw-1\charscalex100 that the requirement of reporting suspicious transactions und er national laws can be the key \line \up0 \expndtw0\charscalex102 element to ac hieving cooperation between financial institutions and the law enforcement \line \up0 \expndtw0\charscalex102 agencies. \par\pard\ql \li2264\sb0\sl-264\slmult0 \par\pard\ql\li2264\sb0\sl-264\slmult0 \par\pard\ql\li2264\sb5\sl-264\slmult0 \u p0 \expndtw-3\charscalex100 iv) Adherence to the Statement of Principles \par\p ard\qj \li2205\ri913\sb24\sl-400\slmult0 \up0 \expndtw0\charscalex104 The Commit tee recommends that banks to adhere to the Statement of Principles and to \line \up0 \expndtw-1\charscalex100 implement specific procedures for customer identif ication and for retaining internal records \line \up0 \expndtw-1\charscalex100 o f transactions. Also, banks should ensure that their internal audits are extende d in order to \line \up0 \expndtw-1\charscalex100 establish an effective means f or general compliance with the Statement of Principles.\ul0\super\cf8\f9\fs23 29 \par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri915\sb20\sl-400\s lmult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs23 It must be ackno wledged, however, that the Statement of Principles is not a treaty and has \up0 \expndtw0\charscalex100 no legal effect. It is merely advisory in nature. Howeve r it represents the first enunciation \up0 \expndtw0\charscalex105 by an interna tional financial organization on prevention of criminal use of the banking \up0 \expndtw-3\charscalex100 system for the purpose of money laundering. \par\pard\q j \li2205\ri915\sb397\sl-404\slmult0 \up0 \expndtw0\charscalex103 Other Basel Co mmittee initiatives on money laundering prevention are contained in the \up0 \ex pndtw0\charscalex103 1997 \ul0\nosupersub\cf7\f8\fs23 Core Principles for Effect ive Banking Supervision\ul0\nosupersub\cf1\f2\fs23 \ul0\nosupersub\cf7\f8\fs23 (Core Principles) \ul0\nosupersub\cf1\f2\fs23 and the 2001 \up0 \expndtw-1\chars calex100 \ul0\nosupersub\cf7\f8\fs23 Customer Due diligence for Banks\ul0\nosupe rsub\cf1\f2\fs23 \ul0\nosupersub\cf7\f8\fs23 (Customer Due Diligence)\ul0\nosup ersub\cf1\f2\fs23 . The Core Principles provide \up0 \expndtw0\charscalex105 a c omprehensive blueprint for an effective bank supervisory system and covers a wid e \up0 \expndtw0\charscalex102 range of topics. Of the total 25 Core Principles, Core Principle 15 specifically deals with \up0 \expndtw0\charscalex102 money la undering. It states: \par\pard\qj \li2730\ri931\sb8\sl-366\slmult0 \up0 \expndtw 0\charscalex107 \ul0\nosupersub\cf13\f14\fs21 Banking supervisors must determine that banks have adequate policies, practices and \up0 \expndtw0\charscalex100 p rocedures in place, including strict \u8220?know-your-customer\u8221? rules that promote high ethical \up0 \expndtw-3\charscalex100 and professional standards i n the financial sector to prevent the bank being used, intentionally \up0 \expnd tw-4\charscalex100 or unintentionally, by criminal elements.\ul0\super\cf14\f15\ fs20 30 \par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri915\sb6\sl -400\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 Brief men tion of the \ul0\nosupersub\cf7\f8\fs23 Customer Due Diligence \ul0\nosupersub\c f1\f2\fs23 paper is also relevant. This paper was issued \line \up0 \expndtw-3\c

harscalex100 because of the deficiencies in \u8216?Know Your Customer\u8217? (KY C) principles practiced by the \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard \ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\q l\li2205\sb57\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs 19\ul0\super\cf9\f10\fs18 28\ul0\nosupersub\cf10\f11\fs19 See Statement IV. \pa r\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf 9\f10\fs18 29\ul0\nosupersub\cf10\f11\fs19 See Statement V. \par\pard\li2205\sb 20\sl-218\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 30\u l0\nosupersub\cf10\f11\fs19 For the text of the \ul0\nosupersub\cf11\f12\fs19 1 997 Core Principles of Banking Supervision\ul0\nosupersub\cf10\f11\fs19 , see {\ field{\*\fldinst {HYPERLINK "http://www.bis.org/publ/bcbs30.pdf/" }}{\fldrslt {\ ul0\nosupersub\cf29\f30\fs19\ul www.bis.org/publ/bcbs30.pdf}}}\par\pard\li2205\s b3\sl-264\slmult0\fi8360 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs 23 43 {\shp {\*\shpinst\shpleft2205\shptop13704\shpright5006\shpbottom13724\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz207\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g53}{\bkmkend Pg53}\par\pard\qj \li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205\s b0\sl-402\slmult0 \par\pard\qj\li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205\ri9 14\sb241\sl-402\slmult0\fi0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2 \fs23 financial institutions throughout the world. In the \ul0\nosupersub\cf7\f8 \fs23 Customer Due Diligence\ul0\nosupersub\cf1\f2\fs23 paper, the Basle \up0 \ expndtw0\charscalex100 Committee recommended adoption of a customer acceptance policy, customer \up0 \expndtw0\charscalex106 identification, ongoing monitoring of high risk accounts and risk management.\ul0\super\cf8\f9\fs2 3 31\ul0\nosupersub\cf1\f2\fs23 In \up0 \expndtw-2\charscalex100 addition to cu stomer identification, the paper also provides for supervisory obligations and \ up0 \expndtw0\charscalex104 powers in the implementation of KYC in a cross-borde r context and application of an \up0 \expndtw-3\charscalex100 accepted minimum s tandard of KYC policies and procedures on a global basis. It should be \up0 \exp ndtw-2\charscalex100 noted that recommendations in the \ul0\nosupersub\cf7\f8\fs 23 Customer Due Diligence\ul0\nosupersub\cf1\f2\fs23 paper have been incorporat ed \up0 \expndtw-3\charscalex100 into the FATF\u8217?s Methodology for Assessing Compliance with Anti-Money Laundering and \up0 \expndtw-4\charscalex100 Combati ng the Financing of Terrorism Standards.\ul0\super\cf8\f9\fs23 32 \par\pard\ql \ li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li 2205\sb224\sl-264\slmult0\tx2906 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\c f4\f5\fs23 2.4 \tab \up0 \expndtw-3\charscalex100 The Financial Action Task Forc e (FATF) \par\pard\qj \li2205\sb0\sl-403\slmult0 \par\pard\qj\li2205\ri914\sb79\ sl-403\slmult0\fi0 \up0 \expndtw0\charscalex103 \ul0\nosupersub\cf1\f2\fs23 The Financial Action Task Force was set up in July 1989 by the heads of seven major \up0 \expndtw-3\charscalex100 industrial nations and the President of the Europe an Commission. In addition to the summit \up0 \expndtw-2\charscalex100 participa nts, a number of other countries have been invited to join in.\ul0\super\cf8\f9\ fs23 33\ul0\nosupersub\cf1\f2\fs23 It is a free-standing \up0 \expndtw0\charsca lex102 specialist body which comprises the world\u8217?s leading experts in the area of finance, law \up0 \expndtw-3\charscalex100 enforcement and legal agencie s. FATF was established with the aim to set out international \up0 \expndtw-3\ch arscalex100 standards, develop and promote policies both at national and interna tional levels to combat \up0 \expndtw-3\charscalex100 money laundering, and more recently, the financing of terrorism.\ul0\super\cf8\f9\fs23 34 \par\pard\qj \li

2205\ri913\sb395\sl-406\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf 1\f2\fs23 FATF also regularly monitors members\u8217? progress in implementing a nti-money laundering \line \up0 \expndtw-1\charscalex100 measures, reviews money laundering techniques and counter-measures, and promotes the \line \up0 \expndt w-1\charscalex100 adoption and implementation of money laundering measures globa lly. The monitoring of \line \up0 \expndtw-1\charscalex100 the actual implementa tion of the recommendations is done through self-assessment done by \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\ li2205\sb74\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19 \ul0\super\cf9\f10\fs18 31\ul0\nosupersub\cf10\f11\fs19 Ibid 5. \par\pard\qj \l i2205\ri937\sb1\sl-220\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\ fs18 32\ul0\nosupersub\cf10\f11\fs19 See Initiatives by the BCBS, IAIS and IOSC O to combat money laundering and the financing of terrorism \line \up0 \expndtw3\charscalex100 (2003) 7. < {\field{\*\fldinst {HYPERLINK "http://www.bis.org/pu bl/joint05.pdf/" }}{\fldrslt {\ul0\nosupersub\cf29\f30\fs19\ul http://www.bis.or g/publ/joint05.pdf}}}\ul0\nosupersub\cf10\f11\fs19 > at 28 July 2005. \par\pard\ qj \li2205\ri932\sb0\sl-224\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9 \f10\fs18 33\ul0\nosupersub\cf10\f11\fs19 The FATF is currently comprised of 31 member jurisdictions and two regional organizations (the European \up0 \expndtw2\charscalex100 Commission and the Gulf Co-operation Council). The FATF\u8217?s member jurisdictions are: Argentina, Australia, \up0 \expndtw-2\charscalex100 Au stria, Belgium, Brazil, Canada, Denmark, Finland, France, Germany, Greece, Hong Kong, China, Ireland, \up0 \expndtw-1\charscalex100 Italy, Japan, Luxembourg, Me xico, Kingdom of Netherlands, New Zealand, Norway, Portugal, the Russian \up0 \e xpndtw0\charscalex102 Federation, Singapore, South Africa, Switzerland, Spain, S weden, Turkey, the United Kingdom and the \up0 \expndtw0\charscalex102 United St ates. (The People\u8217?s Republic of China became an observer on 21 January 200 5). \par\pard\qj \li2205\ri2308\sb0\sl-220\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 34\ul0\nosupersub\cf10\f11\fs19 See Financial Action T ask Force on Money Laundering Annual Report 2004-2005 (2005). \line \up0 \expndt w-2\charscalex100 <{\field{\*\fldinst {HYPERLINK "http://www.fatf-gafi.org/datao ecd/41/25/34988062.pdf /" }}{\fldrslt {\ul0\nosupersub\cf29\f30\fs19\ul http://w ww.fatf-gafi.org/dataoecd/41/25/34988062.pdf }}}\ul0\nosupersub\cf10\f11\fs19 > at 26 July 2005. \par\pard\ql \li10565\sb14\sl-249\slmult0 \up0 \expndtw-3\chars calex100 \ul0\nosupersub\cf1\f2\fs23 44 {\shp {\*\shpinst\shpleft2205\shptop11914\shpright5006\shpbottom11934\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz170\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g54}{\bkmkend Pg54}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\s b0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri9 13\sb249\sl-400\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs23 individual countries in the form of a report and an evaluation by FATF through an on-site \line \up0 \expndtw0\charscalex104 visit by a team of experts. In per forming these activities, FATF collaborates with other \line \up0 \expndtw0\char scalex100 international bodies involved in money laundering prevention. It is no exaggeration to say \line \up0 \expndtw0\charscalex111 that the Task Force was built on the firm foundations established by the \up0 \expndtw0\charscalex105 19 88 UN \par\pard\qj \li2205\ri917\sb20\sl-400\slmult0 \up0 \expndtw0\charscalex10 7 Convention and the Basle Committee Statement of Principles. To date, it is the most \up0 \expndtw0\charscalex106 comprehensive multidimensional and multi-sect oral approach in the global efforts on \up0 \expndtw-3\charscalex100 money laund

ering prevention.\ul0\super\cf8\f9\fs23 35 \par\pard\qj \li2205\ri914\sb396\sl-4 05\slmult0 \up0 \expndtw0\charscalex103 \ul0\nosupersub\cf1\f2\fs23 At present, FATF\u8217?s priorities are to continue the setting of standards to combat money \up0 \expndtw-1\charscalex100 laundering and terrorist financing, the carrying out of typologies and compliance work in \up0 \expndtw0\charscalex108 order to e nsure global action against money laundering and terrorist financing, the \up0 \ expndtw-1\charscalex100 developing of closer cooperation with the IMF and the Wo rld Bank and the enhancing of \up0 \expndtw-1\charscalex100 FATF\u8217?s relatio nships with FATF-style regional bodies.\ul0\super\cf8\f9\fs23 36 \par\pard\qj \l i2205\ri912\sb400\sl-400\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\c f1\f2\fs23 It might be justified to say that the emergence of FATF-style regiona l bodies is one of the \line \up0 \expndtw0\charscalex104 greatest impact of FAT F\u8217?s initiatives. These bodies interpret, promote and implement \line \up0 \expndtw0\charscalex100 FATF standards across the globe. Clearly, this is an ind ication that FATF has become a \line \up0 \expndtw0\charscalex100 strong intern ational motivation in the establishment of money laundering counter-\lin e \up0 \expndtw-5\charscalex100 measures.\ul0\super\cf8\f9\fs23 37 \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\l i2205\sb5\sl-264\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf4\f5\fs 23 2.4.1 The FATF Forty Recommendations \par\pard\qj \li2205\sb0\sl-404\slmult 0 \par\pard\qj\li2205\ri916\sb17\sl-404\slmult0 \up0 \expndtw0\charscalex100 \ul 0\nosupersub\cf1\f2\fs23 The Forty Recommendations provide a complete set of cou nter-measures against money \line \up0 \expndtw-2\charscalex100 laundering cover ing the criminal justice system and law enforcement, the financial system \line \up0 \expndtw0\charscalex103 and its regulation and international cooperation. T hey were first introduced in 1990 to \line \up0 \expndtw0\charscalex100 prevent the misuse of financial institutions by money launderers. The Forty \line \up0 \expndtw0\charscalex102 Recommendations focus on three princi pal areas, namely, the improvement of national \line \up0 \expndtw0\charscalex10 2 legal systems, the enhancement of the role of the financial systems, and the s trengthening \par\pard\qj \li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl220\slmult0 \par\pard\qj\li2205\ri943\sb88\sl-220\slmult0 \up0 \expndtw0\charsca lex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 35\ul0\nosupersub\cf10\f11 \fs19 Abdullahi Y Shehu, \u8216?International Initiatives against Corruption an d Money Laundering: An Overview.\u8217? \up0 \expndtw-1\charscalex100 (2005) 12( 3) \ul0\nosupersub\cf11\f12\fs19 Journal of Financial Crime\ul0\nosupersub\cf10\ f11\fs19 233. \par\pard\qj \li2205\ri2359\sb0\sl-220\slmult0 \up0 \expndtw-2\ch arscalex100 \ul0\super\cf9\f10\fs18 36\ul0\nosupersub\cf10\f11\fs19 See Financi al Action Task Force on Money Laundering Annual Report 2003-2004 (2004) \line \u p0 \expndtw-2\charscalex100 <{\field{\*\fldinst {HYPERLINK "http://www.fatf-gafi .org/dataoecd/12/44/33622501.pdf/" }}{\fldrslt {\ul0\nosupersub\cf29\f30\fs19\ul http://www.fatf-gafi.org/dataoecd/12/44/33622501.PDF}}}\ul0\nosupersub\cf10\f11 \fs19 > at 26 July 2005. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2 \charscalex100 \ul0\super\cf9\f10\fs18 37\ul0\nosupersub\cf10\f11\fs19 Abdullah i Y Shehu, above n35, 234. \par\pard\ql \li10565\sb15\sl-251\slmult0 \up0 \expn dtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 45 {\shp {\*\shpinst\shpleft2205\shptop13256\shpright5006\shpbottom13276\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz152\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g55}{\bkmkend Pg55}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\s b0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri9

12\sb249\sl-400\slmult0 \up0 \expndtw0\charscalex104 \ul0\nosupersub\cf1\f2\fs23 of international cooperation. A number of interpretative notes were developed b etween \up0 \expndtw0\charscalex106 1990 and 1995 to clarify the application of specific Recommendations and to provide \up0 \expndtw-3\charscalex100 additional guidance. \par\pard\qj \li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205\ri914\sb1 7\sl-402\slmult0\fi0 \up0 \expndtw0\charscalex100 The Recommendations were revis ed for the first time in 1996 to take into account changes \line \up0 \expndtw0\ charscalex105 that had occurred in money laundering trends and to anticipate pot ential future threats. \line \up0 \expndtw0\charscalex100 Several substantial ch anges were agreed upon by FATF members including the extension \line \up0 \expnd tw0\charscalex104 of money laundering predicate offences beyond drugs traffickin g. FATF members also \line \up0 \expndtw0\charscalex107 agreed to make mandatory the reporting of suspicious transactions and to expand the \line \up0 \expndtw0 \charscalex100 financial Recommendations to cover non-financial businesses. Addi tionally, the review of \line \up0 \expndtw0\charscalex107 the Recommendations a lso covered the issue of shell corporations, the refinement of \line \up0 \expnd tw-1\charscalex100 identification requirements including new technology developm ents, cross-border currency \line \up0 \expndtw0\charscalex109 monitoring, con trolled delivery techniques and bureaux de change.\ul0\super\cf8\f9\ fs23 38\ul0\nosupersub\cf1\f2\fs23 The \line \up0 \expndtw0\charscalex103 Rec ommendations have now been endorsed by more than 130 countries, and are widely \ line \up0 \expndtw0\charscalex103 accepted as the leading international anti-mon ey laundering standard. \par\pard\qj \li2205\ri915\sb397\sl-404\slmult0 \up0 \ex pndtw0\charscalex102 In 2003, FATF completed a thorough review and update of the Forty Recommendations. \up0 \expndtw0\charscalex102 The revised Forty Recommend ations have introduced a number of prominent changes to \up0 \expndtw0\charscale x100 make the global anti money laundering efforts more successful. It expanded customer due \up0 \expndtw0\charscalex100 diligence requirements for banks and f inancial institutions. Also, it enhanced measures for \up0 \expndtw0\charscalex1 09 dealing with higher money laundering risks associated with correspondent bank ing \up0 \expndtw-3\charscalex100 relationships and politically exposed persons. \par\pard\qj \li2205\ri913\sb396\sl-404\slmult0 \up0 \expndtw-1\charscalex100 I t is worthwhile to make a brief mention of the revised Forty Recommendations whi ch now \line \up0 \expndtw0\charscalex105 apply not only to money laundering but also to terrorism financing. The revised Forty \line \up0 \expndtw0\charscalex1 08 Recommendations can be divided into four parts. Part One outlines the scope o f the \line \up0 \expndtw0\charscalex102 criminal offence of money laundering. T he member countries should criminalize money \line \up0 \expndtw0\charscalex100 laundering on the basis of the Vienna Convention as well as the Palermo Conventi on. The \line \up0 \expndtw0\charscalex100 Task Force also adopted a stronger st andard for money laundering predicate offences.\ul0\super\cf8\f9\fs23 39 \par\pa rd\qj \li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\par d\qj\li2205\ri2355\sb128\sl-220\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super \cf9\f10\fs18 38\ul0\nosupersub\cf10\f11\fs19 See Financial Action Task Force o n Money Laundering Annual Report 1995-1996 (1996) \line \up0 \expndtw-2\charscal ex100 <{\field{\*\fldinst {HYPERLINK "http://www.fatf-gafi.org/dataoecd/13/29/43 26515.pdf /" }}{\fldrslt {\ul0\nosupersub\cf29\f30\fs19\ul http://www.fatf-gafi. org/dataoecd/13/29/4326515.pdf }}}\ul0\nosupersub\cf29\f30\fs19\ul > at 26\ul0\n osupersub\cf10\f11\fs19 July 2005. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 39\ul0\nosupersub\cf10\f11\fs1 9 See Recommendation 1. \par\pard\ql \li10565\sb15\sl-251\slmult0 \up0 \expndtw -3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 46 {\shp {\*\shpinst\shpleft2205\shptop13704\shpright5006\shpbottom13724\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz173\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}}

{\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g56}{\bkmkend Pg56}\par\pard\qj \li2205\sb0\sl-403\slmult0 \par\pard\qj\li2205\s b0\sl-403\slmult0 \par\pard\qj\li2205\sb0\sl-403\slmult0 \par\pard\qj\li2205\sb0 \sl-403\slmult0 \par\pard\qj\li2205\ri915\sb235\sl-403\slmult0 \up0 \expndtw0\ch arscalex108 \ul0\nosupersub\cf1\f2\fs23 Part Two is addressed at the financi al institutions and non-financial business and \up0 \expndtw0\charscalex105 pro fessions and is aimed at preventing money laundering and terrorism financing. Th e \up0 \expndtw0\charscalex110 original Forty Recommendations were designed to p revent the misuse of financial \up0 \expndtw-2\charscalex100 institutions by mon ey launderers. However, experience has shown that criminals will utilize \up0 \e xpndtw0\charscalex102 any form of business and profession to launder their profi ts. Therefore, the revised Forty \up0 \expndtw0\charscalex103 Recommendations m ade a significant change by including various businesses and \up0 \expnd tw-3\charscalex100 professions in money laundering prevention. \par\pard\qj \li2 205\ri915\sb398\sl-402\slmult0\fi0 \up0 \expndtw0\charscalex102 Furthermore, the Task Force extended the Customer Due Diligence process for financial \line \up0 \expndtw0\charscalex100 institutions.\ul0\super\cf8\f9\fs23 40\ul0\nosupersub\c f1\f2\fs23 It requires financial institutions to enhance customer due diligence measures \line \up0 \expndtw0\charscalex100 when dealing with politically expos ed persons\ul0\super\cf8\f9\fs23 41\ul0\nosupersub\cf1\f2\fs23 , correspondent b anking transactions\ul0\super\cf8\f9\fs23 42\ul0\nosupersub\cf1\f2\fs23 as \lin e \up0 \expndtw-2\charscalex100 well as non face-to-face business transactions.\ ul0\super\cf8\f9\fs23 43\ul0\nosupersub\cf1\f2\fs23 Additionally, Recommendatio n 10 requires \line \up0 \expndtw-1\charscalex100 financial institutions to main tain all necessary records for at least five years. The customer \line \up0 \ex pndtw0\charscalex105 due diligence and record-keeping requirements also apply to designated non-financial \line \up0 \expndtw0\charscalex100 business and profes sions such as casinos, real estate agents, dealers in precious metals and \line \up0 \expndtw0\charscalex100 jewelries, lawyers and accountants as well as trust and company service providers.\ul0\super\cf8\f9\fs23 44\ul0\nosupersub\cf1\f2\f s23 It can \line \up0 \expndtw0\charscalex107 be said that such requirements ar e vital to strengthen the measures to combat money \line \up0 \expndtw-3\charsca lex100 laundering and terrorist financing. \par\pard\qj \li2205\sb0\sl-400\slmul t0 \par\pard\qj\li2205\ri917\sb20\sl-400\slmult0 \up0 \expndtw0\charscalex107 Fu rthermore, Recommendations 13 and 14 provides detailed rules and procedures in \ up0 \expndtw0\charscalex100 respect of suspicious transactions reports. Also, fi nancial institutions are asked to establish \up0 \expndtw-1\charscalex100 compli ance frameworks that meet the following criteria: \par\pard\ql \li2555\ri916\sb0 \sl-400\slmult0\tx2950 \up0 \expndtw0\charscalex102 (a)\ul0\nosupersub\cf6\f7\fs 23 \ul0\nosupersub\cf1\f2\fs23 develop and implement internal programmes, polic ies, procedures and controls to \line\tab \up0 \expndtw0\charscalex102 guard aga inst money laundering and terrorist financing; \par\pard\ql \li2555\sb113\sl-264 \slmult0 \up0 \expndtw-2\charscalex100 (b)\ul0\nosupersub\cf6\f7\fs23 \ul0\nosu persub\cf1\f2\fs23 establish on-going employee training programs; \par\pard\ql \ li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li 2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li22 05\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205 \sb66\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\s uper\cf9\f10\fs18 40\ul0\nosupersub\cf10\f11\fs19 See Recommendation 5. \par\pa rd\li2205\sb9\sl-218\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f1 0\fs18 41\ul0\nosupersub\cf10\f11\fs19 See Recommendation 6.\par\pard\li2205\sb 6\sl-218\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 42\ul 0\nosupersub\cf10\f11\fs19 See Recommendation 7.\par\pard\li2205\sb6\sl-218\slm ult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 43\ul0\nosupersub \cf10\f11\fs19 See Recommendation 8.\par\pard\li2205\sb5\sl-218\slmult0\fi0 \up 0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 44\ul0\nosupersub\cf10\f11\fs 19 See Recommendation 12.\par\pard\li2205\sb3\sl-264\slmult0\fi8360 \up0 \expnd

tw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 47 {\shp {\*\shpinst\shpleft2205\shptop13256\shpright5006\shpbottom13276\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz208\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g57}{\bkmkend Pg57}\par\pard\ql \li2556\sb0\sl-400\slmult0 \par\pard\ql\li2556\s b0\sl-400\slmult0 \par\pard\ql\li2556\sb0\sl-400\slmult0 \par\pard\ql\li2556\ri9 14\sb249\sl-400\slmult0\tx2950 \up0 \expndtw0\charscalex105 \ul0\nosupersub\cf1\ f2\fs23 (c)\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 develop an i ndependent audit function to check and test the effectiveness of the \line\tab \ up0 \expndtw-3\charscalex100 compliance program.\ul0\super\cf8\f9\fs23 45 \par\p ard\qj \li2205\ri916\sb396\sl-406\slmult0 \up0 \expndtw0\charscalex107 \ul0\nosu persub\cf1\f2\fs23 Recommendation 18 prohibits the establishment of shell banks or any correspondent \line \up0 \expndtw0\charscalex104 banking relations with s uch banks. A shell bank is a bank incorporated in a jurisdiction \line \up0 \exp ndtw0\charscalex106 which it has no physical presence and which is unaffiliated with a regulated financial \line \up0 \expndtw-3\charscalex100 group. \par\pard\ qj \li2205\ri915\sb394\sl-406\slmult0\fi0 \up0 \expndtw-2\charscalex100 The Task Force also states that all countries need adequate measures to ensure that fina ncial \up0 \expndtw0\charscalex100 institutions and other business and professio ns are complying with their obligations. More \up0 \expndtw0\charscalex110 impor tantly, the required measures must take into account the risks and regulatory \u p0 \expndtw-3\charscalex100 structures that already exist in the relevant sector s.\ul0\super\cf8\f9\fs23 46 \par\pard\qj \li2205\ri913\sb399\sl-400\slmult0\fi0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs23 Part Three of the revis ed Recommendations deals with key institutional measures in anti\up0 \expndtw0\c harscalex104 money laundering systems\ul0\super\cf8\f9\fs23 47\ul0\nosupersub\cf 1\f2\fs23 and the transparency of legal persons and arrangements.\ul0\super\cf8 \f9\fs23 48 \up0 \expndtw0\charscalex104 \ul0\nosupersub\cf1\f2\fs23 These are a mong the prominent changes introduced when the Forty Recommendations \up0 \expnd tw-3\charscalex100 were revised in 2003. \par\pard\qj \li2205\ri916\sb398\sl-403 \slmult0 \up0 \expndtw-1\charscalex100 Moreover, the Task Force has agreed that it is extremely important to enhance international \up0 \expndtw0\charscalex102 cooperation between enforcement agencies, financial institutions, its reg ulators and \up0 \expndtw0\charscalex100 supervisors in order to facilitate the investigations and prosecutions of money launderers. \up0 \expndtw0\charscalex1 00 Therefore, Part Four of the Forty Recommendations deals with mutual legal ass istance in \up0 \expndtw0\charscalex102 relation to investigations, prosecutions and related proceedings of money laundering and \up0 \expndtw0\charscalex100 te rrorist financing.\ul0\super\cf8\f9\fs23 49\ul0\nosupersub\cf1\f2\fs23 Addition ally, Recommendations 38 and 39 deal with the seizure and \up0 \expndtw0\charsca lex100 confiscation of the criminal proceeds as well as extradition. \par\pard\q l \li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\l i2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2 205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li220 5\sb6\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\s uper\cf9\f10\fs18 45\ul0\nosupersub\cf10\f11\fs19 See Recommendation 15. \par\p ard\li2205\sb9\sl-218\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f 10\fs18 46\ul0\nosupersub\cf10\f11\fs19 See Recommendations 23 to 25.\par\pard\ li2205\sb6\sl-218\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\f s18 47\ul0\nosupersub\cf10\f11\fs19 See Recommendations 26 to 32.\par\pard\li22

05\sb6\sl-218\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 48\ul0\nosupersub\cf10\f11\fs19 See Recommendations 33 to 34.\par\pard\li2205\s b5\sl-218\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 49\u l0\nosupersub\cf10\f11\fs19 See Recommendations 36 to 37.\par\pard\li2205\sb3\s l-264\slmult0\fi8360 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 4 8 {\shp {\*\shpinst\shpleft2205\shptop13256\shpright5006\shpbottom13276\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz179\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g58}{\bkmkend Pg58}\par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\s b0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0 \sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb241 \sl-264\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf4\f5\fs23 2.4.2 Special Recommendations on Terrorist Financing \par\pard\qj \li2205\sb0\sl-410 \slmult0 \par\pard\qj\li2205\ri915\sb6\sl-410\slmult0 \up0 \expndtw0\charscalex1 06 \ul0\nosupersub\cf1\f2\fs23 In October 2001, in response to the September 11 attacks on the United States, FATF \line \up0 \expndtw-1\charscalex100 expanded its mission to include efforts to combat terrorist financing. It issued Eight Sp ecial \line \up0 \expndtw0\charscalex104 Recommendations on Terrorist Financi ng which will complement its existing \up0 \expndtw-3\charscalex100 40 \par \pard\ql \li2205\sb111\sl-264\slmult0 \up0 \expndtw-2\charscalex100 recommendati ons on money laundering. The eight recommendations are as follows:\ul0\super\cf8 \f9\fs23 50 \par\pard\ql \li2556\ri915\sb24\sl-400\slmult0\tx2950 \up0 \expndtw0 \charscalex102 \ul0\nosupersub\cf1\f2\fs23 (a)\ul0\nosupersub\cf6\f7\fs23 \ul0\ nosupersub\cf1\f2\fs23 To take immediate steps to ratify and to implement fully the 1999 United Nations \line\tab \up0 \expndtw0\charscalex102 International Con vention for the Suppression of the Financing of Terrorism. \par\pard\ql \li2556\ sb113\sl-264\slmult0 \up0 \expndtw-1\charscalex100 (b)\ul0\nosupersub\cf6\f7\fs2 3 \ul0\nosupersub\cf1\f2\fs23 To criminalize the financing of terrorism, terror ist acts and terrorist organizations. \par\pard\ql \li2556\sb136\sl-264\slmult0 \up0 \expndtw-2\charscalex100 (c)\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf 1\f2\fs23 To implement measures to freeze and confiscate terrorist assets. \par\ pard\ql \li2556\sb136\sl-264\slmult0 \up0 \expndtw-2\charscalex100 (d)\ul0\nosup ersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 To report suspicious transactions linked to terrorism. \par\pard\ql \li2556\ri911\sb44\sl-400\slmult0\tx2950 \up0 \expndtw0\charscalex111 (e)\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\ fs23 To provide the widest possible range of assistance to other countries\u8217 ? law \line\tab \up0 \expndtw-2\charscalex100 enforcement and regulatory authori ties for terrorist financing investigations. \par\pard\ql \li2556\sb113\sl-264\s lmult0 \up0 \expndtw-3\charscalex100 (f)\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupe rsub\cf1\f2\fs23 To impose anti-money laundering requirements on alternative re mittance systems. \par\pard\ql \li2556\ri915\sb24\sl-400\slmult0\tx2950 \up0 \ex pndtw-1\charscalex100 (g)\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs2 3 To strengthen customer identification measures in international and domestic w ire \line\tab \up0 \expndtw-2\charscalex100 transfers. \par\pard\ql \li2556\ri91 3\sb0\sl-400\slmult0\tx2950 \up0 \expndtw-2\charscalex100 (h)\ul0\nosupersub\cf6 \f7\fs23 \ul0\nosupersub\cf1\f2\fs23 To ensure that entities, in particular non -profit organizations, cannot be misused to \line\tab \up0 \expndtw-3\charscalex 100 finance terrorism. \par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li22 05\ri915\sb20\sl-400\slmult0\tx3417 \up0 \expndtw0\charscalex102 In October \tab \up0 \expndtw0\charscalex106 2004, FATF added another key element to the world\

u8217?s counter terrorist \up0 \expndtw-1\charscalex100 financing defences. The new measure, Special Recommendation IX, calls on countries to \up0 \expndtw0\cha rscalex102 stop cross-border movements of currency and monetary instruments rela ted to terrorist \up0 \expndtw0\charscalex104 financing and money laundering and confiscate such funds. It also calls for enhanced \up0 \expndtw0\charscalex100 information-sharing between countries on the movement of illicit cash related to terrorist \up0 \expndtw-1\charscalex100 financing or money laundering.\ul0\supe r\cf8\f9\fs23 51 \par\pard\qj \li2205\ri914\sb384\sl-420\slmult0 \up0 \expndtw0\ charscalex102 \ul0\nosupersub\cf1\f2\fs23 It should be noted that the FATF Nine Special Recommendations on terrorist financing \line \up0 \expndtw0\charscalex10 2 have been endorsed by many non-FATF members and international organizations an d \par\pard\qj \li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \ par\pard\qj\li2205\ri1077\sb86\sl-220\slmult0 \up0 \expndtw-2\charscalex100 \ul0 \super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 50\ul0\nosupersub\cf10\f11\fs19 See F inancial Action Task Force on Money Laundering, \ul0\nosupersub\cf11\f12\fs19 Sp ecial Recommendations on Terrorist Financing \line \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf10\f11\fs19 2004). \par\pard\li2205\sb20\sl-218\slmult0\fi0 \ up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 51\ul0\nosupersub\cf10\f11\ fs19 Ibid.\par\pard\li2205\sb3\sl-264\slmult0\fi8360 \up0 \expndtw-3\charscalex 100 \ul0\nosupersub\cf1\f2\fs23 49 {\shp {\*\shpinst\shpleft2205\shptop13704\shpright5006\shpbottom13724\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz229\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g59}{\bkmkend Pg59}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\s b0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri9 19\sb249\sl-400\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf1\f2\fs2 3 bodies. As such, it can be said that this is one of the major contributions of FATF on money \up0 \expndtw-3\charscalex100 laundering prevention. \par\pard\qj \li2205\ri913\sb399\sl-402\slmult0\fi0 \up0 \expndtw0\charscalex100 The work of FATF is on-going and has proven to have had a major impact on the global \up0 \ expndtw-1\charscalex100 effort to combat money laundering. Empirical studies on the relationship between money \up0 \expndtw0\charscalex105 laundering and the b anking sector have revealed that FATF\u8217?s anti-money laundering \up0 \expndt w0\charscalex100 recommendations have had a great influence in protecting the ba nking sector from being \up0 \expndtw0\charscalex102 used by money launderers.\u l0\super\cf8\f9\fs23 52\ul0\nosupersub\cf1\f2\fs23 Although it has no force of law, the comprehensive set of \up0 \expndtw0\charscalex103 Forty Recommendations and Nine Special Recommendations is a manifestation of the \up0 \expndtw0\chars calex104 important role played by FATF in formulating anti-money laundering poli cies and in \up0 \expndtw-5\charscalex100 mobilizing global awareness of the war on money laundering. \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li220 5\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb4\sl-264\slmult0 \up0 \expndtw-4\char scalex100 \ul0\nosupersub\cf4\f5\fs23 2.4.3 Non-Cooperative/Compliance Territo ries (NCCT) \par\pard\qj \li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205\ri914\sb 20\sl-402\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf1\f2\fs23 In order to reduce the vulnerability of the international financial system and t o increase the \line \up0 \expndtw0\charscalex102 world-wide effectiveness of an ti-money laundering measures, between 1999 and 2000, \line \up0 \expndtw0\charsc alex103 FATF identified jurisdictions with serious deficiencies in their anti-mo ney laundering \line \up0 \expndtw-1\charscalex100 regimes. This initiative was

designed to encourage the implementation of comprehensive \line \up0 \expndtw-3\ charscalex100 and effective anti-money laundering measures in large financial ce ntres. An initial report in \line \up0 \expndtw0\charscalex100 June 2000 identif ied 15 countries and territories\ul0\super\cf8\f9\fs23 53\ul0\nosupersub\cf1\f2\ fs23 as non-cooperative in the fight against \line \up0 \expndtw0\charscalex103 money laundering. The jurisdictions either failed to adopt meaningful legislation \line \up0 \expndtw0\charscalex104 criminalizing laundering or ha ve serious deficiencies in their banking laws and \line \up0 \expndtw-5\c harscalex100 implementing regulations. \par\pard\qj \li2205\ri914\sb395\sl-406\s lmult0 \up0 \expndtw-2\charscalex100 There was evidence that these jurisdictions were very attractive to money launderers since \line \up0 \expndtw0\charscalex1 00 they could provide bank secrecy, offshore banks with anonymous accounts, anon ymous \line \up0 \expndtw0\charscalex103 ownership of international business com panies and lawyers who serve as nominees of \line \up0 \expndtw0\charscalex103 c ommercial entities. Also, in these jurisdictions non-residents are allowed to ow n and \par\pard\qj \li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slm ult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\ri935\sb88\sl-22 0\slmult0 \up0 \expndtw0\charscalex102 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10 \fs18 52\ul0\nosupersub\cf10\f11\fs19 Jackie Johnson and Desmond Lim, \u8216?Mo ney Laundering: Has the Financial Action Task Force Made a \up0 \expndtw0\charsc alex102 Difference?\u8217? (2002) 10(1) \ul0\nosupersub\cf11\f12\fs19 Journal of Financial Crime \ul0\nosupersub\cf10\f11\fs19 18. \par\pard\qj \li2205\ri937\sb 0\sl-220\slmult0 \up0 \expndtw0\charscalex102 \ul0\super\cf9\f10\fs18 53\ul0\nos upersub\cf10\f11\fs19 Bahamas, Cayman Islands, Cook Islands, Dominica, Israel, Lebanon, Liechtenstein, Marshall Islands, \up0 \expndtw0\charscalex102 Nauru, Ni ue, Panama, Philippines, Russia, St Kitts & Nevis and St Vincent & Grenadines. \ par\pard\ql \li10565\sb14\sl-252\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosu persub\cf1\f2\fs23 50 {\shp {\*\shpinst\shpleft2205\shptop13480\shpright5006\shpbottom13500\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz170\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g60}{\bkmkend Pg60}\par\pard\qj \li2205\sb0\sl-403\slmult0 \par\pard\qj\li2205\s b0\sl-403\slmult0 \par\pard\qj\li2205\sb0\sl-403\slmult0 \par\pard\qj\li2205\ri9 15\sb238\sl-403\slmult0\fi0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\ fs23 operate offshore banks.\ul0\super\cf8\f9\fs23 54\ul0\nosupersub\cf1\f2\fs23 By publicly criticizing these jurisdictions, FATF and its member \up0 \expndtw 0\charscalex104 countries hoped that international pressure would result in anti-money laundering \up0 \expndtw0\charscalex108 reforms.\ul0\super\cf8\f 9\fs23 55\ul0\nosupersub\cf1\f2\fs23 It was also hoped that public criticism wo uld have a great impact on their \up0 \expndtw0\charscalex100 economies as prosp ective and legitimate investors would be reluctant to do business with \up0 \exp ndtw-2\charscalex100 them.\ul0\super\cf8\f9\fs23 56\ul0\nosupersub\cf1\f2\fs23 FATF also recommended that its member financial institutions pay special attenti on \up0 \expndtw0\charscalex105 to business relations and transactions with pers ons, including companies and financial \up0 \expndtw-3\charscalex100 institution s, from the non-cooperative jurisdictions.\ul0\super\cf8\f9\fs23 57 \par\pard\qj \li2205\ri915\sb398\sl-402\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersu b\cf1\f2\fs23 FATF pursued the non-cooperative countries and territories during 2000-2001. It monitored \line \up0 \expndtw0\charscalex104 previously identifie d weaknesses and considered countermeasures for jurisdictions \line \up0 \ expndtw0\charscalex103 maintaining their detrimental rules and practices.

It also reviewed the anti-money \line \up0 \expndtw0\charscalex102 launderin g policies in an additional number of jurisdictions. In mid-2001, FATF issued a \line \up0 \expndtw0\charscalex110 new list of jurisdictions having serious defi ciencies in their anti-money laundering \line \up0 \expndtw0\charscalex106 proce dures. For example, Russia and Philippines were given 90 days to improve their \ line \up0 \expndtw0\charscalex100 practices or face economic sanctions. Also sig nificant was the removal of Cayman Islands \line \up0 \expndtw0\charscalex100 fr om the list of jurisdictions with deficient anti-money laundering laws.\ul0\supe r\cf8\f9\fs23 58 \par\pard\qj \li2205\ri915\sb397\sl-404\slmult0\fi0 \up0 \expnd tw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 Blacklisting by FATF has resulted in more countries committed to the prevention of money \line \up0 \expndtw-3\ch arscalex100 laundering. Recently, FATF removed the Cook Islands, Indonesia and P hilippines from the \line \up0 \expndtw0\charscalex100 NCCT list. It has been re ported that the NCCT\u8217?s exercise has proved to be a very useful \line \up0 \expndtw0\charscalex106 and efficient tool to improve global impleme ntation of the FATF Forty \line \up0 \expndtw-3\charscalex100 Recommenda tions.\ul0\super\cf8\f9\fs23 59\ul0\nosupersub\cf1\f2\fs23 At the time of writi ng, only three jurisdictions\ul0\super\cf8\f9\fs23 60\ul0\nosupersub\cf1\f2\fs23 remain on the NCCT \line \up0 \expndtw-4\charscalex100 list. \par\pard\qj \li2 205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li220 5\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\ sb0\sl-220\slmult0 \par\pard\qj\li2205\ri941\sb108\sl-220\slmult0 \up0 \expndtw0 \charscalex103 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 54\ul0\nosupersub\ cf10\f11\fs19 Jackie Johnson, \u8216?In Pursuit of Dirty Money: Identifying Wea knesses in the Global Financial System\u8217? \up0 \expndtw-2\charscalex100 (200 1) 5(2) \ul0\nosupersub\cf11\f12\fs19 Journal of Money Laundering Control\ul0\no supersub\cf10\f11\fs19 124. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expnd tw-2\charscalex100 \ul0\super\cf9\f10\fs18 55\ul0\nosupersub\cf10\f11\fs19 W R Schroeder, above n11, 7. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw2\charscalex100 \ul0\super\cf9\f10\fs18 56\ul0\nosupersub\cf10\f11\fs19 A Y She hu, above n 35, 234. \par\pard\qj \li2205\ri934\sb0\sl-240\slmult0\fi0 \up0 \exp ndtw0\charscalex100 \ul0\super\cf9\f10\fs18 57\ul0\nosupersub\cf10\f11\fs19 Fin ancial Action Task Force on Money Laundering, \ul0\nosupersub\cf11\f12\fs19 Revi ew to Identify Non-Cooperative Countries and \up0 \expndtw0\charscalex100 Territ ories: Increasing the Worldwide Effectiveness of Anti-Money Laundering Measures \ul0\nosupersub\cf10\f11\fs19 (2000) 65. \par\pard\qj \li2205\ri944\sb0\sl-220\s lmult0 \up0 \expndtw-1\charscalex100 \ul0\super\cf9\f10\fs18 58\ul0\nosupersub\c f10\f11\fs19 R Manney, \u8216?Money Laundering: The Global Threat to the Integr ity of Financial Systems (2001) 8(8) \ul0\nosupersub\cf11\f12\fs19 The \up0 \exp ndtw-2\charscalex100 Investment Lawyer \ul0\nosupersub\cf10\f11\fs19 17. \par\pa rd\qj \li2205\ri943\sb0\sl-220\slmult0 \up0 \expndtw0\charscalex103 \ul0\super\c f9\f10\fs18 59\ul0\nosupersub\cf10\f11\fs19 Financial Action Task Force on Mone y Laundering, \ul0\nosupersub\cf11\f12\fs19 Annual and Overall Review of Non-Coo perative \up0 \expndtw0\charscalex103 Countries and Territories\ul0\nosupersub\c f10\f11\fs19 (2005) 20. \par\pard\li2205\sb1\sl-218\slmult0\fi0 \up0 \expndtw-2 \charscalex100 \ul0\super\cf9\f10\fs18 60\ul0\nosupersub\cf10\f11\fs19 Myanmar, Nauru and Nigeria.\par\pard\li2205\sb3\sl-264\slmult0\fi8360 \up0 \expndtw-3\ch arscalex100 \ul0\nosupersub\cf1\f2\fs23 51 {\shp {\*\shpinst\shpleft2205\shptop11914\shpright5006\shpbottom11934\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz185\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P

g61}{\bkmkend Pg61}\par\pard\li2205\sb0\sl-264\slmult0\par\pard\li2205\sb0\sl-26 4\slmult0\par\pard\li2205\sb0\sl-264\slmult0\par\pard\li2205\sb0\sl-264\slmult0\ par\pard\li2205\sb0\sl-264\slmult0\par\pard\li2205\sb254\sl-264\slmult0\fi0\tx29 05 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf4\f5\fs23 2.5\tab \up0 \expnd tw-3\charscalex100 The Wolfsberg Group\par\pard\qj \li2205\sb0\sl-406\slmult0 \p ar\pard\qj\li2205\ri915\sb60\sl-406\slmult0\fi0 \up0 \expndtw0\charscalex106 \ul 0\nosupersub\cf1\f2\fs23 The Wolfsberg Group is an association of a number of le ading international financial \up0 \expndtw0\charscalex106 institutions\ul0\supe r\cf8\f9\fs23 61\ul0\nosupersub\cf1\f2\fs23 and was established in 2000 with th e aim of developing global financial \up0 \expndtw0\charscalex103 services indus try standards with respect to anti-money laundering and counter-terrorism \up0 \ expndtw0\charscalex103 financing activities. \par\pard\qj \li2205\ri913\sb398\sl -402\slmult0 \up0 \expndtw0\charscalex103 In October 2000, together with the rep resentatives from Transparency International, the \line \up0 \expndtw0\charscale x103 Wolfsberg Group published the \ul0\nosupersub\cf7\f8\fs23 Principles on Mon ey Laundering Prevention in Private \line \up0 \expndtw0\charscalex100 Banking. \ul0\nosupersub\cf1\f2\fs23 The Principles were developed to tackle the dangers posed by money laundering \line \up0 \expndtw0\charscalex103 to private banking and more importantly to address the reputational damage suffered by \line \up0 \ expndtw0\charscalex103 banks involved in money laundering scandals.\ul0\super\cf 8\f9\fs23 62\ul0\nosupersub\cf1\f2\fs23 Another reason behind the Principles is \line \up0 \expndtw0\charscalex113 that the banks need to create a common stand ard to reduce the uncertainties and \line \up0 \expndtw0\charscalex105 complexit ies resulting from running multi-national banks across disparate anti-money \lin e \up0 \expndtw0\charscalex108 laundering regime.\ul0\super\cf8\f9\fs23 63\ul0\n osupersub\cf1\f2\fs23 The Principles cover customer identification and due dili gence \line \up0 \expndtw-2\charscalex100 procedures and are considered extensio ns to the FATF Know Your Customer policy.\ul0\super\cf8\f9\fs23 64 \par\pard\qj \li2205\ri914\sb397\sl-404\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\ cf1\f2\fs23 By agreeing to the Principles, the management of banks showed that t hey were committed \line \up0 \expndtw0\charscalex110 to fight against serious c rime. Interestingly, the participant banks have displayed a \line \up0 \expndtw0 \charscalex100 commitment to apply these standards to all their operations at ho me and abroad, including \line \up0 \expndtw0\charscalex104 their offshore centr es, even if the local law would not require such standards and this is \line \up 0 \expndtw-2\charscalex100 considered the real strength of the Principles.\ul0\s uper\cf8\f9\fs23 65\ul0\nosupersub\cf1\f2\fs23 They represent the willingness o f the private \line \up0 \expndtw-2\charscalex100 bankers to go beyond the ident ification of the client to trace the source of dirty money.\ul0\super\cf8\f9\fs2 3 66 \par\pard\qj \li2205\sb0\sl-230\slmult0 \par\pard\qj\li2205\sb0\sl-230\slmu lt0 \par\pard\qj\li2205\sb0\sl-230\slmult0 \par\pard\qj\li2205\ri945\sb210\sl-23 0\slmult0 \up0 \expndtw-3\charscalex100 \ul0\super\cf9\f10\fs18 61\ul0\nosupersu b\cf10\f11\fs19 ABN AMRO Bank N.V., Banco Santander Central Hispano S.A., Bank of Tokyo-Mitsubishi Ltd., Barclays \up0 \expndtw0\charscalex102 Bank, Citigroup, Credit Suisse Group, Deutsche Bank AG, Goldman Sachs, HSBC, J.P. Morgan Chase, \up0 \expndtw0\charscalex102 Socit Generale, UBS AG. \par\pard\qj \li2205\ri942\sb 0\sl-220\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 62\ul0\no supersub\cf10\f11\fs19 Mark Pieth and Gemma Aiolfi, \u8216?The Private Sector B ecomes Active: The Wolfsberg Process\u8217? (2003) 10(4) \up0 \expndtw-3\charsca lex100 \ul0\nosupersub\cf11\f12\fs19 Journal of Financial Crime\ul0\nosupersub\c f10\f11\fs19 360. \par\pard\qj \li2205\ri946\sb0\sl-240\slmult0 \up0 \expndtw0\ charscalex102 \ul0\super\cf9\f10\fs18 63\ul0\nosupersub\cf10\f11\fs19 Andrew Ha ynes, \u8216?The Wolfsberg Principles - An Analysis\u8217? (2004) 7(3) \ul0\nosu persub\cf11\f12\fs19 Journal of Money Laundering \up0 \expndtw0\charscalex102 Co ntrol\ul0\nosupersub\cf10\f11\fs19 207. \par\pard\li2205\sb1\sl-198\slmult0\fi0 \tx3869\tx8849 \up0 \expndtw0\charscalex103 \ul0\super\cf9\f10\fs18 64\ul0\nosup ersub\cf10\f11\fs19 Kris Hinterseer,\tab \up0 \expndtw0\charscalex102 \u8216?Th e Wolfsberg Anti-Money Laundering Principles\u8217?(2001)\tab \up0 \expndtw0\cha rscalex103 5(1) \ul0\nosupersub\cf11\f12\fs19 Journal of Money\par\pard\li2205\s b10\sl-218\slmult0\fi0 \up0 \expndtw0\charscalex103 Laundering Control \ul0\nosu

persub\cf10\f11\fs19 26.\par\pard\ql \li2205\sb0\sl-212\slmult0 \up0 \expndtw-2\ charscalex100 \ul0\super\cf9\f10\fs18 65\ul0\nosupersub\cf10\f11\fs19 Pieth, ab ove n62, 361 \par\pard\qj \li2205\ri1851\sb2\sl-220\slmult0\fi0 \up0 \expndtw-2\ charscalex100 \ul0\super\cf9\f10\fs18 66\ul0\nosupersub\cf10\f11\fs19 M Brindle , \u8216?Private Banks\u8217? Initiative Against Money Laundering\u8217? (2001) 4(4) \ul0\nosupersub\cf11\f12\fs19 Journal of Money \up0 \expndtw-2\charscalex10 0 Laundering Control\ul0\nosupersub\cf10\f11\fs19 346. \par\pard\ql \li10565\sb 14\sl-252\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 52 {\shp {\*\shpinst\shpleft2205\shptop11690\shpright5006\shpbottom11710\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz174\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g62}{\bkmkend Pg62}\par\pard\qj \li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205\s b0\sl-402\slmult0 \par\pard\qj\li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205\ri9 13\sb241\sl-402\slmult0\fi0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf1\f2 \fs23 In response to the global initiative in war on terrorism, the Wolfsberg Gr oup has also come \line \up0 \expndtw0\charscalex111 out with its own set of pri nciples. It issued the \ul0\nosupersub\cf7\f8\fs23 Wolfsberg Anti-Money Launderi ng \line \up0 \expndtw0\charscalex106 Principles for Correspondent Banking\ul0\n osupersub\cf1\f2\fs23 in November 2002. The Principles set a global \line \up0 \expndtw0\charscalex105 standard to govern the establishment and maintenan ce of correspondent banking \line \up0 \expndtw0\charscalex103 relationships. They clearly prohibit financial institutions from doing business with shell \li ne \up0 \expndtw0\charscalex103 banks.\ul0\super\cf8\f9\fs23 67\ul0\nosupersub\c f1\f2\fs23 The Principles also promote a risk-based approach to evaluating corr espondent \line \up0 \expndtw0\charscalex104 banking clients and deal with the i dentification and follow-up of unusual or suspicious \line \up0 \expndtw-3\chars calex100 activities. \par\pard\qj \li2205\ri914\sb396\sl-405\slmult0 \up0 \expnd tw0\charscalex102 In September 2003, the Wolfsberg Group issued the \ul0\nosuper sub\cf7\f8\fs23 Statement on Monitoring, Screening \up0 \expndtw0\charscalex105 and Searching\ul0\nosupersub\cf1\f2\fs23 to address issues related to the devel opment of risk-based processes for \up0 \expndtw-1\charscalex100 monitoring, scr eening and searching of transactions and customers. The Statement provides \up0 \expndtw-1\charscalex100 that risk-based transaction monitoring, real-time scree ning and retroactive searches must be \up0 \expndtw-2\charscalex100 embedded in an integrated anti-money laundering program. \par\pard\qj \li2205\ri914\sb395\sl -405\slmult0 \up0 \expndtw0\charscalex105 In 2006, the Wolfsberg Group published four reports establishing new policies for the \line \up0 \expndtw0\charscalex1 08 prevention of money laundering and terrorism financing in various areas of ba nking \line \up0 \expndtw0\charscalex108 activity. The first report, \ul0\nosupe rsub\cf7\f8\fs23 Guidance on a Risk Based Approach for Managing Money \line \up0 \expndtw0\charscalex107 Laundering Risks\ul0\nosupersub\cf1\f2\fs23 ,\ul0\nosup ersub\cf7\f8\fs23 \ul0\nosupersub\cf1\f2\fs23 provides general rules which co uld help regulators and financial \line \up0 \expndtw0\charscalex107 institution s to formulate a risk based anti-money laundering strategy. The second report, \ par\pard\qj \li2205\ri915\sb0\sl-402\slmult0\fi0 \up0 \expndtw0\charscalex100 \u l0\nosupersub\cf7\f8\fs23 Anti-Money Laundering Guidance for Mutual Funds a nd Other Pooled Investment \line \up0 \expndtw0\charscalex104 Vehicles\ul0\no supersub\cf1\f2\fs23 , addresses questions in connection with direct and indirec t relations between \line \up0 \expndtw-3\charscalex100 investors and investment instruments. The third report, \ul0\nosupersub\cf7\f8\fs23 FAQs\ul0\super\cf16 \f17\fs23 68\ul0\nosupersub\cf7\f8\fs23 on Anti-Money Laundering \line \up0 \ex

pndtw-3\charscalex100 Issues in the Context of Investment and Commercial Banking \ul0\nosupersub\cf1\f2\fs23 addresses specific anti-money \line \up0 \expndtw-3 \charscalex100 laundering questions in relation to investment banking and commer cial banking.\ul0\nosupersub\cf7\f8\fs23 \ul0\nosupersub\cf1\f2\fs23 The fourth \line \up0 \expndtw-2\charscalex100 report, \ul0\nosupersub\cf7\f8\fs23 FAQs on Correspondent Banking\ul0\nosupersub\cf1\f2\fs23 provides guidance on money la undering controls \line \up0 \expndtw-1\charscalex100 in relation to corresponde nt banking. These initiatives envisage the active participation of \line \up0 \e xpndtw-1\charscalex100 the Wolfsberg Group in the process of developing new inte rnational standards for money \line \up0 \expndtw-2\charscalex100 laundering pre vention. \par\pard\qj \li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\ slmult0 \par\pard\qj\li2205\ri945\sb127\sl-220\slmult0 \up0 \expndtw0\charscalex 100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 67\ul0\nosupersub\cf10\f11\fs 19 Shell banks mean banks that have no physical presence in the country where t hey are incorporated and \line \up0 \expndtw0\charscalex100 licensed. \par\pard\ li2205\sb20\sl-218\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\ fs18 68\ul0\nosupersub\cf10\f11\fs19 FAQs means Frequently Asked Questions.\par \pard\li2205\sb3\sl-264\slmult0\fi8360 \up0 \expndtw-3\charscalex100 \ul0\nosupe rsub\cf1\f2\fs23 53 {\shp {\*\shpinst\shpleft2205\shptop13704\shpright5006\shpbottom13724\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz231\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g63}{\bkmkend Pg63}\par\pard\qj \li2205\sb0\sl-406\slmult0 \par\pard\qj\li2205\s b0\sl-406\slmult0 \par\pard\qj\li2205\sb0\sl-406\slmult0 \par\pard\qj\li2205\sb0 \sl-406\slmult0 \par\pard\qj\li2205\ri915\sb220\sl-406\slmult0\fi0 \up0 \expndtw 0\charscalex100 \ul0\nosupersub\cf1\f2\fs23 The continuous effort of the Wolfsbe rg Group implies that banks can establish a common \up0 \expndtw0\charscalex100 standard and can learn a lot from each other by sharing their rules and experien ces.\ul0\super\cf8\f9\fs23 69\ul0\nosupersub\cf1\f2\fs23 More \up0 \expndtw0\ch arscalex100 importantly, it proves that harmonization of the banking standards i s not only possible but \up0 \expndtw-1\charscalex100 truly beneficial for banki ng business. \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl264\slmult0 \par\pard\ql\li2205\sb224\sl-264\slmult0\tx2905 \up0 \expndtw-3\char scalex100 \ul0\nosupersub\cf4\f5\fs23 2.6 \tab \up0 \expndtw-3\charscalex100 The Asia/Pacific Group on Money Laundering \par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri915\sb84\sl-400\slmult0 \up0 \expndtw0\charscalex106 \ul0\ nosupersub\cf1\f2\fs23 As earlier mentioned, FATF efforts in fighting money laun dering have resulted in the \line \up0 \expndtw0\charscalex105 emergence of FATF -Styled Regional Bodies \up0 \expndtw0\charscalex107 (FSRBs) which interpret, pr omote and \par\pard\qj \li2205\ri912\sb0\sl-403\slmult0\fi0 \up0 \expndtw-3\char scalex100 implement the FATF standards in every part of the world. Since Malaysi a is part of Asia, a \line \up0 \expndtw-1\charscalex100 brief mention of the As ia Pacific Group (APG) (one of the FSRBs) is relevant here. APG \line \up0 \expn dtw-3\charscalex100 was established in February 1997 in Bangkok, Thailand and it s mission is to combat money \line \up0 \expndtw0\charscalex100 laundering and t errorism financing activities in the Asia/Pacific region through effective \line \up0 \expndtw-1\charscalex100 participation in FATF\u8217?s standard setting pr ocess and full and effective implementation of \line \up0 \expndtw-2\charscalex1 00 those standards in APG member jurisdictions. As at 28 July 2007, APG has 36 m embers\ul0\super\cf8\f9\fs23 70 \line \up0 \expndtw-2\charscalex100 \ul0\nosuper sub\cf1\f2\fs23 and six observer jurisdictions.\ul0\super\cf8\f9\fs23 71\ul0\nos

upersub\cf1\f2\fs23 This makes APG the largest FSRB in the world.\ul0\super\cf8 \f9\fs23 72 \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb246\sl -264\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 The funct ions of APG are as follows: \par\pard\ql \li2556\ri916\sb24\sl-400\slmult0\tx290 6\tx2906 \up0 \expndtw0\charscalex100 (a)\ul0\nosupersub\cf6\f7\fs23 \ul0\nosup ersub\cf1\f2\fs23 To provide a strong, cohesive and autonomous regional AML/CFT body for APG \line\tab \up0 \expndtw0\charscalex102 members and observers, inclu ding all strategically important jurisdictions in the \line\tab \up0 \expndtw0\c harscalex102 Asia Pacific region; \par\pard\ql \li2555\ri915\sb0\sl-420\slmult0\ tx2906 \up0 \expndtw0\charscalex105 (b)\ul0\nosupersub\cf6\f7\fs23 \ul0\nosuper sub\cf1\f2\fs23 To actively participate in, and cooperate with, the global AML/C FT network, \line\tab \up0 \expndtw-4\charscalex100 including FATF, other FSRBs and relevant international and regional organizations; \par\pard\ql \li2555\sb93 \sl-264\slmult0 \up0 \expndtw-3\charscalex100 (c)\ul0\nosupersub\cf6\f7\fs23 \u l0\nosupersub\cf1\f2\fs23 To assess APG\u8217?s members\u8217? compliance with t he global AML/CFT standards; \par\pard\qj \li2205\sb0\sl-220\slmult0 \par\pard\q j\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\ li2205\ri944\sb133\sl-220\slmult0 \up0 \expndtw0\charscalex100 \ul0\super\cf9\f1 0\fs19\ul0\super\cf9\f10\fs18 69\ul0\nosupersub\cf10\f11\fs19 Hans-Peter Bauer and Martin Peter, \u8216?Global Standards for Money Laundering Prevention\u8217? (2002)10(1) \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf11\f12\fs19 Journal of Financial Crime\ul0\nosupersub\cf10\f11\fs19 69. \par\pard\qj \li2205\ri928\ sb20\sl-220\slmult0 \up0 \expndtw-3\charscalex100 \ul0\super\cf9\f10\fs18 70\ul0 \nosupersub\cf10\f11\fs19 Afghanistan, Australia, Bangladesh, Brunei Darussalam , Cambodia, Canada, Chinese Taipei, Cook Islands, \up0 \expndtw0\charscalex103 F iji Islands, Hong Kong, India, Indonesia, Japan, Korea, Lao PDR, Macau, Malaysia , Marshall Islands, \up0 \expndtw0\charscalex100 Mongolia, Myanmar, Nauru, Nepal , New Zealand, Niue, Pakistan, Palau, Philippines, Samoa, Singapore, \up0 \expnd tw0\charscalex100 Solomon Islands, Sri Lanka, Thailand, Tonga, United States of America, Vanuatu and Vietnam. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \exp ndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 71\ul0\nosupersub\cf10\f11\fs19 Fr ance, Kiribati, Maldives, Papua New Guinea, Timor-Leste and United Kingdom. \par \pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9 \f10\fs18 72\ul0\nosupersub\cf10\f11\fs19 Asia/Pacific Group on Money Launderin g, APG Annual Report 2006-2007, vii. \par\pard\ql \li10565\sb15\sl-251\slmult0 \ up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 54 {\shp {\*\shpinst\shpleft2205\shptop12585\shpright5006\shpbottom12605\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz184\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g64}{\bkmkend Pg64}\par\pard\ql \li2556\sb0\sl-400\slmult0 \par\pard\ql\li2556\s b0\sl-400\slmult0 \par\pard\ql\li2556\sb0\sl-400\slmult0 \par\pard\ql\li2556\ri9 11\sb249\sl-400\slmult0\tx2906\tx2906 \up0 \expndtw-1\charscalex100 \ul0\nosuper sub\cf1\f2\fs23 (d)\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 To c arry out education, research and analysis activities to enhance understanding of \line\tab \up0 \expndtw-2\charscalex100 the money laundering and financing of t errorism environments and the effectiveness \line\tab \up0 \expndtw-3\charscalex 100 of AML/CFT efforts; \par\pard\ql \li2556\ri916\sb0\sl-420\slmult0\tx2906 \up 0 \expndtw0\charscalex100 (e)\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2 \fs23 To provide assistance to APG members to implement the global standards thr ough \line\tab \up0 \expndtw0\charscalex100 implementation planning and the prov ision of guidance; \par\pard\ql \li2555\ri917\sb0\sl-400\slmult0\tx2906 \up0 \ex

pndtw-3\charscalex100 (f)\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs2 3 To support and expand the APG\u8217?s technical assistance and training progra m in order \line\tab \up0 \expndtw-4\charscalex100 to assist members to achieve the APG\u8217?s mission.\ul0\super\cf8\f9\fs23 73 \par\pard\qj \li2205\ri915\sb3 77\sl-405\slmult0 \up0 \expndtw0\charscalex103 \ul0\nosupersub\cf1\f2\fs23 In e nsuring compliance with global AML/CFT standards, APG conducts mutual \l ine \up0 \expndtw-4\charscalex100 evaluations of its member jurisdictions. This process remains a core activity of APG\u8217?s work \line \up0 \expndtw-2\charsc alex100 program and a primary membership requirement. APG began its first round of evaluations \line \up0 \expndtw0\charscalex106 in March 2000 and completed it in 2005. A second round of mutual evaluations has \line \up0 \expndtw0\charscal ex109 commenced and as at \up0 \expndtw0\charscalex107 2007, six APG jurisdictio ns, including Malaysia have been \par\pard\ql \li2205\sb121\sl-253\slmult0 \up0 \expndtw-4\charscalex100 assessed.\ul0\super\cf8\f9\fs23 74 \par\pard\qj \li2205 \sb0\sl-402\slmult0 \par\pard\qj\li2205\ri914\sb22\sl-402\slmult0 \up0 \expndtw0 \charscalex110 \ul0\nosupersub\cf1\f2\fs23 Since its commencement, APG has under taken typologies work in order to better \line \up0 \expndtw0\charscalex103 unde rstand the nature, extent and impact of money laundering and terrorism financing \line \up0 \expndtw0\charscalex109 activities, as well as the practical effect of AML/CFT measures. APG Typologies \line \up0 \expndtw0\charscalex103 Framework provides an operating framework to collect, analyse and disseminate \l ine \up0 \expndtw-3\charscalex100 information on money laundering and terrorism financing trends in the Asia/Pacific region. \line \up0 \expndtw-2\charscalex100 The recent APG Typologies Workshop focused on vulnerabilities in casino and rea l estate \line \up0 \expndtw-3\charscalex100 sector, illegal logging, alternativ e remittance systems, currency smuggling and trade-based \line \up0 \expndtw-3\c harscalex100 money laundering.\ul0\super\cf8\f9\fs23 75 \par\pard\qj \li2205\ri9 15\sb396\sl-405\slmult0 \up0 \expndtw0\charscalex105 \ul0\nosupersub\cf1\f2\fs23 In achieving full implementation of the global AML/CFT standards in APG member \line \up0 \expndtw0\charscalex100 jurisdictions, a number of strategies have be en developed. These include supporting and \line \up0 \expndtw0\charscalex104 pr omoting APG Working Groups and Project Groups to explore and address specific \l ine \up0 \expndtw-3\charscalex100 AML/CFT implementation issues in depth as well as providing targeted and wider regional \line \up0 \expndtw-3\charscalex100 ad vice to assist members to develop AML/CFT implementation plans to better reflect the \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmu lt0 \par\pard\ql\li2205\sb134\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\ super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 73\ul0\nosupersub\cf10\f11\fs19 Ibid 3. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\su per\cf9\f10\fs18 74\ul0\nosupersub\cf10\f11\fs19 Ibid 13. \par\pard\li2205\sb20 \sl-218\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 75\ul0 \nosupersub\cf10\f11\fs19 Asia/Pacific Group on Money Laundering, APG Typologie s Report 2008, 3.\par\pard\li2205\sb3\sl-264\slmult0\fi8360 \up0 \expndtw-3\char scalex100 \ul0\nosupersub\cf1\f2\fs23 55 {\shp {\*\shpinst\shpleft2205\shptop13704\shpright5006\shpbottom13724\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz203\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g65}{\bkmkend Pg65}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\s b0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri9 15\sb249\sl-400\slmult0 \up0 \expndtw0\charscalex106 \ul0\nosupersub\cf1\f2\fs23 priorities of individual jurisdictions and the region. Additional strategies in

clude best \up0 \expndtw-1\charscalex100 practice guidance and advice to raise a wareness of, and assist with, the implementation and \up0 \expndtw0\charscalex10 4 integration of the AML/CFT global standards with the existing legal, financial and law \up0 \expndtw-3\charscalex100 enforcement systems of each jurisdiction. \par\pard\li2205\sb0\sl-264\slmult0\par\pard\li2205\sb0\sl-264\slmult0\par\pard \li2205\sb245\sl-264\slmult0\fi0\tx2906 \up0 \expndtw-3\charscalex100 \ul0\nosup ersub\cf4\f5\fs23 2.7\tab \up0 \expndtw-3\charscalex100 Summary\par\pard\qj \li2 205\sb0\sl-402\slmult0 \par\pard\qj\li2205\ri914\sb80\sl-402\slmult0 \up0 \expnd tw0\charscalex105 \ul0\nosupersub\cf1\f2\fs23 Initially domestic and internation al efforts to combat money laundering were aimed at \line \up0 \expndtw0\charsca lex103 eradicating the drug trade and drug trafficking was the only predicate of fence. But with \line \up0 \expndtw-1\charscalex100 greater awareness about mone y laundering, it soon became apparent that it was not just the \line \up0 \expnd tw0\charscalex103 proceeds of drug trafficking that was laundered. This led to a n extension of the range of \line \up0 \expndtw0\charscalex107 predicate offence s to include other serious offences, such as corruption and even tax \line \up0 \expndtw0\charscalex102 evasion. Following the September 11 tragedy, a new dimen sion was added to the war on \line \up0 \expndtw0\charscalex104 money launderin g. Terrorism financing became a major source of concern of the \line \u p0 \expndtw0\charscalex100 international community. As the techniques used to la under money are also the same ones \line \up0 \expndtw0\charscalex100 used to co nceal the source of terrorist financing, there has been a growing convergence of \line \up0 \expndtw0\charscalex100 the legal frameworks to tackle money launder ing and terrorist financing. \par\pard\qj \li2205\ri914\sb398\sl-402\slmult0 \up 0 \expndtw0\charscalex100 International bodies like the United Nations, FATF and the Basle Committee have played \line \up0 \expndtw0\charscalex107 an important role in developing preventive strategies. Much of the focus has been on \line \ up0 \expndtw0\charscalex111 customer due diligence, which is generally considere d one of the key elements in \line \up0 \expndtw0\charscalex109 preserving the i ntegrity and reputation of banking systems. As money laundering is \line \up0 \e xpndtw0\charscalex105 international in nature, strong international cooperation between governments is vital. \line \up0 \expndtw-1\charscalex100 Without mutual assistance in the investigation and prosecution of offences and cooperation \li ne \up0 \expndtw0\charscalex105 in the confiscation of the proceeds of crime, it would be difficult to effectively combat \line \up0 \expndtw0\charscalex102 mon ey laundering. Significant progress has been made in these areas largely through the \line \up0 \expndtw0\charscalex102 efforts of these international bodies. \ par\pard\qj \li2205\ri915\sb392\sl-410\slmult0 \up0 \expndtw0\charscalex100 Howe ver, the fight against money laundering is not the sole responsibility of govern ment \line \up0 \expndtw0\charscalex100 and law enforcement agencies. The privat e sector also has a part to play and in this respect \line \up0 \expndtw0\charsc alex100 the efforts of the Wolfsberg Group of bank is commendable. This internat ional private \par\pard\ql \li10565\sb131\sl-264\slmult0 \up0 \expndtw-3\charsca lex100 56 \par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkm kstart Pg66}{\bkmkend Pg66}\par\pard\qj \li2205\sb0\sl-404\slmult0 \par\pard\qj\ li2205\sb0\sl-404\slmult0 \par\pard\qj\li2205\sb0\sl-404\slmult0 \par\pard\qj\li 2205\ri914\sb234\sl-404\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf 1\f2\fs23 sector initiative introduced a number of guidelines and principles to address the reputational \line \up0 \expndtw0\charscalex104 damage banks suffere d in the hands of the media following revelations that banks were \line \up0 \ex pndtw0\charscalex108 involved in money laundering. The Wolfsberg Principles serv e as a common global \line \up0 \expndtw0\charscalex102 standard for private ban king and the fact that more and more banks are signing up to the \line \up0 \exp ndtw0\charscalex100 Principles is an indication that the world banking community is committed to fight money \line \up0 \expndtw-1\charscalex100 laundering. \pa r\pard\qj \li2205\ri915\sb400\sl-400\slmult0 \up0 \expndtw0\charscalex100 Althou gh there is now a well established international legal framework to combat money \up0 \expndtw0\charscalex107 laundering, most of the recommendations and princi ples outlined in this Chapter are \up0 \expndtw0\charscalex102 nothing more than a form of soft law and have no legal effect. They depend on voluntary \up0 \exp

ndtw0\charscalex102 compliance and only time will tell how effective they have b een. \par\pard\ql \li10565\sb0\sl-264\slmult0 \par\pard\ql\li10565\sb0\sl-264\sl mult0 \par\pard\ql\li10565\sb0\sl-264\slmult0 \par\pard\ql\li10565\sb0\sl-264\sl mult0 \par\pard\ql\li10565\sb0\sl-264\slmult0 \par\pard\ql\li10565\sb0\sl-264\sl mult0 \par\pard\ql\li10565\sb0\sl-264\slmult0 \par\pard\ql\li10565\sb0\sl-264\sl mult0 \par\pard\ql\li10565\sb0\sl-264\slmult0 \par\pard\ql\li10565\sb0\sl-264\sl mult0 \par\pard\ql\li10565\sb0\sl-264\slmult0 \par\pard\ql\li10565\sb0\sl-264\sl mult0 \par\pard\ql\li10565\sb0\sl-264\slmult0 \par\pard\ql\li10565\sb0\sl-264\sl mult0 \par\pard\ql\li10565\sb0\sl-264\slmult0 \par\pard\ql\li10565\sb0\sl-264\sl mult0 \par\pard\ql\li10565\sb0\sl-264\slmult0 \par\pard\ql\li10565\sb0\sl-264\sl mult0 \par\pard\ql\li10565\sb0\sl-264\slmult0 \par\pard\ql\li10565\sb0\sl-264\sl mult0 \par\pard\ql\li10565\sb0\sl-264\slmult0 \par\pard\ql\li10565\sb0\sl-264\sl mult0 \par\pard\ql\li10565\sb0\sl-264\slmult0 \par\pard\ql\li10565\sb0\sl-264\sl mult0 \par\pard\ql\li10565\sb0\sl-264\slmult0 \par\pard\ql\li10565\sb0\sl-264\sl mult0 \par\pard\ql\li10565\sb0\sl-264\slmult0 \par\pard\ql\li10565\sb0\sl-264\sl mult0 \par\pard\ql\li10565\sb0\sl-264\slmult0 \par\pard\ql\li10565\sb0\sl-264\sl mult0 \par\pard\ql\li10565\sb0\sl-264\slmult0 \par\pard\ql\li10565\sb0\sl-264\sl mult0 \par\pard\ql\li10565\sb45\sl-264\slmult0 \up0 \expndtw-3\charscalex100 57 \par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart Pg6 7}{\bkmkend Pg67}\par\pard\ql \li5494\sb0\sl-264\slmult0 \par\pard\ql\li5494\sb0 \sl-264\slmult0 \par\pard\ql\li5494\sb0\sl-264\slmult0 \par\pard\ql\li5494\sb0\s l-264\slmult0 \par\pard\ql\li5494\sb0\sl-264\slmult0 \par\pard\ql\li5494\sb0\sl264\slmult0 \par\pard\ql\li5494\sb217\sl-264\slmult0 \up0 \expndtw-3\charscalex1 00 \ul0\nosupersub\cf4\f5\fs23 CHAPTER THREE \par\pard\ql \li3703\sb0\sl-264\slm ult0 \par\pard\ql\li3703\sb112\sl-264\slmult0 \up0 \expndtw-3\charscalex100 ANTI -MONEY LAUNDERING LAWS IN MALAYSIA \par\pard\li2205\sb0\sl-264\slmult0\par\pard\ li2205\sb0\sl-264\slmult0\par\pard\li2205\sb0\sl-264\slmult0\par\pard\li2205\sb2 18\sl-264\slmult0\fi0\tx2905 \up0 \expndtw-3\charscalex100 3.1\tab \up0 \expndtw -3\charscalex100 Introduction\par\pard\qj \li2205\sb0\sl-405\slmult0 \par\pard\q j\li2205\ri916\sb61\sl-405\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub \cf1\f2\fs23 Although there is no evidence to suggest that Malaysia is a major r egional centre for money \line \up0 \expndtw-2\charscalex100 laundering, it offe rs a variety of financial services both domestically and offshore that could \li ne \up0 \expndtw0\charscalex102 be misused by those intent on laundering money o r supporting terrorism. Therefore, it is \line \up0 \expndtw0\charscalex102 impe rative that the government put in place laws that can combat money laundering an d \line \up0 \expndtw0\charscalex102 terrorism financing. \par\pard\qj \li2205\r i913\sb397\sl-403\slmult0\fi0 \up0 \expndtw0\charscalex102 It appears that drug trafficking is the main source of illegal proceeds in Malaysia. This is \line \u p0 \expndtw0\charscalex102 because Malaysia is primarily used as a transit count ry to transfer drugs originating from \line \up0 \expndtw0\charscalex102 the Gol den Triangle and Europe.\ul0\super\cf8\f9\fs23 1\ul0\nosupersub\cf1\f2\fs23 How ever, the drug trafficking problem to some extent \line \up0 \expndtw0\charscale x100 has been mitigated by the effective implementation of the Dangerous Drugs ( Forfeiture of \line \up0 \expndtw0\charscalex106 Property) Act 1988. Apart from drug trafficking activities, corruption, fraud, criminal \line \up0 \expndtw0\ch arscalex100 breach of trust, illegal gambling, credit card fraud, counterfeiting , robbery, forgery, human \line \up0 \expndtw0\charscalex100 trafficking, extort ion and smuggling are also major sources of illegal proceeds.\ul0\super\cf8\f9\f s23 2 \par\pard\qj \li2205\ri913\sb397\sl-404\slmult0 \up0 \expndtw-1\charscalex 100 \ul0\nosupersub\cf1\f2\fs23 There is a wide range of money laundering techni ques being used by criminals in Malaysia. \up0 \expndtw-1\charscalex100 These in clude placing criminal proceeds into the banking system using nominees or family \up0 \expndtw0\charscalex103 members, setting up of front companies, purchasing insurance products, purchasing real \up0 \expndtw0\charscalex103 property, purc hasing high value goods, investment in capital markets, using gatekeepers \up0 \ expndtw0\charscalex103 and money changers. Additionally, it has been identified that criminals also manipulate \up0 \expndtw-3\charscalex100 cash transactions t o conceal money trails.\ul0\super\cf8\f9\fs23 3 \par\pard\ql \li2205\sb0\sl-218\ slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\sl

mult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmu lt0 \par\pard\ql\li2205\sb100\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\ super\cf9\f10\fs18 1\ul0\nosupersub\cf10\f11\fs19 APG Mutual Evaluation Report on Malaysia 2007, 20. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\ch arscalex100 \ul0\super\cf9\f10\fs18 2\ul0\nosupersub\cf10\f11\fs19 Ibid. \par\p ard\li2205\sb20\sl-218\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\ f10\fs18 3\ul0\nosupersub\cf10\f11\fs19 Ibid.\par\pard\li2205\sb3\sl-264\slmult 0\fi8360 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 58 {\shp {\*\shpinst\shpleft2205\shptop13704\shpright5006\shpbottom13724\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz164\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g68}{\bkmkend Pg68}\par\pard\qj \li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205\s b0\sl-402\slmult0 \par\pard\qj\li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205\ri9 12\sb241\sl-402\slmult0 \up0 \expndtw0\charscalex108 \ul0\nosupersub\cf1\f2\fs23 In recent years many countries have implemented anti-money laundering laws and \line \up0 \expndtw0\charscalex107 Malaysia is no exception. The enactment of th e Anti-Money Laundering and Anti-\line \up0 \expndtw0\charscalex100 Terrorism Fi nancing Act 2001 (AMLATFA) is an important reflection of the Malaysian \line \up 0 \expndtw-2\charscalex100 government\u8217?s commitment to the combating of mon ey laundering and terrorism financing. \line \up0 \expndtw-1\charscalex100 This chapter aims to examine the key provisions of AMLATFA as it is the key legislati on \line \up0 \expndtw0\charscalex102 relating to money laundering and terrorism financing offences. Before examining these \line \up0 \expndtw0\charscalex100 p rovisions, it would be worthwhile to review the anti-money laundering laws prior to the \line \up0 \expndtw-1\charscalex100 enactment of AMLATFA. \par\pard\ql \ li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li 2205\sb224\sl-264\slmult0\tx2906 \up0 \expndtw-5\charscalex100 \ul0\nosupersub\c f4\f5\fs23 3.2 \tab \up0 \expndtw-3\charscalex100 Background to the Anti-Money L aundering Laws \par\pard\qj \li2205\sb0\sl-403\slmult0 \par\pard\qj\li2205\ri913 \sb79\sl-403\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf1\f2\fs23 T his section will focus on the Dangerous Drugs (Forfeiture of Property) Act 1988 (DDFP) \line \up0 \expndtw0\charscalex103 and the Anti-Corruption Act 1997 (ACA) . Both statutes are federal statures and apply \line \up0 \expndtw0\charscalex10 4 throughout Malaysia. It can be said that these laws are considered the only le gislative \line \up0 \expndtw0\charscalex100 protection against money laundering in Malaysia prior to the enactment of AMLATFA. \line \up0 \expndtw0\charscalex1 09 This section will also highlight the role and function of the National Coordi nation \line \up0 \expndtw-2\charscalex100 Committee to Counter Money Laundering (NCC), which is responsible for developing the \line \up0 \expndtw-2\charscalex 100 regulatory framework for combating money laundering and terrorism financing. \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb248\sl-264\slmult 0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf4\f5\fs23 3.2.1 Pre-AMLATFA regulatory regime \par\pard\qj \li2205\sb0\sl-404\slmult0 \par\pard\qj\li2205\ri 914\sb17\sl-404\slmult0\fi0 \up0 \expndtw0\charscalex103 \ul0\nosupersub\cf1\f2\ fs23 Before the enactment of AMLATFA, Malaysia did not have any specific laws to fight \up0 \expndtw0\charscalex100 money laundering. Therefore, the term \u8216 ?money laundering\u8217? is still considered relatively \up0 \expndtw-4\charscal ex100 new in Malaysia. However the concept of concealing the origins of illegal funds is not new\ul0\super\cf8\f9\fs23 4 \up0 \expndtw-2\charscalex100 \ul0\nosu persub\cf1\f2\fs23 and has been incorporated into several statutes such as the D angerous Drugs (Forfeiture of \up0 \expndtw-3\charscalex100 Property) Act 1988 (

DDFP), the Anti-Corruption Act 1997, the Labuan Offshore Trust Act \up0 \expndtw -4\charscalex100 1996, the Penal Code and the Customs Act 1967. \par\pard\li2205 \sb0\sl-218\slmult0\par\pard\li2205\sb0\sl-218\slmult0\par\pard\li2205\sb0\sl-21 8\slmult0\par\pard\li2205\sb0\sl-218\slmult0\par\pard\li2205\sb0\sl-218\slmult0\ par\pard\li2205\sb122\sl-218\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\supe r\cf9\f10\fs19\ul0\super\cf9\f10\fs18 4\ul0\nosupersub\cf10\f11\fs19 Norhashimah Mohd Yasin, \u8216?Precedents Relating to Money Laundering\u8217? (2004) 3 \ul0 \nosupersub\cf11\f12\fs19 Current Law Journal\ul0\nosupersub\cf10\f11\fs19 i.\p ar\pard\li2205\sb0\sl-264\slmult0\par\pard\li2205\sb75\sl-264\slmult0\fi8360 \up 0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 59 {\shp {\*\shpinst\shpleft2205\shptop13815\shpright5006\shpbottom13835\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz154\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g69}{\bkmkend Pg69}\par\pard\qj \li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205\s b0\sl-402\slmult0 \par\pard\qj\li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205\ri9 11\sb241\sl-402\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf1\f2 \fs23 Sections 4 of the DDFP makes it an offence for a person to deal with, or u se, hold, receive \line \up0 \expndtw-1\charscalex100 or conceal any property de rived from activities relating to drug trafficking.\ul0\super\cf8\f9\fs23 5\ul0\ nosupersub\cf1\f2\fs23 According to \line \up0 \expndtw-4\charscalex100 Mimi Ka mariah, this is considered a money laundering offence.\ul0\super\cf8\f9\fs23 6\u l0\nosupersub\cf1\f2\fs23 However, prosecutions for \line \up0 \expndtw0\charsc alex107 such offences are very rare. So far, there has only been one unreported case, Public \line \up0 \expndtw-3\charscalex100 Prosecutor v Lim Ah Kew,\ul0\su per\cf8\f9\fs23 7\ul0\nosupersub\cf1\f2\fs23 where the accused, a money changer , faced four charges under \line \up0 \expndtw-2\charscalex100 section 4(1) of t he DDFP for receiving and holding property, knowing or having reason to \line \u p0 \expndtw-3\charscalex100 believe that it belonged to a deceased suspected dru g dealer. He had changed large amounts \line \up0 \expndtw0\charscalex100 of Mal aysian Ringgit into Thai currency, and had also allowed funds to pass through hi s \line \up0 \expndtw-4\charscalex100 bank account. The accused admitted handlin g the money, but denied knowing or suspecting \line \up0 \expndtw-2\charscalex10 0 that his customer was a drug dealer or that the money he handled was the proce eds of drug \line \up0 \expndtw-3\charscalex100 dealing. The prosecution asked t he court to make the presumption under the DDFP that the \line \up0 \expndtw-2\c harscalex100 accused\u8217?s customer was a drug dealer based on available evide nce, which would make the \line \up0 \expndtw-4\charscalex100 accused a \u8216?l iable person\u8217? under section 35 of the DDFP. As the accused was a liable pe rson, \line \up0 \expndtw0\charscalex105 he would then have to prove that the fu nds that he handled were not illegal property. \line \up0 \expndtw0\charscalex10 0 Although the judge agreed that the prosecution had a prima facie case, he note d that the \line \up0 \expndtw0\charscalex102 prosecution relied heavily on circ umstantial evidence. As the prosecution had failed to \line \up0 \expndtw-4\char scalex100 prove the case beyond all reasonable doubt, the accused was acquitted. \ul0\super\cf8\f9\fs23 8 \par\pard\qj \li2205\ri915\sb398\sl-402\slmult0\fi0 \up 0 \expndtw0\charscalex103 \ul0\nosupersub\cf1\f2\fs23 The concept of concealing the origin of illegal proceeds can also be found in the Anti-\line \up0 \expndtw 0\charscalex103 Corruption Act 1997(ACA), Labuan Offshore Trust Act 1996, the Pe nal Code and the \line \up0 \expndtw0\charscalex100 Customs Act 1967. Section 18 of the ACA makes it an offence for a person to deal with, \line \up0 \expndtw-4 \charscalex100 use, hold, receive or conceal gratification in relation to an off

ence under the Act.\ul0\super\cf8\f9\fs23 9\ul0\nosupersub\cf1\f2\fs23 Similarl y, \line \up0 \expndtw-4\charscalex100 section 53 of the Labuan Offshore Trust A ct 1996 prohibits a trust company from accepting \line \up0 \expndtw-2\charscale x100 money derived from a criminal offence under the laws of Malaysia. Under sec tions 411 to \line \up0 \expndtw-4\charscalex100 414 of the Penal Code, it is an offence for any person to dishonestly receive stolen property, \line \up0 \expn dtw0\charscalex100 habitually deal in stolen property or assist in concealing st olen property.\ul0\super\cf8\f9\fs23 10\ul0\nosupersub\cf1\f2\fs23 There are al so \line \up0 \expndtw0\charscalex100 provisions in the Customs Act 1967 that pr ohibit the dealing in unaccustomed or prohibited \par\pard\ql \li2205\sb0\sl-218 \slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\s lmult0 \par\pard\ql\li2205\sb76\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul 0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 5\ul0\nosupersub\cf10\f11\fs19 For the details, see \ul0\nosupersub\cf11\f12\fs19 Dangerous Drugs (Forfeiture of Pr operty) Act 1988,\ul0\nosupersub\cf10\f11\fs19 ss 3 and 4. \par\pard\ql \li2205 \sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 6\ul0\ nosupersub\cf10\f11\fs19 Mimi Kamariah Majid, \ul0\nosupersub\cf11\f12\fs19 Dan gerous Drugs Laws\ul0\nosupersub\cf10\f11\fs19 (1995) 336. \par\pard\ql \li2205 \sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 7\ul0\ nosupersub\cf10\f11\fs19 This unreported case was heard at the Alor Star Sessio ns Court. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 8\ul0\nosupersub\cf10\f11\fs19 Norhashimah, above n 4, iv. \par\pard\li2205\sb17\sl-218\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\ super\cf9\f10\fs18 9\ul0\nosupersub\cf10\f11\fs19 For the details, see \ul0\nos upersub\cf11\f12\fs19 Anti-Corruption Act 1997\ul0\nosupersub\cf10\f11\fs19 , s 18.\par\pard\li2205\sb5\sl-218\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\su per\cf9\f10\fs18 10\ul0\nosupersub\cf10\f11\fs19 For the details, see \ul0\nosu persub\cf11\f12\fs19 Penal Code\ul0\nosupersub\cf10\f11\fs19 , ss 411-414.\par\p ard\li2205\sb3\sl-264\slmult0\fi8360 \up0 \expndtw-3\charscalex100 \ul0\nosupers ub\cf1\f2\fs23 60 {\shp {\*\shpinst\shpleft2205\shptop13033\shpright5006\shpbottom13053\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz176\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g70}{\bkmkend Pg70}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\s b0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri9 18\sb249\sl-400\slmult0 \up0 \expndtw0\charscalex104 \ul0\nosupersub\cf1\f2\fs23 goods. The common shortcoming of these various provisions is that they are narr ow in \up0 \expndtw-3\charscalex100 scope as they are limited to certain types o f illegal activities only. \par\pard\qj \li2205\ri915\sb399\sl-402\slmult0 \up0 \expndtw0\charscalex104 Furthermore, there are a number of Malaysian statutes th at provide for the forfeiture or \line \up0 \expndtw0\charscalex105 confiscation of proceeds of crime. The Criminal Procedure Code (CPC) is the primary \line \u p0 \expndtw0\charscalex104 source of power for law enforcement agencies, particu larly the Police, to confiscate the \line \up0 \expndtw0\charscalex102 property identified as the subject matter of crime or that is used in the commission of t he \line \up0 \expndtw-1\charscalex100 crime. Section 407 of the CPC empowers a court of law to make an order it deems suitable \line \up0 \expndtw0\charscalex1 06 for the custody or disposal of any movable property or document regarding whi ch an \line \up0 \expndtw0\charscalex104 offence against the law appears to have been committed or which has been used for the \line \up0 \expndtw-3\charscalex1 00 commission of such an offence.\ul0\super\cf8\f9\fs23 11 \par\pard\qj \li2205\

sb0\sl-400\slmult0 \par\pard\qj\li2205\ri914\sb20\sl-400\slmult0 \up0 \expndtw0\ charscalex103 \ul0\nosupersub\cf1\f2\fs23 It is clear that under section 407 of the CPC, a court has the power to make an order for \up0 \expndtw0\charscalex102 forfeiture or confiscation, but this power has to be exercised in accordance to the special \up0 \expndtw0\charscalex107 provisions relating to forfeiture or c onfiscation contained in the law under which the \up0 \expndtw-1\charscalex100 c onviction was made.\ul0\super\cf8\f9\fs23 12\ul0\nosupersub\cf1\f2\fs23 There a re several statutes which contain special provisions relating \up0 \expndtw-1\ch arscalex100 to forfeiture or confiscation. These include the ACA, the DDFP, the Customs Act 1967, the \up0 \expndtw-2\charscalex100 Excise Act 1976 and the Dang erous Drugs Act 1952. \par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li220 5\ri915\sb20\sl-400\slmult0 \up0 \expndtw0\charscalex104 Sections 36 of the ACA provides for the forfeiture of property upon prosecution for an \line \up0 \expn dtw-2\charscalex100 offence under this Act. Section 37 empowers the Public Prose cutor, before the expiration of \line \up0 \expndtw0\charscalex100 twelve months from the date of the seizure, to apply to the Court for an order of forfeiture \line \up0 \expndtw0\charscalex100 of the property even if there is no prosecuti on or conviction for an offence under the Act. \line \up0 \expndtw0\charscalex10 0 However, subsection (2) requires the judge to whom an application for forfeitu re order is \line \up0 \expndtw0\charscalex104 made, to publish a notice in the Gazette calling upon any person who claims to have an \line \up0 \expndtw-2\char scalex100 interest in the property to attend before the court on date specified in the notice. \par\pard\qj \li2205\sb0\sl-226\slmult0 \par\pard\qj\li2205\sb0\s l-226\slmult0 \par\pard\qj\li2205\sb0\sl-226\slmult0 \par\pard\qj\li2205\ri943\s b206\sl-226\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\su per\cf9\f10\fs18 11\ul0\nosupersub\cf10\f11\fs19 Section 407 of the CPC provide s: " During or at the conclusion of any inquiry or trial in any criminal court \ up0 \expndtw-2\charscalex100 the court may make such order as it thinks fit for the custody or disposal of any property...produced before it \up0 \expndtw0\char scalex100 or in its custody of the police...regarding which any offence appears to have been committed or which has \up0 \expndtw-1\charscalex100 been used for the commission of any offence." \par\pard\qj \li2205\ri939\sb0\sl-220\slmult0 \u p0 \expndtw0\charscalex100 \ul0\super\cf9\f10\fs18 12\ul0\nosupersub\cf10\f11\fs 19 KC Vohrah, \u8216?Forfeiture of the Profits and Proceeds Derived from Drug T rafficking: Thoughts on Future \up0 \expndtw-1\charscalex100 Action in Malaysia\ u8217? (1984) 36(4) \ul0\nosupersub\cf11\f12\fs19 Bulletin Narcotic\ul0\nosupers ub\cf10\f11\fs19 32. \par\pard\ql \li10565\sb223\sl-264\slmult0 \up0 \expndtw-3 \charscalex100 \ul0\nosupersub\cf1\f2\fs23 61 {\shp {\*\shpinst\shpleft2205\shptop12810\shpright5006\shpbottom12830\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz161\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g71}{\bkmkend Pg71}\par\pard\qj \li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205\s b0\sl-402\slmult0 \par\pard\qj\li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205\ri9 14\sb241\sl-402\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf1\f2\fs2 3 Section 126 of the Customs Act 1967 states that all goods liable to seizure sh all be liable to \line \up0 \expndtw0\charscalex105 forfeiture. Section 127(1) p rovides that an order for the forfeiture shall be made if it is \line \up0 \expn dtw0\charscalex100 proved to the satisfaction of the court that an offence again st the Act has been committed \line \up0 \expndtw0\charscalex107 and that the go ods were the subject matter of, or were used in, the commission of the \line \up 0 \expndtw0\charscalex111 offence notwithstanding that no person may have been c

onvicted of such offence. \line \up0 \expndtw0\charscalex104 Furthermore, sectio n 128 provides that where there is no prosecution, any goods seized \line \up0 \ expndtw0\charscalex108 under the Act, or the proceeds of sale of such goods will be forfeited, if they are not \line \up0 \expndtw0\charscalex104 claimed within one month from the date of seizure. The right of third parties is covered \line \up0 \expndtw-3\charscalex100 under section 128(4) of the Act. \par\pard\qj \li 2205\ri914\sb397\sl-404\slmult0\fi0 \up0 \expndtw0\charscalex100 Similarly, sect ion 65(1) of the Excise Act 1976 states that all goods liable to seizure under \ line \up0 \expndtw0\charscalex100 this Act shall be liable to forfeiture. All th e goods forfeited shall be delivered to the proper \line \up0 \expndtw-1\charsca lex100 officer and shall be disposed of in accordance with the directions of the Director General of \line \up0 \expndtw0\charscalex107 Customs and Excise.\ul0\ super\cf8\f9\fs23 13\ul0\nosupersub\cf1\f2\fs23 Section 30 of the Dangerous Dru gs Act 1952 provides for the \line \up0 \expndtw0\charscalex104 forfeiture of ce rtain items, such as dangerous drugs, syringes, pipes, lamp and utensils. \line \up0 \expndtw-2\charscalex100 Before the forfeiture order can be invoked, the se ction requires an offence to be proved. \par\pard\qj \li2205\ri913\sb398\sl-402\ slmult0\fi0 \up0 \expndtw0\charscalex107 The seizure and forfeiture under these statutes are limited to the property reasonably \line \up0 \expndtw0\charscalex1 00 suspected of being involved in offences or breaches of the statutes. They do not cover the \line \up0 \expndtw-1\charscalex100 proceeds of criminal activitie s or assets of criminals which have been converted from those \line \up0 \expndt w0\charscalex100 proceeds. Therefore, a new legislation was needed as the provis ions relating to seizure and \line \up0 \expndtw0\charscalex102 forfeiture were inadequate.\ul0\super\cf8\f9\fs23 14\ul0\nosupersub\cf1\f2\fs23 For this reason , the DDFP was enacted in 1988. The DDFP \line \up0 \expndtw0\charscalex104 cove rs the seizure and forfeiture of property derived from drug trafficking. It shou ld be \line \up0 \expndtw0\charscalex100 noted that the DDFP is a special law wh ich is made under the special powers conferred to \line \up0 \expndtw0\charscale x100 Parliament under article 149 of the Federal Constitution.\ul0\super\cf8\f9\ fs23 15\ul0\nosupersub\cf1\f2\fs23 Article 149 provides special \par\pard\ql \l i2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2 205\sb194\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\u l0\super\cf9\f10\fs18 13\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\ fs19 Excise Act 1976,\ul0\nosupersub\cf10\f11\fs19 s 65(3). \par\pard\ql \li220 5\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 14\ul 0\nosupersub\cf10\f11\fs19 Mimi Kamariah, above n 6, 333. \par\pard\ql \li2205\ sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 15\ul0\ nosupersub\cf10\f11\fs19 Article 149 of the Federal Constitution reads as foll ows: \par\pard\qj \li2205\ri943\sb0\sl-240\slmult0 \up0 \expndtw0\charscalex103 If an Act of Parliament recites that action has been taken or threatened y any s ubstantial body of persons, \up0 \expndtw-2\charscalex100 whether inside or outs ide the Federation, \par\pard\qj \li2205\ri948\sb0\sl-220\slmult0 \up0 \expndtw0 \charscalex107 (a) to cause, or to cause a substantial number of citizens to fea r, organized violence against person or \up0 \expndtw-2\charscalex100 property; or \par\pard\ql \li2205\sb0\sl-197\slmult0 \up0 \expndtw-2\charscalex100 (b) to excite disaffection against the Yang di-Pertuan Agong or any government in the F ederation; or \par\pard\qj \li2205\ri947\sb4\sl-220\slmult0 \up0 \expndtw-1\char scalex100 (c) to promote feelings of ill-will and hostility between different ra ces or other classes of the population likely \up0 \expndtw-2\charscalex100 to c ause violence; or \par\pard\ql \li10565\sb14\sl-252\slmult0 \up0 \expndtw-3\char scalex100 \ul0\nosupersub\cf1\f2\fs23 62 {\shp {\*\shpinst\shpleft2205\shptop12139\shpright5006\shpbottom12159\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz162\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}}

{\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g72}{\bkmkend Pg72}\par\pard\qj \li2205\sb0\sl-403\slmult0 \par\pard\qj\li2205\s b0\sl-403\slmult0 \par\pard\qj\li2205\sb0\sl-403\slmult0 \par\pard\qj\li2205\ri9 13\sb238\sl-403\slmult0\fi0 \up0 \expndtw0\charscalex104 \ul0\nosupersub\cf1\f2\ fs23 powers against subversion and it permits the violation of fundamental right s relating to \up0 \expndtw0\charscalex100 personal liberty,\ul0\super\cf8\f9\fs 23 16\ul0\nosupersub\cf1\f2\fs23 freedom of movement,\ul0\super\cf8\f9\fs23 17\ ul0\nosupersub\cf1\f2\fs23 freedom of speech, assembly and association\ul0\supe r\cf8\f9\fs23 18 \up0 \expndtw0\charscalex102 \ul0\nosupersub\cf1\f2\fs23 and al so relating to the rights of property.\ul0\super\cf8\f9\fs23 19\ul0\nosupersub\c f1\f2\fs23 Therefore, the constitutionality of the DDFP \up0 \expndtw0\charscal ex100 can never be challenged on the ground that it is inconsistent with article 13 of the Federal \up0 \expndtw0\charscalex104 Constitution. This was reaffirme d in the case of Ketua Polis Negara & Anor v Gan Bee \up0 \expndtw-1\charscalex1 00 Huat [1998] 3 CLJ 1, where the court held that by the express authority of ar ticle 149(1) of \up0 \expndtw-2\charscalex100 the Federal Constitution, section 32 of the DDFP shall remain valid. \par\pard\qj \li2205\ri915\sb398\sl-402\slmul t0 \up0 \expndtw0\charscalex105 To sum up, even before the enactment of AMLATFA, the Malaysian government had \up0 \expndtw0\charscalex104 criminalized some ele ments of money laundering under various legislations. However, \up0 \expndtw0\ch arscalex108 under the previous legislations there was a lack of a universal proc edure on how the \up0 \expndtw-1\charscalex100 properties were to be seized and forfeited. The mechanisms confined property to that which \up0 \expndtw0\charsca lex107 is the subject matter of the offence, or property that is used in the com mission of the \up0 \expndtw0\charscalex105 offence. Furthermore, there is no me chanism to effect seizure of immovable property, \up0 \expndtw0\charscalex102 bu siness, or property in financial institutions. Therefore, the enactment of AMLAT FA is \up0 \expndtw-1\charscalex100 timely and an improvement of previous legisl ations as it is more comprehensive in the type \up0 \expndtw-2\charscalex100 of property that can be seized and forfeited. \par\pard\ql \li2205\sb0\sl-264\slmul t0 \par\pard\ql\li2205\sb248\sl-264\slmult0 \up0 \expndtw-1\charscalex100 \ul0\n osupersub\cf4\f5\fs23 3.2.2 The National Coordination Committee to Counter Mon ey Laundering \par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri914\ sb44\sl-400\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf1\f2\fs23 Th e Government of Malaysia established the National Coordination Committee (NCC) i n \line \up0 \expndtw0\charscalex103 April 2000 to coordinate Malaysia\u8217?s n ational efforts to counter money laundering and \line \up0 \expndtw0\charscalex1 00 terrorism financing. NCC consists of 12 Ministries and Government agencies wi th Bank \line \up0 \expndtw0\charscalex100 Negara Malaysia (BNM) as the lead age ncy.\ul0\super\cf8\f9\fs23 20\ul0\nosupersub\cf1\f2\fs23 NCC plays a key role i n collaborative policy \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\li22 05\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb135\sl-218\slmult0 \up0 \expndtw-2\c harscalex100 \ul0\nosupersub\cf10\f11\fs19 (d) to procure the alteration, otherw ise than by lawful means, of anything by law established; or \par\pard\qj \li220 5\ri938\sb21\sl-220\slmult0 \up0 \expndtw0\charscalex100 (e) which is prejudicia l to the maintenance or the functioning of any supply or service to the public o r any \up0 \expndtw-1\charscalex100 class of the public in the Federation or any part thereof; or \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charsc alex100 (f) which is prejudicial to public orders in, or the security of, the Fe deration or any part thereof, \par\pard\qj \li2205\ri941\sb1\sl-220\slmult0 \up0 \expndtw-3\charscalex100 any provision of that law designed to stop or prevent that action is valid notwithstanding that it is inconsistent \up0 \expndtw-3\cha rscalex100 with any of the provisions of Article 5, 9, 10 or 13\u8230? \par\pard \ql \li2205\sb22\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10 \fs18 16\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Federal Con stitution,\ul0\nosupersub\cf10\f11\fs19 art 5. \par\pard\ql \li2205\sb2\sl-218\ slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 17\ul0\nosupersub\

cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Federal Constitution,\ul0\nosupersu b\cf10\f11\fs19 art 7. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\ charscalex100 \ul0\super\cf9\f10\fs18 18\ul0\nosupersub\cf10\f11\fs19 \ul0\nosu persub\cf11\f12\fs19 Federal Constitution,\ul0\nosupersub\cf10\f11\fs19 art 10. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\supe r\cf9\f10\fs18 19\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Fe deral Constitution,\ul0\nosupersub\cf10\f11\fs19 art 13. \par\pard\qj \li2205\r i947\sb1\sl-220\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 20 \ul0\nosupersub\cf10\f11\fs19 NCC comprise of Bank Negara Malaysia, Ministry of Finance, Attorney-General\u8217?s Chambers, Ministry of \line \up0 \expndtw-2\c harscalex100 Foreign Affairs, Ministry of Home Affairs, Royal Malaysian Police F orce, Anti-Corruption Agency, National \par\pard\ql \li10565\sb14\sl-252\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 63 {\shp {\*\shpinst\shpleft2205\shptop11690\shpright10800\shpbottom11710\shpfhdr0\ shpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz180\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 8595}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(8595,20);(8595,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g73}{\bkmkend Pg73}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\s b0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri9 13\sb249\sl-400\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs23 formulation. It\u8217?s agencies and ministries work together to develop law re form proposals, \up0 \expndtw0\charscalex100 regulation and enforceable guidelin es and also share opportunities for training. \par\pard\ql \li2205\sb0\sl-264\sl mult0 \par\pard\ql\li2205\sb249\sl-264\slmult0 \up0 \expndtw-5\charscalex100 NCC \u8217?s objectives are as follows: \par\pard\ql \li2556\ri915\sb64\sl-400\slmul t0\tx2906 \up0 \expndtw0\charscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0 \nosupersub\cf1\f2\fs23 Develop national policy on measures to counter money l aundering and terrorism \line\tab \up0 \expndtw0\charscalex100 financing; \par\p ard\ql \li2556\sb133\sl-264\slmult0 \up0 \expndtw-2\charscalex100 \u-3913?\ul0\n osupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 Coordinate national policie s with regional and international initiatives; \par\pard\ql \li2556\ri915\sb44\s l-400\slmult0\tx2906 \up0 \expndtw0\charscalex104 \u-3913?\ul0\nosupersub\cf6\f7 \fs23 \ul0\nosupersub\cf1\f2\fs23 Agree on an action plan for the countering of money laundering and terrorism \line\tab \up0 \expndtw-5\charscalex100 financ ing in Malaysia; \par\pard\ql \li2556\ri915\sb16\sl-405\slmult0\tx2906\tx2906\tx 2906 \up0 \expndtw0\charscalex102 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosu persub\cf1\f2\fs23 Develop and ensure proper implementation of measures to counter money \line\tab \up0 \expndtw0\charscalex100 laundering and terror ism financing based on internationally accepted standards as \line\tab \up0 \exp ndtw-5\charscalex100 contained in the Financial Action Task Force on Money Laund ering; \line \up0 \expndtw-2\charscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 Identify and remedy any overlap or discrepancy be tween the existing and proposed \line\tab \up0 \expndtw-3\charscalex100 measures to counter money laundering and terrorism financing; \par\pard\ql \li2556\ri913 \sb20\sl-400\slmult0\tx2906 \up0 \expndtw0\charscalex106 \u-3913?\ul0\nosupersub \cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 Create legislative and administrativ e structures for proper implementation of \line\tab \up0 \expndtw-3\charscalex10 0 measures; and \par\pard\ql \li2556\sb133\sl-264\slmult0 \up0 \expndtw-2\charsc alex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 Monit or the effectiveness of measures that have been implemented.\ul0\super\cf8\f9\fs 23 21 \par\pard\qj \li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205\ri913\sb20\sl402\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf1\f2\fs23 NCC provid

es an integrated platform for the relevant Ministries, government agencies and \ line \up0 \expndtw0\charscalex106 supervisory authorities to ensure that Malaysi a implements an effective anti-money \line \up0 \expndtw0\charscalex103 launderi ng and counter the financing of terrorism (AML/CFT) system in line with the \lin e \up0 \expndtw-3\charscalex100 international standards set out by the FATF. As the Secretariat to the NCC, BNM continues \line \up0 \expndtw0\charscalex100 to play an instrumental role in this process by promoting a collaborative culture b etween \line \up0 \expndtw-3\charscalex100 the government and private sector tow ards achieving AML/CFT compliance. This includes \line \up0 \expndtw0\charscalex 100 the creation of regular dialogues and consultations with self regulatory org anization and \line \up0 \expndtw-4\charscalex100 associations to enhance AML/CF T awareness and to emphasis the importance of preventive \line \up0 \expndtw-5\c harscalex100 measures.\ul0\super\cf8\f9\fs23 22 \par\pard\qj \li2205\sb0\sl-220\ slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\sl mult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\ri930\sb169\sl220\slmult0 \up0 \expndtw0\charscalex102 \ul0\nosupersub\cf10\f11\fs19 Narcotics Bureau, the Royal Customs and Excise Department, Securities Commission, Labuan Offshore \up0 \expndtw0\charscalex102 Financial Supervisory Authority, Companies Commission of Malaysia and Inland Revenue Board. \par\pard\ql \li2205\sb2\sl-21 8\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 21\ul0\nosupersu b\cf10\f11\fs19 Bank Negara Malaysia, \ul0\nosupersub\cf11\f12\fs19 Anti-Money Laundering Measures in Malaysia\ul0\nosupersub\cf10\f11\fs19 (2004) 11. \par\p ard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f 10\fs18 22\ul0\nosupersub\cf10\f11\fs19 Bank Negara Malaysia, \ul0\nosupersub\c f11\f12\fs19 Financial Stability and Payment Systems Report 2007\ul0\nosupersub\ cf10\f11\fs19 , 45. \par\pard\ql \li10565\sb15\sl-251\slmult0 \up0 \expndtw-3\ch arscalex100 \ul0\nosupersub\cf1\f2\fs23 64 {\shp {\*\shpinst\shpleft2205\shptop13480\shpright10800\shpbottom13500\shpfhdr0\ shpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz208\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 8595}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(8595,20);(8595,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g74}{\bkmkend Pg74}\par\pard\qj \li2205\sb0\sl-403\slmult0 \par\pard\qj\li2205\s b0\sl-403\slmult0 \par\pard\qj\li2205\sb0\sl-403\slmult0 \par\pard\qj\li2205\ri9 15\sb238\sl-403\slmult0\fi0 \up0 \expndtw0\charscalex106 \ul0\nosupersub\cf1\f2\ fs23 The scope of NCC\u8217?s terms of reference was recently extended to includ e combating \up0 \expndtw0\charscalex102 terrorism financing. NCC members are re sponsible for research into matters relating to \up0 \expndtw0\charscalex100 mon ey laundering, sharing of information, reporting on progress and implementation of \up0 \expndtw-2\charscalex100 NCC\u8217?s decisions within its jurisdiction.\ ul0\super\cf8\f9\fs23 23\ul0\nosupersub\cf1\f2\fs23 At the time of writing, fou r sub-committees have \up0 \expndtw0\charscalex104 been established and they inc lude the Sub-Committee for Investigation Support; Sub\up0 \expndtw-1\charscalex1 00 Committee for Asset Forfeiture Management; Sub-Committee for Inter-Agency Tra ining; \up0 \expndtw-2\charscalex100 and Sub-Committee for Countering Financing of Terrorism.\ul0\super\cf8\f9\fs23 24 \par\pard\qj \li2205\ri912\sb397\sl-403\s lmult0\fi0 \up0 \expndtw0\charscalex104 \ul0\nosupersub\cf1\f2\fs23 NCC is also responsible for ensuring Malaysia complies with the Asia/Pacific Group \line \up 0 \expndtw-2\charscalex100 Money Laundering membership requirements. One of the requirements is the commitment \line \up0 \expndtw0\charscalex100 to participate in mutual evaluations by peer members. The evaluations aim at monitoring \line \up0 \expndtw-1\charscalex100 the progress of the adoption and implementation of internationally recognized AML/CFT \line \up0 \expndtw0\charscalex100 standards

in member jurisdictions. They determine whether the standards are met by the \ line \up0 \expndtw0\charscalex103 jurisdictions concerned and identify weaknesse s for correction. The first evaluation of \line \up0 \expndtw0\charscalex100 Mal aysia, which focused on the Labuan International Offshore Financial Centre (IOFC ), \line \up0 \expndtw-3\charscalex100 was conducted in 2001. According to the e valuation team, Labuan IOFC does not appear to \line \up0 \expndtw-3\charscalex1 00 have a serious organized crime or money laundering problem. At that time AMLA TFA had \line \up0 \expndtw0\charscalex100 just been introduced and so it appear s that the Malaysian government had already taken \line \up0 \expndtw-2\charscal ex100 many important measures to ensure that the risk of money laundering in Lab uan IOFC had \line \up0 \expndtw-1\charscalex100 been minimized even before the introduction of AMLATFA.\ul0\super\cf8\f9\fs23 25\ul0\nosupersub\cf1\f2\fs23 Th e team also made a few \line \up0 \expndtw0\charscalex100 recommendations which have since been followed by BNM to strengthen the regulatory \line \up0 \expndtw 0\charscalex100 regime. \par\pard\qj \li2205\ri912\sb400\sl-400\slmult0 \up0 \ex pndtw-3\charscalex100 The second evaluation on Malaysia was conducted in 2007 an d it appears from the findings \line \up0 \expndtw0\charscalex100 that Malaysia\ u8217?s rating is comparable with many developed countries. Malaysia obtained \l ine \up0 \expndtw-5\charscalex100 nine \up0 \expndtw-5\charscalex100 \u8216?Comp liant\u8217?, \up0 \expndtw0\charscalex103 24 \u8216?Largely Compliant\u8217?, \ up0 \expndtw0\charscalex106 15 \u8216?Partially Compliant\u8217? and one \up0 \e xpndtw-5\charscalex100 \u8216?Non-\par\pard\qj \li2205\ri916\sb0\sl-420\slmult0 \up0 \expndtw0\charscalex102 Compliant\u8217? ratings against the FATF Recommend ations on anti-money laundering and \line \up0 \expndtw0\charscalex102 anti-terr orism financing.\ul0\super\cf8\f9\fs23 26\ul0\nosupersub\cf1\f2\fs23 As a conse quence, NCC formulated a national action plan to \par\pard\ql \li2205\sb0\sl-218 \slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\s lmult0 \par\pard\ql\li2205\sb77\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul 0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 23\ul0\nosupersub\cf10\f11\fs19 Ban k Negara Malaysia, \ul0\nosupersub\cf11\f12\fs19 Anti-Money Laundering Measures in Malaysia\ul0\nosupersub\cf10\f11\fs19 (2004) 2. \par\pard\ql \li2205\sb2\sl -218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 24\ul0\nosupe rsub\cf10\f11\fs19 APG Mutual Evaluation Report on Malaysia 2007, 35. \par\pard \li2205\sb17\sl-218\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10 \fs18 25\ul0\nosupersub\cf10\f11\fs19 APG Mutual Evaluation Report on Labuan, M alaysia 2001, 6.\par\pard\li2205\sb5\sl-218\slmult0\fi0 \up0 \expndtw-2\charscal ex100 \ul0\super\cf9\f10\fs18 26\ul0\nosupersub\cf10\f11\fs19 APG Mutual Evalua tion Report on Malaysia 2007, 214.\par\pard\li2205\sb3\sl-264\slmult0\fi8360 \up 0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 65 {\shp {\*\shpinst\shpleft2205\shptop13480\shpright5006\shpbottom13500\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz190\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g75}{\bkmkend Pg75}\par\pard\qj \li2205\sb0\sl-405\slmult0 \par\pard\qj\li2205\s b0\sl-405\slmult0 \par\pard\qj\li2205\sb0\sl-405\slmult0 \par\pard\qj\li2205\ri9 15\sb230\sl-405\slmult0 \up0 \expndtw0\charscalex103 \ul0\nosupersub\cf1\f2\fs23 address the various recommendations set out in the evaluation. The action plan includes \line \up0 \expndtw0\charscalex102 legislative amendments, measures to strengthened regulatory guidelines and compliance \line \up0 \expndtw0\charscale x100 monitoring, measures to enhance the investigative powers of law enforcement authorities \line \up0 \expndtw0\charscalex100 and the establishment of a natio nal asset management corporation for seized and forfeited \line \up0 \expndtw0\c

harscalex100 assets.\ul0\super\cf8\f9\fs23 27 \par\pard\qj \li2205\ri914\sb397\s l-403\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf1\f2\fs23 One of the major outputs of the action plan was the creation of a sub-committee unde r NCC \line \up0 \expndtw-1\charscalex100 to address the existing gaps pertainin g to Special Recommendation IX on cash couriers. As \line \up0 \expndtw0\charsca lex106 a result of this, a Task Force on Cross-Border Transportation of Currency comprising \line \up0 \expndtw0\charscalex100 BNM, the Royal Malaysian Customs and the Immigration Department was established.\ul0\super\cf8\f9\fs23 28 \line \ up0 \expndtw0\charscalex104 \ul0\nosupersub\cf1\f2\fs23 This is evidence to sugg est that the NCC is functioning effectively to coordinate policy \line \up0 \exp ndtw0\charscalex108 cooperation regarding development and implementation of the AML/CTF efforts in \line \up0 \expndtw-3\charscalex100 Malaysia. \par\pard\ql \l i2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2 205\sb224\sl-264\slmult0\tx2906 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf 4\f5\fs23 3.3 \tab \up0 \expndtw-3\charscalex100 The Anti-Money Laundering and A nti Terrorism Financing Act 2001 \par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pa rd\qj\li2205\ri915\sb84\sl-400\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosuper sub\cf1\f2\fs23 The first piece of anti-money laundering legislation was the Ant i-Money Laundering Act \line \up0 \expndtw0\charscalex100 (AMLA). AMLA was passe d in 2001 but came into force only on 15 January 2002. It was \line \up0 \expndt w0\charscalex105 formulated in consultation with \up0 \expndtw0\charscalex107 13 Government ministries and agencies involved in \par\pard\qj \li2205\ri914\sb0\s l-405\slmult0 \up0 \expndtw-1\charscalex100 combating money laundering. AMLA cri minalised money laundering and imposed various \up0 \expndtw0\charscalex103 obli gations on reporting institutions such as customer identification, record keepin g and \up0 \expndtw0\charscalex105 reporting of suspicious transactions. AML A also introduced mechanisms for the \up0 \expndtw-2\charscalex100 investig ation of money laundering offences and provided measures for freezing, seizure a nd \up0 \expndtw-3\charscalex100 forfeiture of illegal proceeds derived from cri minal activities. \par\pard\qj \li2205\ri914\sb396\sl-400\slmult0 \up0 \expndtw0 \charscalex100 In response to the global fight against terrorism, AMLA was amend ed by the Anti-Money \line \up0 \expndtw0\charscalex100 Laundering (Amendment) A ct in 2003. The amending legislation extended the anti-money \line \up0 \expndtw 0\charscalex100 laundering mechanism to include measures against terrorism finan cing. It also extended the \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\ li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li 2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb39\sl-218\slmult0 \up0 \expndtw-2\ charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 27\ul0\nosupersub\c f10\f11\fs19 Bank Negara Malaysia, Financial Stability and Payment Systems Repo rt 2007, 45. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex1 00 \ul0\super\cf9\f10\fs18 28\ul0\nosupersub\cf10\f11\fs19 APG Mutual Evaluatio n Report on Malaysia 2007, 228. \par\pard\ql \li10565\sb15\sl-251\slmult0 \up0 \ expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 66 {\shp {\*\shpinst\shpleft2205\shptop13928\shpright5006\shpbottom13948\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz153\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g76}{\bkmkend Pg76}\par\pard\qj \li2205\sb0\sl-403\slmult0 \par\pard\qj\li2205\s b0\sl-403\slmult0 \par\pard\qj\li2205\sb0\sl-403\slmult0 \par\pard\qj\li2205\ri9 14\sb238\sl-403\slmult0\fi0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf1\f2 \fs23 list of predicate offences.\ul0\super\cf8\f9\fs23 29\ul0\nosupersub\cf1\f2 \fs23 Since 6 March 2007, AMLA has been renamed the Anti-Money \up0 \expndtw0\c

harscalex106 Laundering and Anti-Terrorism Financing Act 2001 (AMLATFA) to bette r reflect its \up0 \expndtw0\charscalex103 scope. The objectives of AMLATFA are to create the offence of money laundering and \up0 \expndtw0\charscalex103 terro rism financing and criminalize any dealings with criminal proceeds. It also aims to \up0 \expndtw0\charscalex106 provide measures for the prevention and detecti on of money laundering and terrorism \up0 \expndtw0\charscalex104 financing, as well as to provide for the seizure and forfeiture of property involved in or \up 0 \expndtw-3\charscalex100 derived from money laundering and terrorism financing activities. \par\pard\qj \li2205\ri915\sb398\sl-402\slmult0\fi0 \up0 \expndtw0\ charscalex100 AMLATFA is divided into eight parts: Preliminary; money laundering offences; financial \line \up0 \expndtw0\charscalex100 intelligence; reportin g obligations; investigation; freezing, seizure and forfeiture; \lin e \up0 \expndtw-1\charscalex100 suppression of terrorism financing offences, and freezing, seizure and forfeiture of terrorist \line \up0 \expndtw0\charscalex10 3 property; and miscellaneous. It must be noted that certain provisions under AM LATFA \line \up0 \expndtw-1\charscalex100 must be read together with the relevan t provisions under the Mutual Assistance in Criminal \line \up0 \expndtw0\charsc alex107 Matters Act 2002 (MACMA).\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\ cf1\f2\fs23 MACMA contains specific provisions for Malaysia to \line \up0 \expnd tw0\charscalex104 provide and obtain international assistance in criminal matter s, the tracing, recovery or \line \up0 \expndtw0\charscalex111 confiscation of p roperty in respect of serious offence or a foreign serious offence, \line \up0 \ expndtw0\charscalex102 assistance in locating or identifying of witnesses and su spects, the service of process and \line \up0 \expndtw0\charscalex102 enforcemen t of foreign forfeiture order. \par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard \qj\li2205\ri915\sb20\sl-400\slmult0 \up0 \expndtw-1\charscalex100 There are alt ogether 93 sections and two Schedules in AMLATFA. The First Schedule lists \line \up0 \expndtw0\charscalex102 down the reporting institutions while the Second S chedule deals with predicate offences. \line \up0 \expndtw0\charscalex100 Malays ia has taken a list-based approach to the range of predicate offences covered by the \line \up0 \expndtw0\charscalex106 money laundering offence instead of a th reshold approach.\ul0\super\cf8\f9\fs23 30\ul0\nosupersub\cf1\f2\fs23 Since \up 0 \expndtw0\charscalex112 2002, the list of \par\pard\qj \li2205\ri912\sb0\sl-40 5\slmult0 \up0 \expndtw0\charscalex104 predicate offences in the Second Schedule has been expanded significantly to include a \up0 \expndtw0\charscalex106 broad er range of offences commonly associated with money laundering and terrorism \up 0 \expndtw-1\charscalex100 financing. These include corruption, fraud, criminal breach of trust, illegal gambling, credit \up0 \expndtw0\charscalex103 card fra ud, currency counterfeiting, robbery, forgery, human trafficking, extorti on, \up0 \expndtw-3\charscalex100 smuggling and drug-related crimes. \par\pard\q l \li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb188\sl-218\slmult0 \up0 \expn dtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 29\ul0\nosupe rsub\cf10\f11\fs19 This includes sections 130N, 130O, 130P and 130Q of the Pena l Code. \par\pard\qj \li2205\ri943\sb121\sl-220\slmult0 \up0 \expndtw0\charscale x100 \ul0\super\cf9\f10\fs18 30\ul0\nosupersub\cf10\f11\fs19 Recommendation 1 o f the FATF 40 Recommendations provides that predicate offences may be described \up0 \expndtw0\charscalex100 by reference to all offences, or to a threshold lin ked either to a category of serious offences or to the penalty \up0 \expndtw-1\c harscalex100 of imprisonment applicable to the predicate offence (threshold appr oach), or to a list of predicate offences, or \up0 \expndtw-2\charscalex100 a co mbination of these approaches. \par\pard\ql \li10565\sb14\sl-252\slmult0 \up0 \e xpndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 67 {\shp {\*\shpinst\shpleft2205\shptop13144\shpright5006\shpbottom13164\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz168\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}}

{\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g77}{\bkmkend Pg77}\par\pard\qj \li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205\s b0\sl-402\slmult0 \par\pard\qj\li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205\sb0 \sl-402\slmult0 \par\pard\qj\li2205\ri914\sb239\sl-402\slmult0\fi0 \up0 \expndtw 0\charscalex108 \ul0\nosupersub\cf1\f2\fs23 In 2007, an offence relating to pira cy or the counterfeiting of non-artistic goods was \line \up0 \expndtw-2\charsca lex100 included as a predicate offence in AMLATFA. The government has, at the re commendation \line \up0 \expndtw-1\charscalex100 of FATF, also given the approva l to include environmental offences, as predicate offences. \line \up0 \expndtw0 \charscalex107 With this inclusion, the list of offences in AMLATFA is fully com pliant with FATF \line \up0 \expndtw0\charscalex105 Recommendations.\ul0\super\c f8\f9\fs23 31\ul0\nosupersub\cf1\f2\fs23 Section 85 allows the Minister of Fina nce to amend the First and \line \up0 \expndtw-1\charscalex100 Second Schedules of AMLATFA by order published in the \ul0\nosupersub\cf7\f8\fs23 Gazette.\ul0\no supersub\cf1\f2\fs23 Clearly, AMLATFA is \line \up0 \expndtw0\charscalex109 dyn amic in nature and its scope would be expanded from time to time to meet new \li ne \up0 \expndtw0\charscalex110 challenges. This is vital in ensuring that the l egislation is consistent with the latest \line \up0 \expndtw-2\charscalex100 dev elopments in global standards against money laundering and terrorism financing. \par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri914\sb20\sl-400\sl mult0 \up0 \expndtw0\charscalex104 It must be noted that the AML/CFT preventive measures are uniformly applied to both \line \up0 \expndtw0\charscalex103 conven tional and Islamic financial institutions and to the designated non-fin ancial \line \up0 \expndtw0\charscalex104 institutions and professions \up0 \exp ndtw0\charscalex108 (DNFBPs). To assist these institutions comply with the \par\ pard\qj \li2205\ri913\sb0\sl-403\slmult0 \up0 \expndtw-1\charscalex100 AML/CFT m easures effectively, guidelines have been issued by BNM and other regulatory \li ne \up0 \expndtw0\charscalex103 and supervisory authorities. For instance, in 20 06, BNM issued the AML/CFT Standard \line \up0 \expndtw0\charscalex102 Guideline s and AML/CFT Sectoral Guidelines 1 for banking institutions and insurers. In \l ine \up0 \expndtw-3\charscalex100 early \up0 \expndtw0\charscalex107 2007, AML/C FT Sectoral Guidelines were issued to licensed casinos, licensed \line \up0 \exp ndtw0\charscalex100 gaming outlets, lawyers, accountants and company secretaries . The AML/CFT Guidelines \line \up0 \expndtw-1\charscalex100 are legally enforce able and a person could be liable to a fine not exceeding RM250 000 for \line \u p0 \expndtw-2\charscalex100 non-compliance.\ul0\super\cf8\f9\fs23 32 \par\pard\q j \li2205\ri915\sb395\sl-404\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupers ub\cf1\f2\fs23 The effectiveness of the implementation of the relevant AML/CFT G uidelines and controls \line \up0 \expndtw0\charscalex109 at financial instituti ons are evaluated by the BNM under the risk-based supervisory \line \up0 \expndt w0\charscalex100 framework. As such, the reporting institutions are required to focus on AML/CFT internal \line \up0 \expndtw-2\charscalex100 control programs. This is vital to the detection of money laundering and terrorism financing \line \up0 \expndtw0\charscalex100 risks potentially faced by the institutions. More importantly, this approach allows for more \line \up0 \expndtw0\charscalex100 ef ficient and cost-effective measures against the real risks. BNM has also continu ously \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slm ult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmul t0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb100\sl-218\slmul t0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 31\ul0\nosupersub\cf10\f11\fs19 Bank Negara Malaysia, above n 27, 44. \par\pard \li2205\sb20\sl-218\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10 \fs18 32\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Anti-Money Laundering and Anti- Terrorism Financing Act 2001\ul0\nosupersub\cf10\f11\fs19 , s 86.\par\pard\li2205\sb3\sl-264\slmult0\fi8360 \up0 \expndtw-3\charscalex100 \ ul0\nosupersub\cf1\f2\fs23 68

{\shp {\*\shpinst\shpleft2205\shptop13928\shpright5006\shpbottom13948\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz169\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g78}{\bkmkend Pg78}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\s b0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri9 15\sb249\sl-400\slmult0 \up0 \expndtw0\charscalex104 \ul0\nosupersub\cf1\f2\fs23 undertaken compliance examinations against the reporting institutions to determ ine the \up0 \expndtw-2\charscalex100 state of their compliance with the AML/CFT legal and regulatory requirements.\ul0\super\cf8\f9\fs23 33 \par\pard\ql \li220 5\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\ sb0\sl-264\slmult0 \par\pard\ql\li2205\sb141\sl-264\slmult0 \up0 \expndtw-1\char scalex100 \ul0\nosupersub\cf4\f5\fs23 3.3.1 The application of AMLATFA \par\pa rd\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb132\sl-264\slmult0 \up0 \ expndtw-1\charscalex100 \ul0\nosupersub\cf1\f2\fs23 It must be noted that AMLATF A has both retrospective and extra-territorial effect. Section \par\pard\qj \li2 205\ri942\sb19\sl-406\slmult0 \up0 \expndtw-2\charscalex100 2 (1) provides that \u8216?[t]his Act shall apply to any serious offence, foreign serious offence or \up0 \expndtw-4\charscalex100 unlawful activity whether committed before or aft er the commencement date.\u8217? The wording \up0 \expndtw-1\charscalex100 of se ction 2(1) indicates that AMLATFA has a retrospective effect since it applies to any \up0 \expndtw-2\charscalex100 unlawful activities committed before AMLATFA came into force. \par\pard\qj \li2205\ri913\sb279\sl-400\slmult0 \up0 \expndtw-3 \charscalex100 The element of retrospectivity is a matter of concern because it is a long held principle that \up0 \expndtw-1\charscalex100 the law should not h ave a retrospective effect. The presumption against retrospectivity of \up0 \exp ndtw-1\charscalex100 legislation is based upon the judicial philosophy that Parl iament does not intend an unjust \up0 \expndtw-1\charscalex100 result.\ul0\super \cf8\f9\fs23 34\ul0\nosupersub\cf1\f2\fs23 The retrospective application of AML ATFA may be challengeable as it conflicts \up0 \expndtw-2\charscalex100 with art icle 7(1) of the Federal Constitution which states: \par\pard\qj \li2906\ri1484\ sb285\sl-370\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf13\f14\fs21 No person shall be punished for an act or omission which was not punishable by law \up0 \expndtw0\charscalex104 when it was done or made, and no person shall s uffer greater punishment for an \up0 \expndtw-4\charscalex100 offence than was p rescribed by law at the time it was committed. \par\pard\qj \li2205\ri913\sb266\ sl-400\slmult0 \up0 \expndtw0\charscalex104 \ul0\nosupersub\cf1\f2\fs23 This iss ue was raised recently in \ul0\nosupersub\cf7\f8\fs23 Datuk Haji Wasli bin Mohd Said v Federal Attorney \up0 \expndtw-2\charscalex100 General of Malaysia.\ul0\s uper\cf8\f9\fs23 35\ul0\nosupersub\cf1\f2\fs23 In that case, Datuk Haji Wasli ( the Applicant) applied for leave for \up0 \expndtw-3\charscalex100 judicial revi ew of the decision of the Federal Attorney General to charge him with offences \ up0 \expndtw-4\charscalex100 under AMLATFA. It was argued, \ul0\nosupersub\cf7\f 8\fs23 inter alia\ul0\nosupersub\cf1\f2\fs23 , that the retrospective effect of AMLATFA was \up0 \expndtw-1\charscalex100 against Article 7 of the Federal Const itution. The Court held that the appropriate forum to \up0 \expndtw-1\charscalex 100 raise this issue would be at the trial court. Datuk Ian H.C. Chin J said: \p ar\pard\qj \li2906\ri930\sb277\sl-380\slmult0 \up0 \expndtw-3\charscalex100 \ul0 \nosupersub\cf13\f14\fs21 [I]f there is no answer to the contention of the Appli cant concerning Article 7, then it would \line \up0 \expndtw-3\charscalex100 be a great injustice to the Applicant to persist in the charges under the Anti-Mone y \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb138\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\sup

er\cf9\f10\fs19\ul0\super\cf9\f10\fs18 33\ul0\nosupersub\cf10\f11\fs19 Bank Neg ara Malaysia, above n 31. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw2\charscalex100 \ul0\super\cf9\f10\fs18 34\ul0\nosupersub\cf10\f11\fs19 See \ul 0\nosupersub\cf11\f12\fs19 Pesuruhjaya Ibu Kota Kuala Lumpur v Public Trustee & Ors\ul0\nosupersub\cf10\f11\fs19 [1971] 2 MLJ 30 at 31. \par\pard\ql \li2205\sb 2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 35\ul0\no supersub\cf10\f11\fs19 This unreported case was decided in the Kota Kinabalu Hi gh Court of Malaysia on 19 October 2005. \par\pard\ql \li10565\sb15\sl-251\slmul t0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 69 {\shp {\*\shpinst\shpleft2205\shptop13704\shpright5006\shpbottom13724\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz185\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g79}{\bkmkend Pg79}\par\pard\qj \li2906\sb0\sl-370\slmult0 \par\pard\qj\li2906\s b0\sl-370\slmult0 \par\pard\qj\li2906\sb0\sl-370\slmult0 \par\pard\qj\li2906\ri9 31\sb344\sl-370\slmult0 \up0 \expndtw0\charscalex108 \ul0\nosupersub\cf13\f14\fs 21 Laundering Act if it is obvious to the Attorney-General that the Applicant ca nnot be \line \up0 \expndtw0\charscalex102 convicted of the charges if there wer e committed before the coming into force of the Act. \line \up0 \expndtw0\charsc alex100 Let me also quickly add that the charges seem to assert the date of the offences to be on a \line \up0 \expndtw0\charscalex106 date after the coming int o force of the said Act and therefore it cannot be said to be in \line \up0 \exp ndtw-2\charscalex100 violation of Article 7. \par\pard\qj \li2205\ri943\sb266\sl -400\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf1\f2\fs23 The issue of retrospective criminal laws was also raised in \ul0\nosupersub\cf7\f8\fs23 P uncakdana Sdn Bhd v Tribunal \up0 \expndtw-3\charscalex100 Tuntutan Pembeli Ruma h & Ors\ul0\super\cf16\f17\fs23 36\ul0\nosupersub\cf1\f2\fs23 where Raus Sharif J held that: \par\pard\qj \li2906\ri1481\sb285\sl-370\slmult0 \up0 \expndtw0\ch arscalex106 \ul0\nosupersub\cf13\f14\fs21 \u8230?to permit the Tribunal to exerc ise its jurisdiction over the sale and purchase \up0 \expndtw0\charscalex100 agr eement entered into before 1 December 2002 is to allow retrospective criminal \u p0 \expndtw-4\charscalex100 laws. This is prohibited by art.7 of Federal Constit ution. \par\pard\qj \li2205\ri941\sb264\sl-402\slmult0\fi0 \up0 \expndtw0\charsc alex105 \ul0\nosupersub\cf1\f2\fs23 As far as AMLATFA is concerned, the retrospe ctive principle applies to any serious \line \up0 \expndtw-3\charscalex100 offen ce, foreign serious offence or unlawful activity. Therefore, the question to be posed is \line \up0 \expndtw0\charscalex100 whether AMLATFA can be challenged on the ground that it is inconsistent with Article \line \up0 \expndtw0\charscalex 100 7(1) of the Federal Constitutions which clearly prohibits the retrospective criminal laws. \line \up0 \expndtw0\charscalex103 Challenges against the cons titutionality of money laundering legislation in other \line \up0 \expndtw 0\charscalex100 jurisdiction have so far failed. In Australia, the constitutiona l validity of the anti-money \line \up0 \expndtw0\charscalex100 laundering laws was also challenged in \ul0\nosupersub\cf7\f8\fs23 Leask v The Commonwealth\ul0\ nosupersub\cf1\f2\fs23 .\ul0\super\cf8\f9\fs23 37\ul0\nosupersub\cf1\f2\fs23 Th e plaintiff had \line \up0 \expndtw0\charscalex105 been charged with \up0 \expnd tw0\charscalex105 54 counts alleging offences against section \up0 \expndtw0\cha rscalex109 31 of the Financial \par\pard\qj \li2205\ri941\sb0\sl-404\slmult0 \up 0 \expndtw-2\charscalex100 Transactions Reports Act 1988 (FTRA) which makes it a n offence for a person to conduct \line \up0 \expndtw-3\charscalex100 a currency transaction so as to prevent it becoming a significant cash transaction and mak e \line \up0 \expndtw0\charscalex100 it an exempt cash transaction as defined in

the statute. The plaintiff filed an action in the \line \up0 \expndtw0\charscal ex105 High Court challenging the constitutional validity of section 31 of FTRA. The court \line \up0 \expndtw-2\charscalex100 rejected the challenge and held th at the statute was a valid law of the Commonwealth with \line \up0 \expndtw-2\ch arscalex100 respect to currency under section 51 (xii) of the Commonwealth Const itution.\ul0\super\cf8\f9\fs23 38 \par\pard\qj \li2205\ri941\sb257\sl-400\slmult 0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs23 Therefore, it would b e surprising if a Malaysian court were to allow any challenge to the \line \up0 \expndtw0\charscalex100 constitutionality of AMLATFA. Furthermore, it can be arg ued that the retrospective \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\ li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li 2205\sb97\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\u l0\super\cf9\f10\fs18 36\ul0\nosupersub\cf10\f11\fs19 [1996] 187 CLR 379. \par\ pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\ f10\fs18 37\ul0\nosupersub\cf10\f11\fs19 [1996] 187 CLR 379. \par\pard\qj \li22 05\ri932\sb1\sl-220\slmult0 \up0 \expndtw0\charscalex100 \ul0\super\cf9\f10\fs18 38\ul0\nosupersub\cf10\f11\fs19 W Weerasooria, \u8216? High Court Affirms Cons titutional Validity of the Financial Transactions Report Act \up0 \expndtw0\char scalex100 1988\u8217? in W Weerasooria, N Jensen & J Visser \ul0\nosupersub\cf11 \f12\fs19 Money Laundering in Australia\ul0\nosupersub\cf10\f11\fs19 ( 1998). \ par\pard\ql \li10565\sb14\sl-252\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosu persub\cf1\f2\fs23 70 {\shp {\*\shpinst\shpleft2205\shptop13480\shpright5006\shpbottom13500\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz175\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g80}{\bkmkend Pg80}\par\pard\qj \li2205\sb0\sl-404\slmult0 \par\pard\qj\li2205\s b0\sl-404\slmult0 \par\pard\qj\li2205\sb0\sl-404\slmult0 \par\pard\qj\li2205\ri9 41\sb234\sl-404\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf1\f2\fs2 3 application of the AMLATFA is critical in ensuring effective implementation of the law. It \up0 \expndtw-1\charscalex100 is generally accepted that many forms of profit-making crimes are engaged by criminals as \up0 \expndtw0\charscalex10 5 a long term business. Therefore, the retrospectivity of the law is vital to al low the law \up0 \expndtw0\charscalex110 enforcement authorities to bring crimin als to justice and confiscate the substantial \up0 \expndtw0\charscalex105 propo rtion of their illicit gains. This approach would reduce crimes by obstructing t he \up0 \expndtw-2\charscalex100 ability of criminal organizations to finance fu rther criminal operations. \par\pard\qj \li2205\ri941\sb255\sl-406\slmult0 \up0 \expndtw0\charscalex102 AMLATFA also has extra-territorial effect. Section 2(2) provides that \u8216?[t]his Act shall \line \up0 \expndtw0\charscalex104 apply t o any property, whether it is situated in or outside Malaysia.\u8217? However, a case \line \up0 \expndtw-1\charscalex100 would only be pursued in Malaysia afte r consulting a Malaysian diplomatic official in the \line \up0 \expndtw-1\charsc alex100 jurisdiction in which the offence is alleged to have been committed. Und er section 82(2): \par\pard\qj \li2906\ri1308\sb284\sl-370\slmult0 \up0 \expndtw 0\charscalex100 \ul0\nosupersub\cf13\f14\fs21 \u8230?no charge as to any offence shall be inquired into in Malaysia unless a diplomatic \up0 \expndtw0\charscale x100 officer of Malaysia, if there is one, in the territory in which the offence is alleged to \up0 \expndtw0\charscalex100 have been committed certifies that, in his opinion, the charge ought to be brought in \up0 \expndtw0\charscalex103 M alaysia; and where there is no such diplomatic officer, the sanction of the Publ ic \up0 \expndtw-4\charscalex100 Prosecutor shall be required. \par\pard\qj \li2

205\ri914\sb229\sl-420\slmult0 \up0 \expndtw0\charscalex106 \ul0\nosupersub\cf1\ f2\fs23 Furthermore, it must be borne in mind that the extra-territorial effect of AMLATFA \line \up0 \expndtw0\charscalex107 depends on the application of the Mutual Assistance in Criminal Matters Act \up0 \expndtw-3\charscalex100 2002 \pa r\pard\qj \li2205\ri914\sb0\sl-403\slmult0\fi0 \up0 \expndtw-4\charscalex100 (MA CMA). International cooperation in combating money laundering can only be achiev ed \line \up0 \expndtw-4\charscalex100 when there is a mutual legal assistance t reaty (MLAT) concluded between Malaysia and the \line \up0 \expndtw0\charscalex1 05 relevant jurisdiction. Malaysia is a party to the \ul0\nosupersub\cf7\f8\fs23 Treaty on Mutual Legal Assistance in \line \up0 \expndtw-2\charscalex100 Crimin al Matters \ul0\nosupersub\cf1\f2\fs23 which has been signed by ASEAN member cou ntries.\ul0\super\cf8\f9\fs23 39\ul0\nosupersub\cf1\f2\fs23 Apart from this, \l ine \up0 \expndtw0\charscalex105 Malaysia also has a memorandum of understanding on mutual assistance in criminal \line \up0 \expndtw-4\charscalex100 matters wi th Russia, Hong Kong, Venezuela, the United Kingdom and the United States for \l ine \up0 \expndtw-4\charscalex100 drug-related offences. \par\pard\qj \li2205\ri 915\sb395\sl-400\slmult0 \up0 \expndtw0\charscalex103 Where no treaty or agreeme nt exists, the Minister of Home Affairs may give a special \line \up0 \expndtw0\ charscalex103 direction that MACMA shall apply to that foreign state in relation to the requested \par\pard\qj \li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb 0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\ri93 7\sb69\sl-220\slmult0 \up0 \expndtw0\charscalex100 \ul0\super\cf9\f10\fs19\ul0\s uper\cf9\f10\fs18 39\ul0\nosupersub\cf10\f11\fs19 The treaty is intended to pro vide an additional tool to combat transnational crime in the ASEAN region. \up0 \expndtw-2\charscalex100 The ASEAN member countries include Brunei Darussalam, C ambodia, Indonesia, Laos, Malaysia, Myanmar \up0 \expndtw-3\charscalex100 Philip pines, Singapore, Thailand and Vietnam. \par\pard\ql \li10565\sb14\sl-252\slmult 0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 71 {\shp {\*\shpinst\shpleft2205\shptop13704\shpright5006\shpbottom13724\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz196\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g81}{\bkmkend Pg81}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\s b0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri9 14\sb249\sl-400\slmult0\fi0 \up0 \expndtw0\charscalex105 \ul0\nosupersub\cf1\f2\ fs23 assistance.\ul0\super\cf8\f9\fs23 40\ul0\nosupersub\cf1\f2\fs23 With the a pplication of MACMA, court orders under AMLATFA can be \line \up0 \expndtw0\char scalex109 enforced in other jurisdictions and vice-versa. MACMA enables the gove rnment of \line \up0 \expndtw-2\charscalex100 Malaysia to seek and provide a wid e range of assistance in criminal matters including: \par\pard\ql \li2556\ri903\ sb12\sl-410\slmult0\tx2906 \up0 \expndtw-2\charscalex100 \u-3913?\ul0\nosupersub \cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 providing and obtaining evidence, in cluding the taking of statements from persons; \up0 \expndtw0\charscalex110 \u-3 913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 making arrangemen ts for persons to give evidence, or to assist in criminal \line\tab \up0 \expndt w-3\charscalex100 investigations; \par\pard\ql \li2556\ri914\sb19\sl-400\slmult0 \tx2906 \up0 \expndtw0\charscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\n osupersub\cf1\f2\fs23 recovering, forfeiting or confiscating property in respe ct of a serious offence or a \line\tab \up0 \expndtw-1\charscalex100 foreign ser ious offence; \par\pard\ql \li2556\ri915\sb4\sl-420\slmult0\tx2906 \up0 \expndtw 0\charscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 restraining dealings in property, or freezing of property, that may be recove

red in \line\tab \up0 \expndtw-1\charscalex100 respect of a serious offence or a foreign serious offence; \par\pard\ql \li2556\sb129\sl-264\slmult0 \up0 \expndt w-3\charscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs 23 executing requests for search and seizure; \par\pard\qj \li2556\ri4318\sb28 \sl-420\slmult0 \up0 \expndtw-3\charscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs2 3 \ul0\nosupersub\cf1\f2\fs23 locating and identifying witnesses and suspects ; \up0 \expndtw-3\charscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupe rsub\cf1\f2\fs23 service of process; \par\pard\ql \li2556\sb109\sl-264\slmult0 \up0 \expndtw-3\charscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosuper sub\cf1\f2\fs23 identifying and tracing proceeds and instrumentalities of crim e; \par\pard\ql \li2556\ri915\sb28\sl-420\slmult0\tx2906 \up0 \expndtw0\charscal ex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 recover ing pecuniary penalties in respect of a serious offence or a foreign serious \li ne\tab \up0 \expndtw-1\charscalex100 offence; and \par\pard\ql \li2556\sb129\sl264\slmult0 \up0 \expndtw-3\charscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ ul0\nosupersub\cf1\f2\fs23 examining things and premises.\ul0\super\cf8\f9\fs2 3 41 \par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri918\sb24\sl-4 00\slmult0 \up0 \expndtw0\charscalex103 \ul0\nosupersub\cf1\f2\fs23 Section 20 o f MACMA specifies grounds upon which a request for assistance must be \up0 \expn dtw-5\charscalex100 refused. These include: \par\pard\ql \li2556\ri914\sb20\sl-4 00\slmult0\tx2906 \up0 \expndtw-2\charscalex100 \u-3913?\ul0\nosupersub\cf6\f7\f s23 \ul0\nosupersub\cf1\f2\fs23 the appropriate authority of the foreign stat e has failed to comply with the terms of \line\tab \up0 \expndtw-3\charscalex100 the MLAT; \par\pard\ql \li2556\ri918\sb20\sl-400\slmult0\tx2906 \up0 \expndtw-3 \charscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 the request relates to the investigation, prosecution or punishment of a perso n for an \line\tab \up0 \expndtw-4\charscalex100 offence that is an offence of a political nature; \par\pard\ql \li2556\ri914\sb20\sl-400\slmult0\tx2906\tx2906\ tx2906 \up0 \expndtw-4\charscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\n osupersub\cf1\f2\fs23 there are substantial grounds for believing that the req uest was made for the purpose \line\tab \up0 \expndtw-1\charscalex100 of investi gating, prosecuting, punishing or otherwise causing prejudice to a person \line\ tab \up0 \expndtw-1\charscalex100 on account of the person\u8217?s race, religio n, sex, ethnic origin, nationality or political \line\tab \up0 \expndtw-2\charsc alex100 opinions; \par\pard\li2205\sb0\sl-218\slmult0\par\pard\li2205\sb0\sl-218 \slmult0\par\pard\li2205\sb0\sl-218\slmult0\par\pard\li2205\sb0\sl-218\slmult0\p ar\pard\li2205\sb134\sl-218\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\super \cf9\f10\fs19\ul0\super\cf9\f10\fs18 40\ul0\nosupersub\cf10\f11\fs19 \ul0\nosup ersub\cf11\f12\fs19 Mutual Assistance in Criminal Matters Act 2002,\ul0\nosupers ub\cf10\f11\fs19 s 18.\par\pard\li2205\sb5\sl-218\slmult0\fi0 \up0 \expndtw-2\c harscalex100 \ul0\super\cf9\f10\fs18 41\ul0\nosupersub\cf10\f11\fs19 \ul0\nosup ersub\cf11\f12\fs19 Mutual Assistance in Criminal Matters Act 2002\ul0\nosupersu b\cf10\f11\fs19 , s 3.\par\pard\li2205\sb3\sl-264\slmult0\fi8360 \up0 \expndtw-3 \charscalex100 \ul0\nosupersub\cf1\f2\fs23 72 {\shp {\*\shpinst\shpleft2205\shptop13928\shpright5006\shpbottom13948\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz288\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g82}{\bkmkend Pg82}\par\pard\ql \li2556\sb0\sl-400\slmult0 \par\pard\ql\li2556\s b0\sl-400\slmult0 \par\pard\ql\li2556\sb0\sl-400\slmult0 \par\pard\ql\li2556\ri9 15\sb269\sl-400\slmult0\tx2906\tx2906 \up0 \expndtw0\charscalex100 \ul0\nosupers ub\cf1\f2\fs23 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23

the request relates to the investigation, prosecution or punishment of a perso n in \line\tab \up0 \expndtw0\charscalex100 respect of an act or omission that, if it had occurred in Malaysia, would not have \line\tab \up0 \expndtw-5\charsca lex100 constituted an offence against the laws of Malaysia; and \par\pard\ql \li 2556\ri916\sb20\sl-400\slmult0\tx2906 \up0 \expndtw0\charscalex106 \u-3913?\ul0\ nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 the thing requested is of insufficient importance to the investigation or could \line\tab \up0 \expndtw-3\ charscalex100 reasonably be obtained by other means.\ul0\super\cf8\f9\fs23 42 \p ar\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri914\sb20\sl-400\slmu lt0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs23 It must be noted th at the requirement for dual criminality and the prohibition of requests \line \u p0 \expndtw0\charscalex112 where the material sought is not considered to be of sufficient importance to an \line \up0 \expndtw0\charscalex105 investigation cou ld potentially impose serious obstacles to mutual legal assistance in \line \up0 \expndtw0\charscalex102 criminal matters. As such, it has been suggested that t he Malaysian government should \line \up0 \expndtw0\charscalex100 consider makin g the absence of dual criminality a discretionary rather than a mandatory \line \up0 \expndtw0\charscalex100 ground for refusal of assistance, at least in relat ion to less intrusive measures, and should \line \up0 \expndtw0\charscalex100 co nsider removing the requirement that the assistance sought be of sufficient impo rtance.\ul0\super\cf8\f9\fs23 43 \par\pard\qj \li2205\sb0\sl-402\slmult0 \par\pa rd\qj\li2205\ri914\sb17\sl-402\slmult0 \up0 \expndtw0\charscalex102 \ul0\nosuper sub\cf1\f2\fs23 It is also important to note that a request for mutual assistanc e cannot be refused on the \line \up0 \expndtw-4\charscalex100 grounds of secrec y rules. Section 24(4)(b) of MACMA provides that an order for assistance \line \ up0 \expndtw-2\charscalex100 in criminal investigation for foreign state shall h ave effect notwithstanding any obligations \line \up0 \expndtw-1\charscalex100 a s to secrecy or other restrictions upon the disclosure of information. In additi on to this, a \line \up0 \expndtw0\charscalex103 person who complies with such a n order shall not be treated as being in breach of any \line \up0 \expndtw0\char scalex107 restrictions upon the disclosure of information imposed by law, contra ct or rules of \line \up0 \expndtw-3\charscalex100 professional conduct.\ul0\sup er\cf8\f9\fs23 44\ul0\nosupersub\cf1\f2\fs23 Clearly, the overriding of the sec recy rule by MACMA removes the \line \up0 \expndtw0\charscalex107 main obstacles to information sharing with the law enforcement officials in foreign \line \up0 \expndtw-3\charscalex100 countries. \par\pard\qj \li2205\ri913\sb252\sl-410\slm ult0 \up0 \expndtw-2\charscalex100 The concept of extra-territoriality should no t pose any significant problems as it is not new \up0 \expndtw-3\charscalex100 i n Malaysia. It appears in a number of other statutes. For example, section 4(1) of the Penal \up0 \expndtw-3\charscalex100 Code states that the provisions of Ch apter VI shall apply to any offence committed: \par\pard\ql \li2906\ri933\sb255\ sl-380\slmult0\tx3253 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf13\f14\fs21 (a)\ul0\nosupersub\cf15\f16\fs21 \ul0\nosupersub\cf13\f14\fs21 by any citizen or any permanent resident on the high seas on board any ship or on any \line\tab \up0 \expndtw0\charscalex100 aircraft whether or not such ship or aircraft is r egistered in Malaysia; \par\pard\li2205\sb0\sl-218\slmult0\par\pard\li2205\sb0\s l-218\slmult0\par\pard\li2205\sb29\sl-218\slmult0\fi0 \up0 \expndtw-2\charscalex 100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 42\ul0\nosupersub\cf10\f11\fs 19 \ul0\nosupersub\cf11\f12\fs19 Mutual Assistance in Criminal Matters Act 2002 ,\ul0\nosupersub\cf10\f11\fs19 s 20(1) (a)- (m).\par\pard\li2205\sb6\sl-218\slm ult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 43\ul0\nosupersub \cf10\f11\fs19 APG Mutual Evaluation Report on Malaysia 2007, 200.\par\pard\li2 205\sb5\sl-218\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 44\ul0\nosupersub\cf11\f12\fs19 Mutual Assistance in Criminal Matters Act 2002, \ul0\nosupersub\cf10\f11\fs19 s 15(2).\par\pard\li2205\sb3\sl-264\slmult0\fi836 0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 73 {\shp {\*\shpinst\shpleft2205\shptop13704\shpright5006\shpbottom13724\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz198\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{

\sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g83}{\bkmkend Pg83}\par\pard\ql \li2906\sb0\sl-380\slmult0 \par\pard\ql\li2906\s b0\sl-380\slmult0 \par\pard\ql\li2906\sb0\sl-380\slmult0 \par\pard\ql\li2906\ri9 32\sb326\sl-380\slmult0\tx3253 \up0 \expndtw0\charscalex102 \ul0\nosupersub\cf1\ f2\fs23 (b)\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf13\f14\fs21 by any cit izen or any permanent resident in any place without or beyond the limits of \lin e\tab \up0 \expndtw0\charscalex102 Malaysia, as if the offence had been committe d in Malaysia. \par\pard\qj \li2205\ri914\sb241\sl-403\slmult0 \up0 \expndtw-1\c harscalex100 \ul0\nosupersub\cf1\f2\fs23 Extra-territoriality is of utmost impor tance in combating money laundering because money \line \up0 \expndtw0\charscale x102 laundering is international in nature. For criminals, the internationalizat ion of economies \line \up0 \expndtw0\charscalex103 and financial services have presented them with opportunities to carry out their criminal \line \up0 \expndt w0\charscalex103 activities and to disguise their illicit profits. Therefore, an y effective measure to combat \line \up0 \expndtw0\charscalex100 money launderin g requires the full cooperation and mutual assistance of the international \line \up0 \expndtw0\charscalex106 community. For this reason, any legal or technical obstacles to effective international \line \up0 \expndtw-3\charscalex100 cooper ation must be avoided. \par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li22 05\ri917\sb20\sl-400\slmult0 \up0 \expndtw-2\charscalex100 It is important to no te that AMLATFA also applies the principle of \u8216?double jeopardy\u8217?. The \up0 \expndtw-3\charscalex100 proviso to section 2 states: \par\pard\qj \li2730 \ri932\sb5\sl-370\slmult0 \up0 \expndtw0\charscalex109 \ul0\nosupersub\cf13\f14\ fs21 Nothing in this Act shall impose any duty or confer any power on any court in or in \up0 \expndtw0\charscalex103 connection with any proceedings under this Act against a person for a serious offence in \up0 \expndtw-3\charscalex100 res pect of which he has been convicted by a court before the commencement date. \pa r\pard\qj \li2205\ri915\sb381\sl-406\slmult0 \up0 \expndtw0\charscalex102 \ul0\n osupersub\cf1\f2\fs23 Therefore, if a person has already been found guilty of a predicate offence listed in the \up0 \expndtw0\charscalex100 Second Schedule of AMLATFA before it came into force, the person cannot be charged \up0 \expndtw0\c harscalex102 with the same offence under AMLATFA. This is in line with article 7 (2) of the Federal \up0 \expndtw-5\charscalex100 Constitution which states: \par \pard\qj \li2757\ri1482\sb4\sl-370\slmult0 \up0 \expndtw-3\charscalex100 \ul0\no supersub\cf13\f14\fs21 A person who has been acquitted or convicted of an offenc e shall not be tried again for \up0 \expndtw0\charscalex103 the same offence exc ept where the conviction or acquittal has been quashed and a \up0 \expndtw-3\cha rscalex100 retrial ordered by a court superior to that which he was acquitted or convicted. \par\pard\qj \li2205\ri916\sb0\sl-400\slmult0 \up0 \expndtw0\charsca lex100 \ul0\nosupersub\cf1\f2\fs23 However, it must be borne in mind that the pe rson can be found guilty of laundering the \up0 \expndtw0\charscalex100 proceeds of that predicate offence. \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql \li2205\sb255\sl-264\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf4\f 5\fs23 3.3.2 Money Laundering Offences \par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri914\sb24\sl-400\slmult0 \up0 \expndtw0\charscalex102 \ul0 \nosupersub\cf1\f2\fs23 The primary offence of money laundering and the offence of attempting or abetting the \line \up0 \expndtw0\charscalex100 commission of m oney laundering are found in section 4(1) of AMLATFA. Section 4(1) \line \up0 \e xpndtw0\charscalex100 states that: \par\pard\ql \li2757\sb112\sl-241\slmult0 \up 0 \expndtw-4\charscalex100 \ul0\nosupersub\cf13\f14\fs21 Any person who-\par\par d\ql \li10565\sb60\sl-264\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\ cf1\f2\fs23 74 \par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240 {\bkmkstart Pg84}{\bkmkend Pg84}\par\pard\ql \li2731\sb0\sl-241\slmult0 \par\par

d\ql\li2731\sb0\sl-241\slmult0 \par\pard\ql\li2731\sb0\sl-241\slmult0 \par\pard\ ql\li2731\sb0\sl-241\slmult0 \par\pard\ql\li2731\sb0\sl-241\slmult0 \par\pard\ql \li2731\sb0\sl-241\slmult0 \par\pard\ql\li2731\sb114\sl-241\slmult0 \up0 \expndt w-2\charscalex100 \ul0\nosupersub\cf13\f14\fs21 (a) engages in or attempts to en gage in; or \par\pard\ql \li2731\sb139\sl-241\slmult0 \up0 \expndtw-2\charscalex 100 (b) abets the commission of, \par\pard\qj \li2757\ri1482\sb13\sl-370\slmult0 \up0 \expndtw0\charscalex100 money laundering, commits an offence and shall on conviction be liable to a fine not \line \up0 \expndtw0\charscalex100 exceeding five million ringgit or to imprisonment for a term not exceeding five years \lin e \up0 \expndtw-2\charscalex100 or both. \par\pard\qj \li2205\ri913\sb382\sl-405 \slmult0 \up0 \expndtw0\charscalex104 \ul0\nosupersub\cf1\f2\fs23 For the interp retation of section 4(1) of AMLATFA, we need to turn to various other \up0 \expn dtw-2\charscalex100 statutes. Section 107 of the Penal Code defines \u8216?abetm ent\u8217? as the conduct of a person who \up0 \expndtw-2\charscalex100 engages with one or more other persons in any conspiracy for the doing of a thing. Secti on \up0 \expndtw0\charscalex100 120A of the Penal Code defines \u8216?conspiracy \u8217? as the agreement of two or more persons to \up0 \expndtw-1\charscalex100 do, or cause to be done, an illegal act or an act by illegal means. \par\pard\q j \li2205\ri916\sb400\sl-400\slmult0 \up0 \expndtw-1\charscalex100 Section 4(1) must be read together with the definition of money laundering under section \up0 \expndtw-2\charscalex100 3(1)\ul0\nosupersub\cf8\f9\fs15 45\ul0\nosupersub\cf1\ f2\fs23 which states: \par\pard\ql \li2731\sb132\sl-241\slmult0 \up0 \expndtw-4 \charscalex100 \ul0\nosupersub\cf13\f14\fs21 \u8216?money laundering\u8217? mean s the act of a person who-\par\pard\ql \li2731\ri1485\sb5\sl-380\slmult0\tx3080 \up0 \expndtw0\charscalex107 (a)\ul0\nosupersub\cf15\f16\fs21 \ul0\nosupersub\c f13\f14\fs21 engages directly or indirectly, in a transaction that involves proc eeds of any \line\tab \up0 \expndtw-4\charscalex100 unlawful activity; \par\pard \ql \li2731\ri1482\sb0\sl-370\slmult0\tx3080\tx3080 \up0 \expndtw0\charscalex103 (b)\ul0\nosupersub\cf15\f16\fs21 \ul0\nosupersub\cf13\f14\fs21 acquires, recei ves, possesses, disguises, transfers, converts, exchanges, carries, \line\tab \u p0 \expndtw0\charscalex102 disposes, uses, removes from or brings into Malaysia proceeds of any unlawful \line\tab \up0 \expndtw-4\charscalex100 activity; or \p ar\pard\ql \li2731\ri1482\sb0\sl-370\slmult0\tx3080\tx3080 \up0 \expndtw-3\chars calex100 (c)\ul0\nosupersub\cf15\f16\fs21 \ul0\nosupersub\cf13\f14\fs21 conceal s, disguises or impedes the establishment of the true nature, origin, location, \line\tab \up0 \expndtw-2\charscalex100 movement, disposition, title of, rights with respect to, or ownership of, proceeds of \line\tab \up0 \expndtw-4\charscal ex100 any unlawful activity, \par\pard\ql \li2757\sb96\sl-241\slmult0 \up0 \expn dtw-4\charscalex100 where-\par\pard\ql \li2757\ri1482\sb9\sl-375\slmult0 \up0 \e xpndtw-2\charscalex100 (aa) as may be inferred from objective factual circumstan ces, the person knows or has \line \up0 \expndtw-3\charscalex100 reason to belie ve, that the property is proceeds from any unlawful activity; or \line \up0 \exp ndtw-3\charscalex100 (bb) in respect of the conduct of a natural person, the per son without reasonable excuse \line \up0 \expndtw-1\charscalex100 fails to take reasonable steps to ascertain whether or not the property is proceed from \line \up0 \expndtw-4\charscalex100 any unlawful activity\ul0\nosupersub\cf1\f2\fs23 . \par\pard\qj \li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \p ar\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par \pard\qj\li2205\ri938\sb114\sl-220\slmult0 \up0 \expndtw-3\charscalex100 \ul0\su per\cf9\f10\fs19\ul0\super\cf9\f10\fs18 45\ul0\nosupersub\cf10\f11\fs19 It appe ars that AMLATFA criminalizes money laundering in accordance with Article 3(1) ( b) and (c) of the \up0 \expndtw-4\charscalex100 Vienna Convention and Article 6( 1) of the Palermo Convention. \par\pard\ql \li10565\sb14\sl-252\slmult0 \up0 \ex pndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 75 {\shp {\*\shpinst\shpleft2205\shptop13928\shpright5006\shpbottom13948\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz174\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}}

{\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g85}{\bkmkend Pg85}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\s b0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri9 14\sb249\sl-400\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf1\f2\fs2 3 In the light of these provisions, it appears that the offence of money launder ing is expressed \up0 \expndtw0\charscalex110 in wide terms. As such, the offenc e includes, \ul0\nosupersub\cf7\f8\fs23 inter alia,\ul0\nosupersub\cf1\f2\fs23 the dealing in, concealing, \up0 \expndtw0\charscalex102 disguising, converting, transferring or removing, acquiring, or using the proceeds of any \up0 \expndtw 0\charscalex102 unlawful activities: \par\pard\ql \li2556\ri915\sb40\sl-400\slmu lt0\tx2906 \up0 \expndtw-3\charscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \u l0\nosupersub\cf1\f2\fs23 where there is knowledge or reason to believe that s uch proceeds are proceeds of an \line\tab \up0 \expndtw-4\charscalex100 unlawful activity; or \par\pard\ql \li2556\ri918\sb20\sl-400\slmult0\tx2906 \up0 \expndt w0\charscalex105 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs2 3 where without reasonable excuse, there is a failure to take reasonable steps to \line\tab \up0 \expndtw-4\charscalex100 ascertain whether or not such procee ds are proceeds of unlawful activity. \par\pard\qj \li2205\ri915\sb400\sl-400\sl mult0\fi0 \up0 \expndtw-4\charscalex100 Furthermore, \u8216?proceeds of unlawful activity\u8217? is defined as \u8216?any property derived or obtained \up0 \exp ndtw0\charscalex102 directly or indirectly by any person as a result of any unla wful activity.\u8217?\ul0\super\cf8\f9\fs23 46\ul0\nosupersub\cf1\f2\fs23 \u821 6?Property\u8217? is \up0 \expndtw0\charscalex104 broadly defined and it include s movable or immovable property of every description, \up0 \expndtw0\charscalex1 07 whether situated in or outside Malaysia and whether tangible or intangible an d also \up0 \expndtw-5\charscalex100 includes an interest in any such movable or immovable property. \par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \ri914\sb20\sl-400\slmult0 \up0 \expndtw-3\charscalex100 Furthermore, \u8216?unl awful activity\u8217? means \u8216?any activity which is related, directly or in directly \up0 \expndtw0\charscalex104 to any serious offence or any foreign seri ous offence.\u8217?\ul0\super\cf8\f9\fs23 47\ul0\nosupersub\cf1\f2\fs23 \u8216? Serious offence\u8217? means any \up0 \expndtw-3\charscalex100 predicate offence listed in the Second Schedule of AMLATFA and includes any attempt to \up0 \expn dtw0\charscalex100 commit, or the abetment, of any of those listed offences.\ul0 \super\cf8\f9\fs23 48\ul0\nosupersub\cf1\f2\fs23 The predicate offences range \ up0 \expndtw0\charscalex103 from corruption and criminal breach of trust to kidn apping, theft and drug trafficking. \up0 \expndtw0\charscalex103 Clearly, the te rm \u8216?money laundering\u8217? has been defined in AMLATFA in the widest of \ up0 \expndtw-5\charscalex100 terms and therefore make it easier to secure a conv iction. \par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri913\sb20\s l-400\slmult0\fi0 \up0 \expndtw0\charscalex100 AMLATFA defines a \u8216?foreign serious offence\u8217? as one that is against the law of a foreign \line \up0 \e xpndtw-1\charscalex100 state as certified by that state and that consists of or includes an act or activity which, if it \line \up0 \expndtw-2\charscalex100 had occurred in Malaysia, would have constituted a \u8216?serious offence\u8217?.\u l0\super\cf8\f9\fs23 49\ul0\nosupersub\cf1\f2\fs23 Therefore, there is \line \u p0 \expndtw0\charscalex100 no money laundering offence where the predicate condu ct occurred in a foreign state but \line \up0 \expndtw0\charscalex100 was not an offence in that state. Clearly, this dual criminality requirement could hinder \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \ par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb77\sl-218\slmult0 \u p0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 46\ul 0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Anti-Money Laundering and Anti-Terrorism Financing Act 2001,\ul0\nosupersub\cf10\f11\fs19 s 3(1). \pa

r\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf 9\f10\fs18 47\ul0\nosupersub\cf11\f12\fs19 Anti-Money Laundering and Anti-Terror ism Financing Act 2001\ul0\nosupersub\cf10\f11\fs19 , s 3(1). \par\pard\ql \li22 05\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 48\u l0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Anti-Money Laundering and Anti-Terrorism Financing Act 2001,\ul0\nosupersub\cf10\f11\fs19 s 3(1). \p ar\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\c f9\f10\fs18 49\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 AntiMoney Laundering and Anti-Terrorism Financing Act 2001\ul0\nosupersub\cf10\f11\f s19 , s 3(1). \par\pard\ql \li10565\sb15\sl-251\slmult0 \up0 \expndtw-3\charscal ex100 \ul0\nosupersub\cf1\f2\fs23 76 {\shp {\*\shpinst\shpleft2205\shptop13480\shpright5006\shpbottom13500\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz214\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g86}{\bkmkend Pg86}\par\pard\qj \li2205\sb0\sl-405\slmult0 \par\pard\qj\li2205\s b0\sl-405\slmult0 \par\pard\qj\li2205\sb0\sl-405\slmult0 \par\pard\qj\li2205\ri9 15\sb230\sl-405\slmult0\fi0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf1\f2 \fs23 successful prosecution if the predicate offence takes place overseas. At p resent there is lack \up0 \expndtw0\charscalex100 of uniformity among the jurisd ictions in relation to money laundering predicate offences. \up0 \expndtw0\chars calex103 For example, Australia considers tax evasion as a predicate offence, bu t in Malaysia tax \up0 \expndtw0\charscalex111 evasion is not a predicate offenc e because it is treated as a civil offence.\ul0\super\cf8\f9\fs23 50\ul0\nosuper sub\cf1\f2\fs23 Greater \up0 \expndtw-3\charscalex100 uniformity in the predica te offence would facilitate prosecution. \par\pard\qj \li2205\ri916\sb400\sl-400 \slmult0 \up0 \expndtw-3\charscalex100 The money laundering offence applies to b oth natural and legal persons. The Interpretation \line \up0 \expndtw-4\charscal ex100 Acts \up0 \expndtw0\charscalex100 1948 and \up0 \expndtw-1\charscalex100 1967 define \up0 \expndtw0\charscalex101 \u8216?person\u8217? to include a body of persons, corporate or \par\pard\qj \li2205\ri914\sb0\sl-405\slmult0 \up0 \expndtw-3\charscalex100 unincorporated. Furthermore, section 87(1) of AMLA TFA provides that when an offence is \up0 \expndtw-2\charscalex100 committed by a body corporate or an association of persons, a person who was at that time \up 0 \expndtw0\charscalex100 a director, controller, officer or partner, or who was concerned in the management of the \up0 \expndtw-3\charscalex100 affairs of the entity, is deemed to have committed the offence unless that person proves that \up0 \expndtw-4\charscalex100 the offence was committed without his or her conse nt. \par\pard\qj \li2205\ri914\sb394\sl-402\slmult0\fi0 \up0 \expndtw-3\charscal ex100 It is interesting to note that section 4(2) of AMLATFA allows a person to be convicted of a \line \up0 \expndtw0\charscalex100 money laundering offence, i rrespective of whether there is a conviction in respect of the \line \up0 \expnd tw-2\charscalex100 specific predicate offence from which the illegal fund is gen erated.\ul0\super\cf8\f9\fs23 51\ul0\nosupersub\cf1\f2\fs23 AMLATFA does not \l ine \up0 \expndtw0\charscalex102 require the prosecution to establish a link bet ween the predicate offence and the money \line \up0 \expndtw0\charscalex100 laun dering offence, but in practice this is usually done by the prosecution. However , this \line \up0 \expndtw0\charscalex103 practice places a significant barrier to the successful prosecution of money laundering \line \up0 \expndtw-1\charscal ex100 offences because the prosecutor often faces difficulties trying to prove t hat the laundering \line \up0 \expndtw0\charscalex107 activity involved the proc eeds of a predicate offence under the Second Schedule of \line \up0 \expndtw-4\c

harscalex100 AMLATFA. This is because criminals will normally merge the proceeds of different crimes \line \up0 \expndtw-4\charscalex100 in order to make it imp ossible to differentiate the sources of the proceeds.\ul0\super\cf8\f9\fs23 52 \ par\pard\qj \li2205\ri913\sb400\sl-400\slmult0 \up0 \expndtw-1\charscalex100 \ul 0\nosupersub\cf1\f2\fs23 Recently, it was reported in a newspaper that a Session s Court Judge had refused to allow \line \up0 \expndtw-1\charscalex100 two accus ed persons to be charged with money laundering. The defendants were given a \par \pard\qj \li2205\sb0\sl-240\slmult0 \par\pard\qj\li2205\ri945\sb233\sl-240\slmul t0 \up0 \expndtw0\charscalex102 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 5 0\ul0\nosupersub\cf10\f11\fs19 Norhashimah Mohd. Yassin, \ul0\nosupersub\cf11\f 12\fs19 Legal Aspects of Money Laundering in Malaysia from the Common Law \up0 \ expndtw0\charscalex102 Perspective\ul0\nosupersub\cf10\f11\fs19 (2007) 169. \pa r\pard\qj \li2205\ri946\sb0\sl-220\slmult0 \up0 \expndtw0\charscalex100 \ul0\sup er\cf9\f10\fs18 51\ul0\nosupersub\cf10\f11\fs19 This scenario exists for instan ce, when a person working in the regulated sector knows or suspects that \line \ up0 \expndtw0\charscalex105 another person is engaged in money laundering but fa ils to report that knowledge or suspicion to law \line \up0 \expndtw-2\charscale x100 enforcement. \par\pard\qj \li2205\ri3061\sb0\sl-220\slmult0 \up0 \expndtw-2 \charscalex100 \ul0\super\cf9\f10\fs18 52\ul0\nosupersub\cf10\f11\fs19 R E Bell , \u8216?Prosecuting the Money Launderers Who Act for Organized Crime\u8217?, 8. \line \up0 \expndtw-2\charscalex100 <{\field{\*\fldinst {HYPERLINK "http://www. iap.nl.com/journal/paper/article_prosecution.html" }}{\fldrslt {\ul0\nosupersub\ cf29\f30\fs19\ul http://www.iap.nl.com/journal/paper/article_prosecution.html}}} \ul0\nosupersub\cf29\f30\fs19\ul > at 14\ul0\nosupersub\cf10\f11\fs19 July 2007 . \par\pard\ql \li10565\sb14\sl-249\slmult0 \up0 \expndtw-3\charscalex100 \ul0\n osupersub\cf1\f2\fs23 77 {\shp {\*\shpinst\shpleft2205\shptop12810\shpright5006\shpbottom12830\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz170\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g87}{\bkmkend Pg87}\par\pard\qj \li2205\sb0\sl-403\slmult0 \par\pard\qj\li2205\s b0\sl-403\slmult0 \par\pard\qj\li2205\sb0\sl-403\slmult0 \par\pard\qj\li2205\ri9 14\sb238\sl-403\slmult0\fi0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf1\f2 \fs23 partial discharge as the Court held that the money laundering charge frame d against them \line \up0 \expndtw0\charscalex102 was defective.\ul0\super\cf8\f 9\fs23 53\ul0\nosupersub\cf1\f2\fs23 The Judge also noted that it was the court 's duty to ensure that charges \line \up0 \expndtw0\charscalex106 were correctly drafted and that they complied with the three major provisions in the \line \up 0 \expndtw0\charscalex106 Criminal Procedure Code (CPC), namely, sections 152, 1 53 and 154. In that case, it \line \up0 \expndtw-2\charscalex100 appeared that t he prosecution had complied with sections 152 and 153 but not with section \line \up0 \expndtw-2\charscalex100 154\ul0\super\cf8\f9\fs23 54\ul0\nosupersub\cf1\f 2\fs23 which requires that the charge contain particulars of the manner in whic h the alleged \line \up0 \expndtw-3\charscalex100 offence was committed. \par\pa rd\qj \li2205\ri912\sb396\sl-405\slmult0\fi0 \up0 \expndtw-1\charscalex100 In \u l0\nosupersub\cf7\f8\fs23 Syawal Haji Mohd Yassin v PP\ul0\nosupersub\cf1\f2\fs2 3 ,\ul0\super\cf8\f9\fs23 55\ul0\nosupersub\cf1\f2\fs23 the court explained tha t the purpose of sections 152, \up0 \expndtw-4\charscalex100 153 and 154 of the CPC was to enable the accused person to know the matter with which he \up0 \expn dtw0\charscalex104 or she is accused of at the very earliest stage. Therefore, t he offence imputed must be \up0 \expndtw0\charscalex103 positively and precisely stated so that the accused would know what he or she is being \up0 \expndtw0\ch

arscalex103 charged with, and be prepared to answer the charge as he or she best may.\ul0\super\cf8\f9\fs23 56 \par\pard\qj \li2205\ri914\sb398\sl-402\slmult0 \ up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs23 In money laundering proc eedings, the prosecution is required to specifically mention the \up0 \expndtw-3 \charscalex100 crime that was the source of the funds in question and it is not sufficient for the prosecution \up0 \expndtw-2\charscalex100 to generally state that the funds are derived from illegal activities. It appears that this legal \ up0 \expndtw0\charscalex100 impediment must be reviewed because it significantly reduces the prospect of successful \up0 \expndtw0\charscalex100 prosecution. It is interesting to note that in the UK, the Proceeds of Crime Act 2002 has \up0 \expndtw0\charscalex100 removed the predicate offence requirement. Under the UK law, there is no need to prove \up0 \expndtw0\charscalex102 either a specific of fence or a type of offence has been committed. As such, the accused \up0 \expndt w-3\charscalex100 could become liable for money laundering if the court is satis fied beyond reasonable doubt \up0 \expndtw-3\charscalex100 that the funds were d erived from some sort of underlying crime.\ul0\super\cf8\f9\fs23 57 \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\ li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li 2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb120\sl-218\slmult0 \up0 \expndtw-2 \charscalex100 \ul0\super\cf9\f10\fs18 53\ul0\nosupersub\cf10\f11\fs19 M Magesw ari, \u8216?Case Makes Legal History\u8217? \ul0\nosupersub\cf11\f12\fs19 The St ar\ul0\nosupersub\cf10\f11\fs19 22 April 2006. \par\pard\ql \li2205\sb2\sl-218\ slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 54\ul0\nosupersub\ cf10\f11\fs19 Section 154 of the Criminal Procedure Code states: \par\pard\qj \ li2205\ri935\sb1\sl-220\slmult0 \up0 \expndtw0\charscalex100 \u8216?When the nat ure of the case is such that the particulars mentioned in sections 152 and 153 d o not give the \up0 \expndtw-3\charscalex100 accused sufficient notice of the ma tter with which he is charged, the charge shall also contain such particulars \u p0 \expndtw-3\charscalex100 of the manner in which the alleged offence was commi tted as will be sufficient for that purpose. \par\pard\ql \li2205\sb22\sl-218\sl mult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 55\ul0\nosupersub\cf 10\f11\fs19 [2006] 6 CLJ 392. \par\pard\qj \li2205\ri945\sb1\sl-220\slmult0 \up 0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 56\ul0\nosupersub\cf10\f11\fs 19 In this case, the Court also held that the defect in the charge was in a mat ter of substance and not merely of \line \up0 \expndtw-3\charscalex100 form. Thi s was not a mere technical non-compliance of any provision of the law, which cou ld be condoned as \line \up0 \expndtw-4\charscalex100 an irregularity. \par\pard \qj \li2205\ri945\sb0\sl-220\slmult0 \up0 \expndtw0\charscalex105 \ul0\super\cf9 \f10\fs18 57\ul0\nosupersub\cf10\f11\fs19 R E Bell, \u8216?Abolishing the Conce pt of Predicate Offence\u8217? (2002) 6(2) \ul0\nosupersub\cf11\f12\fs19 Journal of Money Laundering \up0 \expndtw-2\charscalex100 Control,\ul0\nosupersub\cf10\ f11\fs19 137, 139. \par\pard\ql \li10565\sb14\sl-252\slmult0 \up0 \expndtw-3\ch arscalex100 \ul0\nosupersub\cf1\f2\fs23 78 {\shp {\*\shpinst\shpleft2205\shptop11914\shpright5006\shpbottom11934\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz165\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g88}{\bkmkend Pg88}\par\pard\qj \li2205\sb0\sl-403\slmult0 \par\pard\qj\li2205\s b0\sl-403\slmult0 \par\pard\qj\li2205\sb0\sl-403\slmult0 \par\pard\qj\li2205\ri9 14\sb238\sl-403\slmult0 \up0 \expndtw0\charscalex103 \ul0\nosupersub\cf1\f2\fs23 If a person is convicted of money laundering under AMLATFA, the person could fa ce a \line \up0 \expndtw0\charscalex100 maximum RM5 million fine, or up to five

years imprisonment, or both. While the amount \line \up0 \expndtw0\charscalex109 of the maximum fine is substantial, the term of imprisonment does not appear to be \line \up0 \expndtw0\charscalex106 proportionate to the gravity of the offen ce. The maximum of five years imprisonment \line \up0 \expndtw-1\charscalex100 a ppears to be significantly lower than the maximum term available for other serio us crimes \line \up0 \expndtw0\charscalex105 such as drugs and corruption offenc es. For example, section 4 of the Dangerous Drugs \line \up0 \expndtw0\charscale x107 (Forfeiture of Property) Act \up0 \expndtw0\charscalex109 1988\ul0\super\cf 8\f9\fs23 58\ul0\nosupersub\cf1\f2\fs23 imposes a maximum sentence of twenty ye ars \par\pard\qj \li2205\ri912\sb0\sl-404\slmult0 \up0 \expndtw0\charscalex106 i mprisonment and section 18 of the Anti-Corruption Act 1997\ul0\super\cf8\f9\fs23 59\ul0\nosupersub\cf1\f2\fs23 provides a maximum \line \up0 \expndtw0\charscal ex105 sentence of seven years. Furthermore, the maximum term of imprisonment for money \line \up0 \expndtw0\charscalex102 laundering offence under AMLATFA is al so lower than that in many other jurisdictions. \line \up0 \expndtw-1\charscalex 100 For example, in the UK, the maximum term is 14 years imprisonment, the US 20 years and \line \up0 \expndtw0\charscalex100 Australia 5-25 years, depending on the value of property and the level of knowledge of the \line \up0 \expndtw-1\c harscalex100 accused person. \par\pard\qj \li2205\ri914\sb397\sl-400\slmult0\fi0 \up0 \expndtw-1\charscalex100 Therefore, it can be said that the penalties for money laundering offence under AMLATFA \up0 \expndtw0\charscalex100 are not suff icient and need to be raised significantly to be in line with other jurisdiction s.\ul0\super\cf8\f9\fs23 60 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\ fs23 This is of vital importance because a sufficiently heavy penalty, apart fro m punishing the \up0 \expndtw0\charscalex100 offender, may also deter others who might be tempted to get involved in the crime as well \up0 \expndtw-1\charscale x100 as the particular money launderer from committing the crime again. \par\par d\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri914\sb20\sl-400\slmult0 \u p0 \expndtw0\charscalex100 At the time of writing, there have been only two conv ictions for money laundering offence \line \up0 \expndtw0\charscalex100 in Malay sia. The first case which was heard in 2005 involved a snatch thief, Abd. Khalid \line \up0 \expndtw-1\charscalex100 bin Hamid, who was convicted in the Kuala L umpur Session Court when he pleaded guilty \line \up0 \expndtw0\charscalex109 to the charge of money laundering under section 4 of AMLATFA.\ul0\super\cf8\f9\fs2 3 61\ul0\nosupersub\cf1\f2\fs23 Before he was \line \up0 \expndtw-1\charscalex1 00 prosecuted under AMLATFA, he had been convicted and sentenced to a total of n ine years \line \up0 \expndtw0\charscalex102 imprisonment for the offences of ro bbery and possession of stolen goods under the Penal \line \up0 \expndtw0\charsc alex102 Code. For each of the five money laundering charges, he was sentenced to three years \par\pard\qj \li2205\sb0\sl-240\slmult0 \par\pard\qj\li2205\ri932\s b233\sl-240\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\su per\cf9\f10\fs18 58\ul0\nosupersub\cf10\f11\fs19 Section 4 of the Dangerous Dru gs (Forfeiture of Property) Act 1988 makes it an offence for a person to deal \u p0 \expndtw-2\charscalex100 with, or use, hold, receive or conceal any property derived from activities relating to drug trafficking. \par\pard\qj \li2205\ri939 \sb0\sl-220\slmult0 \up0 \expndtw-1\charscalex100 \ul0\super\cf9\f10\fs18 59\ul0 \nosupersub\cf10\f11\fs19 Section 18 of the Anti-Corruption Act 1997 makes it a n offence for a person to deal with, use, hold, receive \up0 \expndtw-2\charscal ex100 or conceal gratification in relation to an offence under the Act. \par\par d\qj \li2205\ri945\sb0\sl-220\slmult0 \up0 \expndtw0\charscalex105 \ul0\super\cf 9\f10\fs18 60\ul0\nosupersub\cf10\f11\fs19 Bala Shanmugam et al,\u8216?Money La undering in Malaysia\u8217? (2003) 6(4) \ul0\nosupersub\cf11\f12\fs19 Journal of Money Laundering \up0 \expndtw-3\charscalex100 Control,\ul0\nosupersub\cf10\f11 \fs19 378. \par\pard\li2205\sb17\sl-218\slmult0\fi0 \up0 \expndtw-2\charscalex1 00 \ul0\super\cf9\f10\fs18 61\ul0\nosupersub\cf10\f11\fs19 This unreported case was decided in the Kuala Lumpur Session Court on 19 December 2005.\par\pard\li2 205\sb3\sl-264\slmult0\fi8360 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\ f2\fs23 79 {\shp {\*\shpinst\shpleft2205\shptop12810\shpright5006\shpbottom12830\shpfhdr0\s

hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz180\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g89}{\bkmkend Pg89}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\s b0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri9 17\sb249\sl-400\slmult0 \up0 \expndtw0\charscalex109 \ul0\nosupersub\cf1\f2\fs23 imprisonment. However the sentences were to run concurrently after his nine yea rs \line \up0 \expndtw-2\charscalex100 imprisonment for two previous convictions for robbery and possession of stolen goods. \par\pard\qj \li2205\ri914\sb397\sl -404\slmult0\fi0 \up0 \expndtw-2\charscalex100 The second case which was heard i n 2007 involved an ex- bank manager, Tan Khay Guan, \up0 \expndtw-3\charscalex10 0 who was sentenced to three years imprisonment and fined RM19.3 million after h e pleaded \up0 \expndtw0\charscalex103 guilty to \up0 \expndtw0\charscalex107 56 charges of money laundering.\ul0\super\cf8\f9\fs23 62\ul0\nosupersub\cf1\f2\fs2 3 In default of the fine, the offender was \up0 \expndtw-2\charscalex100 senten ced to 12 months imprisonment. The offender\u8217?s sentence for money launderin g was \up0 \expndtw0\charscalex102 to commence on the expiry of his five years i mprisonment for criminal breach of trust. \up0 \expndtw0\charscalex106 According to the facts of the case, he had opened two current accounts by falsifying \up0 \expndtw-3\charscalex100 signatures without the holder\u8217?s knowledge. He al so approved overdraft facilities amounting \up0 \expndtw-4\charscalex100 to RM21 millions for the two accounts and then withdrew the money from the accounts. He \up0 \expndtw0\charscalex100 transferred RM19.3 millions into the account of Ro ckwell and Bond in the Bank of East \up0 \expndtw0\charscalex100 Asia in Hong Ko ng for the purchase of shares.\ul0\super\cf8\f9\fs23 63 \par\pard\qj \li2205\ri9 16\sb396\sl-404\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf1\f2\fs2 3 Although there have only been two successful convictions so far, they nonethel ess send a \up0 \expndtw0\charscalex104 clear message that those involved in mon ey laundering activities would not be able to \up0 \expndtw0\charscalex102 escap e from the law. As at August 2008, apart from these two cases, there are 18 othe r \up0 \expndtw-1\charscalex100 cases that are still pending in the courts. It a ppears that the progress of these cases is quite \up0 \expndtw0\charscalex106 sl ow and this is due to the heavy workload of the Sessions Court and the appeal an d \up0 \expndtw-5\charscalex100 interlocutory actions taken by many defendants.\ ul0\super\cf8\f9\fs23 64 \par\pard\qj \li2205\ri915\sb397\sl-403\slmult0 \up0 \e xpndtw0\charscalex106 \ul0\nosupersub\cf1\f2\fs23 It is also interesting to note that from the statistics provided by the law enforcement \line \up0 \expndtw0\c harscalex100 authorities, it appears that money laundering investigations pursue d so far are based on a \line \up0 \expndtw0\charscalex100 broad range of predic ate economic crimes. However, none of the investigations has been \line \up0 \ex pndtw0\charscalex102 based on predicate narcotic offences. This is because the D DFP has its own provisions \line \up0 \expndtw-2\charscalex100 which criminalize dealings with drug proceeds and instruments. These provisions are able \line \u p0 \expndtw0\charscalex100 to apply to a broad range of property and capture a w ide range of \u8216?dealings\u8217? in property. \line \up0 \expndtw0\charscalex 100 Besides, they do not require that the person be charged with, or convicted o f, any predicate \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0 \sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb96\ sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\c f9\f10\fs18 62\ul0\nosupersub\cf10\f11\fs19 This unreported case was decided in the Kuala Lumpur Session Court on 25 January 2007. \par\pard\qj \li2205\ri948\s b1\sl-220\slmult0 \up0 \expndtw-3\charscalex100 \ul0\super\cf9\f10\fs18 63\ul0\n osupersub\cf10\f11\fs19 Embun Majid, \u8216?Ex-Bank Manager Hit with Record Fin

e and jailed 13 Years\u8217?, \ul0\nosupersub\cf11\f12\fs19 The Star\ul0\nosuper sub\cf10\f11\fs19 (Kuala Lumpur), 26 \up0 \expndtw-3\charscalex100 January 2007 , 1. \par\pard\li2205\sb20\sl-218\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0 \super\cf9\f10\fs18 64\ul0\nosupersub\cf10\f11\fs19 APG Mutual Evaluation Repor t on Malaysia 2007, 49.\par\pard\li2205\sb3\sl-264\slmult0\fi8360 \up0 \expndtw3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 80 {\shp {\*\shpinst\shpleft2205\shptop13480\shpright5006\shpbottom13500\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz173\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g90}{\bkmkend Pg90}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\s b0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri9 16\sb249\sl-400\slmult0\fi0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\ fs23 offence. The maximum available penalties are dissuasive.\ul0\super\cf8\f9\f s23 65\ul0\nosupersub\cf1\f2\fs23 Most importantly, the unique \up0 \expndtw0\c harscalex100 forfeiture regime under the DDFP and the reverse burden of proof pr ovisions appear to be \up0 \expndtw-1\charscalex100 more effective as a legal to ol for bringing criminals to justice. \par\pard\ql \li2205\sb0\sl-264\slmult0 \p ar\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb5\sl-264\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf4\f5\fs23 3.3.3 Reporting Obligati ons \par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri916\sb24\sl-40 0\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf1\f2\fs23 This section will outline the key reporting obligations imposed on the reporting institution s \line \up0 \expndtw-1\charscalex100 under AMLATFA. These obligations include t he obligation to report cash transactions and \line \up0 \expndtw0\charscalex100 suspicious transactions, to keep records, to identify and verify customers and to establish a \line \up0 \expndtw0\charscalex102 compliance program. Further an alysis of the impact of these obligations on the reporting \line \up0 \expndtw0\ charscalex102 institutions, particularly on banks, will be discussed in chapter four of this thesis. \par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \ri914\sb20\sl-400\slmult0 \up0 \expndtw0\charscalex105 Under AMLATFA, the repor ting institutions refer to those institutions carrying on the \up0 \expndtw0\cha rscalex112 business activities listed in the First Schedule. They can be divided into financial \up0 \expndtw0\charscalex103 institutions and designated non-fin ancial business and professions. The former includes \up0 \expndtw0\charscalex10 3 banks and non-bank financial institutions, while the latter includes company s ecretaries, \up0 \expndtw0\charscalex103 lawyers, accountants as well as the lic ensed casino in Malaysia. \par\pard\qj \li2205\ri913\sb396\sl-405\slmult0\fi0 \u p0 \expndtw-1\charscalex100 The reporting obligations were implemented in stages . When AMLATFA first came into \line \up0 \expndtw0\charscalex100 force in 2002 , the obligation only applied to banks and non-bank financial institutions.\ul0\ super\cf8\f9\fs23 66 \line \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf1\f2\ fs23 The obligations were extended to lawyers, accountants and company secretari es in 2004.\ul0\super\cf8\f9\fs23 67 \line \up0 \expndtw-4\charscalex100 \ul0\no supersub\cf1\f2\fs23 This was necessary to prevent criminals from gaining indire ct access to the financial system \line \up0 \expndtw0\charscalex101 through th e professional \up0 \expndtw0\charscalex101 \u8216?gatekeepers\u8217? who cou ld structure complicated financial \par\pard\qj \li2205\ri915\sb0\sl-400\slmu lt0 \up0 \expndtw-1\charscalex100 transactions with the view to hide tainted pro ceeds. In 2005, the obligations were invoked \line \up0 \expndtw-2\charscalex100 on licensed gaming outlets, Bank Pertanian Malaysia and notaries public.\ul0\su per\cf8\f9\fs23 68\ul0\nosupersub\cf1\f2\fs23 More recently, \line \up0 \expndt

w0\charscalex102 the obligations were further extended to money lenders, pawnbro kers, registered estate \line \up0 \expndtw0\charscalex102 agents, unit trust ma nagement companies, fund managers, future fund managers, trust \par\pard\ql \li2 205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li220 5\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\ sb179\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\s uper\cf9\f10\fs18 65\ul0\nosupersub\cf10\f11\fs19 Ibid. \par\pard\ql \li2205\sb 2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 66\ul0\no supersub\cf10\f11\fs19 Bank Negara Malaysia, Annual Report 2004, 140. \par\pard \ql \li2205\sb22\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10 \fs18 67\ul0\nosupersub\cf10\f11\fs19 Bank Negara Malaysia, Annual Report 2005, 149. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0 \super\cf9\f10\fs18 68\ul0\nosupersub\cf10\f11\fs19 Ibid 150. \par\pard\ql \li1 0565\sb104\sl-264\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\f s23 81 {\shp {\*\shpinst\shpleft2205\shptop13369\shpright5006\shpbottom13389\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz184\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g91}{\bkmkend Pg91}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\s b0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri9 17\sb249\sl-400\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs23 companies, the Malaysia Building Society Berhad, non-bank remittance service pr oviders \up0 \expndtw0\charscalex100 and non-bank affiliated issuers of charge c ards and credit cards.\ul0\super\cf8\f9\fs23 69 \par\pard\qj \li2205\ri914\sb399 \sl-402\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs23 In fulf illing their obligations under AMLATFA, the reporting institutions and individua ls \line \up0 \expndtw0\charscalex106 are protected by various immunities. Secti on 20 clearly overrides any obligation as to \line \up0 \expndtw0\charscalex107 secrecy or other restriction on the disclosure of information imposed by written law. \line \up0 \expndtw0\charscalex107 Therefore, banking secrecy cannot be in voked. In addition to this, section 24 confers \line \up0 \expndtw0\charscalex10 0 protection from civil, criminal and disciplinary proceedings in relation to th e disclosure of \line \up0 \expndtw-1\charscalex100 information in a suspicious transaction report or in connection with such report, whether at \line \up0 \exp ndtw0\charscalex105 the time the report is made or afterwards, except where the disclosure was done in bad \line \up0 \expndtw-3\charscalex100 faith. \par\pard\ qj \li2205\sb0\sl-401\slmult0 \par\pard\qj\li2205\ri912\sb18\sl-401\slmult0 \up0 \expndtw-2\charscalex100 Section 14 of AMLATFA requires the reporting instituti on to submit two types of reports. \line \up0 \expndtw0\charscalex103 The first type of report is the Cash Transaction Report (CTR). Under section 14(a) the \li ne \up0 \expndtw-4\charscalex100 institutions must report to the Financial Intel ligence Unit (FIU) any transaction that exceeds \line \up0 \expndtw0\charscalex1 02 the specified threshold amount. Recently, the FIU set the specified threshold amount at \line \up0 \expndtw0\charscalex102 RM50,000 per day. It must be noted that CTR was only invoked in September 2006 by \line \up0 \expndtw-2\charscalex 100 virtue of Anti Money Laundering (Invocation of Part IV) Order 2006. By virtu e of section \line \up0 \expndtw-4\charscalex100 13(4), the reporting institutio ns are required to aggregate multiple cash transactions in a day \line \up0 \exp ndtw0\charscalex100 that exceed the threshold amount as a single transaction if they are undertaken by, or on \line \up0 \expndtw0\charscalex100 behalf of, one person. This is aimed at eradicating \u8216?smurfing\u8217? or \u8216?structurin

g\u8217? activities. \line \up0 \expndtw0\charscalex100 \u8216?Smurfing\u8217? i s a typical money laundering technique used by criminals to avoid detection \lin e \up0 \expndtw0\charscalex100 and it involves breaking large cash transactions into smaller transactions so that they fall \line \up0 \expndtw-1\charscalex100 below the CTR threshold. \par\pard\qj \li2205\ri916\sb395\sl-406\slmult0 \up0 \e xpndtw0\charscalex105 The second type of report that reporting institutions have to submit is the Suspicious \line \up0 \expndtw-2\charscalex100 Transactions Re port (STR). Under section 14(b), a STR should be made when the identity \line \u p0 \expndtw0\charscalex100 of the persons involved, the transaction itself, or a ny other circumstances concerning the \line \up0 \expndtw0\charscalex100 transac tion, gives rise to suspicion. Here, the suspicious transaction does not have to be in \par\pard\li2205\sb0\sl-218\slmult0\par\pard\li2205\sb0\sl-218\slmult0\pa r\pard\li2205\sb0\sl-218\slmult0\par\pard\li2205\sb0\sl-218\slmult0\par\pard\li2 205\sb156\sl-218\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs 19\ul0\super\cf9\f10\fs18 69\ul0\nosupersub\cf10\f11\fs19 Bank Negara Malaysia, Financial Stability and Payment Systems Report 2006, 38.\par\pard\li2205\sb3\sl -264\slmult0\fi8360 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 82 {\shp {\*\shpinst\shpleft2205\shptop14151\shpright5006\shpbottom14171\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz177\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g92}{\bkmkend Pg92}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\s b0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri9 15\sb249\sl-400\slmult0 \up0 \expndtw0\charscalex104 \ul0\nosupersub\cf1\f2\fs23 form of cash and it applies to any amount of money. \u8216?Suspicion\u8217? is not defined under \up0 \expndtw-5\charscalex100 AMLATFA. In \ul0\nosupersub\cf7\ f8\fs23 Queensland Bacon v Rees\ul0\nosupersub\cf1\f2\fs23 ,\ul0\super\cf8\f9\fs 23 70\ul0\nosupersub\cf1\f2\fs23 Kitto J said that: \par\pard\qj \li2757\ri1481 \sb5\sl-370\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf13\f14\fs21 A suspicion that something exists is more than a mere idle wondering whether it exists \up0 \expndtw-2\charscalex100 or not; it is a positive feeling of actual apprehension or mistrust, amounting to \u8216?a slight \up0 \expndtw-4\charscale x100 opinion but without sufficient evidence. \par\pard\qj \li2205\sb0\sl-402\sl mult0 \par\pard\qj\li2205\ri914\sb2\sl-402\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf1\f2\fs23 BNM provides examples of suspicious transactions in its \ul0\nosupersub\cf7\f8\fs23 AML/CFT Sectoral Guidelines 1 \line \up0 \expnd tw-1\charscalex100 for Banking and Financial Institutions.\ul0\nosupersub\cf1\f2 \fs23 The examples of suspicious transactions provided \line \up0 \expndtw0\cha rscalex100 fall under the following categories: Cash Transaction; Accounts; International \line \up0 \expndtw0\charscalex104 Banking/Trade Finan ce; Employees and Agents; Private Banking and Trust Services; \line \up0 \expndt w0\charscalex100 Secured and Unsecured Lending; and Credit Cards. It is critical to have sufficiently clear \line \up0 \expndtw-2\charscalex100 examples of susp icious transactions to enable the reporting institutions to comply with the \lin e \up0 \expndtw-4\charscalex100 STR requirement effectively. It is generally acc epted that unclear reasons for suspicion may \line \up0 \expndtw-4\charscalex100 cause defensive reporting which could significantly jeopardize the STR regime. \par\pard\qj \li2205\ri914\sb398\sl-403\slmult0 \up0 \expndtw0\charscalex106 AML ATFA also imposes obligations on reporting institutions to identify and verify \ line \up0 \expndtw0\charscalex103 customers. Section 16(1) requires the reportin g institutions to maintain accounts in the \line \up0 \expndtw0\charscalex100 na me of accounts holders and prohibits the opening of anonymous accounts or accoun

ts \line \up0 \expndtw0\charscalex102 which are in a fictitious, false or incorr ect name. Sub-section (2) requires the reporting \line \up0 \expndtw-1\charscale x100 institutions to verify the identity of the account holder, the identity of the person in whose \line \up0 \expndtw0\charscalex110 name the transaction is c onducted as well as the identity of the beneficiary of the \line \up0 \expndtw0\ charscalex108 transaction, and to include the details in a record. Section \up0 \expndtw0\charscalex105 5(1) of the Anti-Money \par\pard\ql \li2205\sb112\sl-264 \slmult0\tx6587\tx10335 \up0 \expndtw0\charscalex102 Laundering and Anti-Terrori sm Financing \tab \up0 \expndtw0\charscalex100 (Reporting Obligations) Regulatio ns \tab \up0 \expndtw-3\charscalex100 2007 \par\pard\qj \li2205\ri916\sb20\sl-40 5\slmult0 \up0 \expndtw-3\charscalex100 (AMLATF Regulations) specifies that cust omer due diligence measures must be conducted \line \up0 \expndtw-1\charscalex10 0 when there is a suspicion of money laundering or when there is a doubt about t he veracity \line \up0 \expndtw0\charscalex103 or adequacy of information on the identity of the account holder which it has obtained \line \up0 \expndtw-1\char scalex100 previously. Furthermore, section 5(2) (b) of the AMLATF Regulations re quires a bank to \line \up0 \expndtw-1\charscalex100 identify and verify the ide ntity of the beneficial owner of its customer. A reporting \par\pard\ql \li2205\ sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb 0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\ sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb202\ sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\c f9\f10\fs18 70\ul0\nosupersub\cf10\f11\fs19 [1965] 115 CLR 266. \par\pard\ql \l i10565\sb15\sl-251\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\ fs23 83 {\shp {\*\shpinst\shpleft2205\shptop14151\shpright5006\shpbottom14171\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz200\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g93}{\bkmkend Pg93}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\s b0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri9 16\sb249\sl-400\slmult0 \up0 \expndtw0\charscalex103 \ul0\nosupersub\cf1\f2\fs23 institution that fails to comply with this obligation commits an offence and is liable to a \up0 \expndtw-3\charscalex100 fine not exceeding RM250,000.\ul0\sup er\cf8\f9\fs23 71 \par\pard\qj \li2205\ri915\sb397\sl-404\slmult0 \up0 \expndtw0 \charscalex107 \ul0\nosupersub\cf1\f2\fs23 Sections 13 and 17 set out the variou s record keeping requirements. Section 13(1) of \line \up0 \expndtw0\charscalex1 02 AMLATFA requires a reporting institution to keep a record of any transaction involving \line \up0 \expndtw0\charscalex105 domestic currency, or any foreign c urrency, exceeding the amount specified by BNM. \line \up0 \expndtw-2\charscalex 100 Under section 17(1), reporting institutions are obliged to maintain all reco rds for a period of \line \up0 \expndtw-1\charscalex100 not less than six years from the date an account has been closed or the transaction has been \line \up0 \expndtw0\charscalex107 completed or terminated. Subsection (4) states that fail ure to comply with the record \line \up0 \expndtw0\charscalex100 keeping require ment will render the institutions liable to a fine not exceeding one million \li ne \up0 \expndtw-2\charscalex100 ringgit, or to imprisonment for a term not exce eding one year, or both. Furthermore, section \line \up0 \expndtw-1\charscalex10 0 7(2) of the AMLATF Regulations has added a penalty for the continuing offence of failure \line \up0 \expndtw0\charscalex108 to retain records i.e. RM1000 for each day during which the offence continued after \line \up0 \expndtw-3\charscal ex100 conviction. \par\pard\ql \li2205\ri915\sb392\sl-410\slmult0\tx2555 \up0 \e

xpndtw0\charscalex104 To ensure compliance with the reporting obligations under AMLATFA, the reporting \line \up0 \expndtw-4\charscalex100 institutions have to establish a compliance programme. The compliance programme must: \line\tab \up0 \expndtw-4\charscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf 1\f2\fs23 establish procedures to ensure high standards of integrity of its em ployees and a \par\pard\ql \li2555\ri915\sb0\sl-410\slmult0\fi350\tx2906 \up0 \e xpndtw-4\charscalex100 system to evaluate the personal, employment and financial history of the employees; \up0 \expndtw-1\charscalex100 \u-3913?\ul0\nosupersub \cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 establish on-going employee training programmes and instruct employees on their \line\tab \up0 \expndtw-2\charscalex 100 responsibilities; and \par\pard\ql \li2555\ri916\sb9\sl-400\slmult0\tx2906 \ up0 \expndtw0\charscalex102 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub \cf1\f2\fs23 develop an independent audit function to check and test the effec tiveness of the \line\tab \up0 \expndtw-5\charscalex100 compliance programme.\ul 0\super\cf8\f9\fs23 72 \par\pard\qj \li2205\ri917\sb20\sl-400\slmult0 \up0 \expn dtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 AMLATFA clearly specifies that i t is the duty of the supervisory or licensing authorities to \line \up0 \expndtw -3\charscalex100 ensure that the reporting institutions adopt and implement the compliance programme.\ul0\super\cf8\f9\fs23 73 \par\pard\qj \li2205\ri915\sb400\ sl-400\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs23 Furtherm ore, AMLATFA also requires a reporting institution to designate a compliance \li ne \up0 \expndtw0\charscalex100 officer, at management level in each branch and subsidiary to report suspicious transactions \par\pard\ql \li2205\sb0\sl-218\slm ult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmul t0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb59\sl-218\slmult 0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 7 1\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Anti-Money Launder ing and Anti-Terrorism Financing Act 2001\ul0\nosupersub\cf10\f11\fs19 , s 86. \ par\pard\li2205\sb17\sl-218\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\super \cf9\f10\fs18 72\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Ant i-Money Laundering and Anti-Terrorism Financing Act 2001\ul0\nosupersub\cf10\f11 \fs19 , s 19(2).\par\pard\li2205\sb5\sl-218\slmult0\fi0 \up0 \expndtw-2\charscal ex100 \ul0\super\cf9\f10\fs18 73\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\c f11\f12\fs19 Anti-Money Laundering and Anti-Terrorism Financing Act 2001\ul0\nos upersub\cf10\f11\fs19 , s 21(1)(b).\par\pard\li2205\sb3\sl-264\slmult0\fi8360 \u p0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 84 {\shp {\*\shpinst\shpleft2205\shptop13704\shpright5006\shpbottom13724\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz212\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g94}{\bkmkend Pg94}\par\pard\qj \li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205\s b0\sl-402\slmult0 \par\pard\qj\li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205\ri9 14\sb241\sl-402\slmult0\fi0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2 \fs23 to FIU.\ul0\super\cf8\f9\fs23 74\ul0\nosupersub\cf1\f2\fs23 The complianc e officer is responsible for taking all reasonable steps to ensure that \up0 \ex pndtw-3\charscalex100 the institution complies with its reporting obligations un der AMLATFA.\ul0\super\cf8\f9\fs23 75\ul0\nosupersub\cf1\f2\fs23 Failure to do so, \up0 \expndtw0\charscalex109 could make him or her personally liable to a fi ne not exceeding RM100,000, or to \up0 \expndtw-3\charscalex100 imprisonment for a term not exceeding six months or to both.\ul0\nosupersub\cf17\f18\fs23 \ul0\ nosupersub\cf1\f2\fs23 In addition, he or she shall be \up0 \expndtw-1\charscale x100 liable to be punished with a daily fine not exceeding RM1,000 for everyday

during which \up0 \expndtw-3\charscalex100 the offence continues.\ul0\super\cf8\ f9\fs23 76\ul0\nosupersub\cf1\f2\fs23 Additionally, an institution that failed to comply with the reporting \up0 \expndtw-1\charscalex100 obligations could fin d itself subject to an action from FIU.\ul0\super\cf8\f9\fs23 77\ul0\nosupersub\ cf1\f2\fs23 To make matters worse, FIU \up0 \expndtw0\charscalex104 could make a recommendation for revocation of the institution\u8217?s licence if it has bee n \up0 \expndtw-3\charscalex100 convicted of an offence under AMLATFA.\ul0\super \cf8\f9\fs23 78 \par\pard\qj \li2205\ri914\sb397\sl-404\slmult0 \up0 \expndtw-1\ charscalex100 \ul0\nosupersub\cf1\f2\fs23 To enhance the awareness of the report ing obligations faced by the reporting institutions, \line \up0 \expndtw-2\chars calex100 FIU has conducted various briefing sessions for the compliance officers of the institutions. \line \up0 \expndtw0\charscalex104 These briefing sessions also create a platform for clarification of issues and problems \line \up0 \exp ndtw-3\charscalex100 relating to AML/CFT measures and the reporting mechanisms.\ ul0\super\cf8\f9\fs23 79\ul0\nosupersub\cf1\f2\fs23 While it is undeniable that \line \up0 \expndtw-1\charscalex100 the reporting obligations under AMLATFA wou ld protect the financial sector from being \line \up0 \expndtw-1\charscalex100 a bused by criminals and terrorists, they also place a significant compliance burd en on the \line \up0 \expndtw0\charscalex100 reporting institutions. For example , banks have to adopt new procedures to identify and \line \up0 \expndtw0\charsc alex105 verify customers, to report suspicious transactions and to establish ongoing training \line \up0 \expndtw0\charscalex102 programs. To facilitate compli ance banks may have to invest in new technology which \line \up0 \expndtw0\chars calex112 could place an unfair burden on the smaller banks. Failure to comply wi th these \line \up0 \expndtw-2\charscalex100 requirements could make banks liabl e for fines, imprisonment and revocation of licence. \par\pard\ql \li2205\sb0\sl -264\slmult0 \par\pard\ql\li2205\sb248\sl-264\slmult0 \up0 \expndtw-3\charscalex 100 \ul0\nosupersub\cf4\f5\fs23 3.3.4 Financial Intelligence \par\pard\qj \li2 205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri914\sb24\sl-400\slmult0 \up0 \expnd tw0\charscalex100 \ul0\nosupersub\cf1\f2\fs23 Part III of AMLATFA deals with fin ancial intelligence. Basically, it covers the functions \line \up0 \expndtw0\cha rscalex100 and powers of the competent authority responsible for undertaking fin ancial intelligence \line \up0 \expndtw0\charscalex100 activities. In January 20 02, the Minister of Finance appointed BNM as the competent \par\pard\ql \li2205\ sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb 0\sl-218\slmult0 \par\pard\ql\li2205\sb77\sl-218\slmult0 \up0 \expndtw-2\charsca lex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 74\ul0\nosupersub\cf10\f11 \fs19 \ul0\nosupersub\cf11\f12\fs19 Anti-Money Laundering and Anti-Terrorism Fi nancing Act 2001\ul0\nosupersub\cf10\f11\fs19 , s 19(4). \par\pard\ql \li2205\sb 2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 75\ul0\no supersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Anti-Money Laundering and Anti-Terrorism Financing Act 2001\ul0\nosupersub\cf10\f11\fs19 , s 22(1). \par\p ard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f 10\fs18 76\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Anti-Mone y Laundering and Anti-Terrorism Financing Act 2001\ul0\nosupersub\cf10\f11\fs19 , s 22(4). \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 77\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f 12\fs19 Anti-Money Laundering and Anti-Terrorism Financing Act 2001\ul0\nosupers ub\cf10\f11\fs19 , s 22(3). \par\pard\qj \li2205\ri3631\sb1\sl-220\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 78\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Anti-Money Laundering and Anti-Terrorism Financi ng Act 2001\ul0\nosupersub\cf10\f11\fs19 , s 21(2). \up0 \expndtw-2\charscalex10 0 \ul0\super\cf9\f10\fs18 79\ul0\nosupersub\cf10\f11\fs19 APG Mutual Evaluation Report on Malaysia 2007, 67. \par\pard\ql \li10565\sb14\sl-252\slmult0 \up0 \exp ndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 85 {\shp {\*\shpinst\shpleft2205\shptop13033\shpright5006\shpbottom13053\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz227\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}}

{\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g95}{\bkmkend Pg95}\par\pard\qj \li2205\sb0\sl-405\slmult0 \par\pard\qj\li2205\s b0\sl-405\slmult0 \par\pard\qj\li2205\sb0\sl-405\slmult0 \par\pard\qj\li2205\ri9 15\sb230\sl-405\slmult0 \up0 \expndtw0\charscalex103 \ul0\nosupersub\cf1\f2\fs23 authority under AMLATFA. As a result, BNM established a new department, Financi al \up0 \expndtw0\charscalex100 Intelligence Unit (FIU), to carry out the functi ons of the competent authority. Apart from \up0 \expndtw0\charscalex105 this, FI U also acts as the national AML/CFT regulator. In this role it is responsible fo r \up0 \expndtw0\charscalex108 formulating and implementing a comprehensive nati onal AML/CFT regime and the \up0 \expndtw-3\charscalex100 promotion of national awareness of money laundering issues. \par\pard\qj \li2205\ri913\sb400\sl-400\sl mult0 \up0 \expndtw-1\charscalex100 Section 8 of AMLATFA illustrates the extent of the legal power given to FIU for it to carry \up0 \expndtw-2\charscalex100 ou t its role as competent authority. It has, for example, the power: \par\pard\ql \li2556\ri914\sb20\sl-400\slmult0\tx2906 \up0 \expndtw-1\charscalex100 \u-3913?\ ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 to receive and analyze information and reports from any person, including reports \line\tab \up0 \expn dtw-2\charscalex100 issued by reporting institutions; \par\pard\ql \li2556\ri913 \sb20\sl-400\slmult0\tx2906\tx2906\tx2906 \up0 \expndtw-1\charscalex100 \u-3913? \ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 to send any report re ceived or any information derived from any such report to an \line\tab \up0 \exp ndtw0\charscalex105 enforcement agency, if it is satisfied or has reason to beli eve or suspect that a \line\tab \up0 \expndtw-1\charscalex100 transaction involv es proceeds of an unlawful activity or a serious offence is being, \line\tab \up 0 \expndtw-2\charscalex100 has been or is about to be committed; and \par\pard\q l \li2556\ri914\sb16\sl-406\slmult0\tx2906\tx2906\tx2906 \up0 \expndtw0\charscal ex104 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 to send any information derived from an examination carried out on reporting \line\tab \up0 \expndtw0\charscalex100 obligations to an enforcement agency if it has reas on to suspect that a transaction \line\tab \up0 \expndtw-2\charscalex100 involve s proceeds of an unlawful activity or a serious offence is being, has been or \l ine\tab \up0 \expndtw-3\charscalex100 is about to be committed.\ul0\super\cf8\f9 \fs23 80 \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb248\sl-26 4\slmult0 \up0 \expndtw-5\charscalex100 \ul0\nosupersub\cf1\f2\fs23 Additionally , FIU may also: \par\pard\ql \li2556\sb156\sl-264\slmult0 \up0 \expndtw-3\charsc alex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 compi le statistic and records; \par\pard\ql \li2556\ri916\sb44\sl-400\slmult0\tx2906 \up0 \expndtw0\charscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersu b\cf1\f2\fs23 give instructions to a reporting institution in relation to any report or information \line\tab \up0 \expndtw-1\charscalex100 received; and \par \pard\ql \li2556\ri915\sb20\sl-400\slmult0\tx2906 \up0 \expndtw-1\charscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 make recommen dations to the relevant supervisory authority, enforcement agency \line\tab \up0 \expndtw-1\charscalex100 and reporting institutions arising out of any report o r information received.\ul0\super\cf8\f9\fs23 81 \par\pard\qj \li2205\ri914\sb39 2\sl-410\slmult0 \up0 \expndtw0\charscalex103 \ul0\nosupersub\cf1\f2\fs23 As a c ompetent authority, FIU is considered the central agency to receive and analyze \line \up0 \expndtw-1\charscalex100 STRs and CTRs, as well as to disseminate fin ancial information from these reports to the \line \up0 \expndtw-1\charscalex100 relevant enforcement agencies for investigation into suspected criminal offence s. Since \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\ slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb35\sl-218\s lmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\f s18 80\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Anti-Money La

undering and Anti-Terrorism Financing Act 2001\ul0\nosupersub\cf10\f11\fs19 , s 8(2). \par\pard\li2205\sb20\sl-218\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul 0\super\cf9\f10\fs18 81\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\f s19 Anti-Money Laundering and Anti-Terrorism Financing Act 2001\ul0\nosupersub\c f10\f11\fs19 , s 8(3).\par\pard\li2205\sb3\sl-264\slmult0\fi8360 \up0 \expndtw-3 \charscalex100 \ul0\nosupersub\cf1\f2\fs23 86 {\shp {\*\shpinst\shpleft2205\shptop13928\shpright5006\shpbottom13948\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz233\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g96}{\bkmkend Pg96}\par\pard\qj \li2205\sb0\sl-405\slmult0 \par\pard\qj\li2205\s b0\sl-405\slmult0 \par\pard\qj\li2205\sb0\sl-405\slmult0 \par\pard\qj\li2205\ri9 15\sb230\sl-405\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf1\f2\fs2 3 November 2005, FIU introduced the Financial Intelligence System (FINS) to enab le online \up0 \expndtw0\charscalex100 submission of STRs and CTRs by the report ing institutions. FINs will enhance the quality \up0 \expndtw-2\charscalex100 of the financial intelligence analysis through the use of advanced intelligence so ftware, case \up0 \expndtw0\charscalex105 management tools and information disse mination software. These new features would \up0 \expndtw-2\charscalex100 signif icantly facilitate and expedite investigations by the law enforcement. \par\pard \qj \li2205\ri915\sb400\sl-400\slmult0 \up0 \expndtw0\charscalex100 Section 9(1) of AMLATFA empowers FIU to authorize any enforcement agency to have \line \up0 \expndtw0\charscalex108 access to such information as FIU may specify, for the p urposes of performing the \line \up0 \expndtw-2\charscalex100 enforcement agency \u8217?s function. For this purpose, FIU has the absolute discretion to decide \ line \up0 \expndtw0\charscalex106 what information to release to an enforcement agency. Furthermore, subsection \up0 \expndtw-3\charscalex100 (3) \par\pard\qj \ li2205\ri914\sb0\sl-405\slmult0 \up0 \expndtw0\charscalex111 empowers FIU to aut horize the Attorney General to have access to the specified \up0 \expndtw0\chars calex106 information in dealing with the request that are related to possible or actual criminal \up0 \expndtw0\charscalex102 offences made to a foreign state b y Malaysia or vice versa. However, such requests are \up0 \expndtw0\charscalex10 4 governed by the Mutual Assistance in Criminal Matters Act 2002 (MACMA) and the \up0 \expndtw-5\charscalex100 Mutual Assistance in Criminal Matters Regulations 2003. \par\pard\qj \li2205\ri915\sb394\sl-402\slmult0 \up0 \expndtw-1\charscale x100 As already mentioned, the extent of assistance and cooperation that Malaysi an authorities \up0 \expndtw-2\charscalex100 receive from a foreign jurisdiction in money laundering investigations depends on whether \up0 \expndtw-2\charscale x100 there is an applicable bilateral or multi-lateral mutual legal assistance t reaty (MLAT) with \up0 \expndtw0\charscalex102 the relevant foreign jurisdiction . To date, Malaysia has signed MLATs with Singapore, \up0 \expndtw0\charscalex10 0 Indonesia, Brunei, Thailand, Myanmar, Laos, Cambodia, Vietnam, Philippi nes and \up0 \expndtw-1\charscalex100 Australia. But, even if there is no treat y or agreement in place, assistance may be given to \up0 \expndtw0\charscalex111 any foreign state by the special direction of the Minister of Home Affairs on t he \up0 \expndtw-5\charscalex100 recommendation of the Attorney General.\ul0\sup er\cf8\f9\fs23 82 \par\pard\qj \li2205\ri914\sb396\sl-405\slmult0 \up0 \expndtw3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 Section 10 of AMLATFA permits FIU to disclose financial intelligence to a corresponding \up0 \expndtw-3\charscalex10 0 authority of a foreign state pursuant to any existing arrangement between Mala ysia and the \up0 \expndtw0\charscalex106 foreign state. However, FIU may only e nter into an agreement with a corresponding \up0 \expndtw0\charscalex109 authori

ty in a foreign state on cooperation in relation to the exchange of financial \u p0 \expndtw-5\charscalex100 intelligence if the following conditions are met: \p ar\pard\li2205\sb0\sl-218\slmult0\par\pard\li2205\sb0\sl-218\slmult0\par\pard\li 2205\sb192\sl-218\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\f s19\ul0\super\cf9\f10\fs18 82\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11 \f12\fs19 Mutual Assistance in Criminal Matters Act 2002\ul0\nosupersub\cf10\f11 \fs19 , s 18.\par\pard\li2205\sb3\sl-264\slmult0\fi8360 \up0 \expndtw-3\charscal ex100 \ul0\nosupersub\cf1\f2\fs23 87 {\shp {\*\shpinst\shpleft2205\shptop14151\shpright5006\shpbottom14171\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz185\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g97}{\bkmkend Pg97}\par\pard\ql \li2556\sb0\sl-406\slmult0 \par\pard\ql\li2556\s b0\sl-406\slmult0 \par\pard\ql\li2556\sb0\sl-406\slmult0 \par\pard\ql\li2556\ri9 12\sb246\sl-406\slmult0\fi0\tx2906\tx2906\tx2906\tx2906\tx2906 \up0 \expndtw0\ch arscalex102 \ul0\nosupersub\cf1\f2\fs23 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul 0\nosupersub\cf1\f2\fs23 the exchange of financial intelligence is limited to information obtained by FIU \line\tab \up0 \expndtw-2\charscalex100 relating to suspicious transactions reports and cash transactions reports;\ul0\super\cf8\f9\ fs23 83 \line \up0 \expndtw0\charscalex102 \ul0\nosupersub\cf1\f2\fs23 \u-3913?\ ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 there exist a governme nt to government arrangement between Malaysia and the \line\tab \up0 \expndtw-4\ charscalex100 foreign state under which the corresponding authority of the forei gn state has agreed \line\tab \up0 \expndtw0\charscalex103 to communicate to Mal aysia, upon Malaysia\u8217?s request, information received by \line\tab \up0 \ex pndtw0\charscalex107 them that corresponds to anything required to be disclosed to FIU relating to \line\tab \up0 \expndtw-5\charscalex100 suspicious transactio ns reports and cash transactions reports;\ul0\super\cf8\f9\fs23 84 \par\pard\ql \li2555\ri914\sb19\sl-400\slmult0\tx2906\tx2906 \up0 \expndtw0\charscalex100 \ul 0\nosupersub\cf1\f2\fs23 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf 1\f2\fs23 FIU is satisfied that the foreign corresponding authority has given an appropriate \line\tab \up0 \expndtw-4\charscalex100 undertaking for protectin g the confidentiality of any information communicated to it \line\tab \up0 \expn dtw-5\charscalex100 and that it will not be used as evidence in any proceedings. \ul0\super\cf8\f9\fs23 85 \par\pard\qj \li2205\ri914\sb396\sl-405\slmult0 \up0 \ expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs23 Furthermore, section 29(3) of AMLATFA empowers FIU and the relevant enforcement \line \up0 \expndtw0\charscal ex104 agency to coordinate and cooperate with any other domestic and foreign enf orcement \line \up0 \expndtw0\charscalex100 agency in any investigations into mo ney laundering and terrorism financing offences in \line \up0 \expndtw-2\charsca lex100 Malaysia and in foreign jurisdictions. As of August 2008, FIU has entered into agreements \line \up0 \expndtw-2\charscalex100 with Indonesia, Philippines , Thailand, China, Sri Lanka, Bangladesh and Brunei. \par\pard\qj \li2205\ri917\ sb400\sl-400\slmult0 \up0 \expndtw0\charscalex103 It is interesting to note that FIU has been a member of the Egmont Group of Financial \line \up0 \expndtw0\cha rscalex102 Intelligence Units since July \up0 \expndtw0\charscalex105 2003. The Egmont Group provides support for FIUs to \par\pard\qj \li2205\ri915\sb0\sl-404\ slmult0 \up0 \expndtw0\charscalex105 improve their respective national AML/CFT p rograms. This includes expanding and \line \up0 \expndtw0\charscalex100 systemat izing the exchange of financial intelligence among its members, and improving \l ine \up0 \expndtw0\charscalex105 expertise and capabilities of the intelligence personnel. The Egmont Group provides \line \up0 \expndtw0\charscalex108 opportun

ities for BNM and other FIUs to rapidly exchange critical information on \line \ up0 \expndtw-3\charscalex100 transnational crime.\ul0\super\cf8\f9\fs23 86\ul0\n osupersub\cf1\f2\fs23 Since 2006, the Malaysian FIU has represented the Asia Gr oup in the \line \up0 \expndtw-4\charscalex100 Egmont Committee. \par\pard\qj \l i2205\ri916\sb397\sl-400\slmult0 \up0 \expndtw0\charscalex104 It appears that si nce its establishment, FIU has made significant progress fulfilling its \line \u p0 \expndtw0\charscalex104 functions. Besides, FIU has also taken a lead role in the region by providing training, \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\ pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pa rd\ql\li2205\sb57\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f1 0\fs19\ul0\super\cf9\f10\fs18 83\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\c f11\f12\fs19 Anti-Money Laundering and Anti-Terrorism Financing Act 2001\ul0\nos upersub\cf10\f11\fs19 , s 10(1). \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \e xpndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 84\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Anti-Money Laundering and Anti-Terrorism Financing Act 2001\ul0\nosupersub\cf10\f11\fs19 , s 10(1) (a). \par\pard\ql \li2205\sb2\s l-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 85\ul0\nosup ersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Anti-Money Laundering and Ant i-Terrorism Financing Act 2001\ul0\nosupersub\cf10\f11\fs19 , s 10(1) (b). \par\ pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\ f10\fs18 86\ul0\nosupersub\cf10\f11\fs19 Ibid. \par\pard\ql \li10565\sb15\sl-25 1\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 88 {\shp {\*\shpinst\shpleft2205\shptop13480\shpright5006\shpbottom13500\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz209\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g98}{\bkmkend Pg98}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\s b0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri9 14\sb249\sl-400\slmult0\fi0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf1\f2 \fs23 technical assistance and mentoring the other APG members, especially those from ASEAN \up0 \expndtw-1\charscalex100 countries.\ul0\super\cf8\f9\fs23 87\ul 0\nosupersub\cf1\f2\fs23 Given the progress made by FIU so far, it appears that it will greatly contribute \up0 \expndtw-2\charscalex100 to the effective imple mentation of the AML/CFT regime in Malaysia. \par\pard\ql \li2205\sb0\sl-264\slm ult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb5\sl-264\slmul t0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf4\f5\fs23 3.3.5 Investigatio n \par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri915\sb24\sl-400\ slmult0 \up0 \expndtw0\charscalex103 \ul0\nosupersub\cf1\f2\fs23 As mentioned ea rlier, AMLATFA is implemented by a group of multi-law enforcement \line \up0 \ex pndtw0\charscalex103 agencies lead by FIU. Therefore, AMLATFA has given investig ation powers not just to \line \up0 \expndtw-1\charscalex100 FIU but also to oth er law enforcement agencies, such as the Royal Malaysia Police (RMP), \line \up0 \expndtw0\charscalex101 Anti-Corruption Agency \up0 \expndtw0\charscalex112 (AC A) and BNM. In practice there is a certain degree of \par\pard\qj \li2205\ri914\ sb0\sl-404\slmult0 \up0 \expndtw0\charscalex103 specialization among the differe nt agencies. For example, money laundering relating to \up0 \expndtw0\charscalex 111 drug offences is investigated by RMP, money laundering relating to corruptio n is \up0 \expndtw0\charscalex100 investigated by ACA and money laundering relat ing to banks and financial institutions is \up0 \expndtw0\charscalex105 investig ated by BNM. As the competent authority, FIU may exercise all the powers of \up0 \expndtw0\charscalex109 investigation provided under AMLATFA to conduct an inve stigation regarding the \up0 \expndtw-3\charscalex100 commission of an offence u

nder Part III or IV of the Act.\ul0\super\cf8\f9\fs23 88 \par\pard\ql \li2205\ri 916\sb389\sl-410\slmult0\tx2556 \up0 \expndtw0\charscalex105 \ul0\nosupersub\cf1 \f2\fs23 Given the complex nature of money laundering and terrorism financing, A MLATFA \up0 \expndtw-4\charscalex100 confers a wide range of powers to investiga ting officers. These include powers to: \line \tab \up0 \expndtw-4\charscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 enter any pr emises belonging to or in the possession or control of the person \par\pard\qj \ li2906\ri1468\sb19\sl-400\slmult0 \up0 \expndtw-1\charscalex100 or the person\u8 217?s employee, and in the case of a body corporate, its director or \up0 \expnd tw-5\charscalex100 manager; \par\pard\ql \li2556\sb133\sl-264\slmult0 \up0 \expn dtw-3\charscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\ fs23 search the premises for any property, record, report or document; \par\pa rd\ql \li2556\ri1468\sb44\sl-400\slmult0\tx2906 \up0 \expndtw-1\charscalex100 \u -3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 inspect, make c opies of or take extracts from any record, report or document \line\tab \up0 \ex pndtw-2\charscalex100 so seized and detained; \par\pard\ql \li2556\ri1466\sb20\s l-400\slmult0\tx2906\tx2906 \up0 \expndtw-3\charscalex100 \u-3913?\ul0\nosupersu b\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 take possession of and remove from the premises, any property, record, report \line\tab \up0 \expndtw0\charscalex10 3 or document so seized and detained it for such period as the investigating \li ne\tab \up0 \expndtw-3\charscalex100 officer deems necessary; \par\pard\ql \li22 05\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205 \sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\s b39\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\sup er\cf9\f10\fs18 87\ul0\nosupersub\cf10\f11\fs19 APG Mutual Evaluation Reports o n Malaysia 2007, 72. \par\pard\qj \li2205\ri939\sb1\sl-220\slmult0 \up0 \expndtw 0\charscalex100 \ul0\super\cf9\f10\fs18 88\ul0\nosupersub\cf10\f11\fs19 Part II I of AMLATFA deals with the functions and powers of the competent authority and Part IV deals \up0 \expndtw-1\charscalex100 with the reporting obligations impos ed on the reporting institutions. \par\pard\ql \li10565\sb14\sl-252\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 89 {\shp {\*\shpinst\shpleft2205\shptop13704\shpright5006\shpbottom13724\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz191\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g99}{\bkmkend Pg99}\par\pard\ql \li2556\sb0\sl-400\slmult0 \par\pard\ql\li2556\s b0\sl-400\slmult0 \par\pard\ql\li2556\sb0\sl-400\slmult0 \par\pard\ql\li2556\ri1 466\sb269\sl-400\slmult0\tx2906\tx2906\tx2906\tx2906 \up0 \expndtw-2\charscalex1 00 \ul0\nosupersub\cf1\f2\fs23 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosuper sub\cf1\f2\fs23 search any person who is in, or on, such premises, if the inve stigating officer \line\tab \up0 \expndtw0\charscalex100 has reason to suspect t hat that person has on his or her person any property, \line\tab \up0 \expndtw0\ charscalex102 record, report or document, including personal document, necessary in the \line\tab \up0 \expndtw-4\charscalex100 investigating officer\u8217?s op inion, for the purpose of investigation into an offence \line\tab \up0 \expndtw5\charscalex100 under this Act; \par\pard\qj \li2556\ri2214\sb4\sl-420\slmult0 \ up0 \expndtw-2\charscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersu b\cf1\f2\fs23 break open, examine and search any article, container or recepta cle; or \up0 \expndtw-3\charscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\ nosupersub\cf1\f2\fs23 stop, detain or search any conveyance.\ul0\super\cf8\f9 \fs23 89 \par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri917\sb17\ sl-400\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs23 Investig

ating officers may search, seize and arrest without a warrant.\ul0\super\cf8\f9\ fs23 90\ul0\nosupersub\cf1\f2\fs23 However, this is \line \up0 \expndtw0\charsc alex103 subject to section \up0 \expndtw0\charscalex109 48 where the Public Pr osecutor\u8217?s permission is required if the \par\pard\qj \li2205\ri914\sb0\sl -400\slmult0 \up0 \expndtw-1\charscalex100 investigation relates to a financial institution. In this respect, an investigating officer may \up0 \expndtw-3\chars calex100 also take possession of any related material, if in his or her opinion, possession is needed in \up0 \expndtw0\charscalex102 order to carry out the inv estigation or material may be interfered or destroyed unless is \up0 \expndtw-5\ charscalex100 taken or the material is needed as evidence.\ul0\super\cf8\f9\fs23 91 \par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri914\sb20\sl-40 0\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf1\f2\fs23 Furtherm ore, section 32 of AMLATFA empowers the investigating officer to examine any \up 0 \expndtw0\charscalex100 person in relation to a money laundering investigation . Sub section (2) provides that the \up0 \expndtw-2\charscalex100 investigating officer can force any person to attend an interview, produce any document or \up 0 \expndtw-2\charscalex100 provide any statement on oath. Under subsection (4), the person must answer all questions \up0 \expndtw-1\charscalex100 put to him or her by the investigating officer except questions which may incriminate him \up 0 \expndtw-3\charscalex100 or her in some way. It is clear that this provision u pholds the common law privilege against \up0 \expndtw-1\charscalex100 self-incri mination.\ul0\super\cf8\f9\fs23 92\ul0\nosupersub\cf1\f2\fs23 Any person who fa ils to cooperate with the investigating officer may \up0 \expndtw-2\charscalex10 0 be held liable for an offence under subsection (8). \par\pard\qj \li2205\sb0\s l-400\slmult0 \par\pard\qj\li2205\ri916\sb20\sl-400\slmult0 \up0 \expndtw-2\char scalex100 Section 35 deals with tipping-off offences. Tipping-off may occur when a person discloses \line \up0 \expndtw-2\charscalex100 the information that an investigating officer is conducting an investigation or a STR has \par\pard\ql \ li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li 2205\sb175\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ ul0\super\cf9\f10\fs18 89\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12 \fs19 Anti-Money Laundering and Anti-Terrorism Financing Act 2001\ul0\nosupersub \cf10\f11\fs19 , s 31(1). \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw2\charscalex100 \ul0\super\cf9\f10\fs18 90\ul0\nosupersub\cf10\f11\fs19 \ul0\no supersub\cf11\f12\fs19 Anti-Money Laundering and Anti-Terrorism Financing Act 20 01\ul0\nosupersub\cf10\f11\fs19 , s 41. \par\pard\ql \li2205\sb22\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 91\ul0\nosupersub\cf10\f1 1\fs19 \ul0\nosupersub\cf11\f12\fs19 Anti-Money Laundering and Anti-Terrorism F inancing Act 2001\ul0\nosupersub\cf10\f11\fs19 , s 48(3). \par\pard\qj \li2205\r i592\sb1\sl-220\slmult0\fi0 \up0 \expndtw-1\charscalex100 \ul0\super\cf9\f10\fs1 8 92\ul0\nosupersub\cf10\f11\fs19 Lord Goddard in \ul0\nosupersub\cf11\f12\fs19 Blunt v Park Lane Hotel Ltd.\ul0\nosupersub\cf10\f11\fs19 [1942] 2 ICB 253 exp lained the common law privilege against \up0 \expndtw-2\charscalex100 self-incri mination as follows: \par\pard\qj \li2205\ri583\sb0\sl-220\slmult0 \up0 \expndtw -2\charscalex100 \u8216?It is a fundamental principle of the common law that, in civil and criminal cases, a person is not obliged to answer \line \up0 \expndtw -1\charscalex100 any question or produce any document if the answer or document would have a tendency to expose that person, \line \up0 \expndtw-1\charscalex100 either directly or indirectly, to a criminal conviction the imposition of a pen alty or the forfeiture of an estate.\u8217? \par\pard\ql \li10565\sb14\sl-252\sl mult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 90 {\shp {\*\shpinst\shpleft2205\shptop12585\shpright5006\shpbottom12605\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz194\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s

p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g100}{\bkmkend Pg100}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i914\sb249\sl-400\slmult0 \up0 \expndtw0\charscalex107 \ul0\nosupersub\cf1\f2\fs 23 been made and this disclosure will likely to prejudice the investigation. To prove the \line \up0 \expndtw0\charscalex102 offence, the prosecution must show that the person has the knowledge or had a reason to \line \up0 \expndtw-2\chars calex100 suspect that the investigation is being conducted or is about to be con ducted or that the STR \line \up0 \expndtw-3\charscalex100 has been made.\ul0\su per\cf8\f9\fs23 93 \par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i916\sb20\sl-400\slmult0 \up0 \expndtw0\charscalex107 \ul0\nosupersub\cf1\f2\fs2 3 Section 37(1) allows the investigating officer to request the delivery of any property, \up0 \expndtw0\charscalex103 record, report or document, and if the re quest is not complied with, the officer can seize \up0 \expndtw0\charscalex100 t hem under section 38. In addition to this, a person who fails to comply with sec tion 37(1) \up0 \expndtw0\charscalex107 could face a fine not exceeding one mill ion ringgit or to imprisonment for a term not \up0 \expndtw-3\charscalex100 exce eding one year or both. \par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2 205\ri915\sb20\sl-400\slmult0 \up0 \expndtw0\charscalex102 It must be noted that if the investigating officer wants to examine a person currently in a \line \up 0 \expndtw-1\charscalex100 foreign jurisdiction, the officer can request attenda nce of such person by virtue of section 9 \line \up0 \expndtw0\charscalex100 of MACMA.\ul0\super\cf8\f9\fs23 94\ul0\nosupersub\cf1\f2\fs23 However, the attenda nce of such person is on a voluntary basis. Therefore, \line \up0 \expndtw0\char scalex104 if the person refuses to attend, he or she cannot be compelled to do s o under MACMA. \line \up0 \expndtw-2\charscalex100 Nevertheless, the Attorney Ge neral can request the appropriate authority of the foreign state \line \up0 \exp ndtw0\charscalex100 to arrange for the relevant evidence to be obtained and sent to Malaysia under section 8 of \line \up0 \expndtw-1\charscalex100 MACMA. \par\ pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri915\sb20\sl-400\slmult0 \fi0 \up0 \expndtw0\charscalex105 Section 8 was discussed recently in the case o f \ul0\nosupersub\cf7\f8\fs23 Tan Sri Eric Chia Eng Hock v Public \line \up0 \ex pndtw-1\charscalex100 Prosecutor\ul0\nosupersub\cf1\f2\fs23 .\ul0\super\cf8\f9\f s23 95\ul0\nosupersub\cf1\f2\fs23 There, the appellant was tried in the Session s Court on a charge of criminal \line \up0 \expndtw0\charscalex100 breach of tru st. During the trial, the Public Prosecutor (PP) applied for the admission of \l ine \up0 \expndtw0\charscalex106 certain evidence taken in Hong Kong by a magist rate of Hong Kong pursuant to the \line \up0 \expndtw-3\charscalex100 Attorney G eneral\u8217?s request under section 8(1) of MACMA. The Session Court rejected t he \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult 0 \par\pard\ql\li2205\sb75\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\sup er\cf9\f10\fs19\ul0\super\cf9\f10\fs18 93\ul0\nosupersub\cf10\f11\fs19 \ul0\nos upersub\cf11\f12\fs19 Anti-Money Laundering and Anti-Terrorism Financing Act 200 1\ul0\nosupersub\cf10\f11\fs19 , s 35(1) (a) (b). \par\pard\ql \li2205\sb2\sl-21 8\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 94\ul0\nosupersu b\cf10\f11\fs19 Section 9 of MACMA states as follows: \par\pard\ql \li2205\ri94 7\sb0\sl-230\slmult0\tx2556\tx2556 \up0 \expndtw-1\charscalex100 (1) The Attorn ey General may request the appropriate authority of a foreign State to assist in arranging for \line\tab \up0 \expndtw0\charscalex102 the attendance in Malaysia of a person in the foreign State for the purpose of giving any evidence or \lin e\tab \up0 \expndtw0\charscalex102 assistance if he is satisfied that -\par\pard \ql \li2605\ri934\sb0\sl-220\slmult0\tx2906 \up0 \expndtw0\charscalex105 (a) th ere are reasonable grounds to believe that the person is capable of giving such evidence or \line\tab \up0 \expndtw-2\charscalex100 assistance relevant to a cri minal matter involving a serious offence; and \par\pard\ql \li2600\sb1\sl-210\sl mult0 \up0 \expndtw-3\charscalex100 (b)\ul0\nosupersub\cf18\f19\fs19 \ul0\nosup ersub\cf10\f11\fs19 the person consents to travel to Malaysia for the purpose o f giving such evidence or assistance. \par\pard\ql \li2269\ri945\sb54\sl-230\slm

ult0\tx2553\tx2553 \up0 \expndtw-2\charscalex100 (2) The Attorney General may ma ke arrangements with the appropriate authority of the foreign State for the \lin e\tab \up0 \expndtw0\charscalex100 purpose of the attendance of that person in M alaysia, his return to the foreign State and other relevant \line\tab \up0 \expn dtw0\charscalex100 matters. \par\pard\li2205\sb18\sl-218\slmult0\fi0 \up0 \expnd tw-2\charscalex100 \ul0\super\cf9\f10\fs18 95\ul0\nosupersub\cf10\f11\fs19 [200 6] 3 CLJ 693.\par\pard\li2205\sb3\sl-264\slmult0\fi8360 \up0 \expndtw-3\charscal ex100 \ul0\nosupersub\cf1\f2\fs23 91 {\shp {\*\shpinst\shpleft2205\shptop11624\shpright5006\shpbottom11644\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz167\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g101}{\bkmkend Pg101}\par\pard\qj \li2205\sb0\sl-405\slmult0 \par\pard\qj\li2205 \sb0\sl-405\slmult0 \par\pard\qj\li2205\sb0\sl-405\slmult0 \par\pard\qj\li2205\r i913\sb230\sl-405\slmult0 \up0 \expndtw0\charscalex102 \ul0\nosupersub\cf1\f2\fs 23 PP\u8217?s application on the ground that section 33 of the Evidence Act 1950 applied to the \up0 \expndtw-2\charscalex100 Hong Kong evidence and that the pr e-conditions for admissibility laid down in the section \up0 \expndtw0\charscale x103 had not been fulfilled. The PP then appealed to the High Court which ordere d that the \up0 \expndtw0\charscalex104 evidence taken in Hong Kong be admitted as evidence in the trial. The appellant then \up0 \expndtw-3\charscalex100 appea led to the Court of Appeal but the appeal was dismissed. \par\pard\qj \li2205\ri 917\sb400\sl-400\slmult0 \up0 \expndtw-1\charscalex100 In the Court of Appeal, A bdul Aziz Mohamad, JCA discussed the application of section 8 \up0 \expndtw-2\ch arscalex100 of MACMA in the following terms:\ul0\super\cf8\f9\fs23 96 \par\pard\ qj \li2731\sb0\sl-372\slmult0 \par\pard\qj\li2731\ri931\sb32\sl-372\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf13\f14\fs21 It is clear from the sec tion that its scheme is to enable evidence in the form of testimonies or \line \ up0 \expndtw0\charscalex102 things to be taken or obtained in a foreign State fo r the specific purposes of being used as \line \up0 \expndtw-2\charscalex100 evi dence in criminal proceedings in Malaysia\u8230?..To me it was obvious that the scheme of s 8 \line \up0 \expndtw0\charscalex100 of the MACMA is entirely differ ent from the scheme of s 33 of the Evidence Act 1950 and \line \up0 \expndtw-1\c harscalex100 that therefore any requirement for the admission of evidence under s 33 belongs exclusively \line \up0 \expndtw-1\charscalex100 to the scheme of s 33 and cannot extend so as to be a part of the scheme of s 8. \par\pard\qj \li2 205\ri914\sb381\sl-405\slmult0 \up0 \expndtw0\charscalex103 \ul0\nosupersub\cf1\ f2\fs23 While section 8 of MACMA could facilitate the obtaining of important evi dence from \up0 \expndtw0\charscalex100 foreign jurisdiction, the process is ver y costly and time consuming. For example, money \up0 \expndtw0\charscalex100 lau ndering investigations often involve cross-border transactions, many enti ties and \up0 \expndtw-4\charscalex100 numerous bank accounts. These in turn ra ise many practical problems that delay the process \up0 \expndtw-5\charscalex100 and the increase costs. \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li 2205\sb248\sl-264\slmult0 \up0 \expndtw-4\charscalex100 \ul0\nosupersub\cf4\f5\f s23 3.3.6 Freezing, Seizure and Forfeiture of Property \par\pard\qj \li2205\sb 0\sl-400\slmult0 \par\pard\qj\li2205\ri913\sb24\sl-400\slmult0 \up0 \expndtw0\ch arscalex108 \ul0\nosupersub\cf1\f2\fs23 Part VI of AMLATFA provides for standard ized mechanisms applicable to all law \up0 \expndtw0\charscalex105 enforcement a gencies for freezing, seizure and forfeiture of property suspected to be \up0 \e xpndtw-5\charscalex100 involved in money laundering or terrorism financing activ ities. \par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri915\sb20\sl

-400\slmult0 \up0 \expndtw-3\charscalex100 One of the most powerful provisions o f AMLATFA is the avenue to freeze property by the \line \up0 \expndtw-3\charscal ex100 law enforcement agencies for the purpose of investigation before affecting a seizure. Under \line \up0 \expndtw-3\charscalex100 section 44 the freezing or der is valid for 90 days and will expire unless the person is \par\pard\ql \li22 05\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb193\sl-218\slmult0 \up0 \expndtw-2\c harscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 96\ul0\nosupersub\cf 10\f11\fs19 Ibid 722. \par\pard\ql \li10565\sb15\sl-251\slmult0 \up0 \expndtw-3 \charscalex100 \ul0\nosupersub\cf1\f2\fs23 92 {\shp {\*\shpinst\shpleft2205\shptop14151\shpright5006\shpbottom14171\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz182\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g102}{\bkmkend Pg102}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i915\sb249\sl-400\slmult0\fi0 \up0 \expndtw0\charscalex105 \ul0\nosupersub\cf1\f 2\fs23 charged.\ul0\super\cf8\f9\fs23 97\ul0\nosupersub\cf1\f2\fs23 It has the effect of making it impossible for a person to deal with his or her \up0 \expndt w-3\charscalex100 property except for the reasons in subsection (3)(b) which inc lude: \par\pard\ql \li2556\ri3074\sb4\sl-420\slmult0 \up0 \expndtw-3\charscalex1 00 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 determinin g any disputes as to the ownership of the property; \line \up0 \expndtw-3\charsc alex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 its p roper administration during the period of the order; \line \up0 \expndtw-3\chars calex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 the payment of debts due to creditors prior to the order; \line \up0 \expndtw-3\char scalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 the payment of money to the person or his family; or \line \up0 \expndtw-3\charscal ex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 the pay ment of the costs in criminal proceedings. \par\pard\qj \li2205\ri913\sb389\sl-4 10\slmult0 \up0 \expndtw-4\charscalex100 In addition to this, the person can als o be banned from leaving Malaysia and must surrender \up0 \expndtw0\charscalex10 5 any travel documents to the Director General of Immigration within one week of the \up0 \expndtw-5\charscalex100 publication of the freezing order.\ul0\super\ cf8\f9\fs23 98 \par\pard\qj \li2205\ri914\sb399\sl-400\slmult0 \up0 \expndtw0\ch arscalex100 \ul0\nosupersub\cf1\f2\fs23 The procedure for seizure is provided un der sections 45 to 54 of AMLATFA. A seizure \up0 \expndtw-3\charscalex100 order is to secure the evidence for the purpose of money laundering and terrorism fina ncing \up0 \expndtw0\charscalex107 prosecution. The procedure for seizure varies depending on whether the property is \up0 \expndtw0\charscalex104 movable or im movable or whether it is in a financial institution or not. Clearly, this is \up 0 \expndtw-5\charscalex100 another innovation introduced by AMLATFA. \par\pard\q j \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri915\sb20\sl-400\slmult0\fi0 \ up0 \expndtw-3\charscalex100 Section 45 covers the seizure of movable property. This section, however, is not applicable \line \up0 \expndtw-4\charscalex100 to any movable property in a financial institution.\ul0\super\cf8\f9\fs23 99\ul0\no supersub\cf1\f2\fs23 Section 46 sets out the manner in which \line \up0 \expndt w-2\charscalex100 the seizure of movable property is to be effected. As a rule, it will be effected by removing \line \up0 \expndtw-3\charscalex100 the movable property from the possession of the person from whom it is seized and placing \l ine \up0 \expndtw-3\charscalex100 it in the custody of such person and at such p lace as the investigating officer determines.\ul0\super\cf8\f9\fs23 100 \line \u

p0 \expndtw-2\charscalex100 \ul0\nosupersub\cf1\f2\fs23 However, where it is not practicable, the property may be left at the premises in which it is \line \up0 \expndtw-2\charscalex100 seized under the custody of the person determined by t he investigating officer.\ul0\super\cf8\f9\fs23 101 \par\pard\qj \li2205\sb0\sl400\slmult0 \par\pard\qj\li2205\ri914\sb20\sl-400\slmult0 \up0 \expndtw-3\charsc alex100 \ul0\nosupersub\cf1\f2\fs23 The power of seizure of movable property in a financial institution is conferred specifically \line \up0 \expndtw-3\charscal ex100 by section 50. The seizure order can only be issued by the public prosecut or if it is satisfied \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\li220 5\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb15\sl-218\slmult0 \up0 \expndtw-2\cha rscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 97\ul0\nosupersub\cf10 \f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Anti-Money Laundering and Anti-Terroris m Financing Act 2001\ul0\nosupersub\cf10\f11\fs19 , s 44(5). \par\pard\ql \li220 5\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 98\ul 0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Anti-Money Laundering and Anti-Terrorism Financing Act 2001\ul0\nosupersub\cf10\f11\fs19 , s 44(4) (c) . \par\pard\qj \li2205\ri3567\sb1\sl-220\slmult0 \up0 \expndtw-2\charscalex100 \ ul0\super\cf9\f10\fs18 99\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12 \fs19 Anti-Money Laundering and Anti-Terrorism Financing Act 2001\ul0\nosupersub \cf10\f11\fs19 , s 45(4). \line \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10 \fs18 100\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Anti-Money Laundering and Anti-Terrorism Financing Act 2001\ul0\nosupersub\cf10\f11\fs19 , s 46(1). \line \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 101\ul0\no supersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Anti-Money Laundering and Anti-Terrorism Financing Act 2001\ul0\nosupersub\cf10\f11\fs19 , s 46(2). \par\p ard\ql \li10565\sb14\sl-252\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersu b\cf1\f2\fs23 93 {\shp {\*\shpinst\shpleft2205\shptop13256\shpright5006\shpbottom13276\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz228\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g103}{\bkmkend Pg103}\par\pard\qj \li2205\sb0\sl-403\slmult0 \par\pard\qj\li2205 \sb0\sl-403\slmult0 \par\pard\qj\li2205\sb0\sl-403\slmult0 \par\pard\qj\li2205\r i914\sb238\sl-403\slmult0\fi0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f 2\fs23 that the movable property including monetary instruments is the subject m atter of a money \up0 \expndtw0\charscalex103 laundering or terrorism financing offence. However, the public prosecutor must consult \up0 \expndtw0\charscalex10 5 with the relevant supervisory body, such as BNM or the Securities Commission. Non\up0 \expndtw-1\charscalex100 compliance with the order is an offence and sub ject to a penalty of one million ringgit fine, \up0 \expndtw0\charscalex103 or o ne year imprisonment, or to both.\ul0\super\cf8\f9\fs23 102\ul0\nosupersub\cf1\f 2\fs23 Section 50(2) gives the financial institution, its \up0 \expndtw0\charsc alex102 employees or its agents immunity against any criminal or civil proceedin gs as a result of \up0 \expndtw0\charscalex102 complying with the seizure order. \par\pard\qj \li2205\ri914\sb397\sl-403\slmult0\fi0 \up0 \expndtw0\charscalex10 3 It is important to note that the seizure order under section 50(1) is not revi ewable by the \up0 \expndtw0\charscalex102 court. In \ul0\nosupersub\cf7\f8\fs23 City\ul0\nosupersub\cf1\f2\fs23 \ul0\nosupersub\cf7\f8\fs23 Growth Sdn Bhd & A nor \ul0\nosupersub\cf1\f2\fs23 v.\ul0\nosupersub\cf7\f8\fs23 The Government of Malaysia\ul0\nosupersub\cf1\f2\fs23 ,\ul0\super\cf8\f9\fs23 103\ul0\nosupersub\ cf1\f2\fs23 the applicants \up0 \expndtw0\charscalex108 applied to quash the or der made by the Deputy Public Prosecutor against their bank \up0 \expndtw0\chars

calex100 accounts. The order was made in pursuant to section 50(1) of AMLATFA. T he issue there \up0 \expndtw0\charscalex100 was whether such an order is reviewa ble by way of judicial review. The court held that the \up0 \expndtw-1\charscale x100 deputy public prosecutor was performing his duty under the law and therefor e could not be \up0 \expndtw-2\charscalex100 accountable by way of judicial revi ew. Raus Sharif J, at p.424 noted: \par\pard\qj \li2730\sb0\sl-370\slmult0 \par\ pard\qj\li2730\ri930\sb35\sl-370\slmult0 \up0 \expndtw0\charscalex103 \ul0\nosup ersub\cf13\f14\fs21 Looking at the order of the Deputy Public Prosecutor as well as the provision of s.50(1) of \line \up0 \expndtw0\charscalex104 AMLA, I am of the view that the order of the Deputy Public Prosecutor is not reviewable \line \up0 \expndtw0\charscalex102 under O.53 of the [Rules of High Court]. To me, s. 50(1) of AMLA is part and parcel of the \line \up0 \expndtw0\charscalex107 inves tigation process into an offence under s.4(1) of AMLA. It appears that in order to \line \up0 \expndtw0\charscalex102 facilitate the investigation into the offe nce of money laundering, the law has provided with \line \up0 \expndtw0\charscal ex100 the Public Prosecutor the power to assist the investigating officer. Clear ly, s.50(1) of AMLA \line \up0 \expndtw0\charscalex105 was enacted to enable the Public Prosecutor or his Deputy to make an order of seizure of \line \up0 \expn dtw0\charscalex104 movable properties in the possession of the financial institu tions by ordering the financial \line \up0 \expndtw-1\charscalex100 institutions not to part, deal in, or otherwise dispose of such property or any part of it u ntil the \line \up0 \expndtw-1\charscalex100 order is revoked or varied. Thus, b y issuing the said orders the Deputy Public Prosecutor was \line \up0 \expndtw-1 \charscalex100 merely exercising a function under AMLA. \par\pard\qj \li2205\ri9 15\sb386\sl-400\slmult0 \up0 \expndtw0\charscalex102 \ul0\nosupersub\cf1\f2\fs23 The seizure of immovable property is provided for in section 51. In so far as i mmovable \line \up0 \expndtw0\charscalex102 property is concerned, the provision s of the National Land Code are also applicable. \par\pard\ql \li2205\sb0\sl-218 \slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\s lmult0 \par\pard\ql\li2205\sb117\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \u l0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 102\ul0\nosupersub\cf10\f11\fs19 \ ul0\nosupersub\cf11\f12\fs19 Anti-Money Laundering and Anti-Terrorism Financing Act 2001\ul0\nosupersub\cf10\f11\fs19 , s 50(3). \par\pard\ql \li2205\sb2\sl-218 \slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 103\ul0\nosupersu b\cf10\f11\fs19 [2005] 7 CLJ 422. \par\pard\ql \li10565\sb15\sl-251\slmult0 \up 0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 94 {\shp {\*\shpinst\shpleft2205\shptop13928\shpright5006\shpbottom13948\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz200\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g104}{\bkmkend Pg104}\par\pard\qj \li2205\sb0\sl-404\slmult0 \par\pard\qj\li2205 \sb0\sl-404\slmult0 \par\pard\qj\li2205\sb0\sl-404\slmult0 \par\pard\qj\li2205\r i915\sb234\sl-404\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs 23 Section 52 specifically deals with seizure of a business related to the perso n against whom \up0 \expndtw-2\charscalex100 prosecution for an offence under AM LATFA is intended to be commenced, or a business in \up0 \expndtw0\charscalex108 which a relative or an associate of such person is involved. It must be noted t hat the \up0 \expndtw0\charscalex100 enforcement agency is empowered to seize th e business, as well as make certain orders in \up0 \expndtw0\charscalex107 relat ion to the activities carried on by the business, its accounts, its profits, dir ectors, \up0 \expndtw-3\charscalex100 officers and employees of the business.\ul 0\super\cf8\f9\fs23 104 \par\pard\qj \li2205\ri915\sb398\sl-402\slmult0 \up0 \ex

pndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs23 Section 52 was used by the Roya l Malaysian Police to seize the business of Invent Qjaya \line \up0 \expndtw0\ch arscalex103 Sdn Bhd in February 2005. The order was issued following reports of fraud involving \line \up0 \expndtw-2\charscalex100 RM50 million. As a result, a n administrator was appointed to supervise, direct and control \line \up0 \expnd tw-1\charscalex100 the company\u8217?s business. However, in December 2005, the seizure order was revoked and \line \up0 \expndtw0\charscalex105 the company\u82 17?s business was handed back to its directors and executive officers.\ul0\super \cf8\f9\fs23 105\ul0\nosupersub\cf1\f2\fs23 It \line \up0 \expndtw0\charscalex1 03 appears that this provision may place significant burden on a business subjec ted to the \line \up0 \expndtw-1\charscalex100 order. The business for instance, may be placed in receivership and therefore could suffer \line \up0 \expndtw-2\ charscalex100 tremendous damage as the result of the order. However, no action c an be taken against the \line \up0 \expndtw0\charscalex103 enforcement agency be cause section 77 of AMLATFA gives the agency immunity. In \line \up0 \expndtw0\c harscalex100 addition to this, section 57 does not allow the validity of the fre eze or seizure order to be \line \up0 \expndtw-1\charscalex100 challenged. \par\ pard\qj \li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205\ri911\sb16\sl-402\slmult0 \fi0 \up0 \expndtw-2\charscalex100 Sections 55 and 56 of AMLATFA deal with forfe iture of property. Generally, forfeiture is \line \up0 \expndtw-2\charscalex100 available for property which is the subject matter, or the instrument of a money laundering \line \up0 \expndtw-2\charscalex100 and terrorism financing offence. In determining whether the property is the subject matter, \line \up0 \expndtw4\charscalex100 or the instrument of the offence, section 55(3) allows the court to apply the civil standard of \line \up0 \expndtw0\charscalex106 \u8216?balanc e of probabilities\u8217?.\ul0\super\cf8\f9\fs23 106\ul0\nosupersub\cf1\f2\fs23 This makes it easier for the prosecutor to prove its case \line \up0 \expndtw-2 \charscalex100 because experience has shown that the prosecutor faces difficulti es proving to the criminal \line \up0 \expndtw-1\charscalex100 standard that the accused has engaged in prior criminal conduct from which he or she has \line \u p0 \expndtw-1\charscalex100 obtained certain property, and in linking the procee ds to specific prior criminal activity. It \line \up0 \expndtw-1\charscalex100 c an be said that these circumstances arise because the money laundering offence, unlike \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\sl mult0 \par\pard\ql\li2205\sb94\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0 \super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 104\ul0\nosupersub\cf10\f11\fs19 \ul 0\nosupersub\cf11\f12\fs19 Anti-Money Laundering and Anti-Terrorism Financing Ac t 2001\ul0\nosupersub\cf10\f11\fs19 , s 52(1). \par\pard\qj \li2205\ri947\sb1\sl -220\slmult0\fi0 \up0 \expndtw0\charscalex100 \ul0\super\cf9\f10\fs18 105\ul0\no supersub\cf10\f11\fs19 M Mageswari, \u8216?Police revoke seizure order issued a gainst InventQjaya\u8217? \ul0\nosupersub\cf11\f12\fs19 The Star\ul0\nosupersub\ cf10\f11\fs19 (Kuala Lumpur), 10 \up0 \expndtw0\charscalex100 January 2006. \pa r\pard\qj \li2205\ri946\sb0\sl-220\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul 0\super\cf9\f10\fs18 106\ul0\nosupersub\cf10\f11\fs19 See also \ul0\nosupersub\ cf11\f12\fs19 Anti-Money Laundering and Anti-Terrorism Financing Act 2001\ul0\no supersub\cf10\f11\fs19 , s 70 which deals with standard \line \up0 \expndtw-3\ch arscalex100 of proof. \par\pard\ql \li10565\sb14\sl-252\slmult0 \up0 \expndtw-3\ charscalex100 \ul0\nosupersub\cf1\f2\fs23 95 {\shp {\*\shpinst\shpleft2205\shptop13256\shpright5006\shpbottom13276\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz162\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P

g105}{\bkmkend Pg105}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i915\sb249\sl-400\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf1\f2\f s23 other criminal offences, has no direct victim who can give evidence against the perpetrator. \up0 \expndtw0\charscalex103 Therefore easing the burden of pro of for the prosecutor is vital for ensuring an effective \up0 \expndtw0\charscal ex100 forfeiture regime. However, AMLATFA specifies that the criminal standard o f proof must \up0 \expndtw-1\charscalex100 be applied for money laundering and t errorism financing offences.\ul0\super\cf8\f9\fs23 107 \par\pard\ql \li2205\sb0\ sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb5\sl -264\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf1\f2\fs23 Under AML ATFA, the court will issue a forfeiture order in the following circumstances: \p ar\pard\ql \li2556\ri914\sb44\sl-400\slmult0\tx2906 \up0 \expndtw-4\charscalex10 0 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 Section 55( 1)(a) - where a person has been prosecuted for and convicted of a money \line\ta b \up0 \expndtw-5\charscalex100 laundering or terrorism financing offence; \par\ pard\ql \li2556\ri914\sb20\sl-400\slmult0\tx2906\tx2906\tx2906 \up0 \expndtw-2\c harscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 Section 55(1)(b) - where a person has been prosecuted for such an offence, but t he \line\tab \up0 \expndtw-4\charscalex100 offence has not been proved, the cour t may make a forfeiture order if it satisfied that \line\tab \up0 \expndtw-3\cha rscalex100 the accused is not the true and lawful owner of such property and no other person is \line\tab \up0 \expndtw-4\charscalex100 entitled to the property ; \par\pard\ql \li2556\ri915\sb16\sl-406\slmult0\tx2906\tx2906\tx2906 \up0 \expn dtw0\charscalex104 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\f s23 Section 56 - where there has been no prosecution or no conviction for such an \line\tab \up0 \expndtw-1\charscalex100 offence, the court may make a forfei ture order if it satisfied that the property is the \line\tab \up0 \expndtw0\cha rscalex100 subject matter of such an offence, or has been used in the commission of such an \line\tab \up0 \expndtw0\charscalex100 offence. \par\pard\qj \li2205 \ri914\sb399\sl-400\slmult0 \up0 \expndtw0\charscalex105 It is clear that under AMLATFA, forfeiture may occur with or without conviction. It \up0 \expndtw-2\cha rscalex100 appears that under section 56, forfeiture can be undertaken through p roceeding against the \up0 \expndtw-4\charscalex100 property itself and is indep endent of any criminal charges against the owner of the property. \up0 \expndtw0 \charscalex102 According to Kennedy, this approach has the potential to be extremely effective \up0 \expndtw-5\charscalex100 particularly where:\ul0\ super\cf8\f9\fs23 108 \par\pard\ql \li2556\sb133\sl-264\slmult0 \up0 \expndtw-3\ charscalex100 \ul0\nosupersub\cf1\f2\fs23 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ ul0\nosupersub\cf1\f2\fs23 the property owner may have died; \par\pard\ql \li2 556\sb156\sl-264\slmult0 \up0 \expndtw-3\charscalex100 \u-3913?\ul0\nosupersub\c f6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 there has been an acquittal in crimina l proceedings; \par\pard\qj \li2556\ri1740\sb28\sl-420\slmult0 \up0 \expndtw-2\c harscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 there has been a criminal conviction but the confiscation hearing has failed; \u p0 \expndtw-3\charscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub \cf1\f2\fs23 the defendant is not within the jurisdiction; \par\pard\ql \li255 6\sb129\sl-264\slmult0 \up0 \expndtw-3\charscalex100 \u-3913?\ul0\nosupersub\cf6 \f7\fs23 \ul0\nosupersub\cf1\f2\fs23 the name of the property owner is unknow n; or \par\pard\ql \li2556\sb156\sl-264\slmult0 \up0 \expndtw-2\charscalex100 \u -3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 there is insuff icient evidence to prosecute for a criminal offence. \par\pard\ql \li2205\sb0\sl -218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-2 18\slmult0 \par\pard\ql\li2205\sb200\sl-218\slmult0 \up0 \expndtw-2\charscalex10 0 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 107\ul0\nosupersub\cf10\f11\fs1 9 \ul0\nosupersub\cf11\f12\fs19 Anti-Money Laundering and Anti-Terrorism Financ ing Act 2001\ul0\nosupersub\cf10\f11\fs19 , s 70(2). \par\pard\qj \li2205\ri944\ sb1\sl-220\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 108 \ul0\nosupersub\cf10\f11\fs19 Anthony Kennedy, \u8216?An Evaluation of the Reco very of Criminal Proceeds in the United Kingdom\u8217? (2007) \up0 \expndtw-2\ch

arscalex100 10(1) \ul0\nosupersub\cf11\f12\fs19 Journal of Money Laundering Cont rol\ul0\nosupersub\cf10\f11\fs19 33, 37. \par\pard\ql \li10565\sb14\sl-252\slmu lt0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 96 {\shp {\*\shpinst\shpleft2205\shptop13704\shpright5006\shpbottom13724\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz255\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g106}{\bkmkend Pg106}\par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205 \sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\s b0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb2 41\sl-264\slmult0\tx4143 \up0 \expndtw0\charscalex102 \ul0\nosupersub\cf1\f2\fs2 3 Therefore, section \tab \up0 \expndtw0\charscalex115 56 should be welcomed bec ause it can be utilized by the law \par\pard\qj \li2205\ri915\sb24\sl-400\slmult 0 \up0 \expndtw0\charscalex100 enforcement authorities to recover the criminal p roceeds even though the criminals cannot \up0 \expndtw-1\charscalex100 be prosec uted for money laundering offence. From experience, money laundering offences \u p0 \expndtw-2\charscalex100 are normally difficult to prove. \par\pard\qj \li220 5\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri916\sb20\sl-400\slmult0 \up0 \expndtw -1\charscalex100 It is interesting to note that the Dangerous Drugs (Forfeiture of Property) Act 1988 (DDFP) \line \up0 \expndtw-1\charscalex100 has a similar p rovision.\ul0\super\cf8\f9\fs23 109\ul0\nosupersub\cf1\f2\fs23 As such, DDFP ca se law may be relied upon to interpret section \par\pard\qj \li2205\ri913\sb0\sl -402\slmult0\fi0 \up0 \expndtw0\charscalex100 56 of AMLATFA. In \ul0\nosupersub\ cf7\f8\fs23 Kanagasavey a/l Sinayah v. Public Prosecutor\ul0\nosupersub\cf1\f2\f s23 ,\ul0\super\cf8\f9\fs23 110\ul0\nosupersub\cf1\f2\fs23 the appellant was \l ine \up0 \expndtw0\charscalex100 detained under the Dangerous Drugs (Special Pre ventive Measures) Act 1985 (SPMA) but \line \up0 \expndtw0\charscalex103 was rel eased by a writ of \ul0\nosupersub\cf7\f8\fs23 habeas corpus\ul0\nosupersub\cf1\ f2\fs23 . At the same time, the sum of RM7,500 held in \line \up0 \expndtw0\char scalex105 two banking accounts of the appellant was seized by the respondent und er DDFP. The \line \up0 \expndtw0\charscalex100 appellant claimed the seized pro perty but the respondent referred the claim to the Sessions \line \up0 \expndtw0 \charscalex102 Courts for a decision under section 32(2) of DDFP. The court orde red the property to be \line \up0 \expndtw0\charscalex100 forfeited because the appellant had failed to rebut the presumptions as to liable person and \line \up 0 \expndtw-1\charscalex100 illegal property under section 35 of the DDFP.\ul0\su per\cf8\f9\fs23 111\ul0\nosupersub\cf1\f2\fs23 The appellant appealed to the Hi gh Court, \line \up0 \expndtw0\charscalex103 but the appeal was dismissed. The H igh Court held that since the appellant had failed to \line \up0 \expndtw0\chars calex103 rebut the presumptions, the property was rightly forfeited.\ul0\super\c f8\f9\fs23 112\ul0\nosupersub\cf1\f2\fs23 Jeffrey Tan JC noted at p 601: \par\p ard\qj \li2731\ri931\sb4\sl-370\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosup ersub\cf13\f14\fs21 In criminal proceedings the burden is always on the prosecut ion to commence and furnish the \line \up0 \expndtw-1\charscalex100 required pro of, however, in proceedings under the Act [DDFP] there is a subtle twist to that \line \up0 \expndtw-2\charscalex100 burden\u8230?the person proceeded against i s required to rebut those presumption on a balance of \line \up0 \expndtw0\chars calex100 probabilities\u8230?in that (i) he is not a liable person under s.7 or (ii) the property is not illegal \line \up0 \expndtw-1\charscalex100 property. \ par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri915\sb6\sl-400\slmu lt0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf1\f2\fs23 It is important to note that under section 35 of DDFP the burden of proof is placed on the \line \

up0 \expndtw-1\charscalex100 defendant to show that the property is not the proc eeds of crime. But this is not the case \par\pard\qj \li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\ri939\sb109\sl-220\sl mult0\fi0 \up0 \expndtw-3\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f1 0\fs18 109\ul0\nosupersub\cf10\f11\fs19 Section 32 of DDFP provides for forfeit ure of property seized under the Act where there is no prosecution, \up0 \expndt w-4\charscalex100 or no proceedings under Part Three or no claim thereto. \par\p ard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f 10\fs18 110\ul0\nosupersub\cf10\f11\fs19 [1995] 1LNS 98. \par\pard\ql \li2205\s b2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 111\ul0\ nosupersub\cf10\f11\fs19 Section 35 of DDFP Act provides: \par\pard\qj \li2205\ ri940\sb0\sl-230\slmult0 \up0 \expndtw0\charscalex102 "Where any proceedings und er this Act are brought against any person in respect of any property on the \up 0 \expndtw0\charscalex100 ground that such person is a liable person or that suc h property is illegal property, the Court shall presume \up0 \expndtw-1\charscal ex100 that person to be a liable person and that property to be illegal property , unless the person proceeded against \up0 \expndtw-3\charscalex100 proves to th e contrary by admissible evidence and where he adduces any such evidence, the Pu blic Prosecutor \up0 \expndtw-4\charscalex100 shall have the right to rebut the same.\ul0\nosupersub\cf13\f14\fs21 " \par\pard\qj \li2205\ri945\sb0\sl-220\slmul t0\fi0 \up0 \expndtw-3\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\f s18 112\ul0\nosupersub\cf10\f11\fs19 See also \ul0\nosupersub\cf11\f12\fs19 Ket ua Polis Negara & Anor v Gan Bee Huat & Other Appeals\ul0\nosupersub\cf10\f11\fs 19 [1998] 3 CLJ 1; \ul0\nosupersub\cf11\f12\fs19 Public Prosecutor \up0 \expndt w-4\charscalex100 v Tan Lee Kok\ul0\nosupersub\cf10\f11\fs19 [1988] 2 CLJ 286. \par\pard\ql \li10565\sb13\sl-244\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nos upersub\cf1\f2\fs23 97 {\shp {\*\shpinst\shpleft2205\shptop11893\shpright5006\shpbottom11913\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz182\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g107}{\bkmkend Pg107}\par\pard\qj \li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205 \sb0\sl-402\slmult0 \par\pard\qj\li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205\r i913\sb241\sl-402\slmult0\fi0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f 2\fs23 with section 56 of AMLATFA. In fact, reversal of onus of proof provisions is expressly \line \up0 \expndtw0\charscalex104 encouraged by Article 12(7) of the \ul0\nosupersub\cf7\f8\fs23 UN Convention against Transnational Organized \l ine \up0 \expndtw0\charscalex105 Crime,\ul0\nosupersub\cf1\f2\fs23 and Article 5(7) of the Vienna Convention. The justification for reversing the \line \up0 \e xpndtw0\charscalex108 burden of proof is that information regarding the origin o f the money is within the \line \up0 \expndtw0\charscalex108 defendant\u8217?s k nowledge and to impose on the prosecution the burden of proving its \line \up0 \ expndtw0\charscalex104 illegitimate origin would be too burdensome.\ul0\super\cf 8\f9\fs23 113\ul0\nosupersub\cf1\f2\fs23 Also, it has been argued that without \line \up0 \expndtw-2\charscalex100 reversing the burden of proof, forfeiture la ws would become ineffective.\ul0\super\cf8\f9\fs23 114\ul0\nosupersub\cf1\f2\fs2 3 Unfortunately, \line \up0 \expndtw0\charscalex105 it appears that the reversa l of the burden of proof is not available under AMLATFA. \line \up0 \expndtw0\ch arscalex108 Therefore, it is suggested that the Malaysian government give consid eration to the \line \up0 \expndtw0\charscalex103 introduction of a similar mech anism because it is an important element of an effective \line \up0 \expndtw-3\c harscalex100 forfeiture regime. \par\pard\qj \li2205\sb0\sl-400\slmult0 \par\par

d\qj\li2205\ri917\sb20\sl-400\slmult0 \up0 \expndtw-3\charscalex100 Forfeiture p rovisions under AMLATFA are subject to notice being given to third parties so \u p0 \expndtw0\charscalex100 that \ul0\nosupersub\cf7\f8\fs23 bona fide\ul0\nosupe rsub\cf1\f2\fs23 third parties that have an interest in the property can make t heir claims in \up0 \expndtw-4\charscalex100 court under section 61. However, th e onus is on the claimant to prove that:\ul0\super\cf8\f9\fs23 115 \par\pard\ql \li2380\sb113\sl-264\slmult0 \up0 \expndtw-5\charscalex100 \ul0\nosupersub\cf1\f 2\fs23 (a) The claimant has a legitimate interest in the property; \par\pard\qj \li2380\ri917\sb24\sl-400\slmult0\tx2731 \up0 \expndtw-1\charscalex100 (b)\ul0\ nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 No participation, collusion or involvement with respect to the offence under section \line\tab \up0 \expndt w-1\charscalex100 4(1) which is the object of the proceedings can be imputed to the claimant; \par\pard\qj \li2380\ri916\sb0\sl-420\slmult0\tx2731 \up0 \expndtw -4\charscalex100 (c) The claimant lacked knowledge and was not intentionally ign orant of the illegal use of \line\tab \up0 \expndtw-4\charscalex100 the property , or if he had knowledge, did not freely consent to its illegal use; \par\pard\q l \li2380\ri913\sb0\sl-400\slmult0\tx2731\tx2731\tx2731 \up0 \expndtw0\charscale x105 (d) The claimant did not acquire any right in the property from a person pr oceeded \line\tab \up0 \expndtw-3\charscalex100 against under circumstances that give rise to a reasonable inference that any right was \line\tab \up0 \expndtw0 \charscalex105 transferred for the purpose of avoiding the eventual subsequent f orfeiture of the \line\tab \up0 \expndtw-3\charscalex100 property; and \par\pard \qj \li2380\ri916\sb0\sl-400\slmult0\tx2731 \up0 \expndtw-3\charscalex100 (e) Th e claimant did all that could reasonably be expected to prevent the illegal use of the \line\tab \up0 \expndtw-4\charscalex100 property. \par\pard\ql \li2205\sb 0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\ sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl -218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb24\sl218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\ f10\fs18 113\ul0\nosupersub\cf10\f11\fs19 R E Bell, above n 53. \par\pard\qj \l i2205\ri948\sb1\sl-220\slmult0\fi0 \up0 \expndtw-1\charscalex100 \ul0\super\cf9\ f10\fs18 114\ul0\nosupersub\cf10\f11\fs19 Anthony Smellie, \u8216?Prosecutorial Challenges in Freezing and Forfeiting Proceeds of Transnational Crime \line \up 0 \expndtw0\charscalex100 and the Use of International Asset Sharing to Promote International Cooperation.\u8217? (2007) \up0 \expndtw-1\charscalex100 8(2) \ul0 \nosupersub\cf11\f12\fs19 Journal of \par\pard\ql \li2205\sb2\sl-218\slmult0 \up 0 \expndtw-2\charscalex100 Money Laundering Control\ul0\nosupersub\cf10\f11\fs19 104, 107. \par\pard\li2205\sb20\sl-218\slmult0\fi0 \up0 \expndtw-2\charscalex1 00 \ul0\super\cf9\f10\fs18 115\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf1 1\f12\fs19 Anti-Money Laundering and Anti-Terrorism Financing Act 2001,\ul0\nosu persub\cf10\f11\fs19 s 61(4).\par\pard\li2205\sb3\sl-264\slmult0\fi8360 \up0 \e xpndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 98 {\shp {\*\shpinst\shpleft2205\shptop13256\shpright5006\shpbottom13276\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz203\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g108}{\bkmkend Pg108}\par\pard\qj \li2205\sb0\sl-404\slmult0 \par\pard\qj\li2205 \sb0\sl-404\slmult0 \par\pard\qj\li2205\sb0\sl-404\slmult0 \par\pard\qj\li2205\r i916\sb234\sl-404\slmult0\fi0 \up0 \expndtw0\charscalex106 \ul0\nosupersub\cf1\f 2\fs23 It must be noted that the above approach is similar to that adopted by se ction 32(3) of \up0 \expndtw-1\charscalex100 DDFP\ul0\nosupersub\cf10\f11\fs19 . \ul0\nosupersub\cf1\f2\fs23 In the proceeding under section 32(3) of DDFP, the

court shall order the property to \up0 \expndtw0\charscalex107 be released if: ( i) the person claiming the property is lawfully entitled thereto; (ii) no \up0 \ expndtw0\charscalex105 offence under the Act or under the Dangerous Drugs Act 19 52 has been committed in \up0 \expndtw-1\charscalex100 respect of the property; and (iii) such property is not illegal property. The property shall be \up0 \exp ndtw-2\charscalex100 forfeited if any of the above conditions are not met. \par\ pard\qj \li2205\ri912\sb398\sl-402\slmult0\fi0 \up0 \expndtw-1\charscalex100 The refore, once again DDFP case law could be used to interpret section 61 of AMLATF A. \line \up0 \expndtw0\charscalex100 For example, in \ul0\nosupersub\cf7\f8\fs2 3 Public Prosecutor v Lee Kee Seng & Anor, \ul0\super\cf8\f9\fs23 116\ul0\nosupe rsub\cf1\f2\fs23 which was an appeal by the \line \up0 \expndtw-2\charscalex100 Public Prosecutor against the decision of the Session Court, the Court ordered a car that had \line \up0 \expndtw-2\charscalex100 been forfeited to be returned to Hong Leong Finance, the second respondent. The registered \line \up0 \expndtw 0\charscalex100 owner of the car was Loh Kan Hock and ownership was claimed by H ong Leong Finance \line \up0 \expndtw0\charscalex105 as the lenders. The purchas e price of the car was RM120,000. Loh Kah Hock had paid \line \up0 \expndtw0\cha rscalex100 RM50,000 as down payment and the remaining amount of RM70,000 was pai d through a \line \up0 \expndtw0\charscalex100 loan from Hong Leong Finance. Bef ore the car was forfeited, Loh Kah Hock had paid 33 \line \up0 \expndtw0\charsca lex100 instalments amounting to RM40,833. The High Court allowed the appeal and held that the \line \up0 \expndtw0\charscalex100 onus was on Hong Leong Finance to produce evidence to rebut the presumptions that Loh \line \up0 \expndtw0\char scalex104 Kah Hock was not a liable person and the car was not illegal property under DDFP. To \line \up0 \expndtw0\charscalex104 rebut the presumption that the car was not illegal property,\ul0\super\cf8\f9\fs23 117\ul0\nosupersub\cf1\f2\f s23 it must be proved that the \line \up0 \expndtw0\charscalex106 whole of the purchase price and the payment of the loan were from a legal source. By \line \u p0 \expndtw0\charscalex100 proving a part of the purchase price was from a legal source was not sufficient to rebut the \line \up0 \expndtw0\charscalex100 said presumption. The car was therefore illegal property and it must be forfeited. \p ar\pard\qj \li2205\ri915\sb396\sl-405\slmult0 \up0 \expndtw0\charscalex100 Anoth er useful case is\ul0\nosupersub\cf7\f8\fs23 Public Finance Bhd v Public Prosec utor\ul0\nosupersub\cf1\f2\fs23 .\ul0\super\cf8\f9\fs23 118\ul0\nosupersub\cf1\f 2\fs23 The case was an appeal \line \up0 \expndtw0\charscalex100 against the de cision of the Sessions Court which ordered the forfeiture of a motor vehicle \li ne \up0 \expndtw0\charscalex102 seized by the police under section 25 of DDFP. T he car was seized from a person named \line \up0 \expndtw0\charscalex106 Azlin w hom the police suspected was involved in dangerous drugs activities. The car \li ne \up0 \expndtw0\charscalex100 however, was owned by the appellant and it was h ired under a hire purchase agreement to \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb94\sl-218\slmult0 \ up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 116\ ul0\nosupersub\cf10\f11\fs19 [2005] 7 MLJ 336. \par\pard\qj \li2205\ri933\sb1\s l-220\slmult0\fi0 \up0 \expndtw0\charscalex100 \ul0\super\cf9\f10\fs18 117\ul0\n osupersub\cf10\f11\fs19 Section 2 of DDFP defines illegal property as any prope rty, whether within or outside Malaysia, which is \up0 \expndtw-2\charscalex100 wholly or partly derive or obtained from or by means of any prohibited activity carried out by any person after \up0 \expndtw-2\charscalex100 the commencement o f this Act. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex10 0 \ul0\super\cf9\f10\fs18 118\ul0\nosupersub\cf10\f11\fs19 [1999] 8 CLJ 485. \p ar\pard\ql \li10565\sb15\sl-251\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosup ersub\cf1\f2\fs23 99 {\shp {\*\shpinst\shpleft2205\shptop13256\shpright5006\shpbottom13276\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz190\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276

8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g109}{\bkmkend Pg109}\par\pard\qj \li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205 \sb0\sl-402\slmult0 \par\pard\qj\li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205\r i914\sb241\sl-402\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf1\f2\f s23 another person named Mohd Anwar who did not make any claim although he was n otified \line \up0 \expndtw-3\charscalex100 of the proceeding. At the Session Co urt, Azlin told the court that he bought the car from the \line \up0 \expndtw-4\ charscalex100 hirer for RM40,000 and that he had already paid RM15,000 towards t he purchase price. He \line \up0 \expndtw-2\charscalex100 admitted that he used the profits from his food business as well as from the drugs business \line \up 0 \expndtw0\charscalex103 to pay for the car. The Session Court judge found that the car was illegal property and \line \up0 \expndtw-1\charscalex100 hence orde red forfeiture. The appellant was dissatisfied with the decision and appealed to \line \up0 \expndtw0\charscalex105 the High Court. In allowing the appeal, the High Court held that the facts of the case \line \up0 \expndtw0\charscalex102 sh owed that the car was never an illegal property right from the inception. The ca r was \line \up0 \expndtw0\charscalex107 bought by the appellant and was hired o ut to Mohd Anwar under the hire-purchase \line \up0 \expndtw0\charscalex106 agre ement which clearly prohibits the transfer of the car to a third party without t he \line \up0 \expndtw-4\charscalex100 appellant\u8217?s consent. Furthermore, A zlin\u8217?s evidence that he bought the car from the proceeds \line \up0 \expnd tw-3\charscalex100 of drugs is vague and should not be accepted without corrobor ation. Since the appellant has \line \up0 \expndtw-2\charscalex100 established t hat it was lawfully entitled to the car, and that the car was not illegal proper ty, \line \up0 \expndtw-3\charscalex100 and that no offence has been committed i n respect of the car, it should therefore be released \line \up0 \expndtw-4\char scalex100 to the appellant. \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql \li2205\sb248\sl-264\slmult0\tx10247 \up0 \expndtw0\charscalex108 From the above cases, it is clear that in exercising their rights under section \tab \up0 \exp ndtw0\charscalex109 61 of \par\pard\qj \li2205\ri915\sb20\sl-405\slmult0 \up0 \e xpndtw0\charscalex105 AMLATFA, the burden of proof is on the third parties to sh ow that they are lawfully \up0 \expndtw0\charscalex100 entitled to the property. It appears that section 61 places a heavier burden on third parties \up0 \expnd tw-3\charscalex100 when compared to section 32(3) of DDFP. This may cause an unf air burden on third parties \up0 \expndtw-3\charscalex100 and therefore such a r equirement must be reviewed to ensure that claims by \ul0\nosupersub\cf7\f8\fs23 bona fide\ul0\nosupersub\cf1\f2\fs23 third \up0 \expndtw-4\charscalex100 parti es are not prejudiced. \par\pard\qj \li2205\ri915\sb397\sl-403\slmult0\fi0 \up0 \expndtw-2\charscalex100 Apart from forfeiture, section 59 of AMLATFA empowers t he law enforcement agency to \up0 \expndtw0\charscalex100 apply for a pecuniary penalty order (PPO) against the defendant. The PPO is equal to the \up0 \expndtw -1\charscalex100 estimated value of the proceeds of crimes which were either not recovered, or not proven \up0 \expndtw0\charscalex100 on the balance of probabi lities.\ul0\super\cf8\f9\fs23 119\ul0\nosupersub\cf1\f2\fs23 If the court is sa tisfied that the person derived benefits \up0 \expndtw0\charscalex104 from the p roceeds of crime, the court will assess the benefits so derived and order the \u p0 \expndtw0\charscalex100 person to pay to the Federal Government a pecuniary p enalty equal to the amount of the \up0 \expndtw0\charscalex100 benefits derived from the proceeds of crime. \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb174\sl-218\slmult0 \up0 \expndt w-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 119\ul0\nosuper sub\cf10\f11\fs19 Norhashimah, above n 51, 56. \par\pard\ql \li10449\sb15\sl-25 1\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 100 {\shp {\*\shpinst\shpleft2205\shptop14151\shpright5006\shpbottom14171\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz192\shplid0

{\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g110}{\bkmkend Pg110}\par\pard\qj \li2205\sb0\sl-405\slmult0 \par\pard\qj\li2205 \sb0\sl-405\slmult0 \par\pard\qj\li2205\sb0\sl-405\slmult0 \par\pard\qj\li2205\s b0\sl-405\slmult0 \par\pard\qj\li2205\ri914\sb225\sl-405\slmult0 \up0 \expndtw0\ charscalex105 \ul0\nosupersub\cf1\f2\fs23 Section 59(4) states that in determini ng whether or not any benefit is derived from the \up0 \expndtw0\charscalex100 p roceeds of crime, the court shall apply the civil standard of proof. However, ac cording to \up0 \expndtw-2\charscalex100 Norhashimah, this provision is inapplic able and should be deleted because if the benefit can \up0 \expndtw0\charscalex1 05 be proved to be derived from the proceeds of crime, it will have been already forfeited \up0 \expndtw-3\charscalex100 under sections 55 and 56 of the AMLATFA .\ul0\super\cf8\f9\fs23 120 \par\pard\qj \li2205\ri915\sb395\sl-405\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs23 Another issue as regards to the PPO under AMLATFA is that the law does not specify any \up0 \expndtw0\chars calex100 particular time period. In fact, most jurisdictions set a time limit fo r a PPO to be made. In \up0 \expndtw-1\charscalex100 Australia for instance, by virtue of section 134 of the POCA 2002, an application for a PPO \up0 \expndtw0\ charscalex102 must be made within six months of conviction of non-serious offenc es or nine months of \up0 \expndtw0\charscalex102 conviction of serious offences . \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb248\sl-264\slmul t0\tx6085 \up0 \expndtw0\charscalex101 Despite the shortcomings in section \ tab \up0 \expndtw0\charscalex103 59, it can be said that AMLATFA provides \par\pard\qj \li2205\ri916\sb24\sl-400\slmult0 \up0 \expndtw0\charscalex109 com prehensive procedures for the freezing, seizure and forfeiture of property. Any \line \up0 \expndtw0\charscalex110 limitations in the previous legislations have been addressed and more importantly, \line \up0 \expndtw0\charscalex106 AMLATFA introduces more powerful and innovative measures that can facilitate the \line \up0 \expndtw-2\charscalex100 recovery of illegal proceeds from money laundering and any other serious crimes. \par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard \qj\li2205\ri913\sb20\sl-400\slmult0\fi0 \up0 \expndtw0\charscalex105 By using A MLATFA as a strategic approach, the law enforcement agencies can more \up0 \expn dtw0\charscalex105 easily detect and confiscate the proceeds of crimes. This vie w has been proven correct \up0 \expndtw0\charscalex100 recently when it was repo rted that the Anti-Corruption Agency had seized assets procured \up0 \expndtw0\c harscalex100 through bribery worth RM25 million and forfeited another RM206,000 in assets that were \up0 \expndtw0\charscalex102 acquired through corruption. Th ese actions were taken under AMLATFA.\ul0\super\cf8\f9\fs23 121\ul0\nosupersub\c f1\f2\fs23 Obviously, \up0 \expndtw0\charscalex102 AMLATFA provides the law enf orcement officials with more effective tools than before \up0 \expndtw0\charscal ex102 for confiscating criminal proceeds from any serious crimes in Malaysia. \p ar\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \pa r\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\ pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pa rd\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard \ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb49\sl-218\slmult0 \up0 \expn dtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 120\ul0\nosup ersub\cf10\f11\fs19 Ibid 173. \par\pard\li2205\sb20\sl-218\slmult0\fi0 \up0 \ex pndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 121\ul0\nosupersub\cf10\f11\fs19 \u8216?ACA seals assets worth RM25 millions\u8217? \ul0\nosupersub\cf11\f12\fs19 New Straits Times\ul0\nosupersub\cf10\f11\fs19 24 January 2007.\par\pard\li220 5\sb3\sl-264\slmult0\fi8243 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2 \fs23 101

{\shp {\*\shpinst\shpleft2205\shptop13928\shpright5006\shpbottom13948\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz148\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g111}{\bkmkend Pg111}\par\pard\li2205\sb0\sl-264\slmult0\par\pard\li2205\sb0\sl264\slmult0\par\pard\li2205\sb0\sl-264\slmult0\par\pard\li2205\sb0\sl-264\slmult 0\par\pard\li2205\sb0\sl-264\slmult0\par\pard\li2205\sb0\sl-264\slmult0\par\pard \li2205\sb0\sl-264\slmult0\par\pard\li2205\sb0\sl-264\slmult0\par\pard\li2205\sb 98\sl-264\slmult0\fi0\tx2905 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf4\f 5\fs23 3.4\tab \up0 \expndtw-3\charscalex100 The Criminalisation of Terrorism Fi nancing\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri915\sb75\sl -400\slmult0 \up0 \expndtw0\charscalex106 \ul0\nosupersub\cf1\f2\fs23 In respons e to the September 11 tragedy, FATF issued new international standards to \up0 \ expndtw-1\charscalex100 combat terrorism financing. As such, all countries acros s the globe are obliged to adopt and \up0 \expndtw0\charscalex103 implement the Nine Special Recommendations to prevent terrorists and their supporters \up0 \ex pndtw0\charscalex103 from access to the international financial system. \par\par d\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri914\sb20\sl-400\slmult0 \u p0 \expndtw0\charscalex100 As pointed out earlier, AMLATFA was amended so that a new Part VIA could be inserted \line \up0 \expndtw-1\charscalex100 to deal with terrorism financing offences and to extend the mechanism for freezing, seizure \line \up0 \expndtw0\charscalex111 and forfeiture of assets used for the financi ng of terrorist activities. Consequential \line \up0 \expndtw0\charscalex100 ame ndments were also made to the Penal Code. A new Chapter VIA was inserted into th e \line \up0 \expndtw0\charscalex100 Penal Code to deal with offences relating t o terrorism. These amendments came into force \line \up0 \expndtw-1\charscalex10 0 in March 2007. \par\pard\qj \li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205\ri9 14\sb17\sl-402\slmult0\fi0 \up0 \expndtw-2\charscalex100 Before examining these provisions, it would be worthwhile to make a brief mention of the \up0 \expndtw0 \charscalex100 situation under the previous law. Prior to the amendment of AMLAT FA, there were two \up0 \expndtw-1\charscalex100 provisions that were capable of criminalising terrorism financing in Malaysia. They were \up0 \expndtw0\charsca lex100 section 125A of the Penal Code and section 59 of the Internal Security Ac t 1960 (ISA). \up0 \expndtw-2\charscalex100 Section 125A of the Penal Code makes it an offence for a person to harbour by any act the \up0 \expndtw0\charscalex1 04 enemies of the King. Section 130A of the Penal Code defines \u8216?harbouring \u8217? to include \up0 \expndtw0\charscalex105 supplying the enemies of the Kin g with such things as shelter, food, drink, money or \up0 \expndtw0\charscalex10 5 clothes. \u8216?Enemies of the King\u8217? is not defined, but its context ind icates its meaning is \up0 \expndtw0\charscalex107 restricted to the conduct of persons who \u8216?wage war\u8217? against the King or against the \up0 \expndtw -5\charscalex100 government of any power in alliance with the King.\ul0\super\cf 8\f9\fs23 122 \par\pard\qj \li2205\ri912\sb400\sl-400\slmult0 \up0 \expndtw0\cha rscalex100 \ul0\nosupersub\cf1\f2\fs23 Section 59(3) of the ISA makes it an offe nce for a person to provide supplies to another \line \up0 \expndtw-2\charscalex 100 person, where it may reasonably be presumed that the latter intends to act, is about to act, or \line \up0 \expndtw-2\charscalex100 has acted, in a manner \ u8216?prejudicial to public safety or to the maintenance of public order\u8217?, \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb77\sl-218\slmult0 \ up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 122\ ul0\nosupersub\cf10\f11\fs19 APG Mutual Evaluation Report on Malaysia 2007, 53.

\par\pard\ql \li10449\sb15\sl-251\slmult0 \up0 \expndtw-3\charscalex100 \ul0\no supersub\cf1\f2\fs23 102 {\shp {\*\shpinst\shpleft2205\shptop14151\shpright5006\shpbottom14171\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz170\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g112}{\bkmkend Pg112}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i913\sb249\sl-400\slmult0 \up0 \expndtw0\charscalex102 \ul0\nosupersub\cf1\f2\fs 23 or that the supplies are intended for the use of a terrorist. \u8216?Terroris t\u8217? means \ul0\nosupersub\cf7\f8\fs23 inter alia,\ul0\nosupersub\cf1\f2\fs2 3 a \up0 \expndtw-3\charscalex100 person who by the use of any firearm, explosi ve or ammunition acts in a manner prejudicial \up0 \expndtw-4\charscalex100 to p ublic safety or to the maintenance of public order.\ul0\super\cf8\f9\fs23 123 \p ar\pard\qj \li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205\ri914\sb17\sl-402\slmu lt0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf1\f2\fs23 It has been recogn ised that these provisions are narrow in scope and are able to operate as \line \up0 \expndtw-2\charscalex100 terrorism financing offences in a very limited cap acity. Section 125A of the Penal Code is \line \up0 \expndtw-1\charscalex100 onl y capable of capturing the unlawful intentions of a narrow range of finance-reci pients, \line \up0 \expndtw0\charscalex100 namely those whose plans encompass th e violent overthrow of the government. It is also \line \up0 \expndtw0\charscale x100 unlikely to cover the range of \u8216?funds\u8217? defined in the UN Terror ist Financing Convention. \line \up0 \expndtw0\charscalex100 Furthermore, its co ntent indicates aid of a direct kind, complicating its application to the \line \up0 \expndtw0\charscalex105 supply of funds for the general benefit of a terror ist group, and the collection of such \line \up0 \expndtw-5\charscalex100 funds. \ul0\super\cf8\f9\fs23 124 \par\pard\qj \li2205\ri915\sb398\sl-402\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf1\f2\fs23 Section 59(3) of ISA also h as limitations. It defines the intentions of the terrorist-recipient \line \up0 \expndtw0\charscalex104 of funds in terms that are general enough to capture a w ide range of terrorist activity. \line \up0 \expndtw-3\charscalex100 However, it s scope is restricted to a person whose terrorism aims are within Malaysia only, \line \up0 \expndtw0\charscalex100 and it can only criminalise the provision of funds to terrorist groups whose intentions are \line \up0 \expndtw0\charscalex1 00 domestic in nature.\ul0\super\cf8\f9\fs23 125\ul0\nosupersub\cf1\f2\fs23 So far, it appears that section 125A of the Penal Code and section \line \up0 \expn dtw0\charscalex102 59(3) of ISA have not been used as the basis for investigatio ns and prosecutions.\ul0\nosupersub\cf8\f9\fs15 126\ul0\nosupersub\cf1\f2\fs23 As \line \up0 \expndtw-1\charscalex100 such, the enactment of Part VIA of AMLAT FA and Part VIA of the Penal Code is timely \line \up0 \expndtw0\charscalex103 a s they provide more effective tools for combating terrorism financing activities in the \line \up0 \expndtw-5\charscalex100 country. \par\pard\qj \li2205\ri915\ sb396\sl-405\slmult0 \up0 \expndtw0\charscalex100 Section 3(1) of AMLATFA define s a \u8216?terrorism financing offence\u8217? as any offence under \up0 \expndtw 0\charscalex103 sections 130N, 130O, 130P or 130Q of the Penal Code. These secti ons create the new \up0 \expndtw-2\charscalex100 offences of providing or collec ting property for terrorists acts; providing financial services \up0 \expndtw0\c harscalex100 for terrorist purposes; arranging for retention or control of terro rist property and dealing \up0 \expndtw0\charscalex100 with terrorist property. \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \ par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb96\sl-218\slmult0 \u

p0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 123\u l0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Internal Security Act 1960\ul0\nosupersub\cf10\f11\fs19 , s 2. \par\pard\qj \li2205\ri5054\sb1\sl-220 \slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 124\ul0\nosupersu b\cf10\f11\fs19 APG Mutual Evaluation Report on Malaysia 2007, 54. \line \up0 \ expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 125\ul0\nosupersub\cf10\f11\fs19 Ibid. \par\pard\li2205\sb20\sl-218\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ ul0\super\cf9\f10\fs18 126\ul0\nosupersub\cf10\f11\fs19 Ibid 55.\par\pard\li220 5\sb3\sl-264\slmult0\fi8243 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2 \fs23 103 {\shp {\*\shpinst\shpleft2205\shptop13480\shpright5006\shpbottom13500\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz191\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g113}{\bkmkend Pg113}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\s b0\sl-400\slmult0 \par\pard\qj\li2205\ri915\sb249\sl-400\slmult0 \up0 \expndtw-1 \charscalex100 \ul0\nosupersub\cf1\f2\fs23 According to section 130B of the Pena l Code, \u8216?terrorist\u8217? means any person who commits, \up0 \expndtw-2\ch arscalex100 or attempt to commit, any terrorist act, or who participates in or f acilitates the commission \up0 \expndtw-2\charscalex100 of any terrorist act.\ul 0\super\cf8\f9\fs23 127\ul0\nosupersub\cf1\f2\fs23 Section 130B further defines \u8216?terrorist act\u8217? as: \par\pard\ql \li2205\sb133\sl-264\slmult0 \up0 \expndtw-5\charscalex100 (a) the act or threat as prescribed under subsection (3 );\ul0\super\cf8\f9\fs23 128 \par\pard\qj \li2205\ri915\sb24\sl-400\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 (b) the act is done or the threat is made with the intention of advancing a political, religious \up0 \exp ndtw-4\charscalex100 or ideological cause; and \par\pard\qj \li2205\ri913\sb0\sl -400\slmult0 \up0 \expndtw0\charscalex107 (c) the act or threat is intended or m ay reasonably be regarded as being intended to \up0 \expndtw0\charscalex100 inti midate the public or section of the public, or influence or compel the Governmen t of \up0 \expndtw0\charscalex105 Malaysia or the Government of any State in Mal aysia, any other government, or any \up0 \expndtw-5\charscalex100 international organization to do or refrain from doing any act. \par\pard\ql \li2205\sb0\sl-26 4\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb5\sl-264\ slmult0 \up0 \expndtw-3\charscalex100 Moreover, \u8216?terrorist property\u8217? is defined as: \par\pard\ql \li2205\sb136\sl-264\slmult0 \up0 \expndtw-5\charsc alex100 (a) proceeds from the commission of a terrorist act; or \par\pard\ql \li 2205\sb136\sl-264\slmult0 \up0 \expndtw-4\charscalex100 (b) property that has be en, is being, or is likely to be used to commit a terrorist act; or \par\pard\qj \li2205\ri914\sb24\sl-400\slmult0 \up0 \expndtw0\charscalex100 (c) property tha t has been, is being, or is likely to be used by a terrorist, terrorist entity o r \up0 \expndtw-1\charscalex100 terrorist group; or \par\pard\qj \li2205\ri916\s b0\sl-400\slmult0 \up0 \expndtw0\charscalex100 (d) property owned or controlled by or on behalf of a terrorist, terrorist entity or terrorist \up0 \expndtw-1\ch arscalex100 group, including funds derived or generated from such property; or \ par\pard\qj \li2205\ri915\sb20\sl-400\slmult0 \up0 \expndtw0\charscalex104 (e) p roperty that has been collected for the purpose of providing support to a terror ist, \up0 \expndtw-5\charscalex100 terrorist entity or terrorist group or fundin g a terrorist act. \par\pard\qj \li2205\ri918\sb400\sl-400\slmult0 \up0 \expndtw -3\charscalex100 It appears that the terrorism financing offences and their rele vant defining provisions are in \up0 \expndtw-4\charscalex100 line with Article

2 of the UN Terrorist Financing Convention 1999. \par\pard\qj \li2205\ri916\sb40 0\sl-400\slmult0 \up0 \expndtw0\charscalex100 It would be worthwhile to further examine sections 130N and 130O. Section 130N states \line \up0 \expndtw-1\charsc alex100 that: \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl -218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-2 18\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218 \slmult0 \par\pard\ql\li2205\sb83\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 127\ul0\nosupersub\cf10\f11\fs19 This also includes a specified entity under section 66B or section 66C of AMLATF A. \par\pard\qj \li2205\ri940\sb1\sl-220\slmult0\fi0 \up0 \expndtw-1\charscalex1 00 \ul0\super\cf9\f10\fs18 128\ul0\nosupersub\cf10\f11\fs19 The act or threat p rescribed under subsection (3) covers a wide range of circumstances and it inclu des an \up0 \expndtw-1\charscalex100 act or threat which involves serious bodily injury to a person or endangers a person\u8217?s life. \par\pard\ql \li10449\sb 14\sl-252\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 104 {\shp {\*\shpinst\shpleft2205\shptop13704\shpright5006\shpbottom13724\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz154\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g114}{\bkmkend Pg114}\par\pard\qj \li2731\sb0\sl-400\slmult0 \par\pard\qj\li2731 \sb0\sl-400\slmult0 \par\pard\qj\li2731\sb0\sl-400\slmult0 \par\pard\qj\li2731\r i915\sb249\sl-400\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf1\f2\f s23 Whoever, by any means, directly or indirectly, provides or collects or makes available \line \up0 \expndtw0\charscalex104 any property intending, knowing or having reasonable grounds to believe that the \line \up0 \expndtw-2\charscalex1 00 property will be used, in whole or in part, to commit a terrorist act shall b e punished-\par\pard\ql \li2731\sb113\sl-264\slmult0 \up0 \expndtw-3\charscalex1 00 (a) if the act results in death, with death; and \par\pard\qj \li2731\ri914\s b44\sl-400\slmult0 \up0 \expndtw0\charscalex102 (b) in any other case, with impr isonment for a term of not less than seven years but \up0 \expndtw0\charscalex10 2 not exceeding thirty years, and shall also be liable to fine and shall also be liable to \up0 \expndtw0\charscalex102 forfeiture of any property so provided o r collected or made available. \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard \ql\li2205\sb249\sl-264\slmult0 \up0 \expndtw-3\charscalex100 While section 130O provides that: \par\pard\qj \li2906\ri915\sb24\sl-400\slmult0 \up0 \expndtw0\ch arscalex102 Whoever, directly or indirectly, provides or makes available financi al services or \up0 \expndtw0\charscalex102 facilities-\par\pard\qj \li2906\ri91 4\sb20\sl-400\slmult0 \up0 \expndtw-1\charscalex100 (a) intending that the servi ces or facilities be used, or knowing or having reasonable \line \up0 \expndtw-1 \charscalex100 grounds to believe that the services or facilities will be used, in whole or in part, for \line \up0 \expndtw-1\charscalex100 the purpose of comm itting or facilitating the commission of a terrorist act, or for the \line \up0 \expndtw0\charscalex100 purpose of benefiting any person who is committing or fa cilitating the commission \line \up0 \expndtw-1\charscalex100 of a terrorist act ; or \par\pard\qj \li2906\ri915\sb0\sl-400\slmult0 \up0 \expndtw0\charscalex102 (b) knowing or having reasonable grounds to believe that, in whole or in part, t he \up0 \expndtw0\charscalex102 services or facilities will be used by or will b enefit any terrorist, terrorist entity or \up0 \expndtw0\charscalex102 terrorist group, \par\pard\ql \li2906\sb133\sl-264\slmult0 \up0 \expndtw-3\charscalex100 shall be punished: \par\pard\ql \li3606\sb136\sl-264\slmult0 \up0 \expndtw-3\cha rscalex100 (aa) if the act results in death, with death; and \par\pard\qj \li360 6\ri916\sb24\sl-400\slmult0 \up0 \expndtw0\charscalex100 (bb) in any other case,

with imprisonment for a term of not less than seven \up0 \expndtw0\charscalex10 0 years but not exceeding thirty years, and shall also be liable to fine. \par\p ard\qj \li2205\ri914\sb399\sl-402\slmult0 \up0 \expndtw0\charscalex103 Section 1 30N creates the offence of providing or collecting property with knowledge, \lin e \up0 \expndtw0\charscalex103 intention or reasonable grounds to believe that i t will be used to commit a terrorist act. \line \up0 \expndtw0\charscalex104 Sec tion 130O prohibits a person from making available financial services or facilit ies \line \up0 \expndtw0\charscalex106 knowing or having grounds to believe that they will be used by, or will benefit, any \line \up0 \expndtw-2\charscalex100 terrorist, terrorist entity or terrorist group. Notably, \u8216?financial servic es or facilities\u8217? are not \line \up0 \expndtw0\charscalex100 defined excep t to provide that they include services and facilities offered by lawyers and \l ine \up0 \expndtw-4\charscalex100 accountants acting as nominees or agents for t heir client. Therefore, while section 130O is a \line \up0 \expndtw-4\charscalex 100 useful provision within its own terms, it could not operate to cr iminalize in a \par\pard\ql \li10449\sb32\sl-264\slmult0 \up0 \expndtw-3\chars calex100 105 \par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\ bkmkstart Pg115}{\bkmkend Pg115}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\par d\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\ qj\li2205\ri915\sb249\sl-400\slmult0 \up0 \expndtw0\charscalex105 \ul0\nosupersu b\cf1\f2\fs23 comprehensive manner the provision or collection of funds for the support of terrorist \up0 \expndtw-3\charscalex100 individuals or group. \ul0\su per\cf8\f9\fs23 129 \par\pard\qj \li2205\ri914\sb397\sl-404\slmult0 \up0 \expndt w0\charscalex100 \ul0\nosupersub\cf1\f2\fs23 It must be borne in mind that secti ons 130N and 130O provide severe penalties including \line \up0 \expndtw0\charsc alex104 the death sentence. These provisions would have a significant impact on the banks and \line \up0 \expndtw-1\charscalex100 financial institutions if they become involved in terrorism financing activities. As such, it is \line \up0 \e xpndtw-2\charscalex100 more important now than ever before for banks and financi al institutions to ensure that their \line \up0 \expndtw0\charscalex109 customer identification and due diligence measures are effective to detect terrorism \li ne \up0 \expndtw-3\charscalex100 financing activities. \par\pard\qj \li2205\ri91 4\sb395\sl-406\slmult0 \up0 \expndtw-1\charscalex100 Section 130P of the Penal C ode prohibits the conduct of arranging for retention or control \up0 \expndtw0\c harscalex103 of terrorist property. As such, it can be said that this provision relates to laundering of \up0 \expndtw0\charscalex100 terrorist property. Sectio n 130Q criminalizes the conduct of dealing in terrorist property. \up0 \expndtw1\charscalex100 Section 130Q(2) extensively defines \u8216?dealing\u8217? to inc lude; \par\pard\ql \li2205\sb112\sl-264\slmult0 \up0 \expndtw-3\charscalex100 (a ) acquiring or possessing any terrorist property; \par\pard\qj \li2205\ri914\sb 24\sl-400\slmult0\tx2556 \up0 \expndtw-2\charscalex100 (b) entering into or faci litating, directly or indirectly, any transaction in respect of terrorist \line\ tab \up0 \expndtw-3\charscalex100 property; \par\pard\ql \li2205\sb113\sl-264\sl mult0 \up0 \expndtw-3\charscalex100 (c) converting, concealing or disguising te rrorist property; or \par\pard\qj \li2205\ri916\sb8\sl-420\slmult0\tx2556 \up0 \ expndtw-4\charscalex100 (d) providing any financial or other services in respec t of any terrorist property to or for the \line\tab \up0 \expndtw-4\charscalex10 0 benefit of, or at the direction or order of, any terrorist, terrorist entity o r terrorist group. \par\pard\qj \li2205\ri915\sb397\sl-400\slmult0\fi0 \up0 \exp ndtw0\charscalex102 It has been argued that section 130Q is capable of criminali zing most kinds of conduct \up0 \expndtw0\charscalex100 directed at or resulting in the provision or collection of funds for terrorist individuals or \up0 \expn dtw-1\charscalex100 groups.\ul0\super\cf8\f9\fs23 130\ul0\nosupersub\cf1\f2\fs23 Sections 130P and 130Q require knowledge to convict a person. It appears that \up0 \expndtw0\charscalex100 the terrorism financing offences under the Penal Co de do not require that the funds were \up0 \expndtw-1\charscalex100 actually use d to carry out or attempt a terrorist acts. \par\pard\qj \li2205\sb0\sl-400\slmu lt0 \par\pard\qj\li2205\ri915\sb20\sl-400\slmult0 \up0 \expndtw0\charscalex100 F urthermore, the offences apply to both natural and legal persons. Section 130T c learly \line \up0 \expndtw-2\charscalex100 specifies that if any of the offences

were committed by a body corporate, any person who, \line \up0 \expndtw-2\chars calex100 at the time of the commission of the offence, was a person responsible for the management \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\s b173\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\su per\cf9\f10\fs18 129\ul0\nosupersub\cf10\f11\fs19 APG Mutual Evaluation Report on Malaysia 2007, 52. \par\pard\li2205\sb20\sl-218\slmult0\fi0 \up0 \expndtw-2\c harscalex100 \ul0\super\cf9\f10\fs18 130\ul0\nosupersub\cf10\f11\fs19 APG Mutua l Evaluation Report on Malaysia 2007, 53.\par\pard\li2205\sb3\sl-264\slmult0\fi8 243 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 106 {\shp {\*\shpinst\shpleft2205\shptop13928\shpright5006\shpbottom13948\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz172\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g116}{\bkmkend Pg116}\par\pard\qj \li2205\sb0\sl-403\slmult0 \par\pard\qj\li2205 \sb0\sl-403\slmult0 \par\pard\qj\li2205\sb0\sl-403\slmult0 \par\pard\qj\li2205\r i914\sb238\sl-403\slmult0\fi0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f 2\fs23 or control of the body corporate, shall be liable for that offence unless he or she can prove \line \up0 \expndtw0\charscalex100 that the offence was com mitted without his or her consent and he or she had exercised all \line \up0 \ex pndtw0\charscalex103 such due diligence to prevent the commission of the offence . Notably, this provision is \line \up0 \expndtw0\charscalex103 similar to the section 87(1) of AMLATFA.\ul0\super\cf8\f9\fs23 131\ul0\nosupersub\cf1\f2\fs23 Both section 130T of the Penal Code and \line \up0 \expndtw-1\charscalex100 sect ion 87(1) of AMLATFA place a significant burden on the management of the reporti ng \line \up0 \expndtw0\charscalex100 institutions to ensure that their institut ions are well protected from money laundering and \line \up0 \expndtw0\charscale x100 terrorism financing activities. \par\pard\qj \li2205\ri913\sb397\sl-403\slm ult0 \up0 \expndtw0\charscalex103 Part VIA of AMLATFA also provides measures to trace, freeze, seize and forfeit assets \line \up0 \expndtw0\charscalex102 inten ded to be used for, or acquired as a result of, terrorist acts. These measures w ill also \line \up0 \expndtw0\charscalex108 enable the government of Malaysia to freeze the assets of known terrorists based on \line \up0 \expndtw0\charscalex1 00 information received from, for instance, the lists issued by the Security Cou ncil Sanctions \line \up0 \expndtw0\charscalex102 Committee established under th e United Nations Security Council. In 1999, the Security \line \up0 \expndtw-1\c harscalex100 Council adopted the Security Council Resolution 1267 which establis hed sanctions against \line \up0 \expndtw0\charscalex102 the Taliban regime in A fghanistan for its support of Osama bin Laden and the Al-Qaeda \line \up0 \expnd tw0\charscalex102 organization. Following the September 11 tragedy, Resolution 1 373 was also adopted by \line \up0 \expndtw0\charscalex100 the Security Council. It required countries to take coordinated actions to prevent any kind \line \up 0 \expndtw0\charscalex109 of support to terrorist organizations, including finan cial support. It also required all \line \up0 \expndtw0\charscalex107 countries to criminalise terrorism financing and freeze without delay all the assets of \l ine \up0 \expndtw-3\charscalex100 terrorists and terrorist organizations. \par\p ard\qj \li2205\ri914\sb400\sl-400\slmult0 \up0 \expndtw0\charscalex100 By virtue of section 66B(1) of AMLATFA, the Minister of Home Affairs is empowered to \up0 \expndtw0\charscalex103 declare, by an order published in the \ul0\nosupersub\c f7\f8\fs23 Gazette,\ul0\nosupersub\cf1\f2\fs23 any entity that has knowingly co mmitted, \up0 \expndtw-1\charscalex100 attempted to commit, participated in comm itting or facilitated the commission of a terrorist \up0 \expndtw0\charscalex100 act, or is knowingly acting on behalf of, at the direction of, or in associatio

n with, such an \up0 \expndtw0\charscalex100 entity as a specified entity. \par\ pard\qj \li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\p ard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\par d\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\ qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\ri936\sb29\sl-220\slmult0\fi0\t x3173 \up0 \expndtw0\charscalex103 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs1 8 131\ul0\nosupersub\cf10\f11\fs19 Section \tab \up0 \expndtw0\charscalex109 87 (1) of AMLATFA provides where an offence is committed by a body corporate or an \up0 \expndtw0\charscalex100 association, a person who is its director, or who is concerned in the management of its affairs, is deemed to \up0 \expndtw0\chars calex103 have committed that offence unless that person proves that the offence was committed without his or her \up0 \expndtw-2\charscalex100 consent and that he or she exercised such diligence to prevent the commission of the offence. \pa r\pard\ql \li10449\sb14\sl-252\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupe rsub\cf1\f2\fs23 107 {\shp {\*\shpinst\shpleft2205\shptop13480\shpright5006\shpbottom13500\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz166\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g117}{\bkmkend Pg117}\par\pard\qj \li2205\sb0\sl-403\slmult0 \par\pard\qj\li2205 \sb0\sl-403\slmult0 \par\pard\qj\li2205\sb0\sl-403\slmult0 \par\pard\qj\li2205\r i915\sb238\sl-403\slmult0\fi0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf1\ f2\fs23 It is important to note that such an order will have the effect of prohi biting any Malaysian \up0 \expndtw0\charscalex108 citizen or body corporate from any kind of dealing with the entity. It also makes it \up0 \expndtw0\charscalex 104 mandatory to disclose to the Inspector General of Police, the existence of t he entity\u8217?s \up0 \expndtw-4\charscalex100 property in their possession or control, and any information about a transaction in respect of \up0 \expndtw-2\c harscalex100 such property.\ul0\super\cf8\f9\fs23 132\ul0\nosupersub\cf1\f2\fs23 Any person who contravenes these requirements commits an offence and \up0 \exp ndtw-2\charscalex100 shall be liable on conviction to a fine not exceeding one m illion ringgit or to imprisonment \up0 \expndtw-3\charscalex100 for a term not e xceeding one year or to both.\ul0\super\cf8\f9\fs23 133 \par\pard\qj \li2205\ri9 14\sb397\sl-403\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf1\f2\fs2 3 Section 66B(6) allows the specified entity to apply for the order to be revoke d. However, \up0 \expndtw0\charscalex100 this must be done within 60 days of the order being issued. Furthermore, section 66B(7) \up0 \expndtw0\charscalex100 st ates that the Minister can either revoke the order and gazette this decision, or he or she \up0 \expndtw-4\charscalex100 can uphold it and notify the entity wi thin 60 days of receiving the application. The decision \up0 \expndtw0\charscale x113 of the Minister is final.\ul0\super\cf8\f9\fs23 134\ul0\nosupersub\cf1\f2\f s23 It appears that this section aims to rule out any court \up0 \expndtw-2\cha rscalex100 involvement.\ul0\super\cf8\f9\fs23 135\ul0\nosupersub\cf1\f2\fs23 Se ction 66B(9) indicates that the order can be maintained indefinitely, but \up0 \ expndtw-3\charscalex100 the Minister must review it every six months. \par\pard\ qj \li2205\ri913\sb397\sl-403\slmult0 \up0 \expndtw-3\charscalex100 It is intere sting to note that the Minister can make exemptions to the order to exclude fund s \line \up0 \expndtw0\charscalex105 for basic or extraordinary expenses.\ul0\su per\cf8\f9\fs23 136\ul0\nosupersub\cf1\f2\fs23 These include payment for foodst uffs, rent or \line \up0 \expndtw-1\charscalex100 mortgage, medicines and medica l treatment, taxes, insurance premiums and public utility \line \up0 \expndtw0\c harscalex107 charges. Also exempted are the payment of professional fees and rei

mbursement of \line \up0 \expndtw-2\charscalex100 incurred legal expenses or fee s for maintenance of frozen funds or other financial assets or \line \up0 \expnd tw-2\charscalex100 economic resources.\ul0\super\cf8\f9\fs23 137\ul0\nosupersub\ cf1\f2\fs23 Section 66B(11) specifies that the Minister must direct the relevan t \line \up0 \expndtw-2\charscalex100 authority to issue a directive to all the institutions it supervises informing them of the order. \par\pard\qj \li2205\ri9 16\sb400\sl-400\slmult0 \up0 \expndtw0\charscalex102 Furthermore, section 66C em powers the Minister of Home Affairs to apply by an order \line \up0 \expndtw0\ch arscalex104 published in the Gazette any measures imposed by the Security Counci l of the United \line \up0 \expndtw0\charscalex104 Nations through its resolutio ns made in pursuant of Article 41 of the United Nations \par\pard\ql \li2205\sb0 \sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\s l-218\slmult0 \par\pard\ql\li2205\sb77\sl-218\slmult0 \up0 \expndtw-2\charscalex 100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 132\ul0\nosupersub\cf10\f11\f s19 \ul0\nosupersub\cf11\f12\fs19 Anti-Money Laundering and Anti-Terrorism Fina ncing Act 2001\ul0\nosupersub\cf10\f11\fs19 , s 66B(3). \par\pard\qj \li2205\ri3 438\sb1\sl-220\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 133 \ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Anti-Money Launderi ng and Anti-Terrorism Financing Act 2001\ul0\nosupersub\cf10\f11\fs19 , s 66B(4) . \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 134\ul0\nosupersub\cf10\ f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Anti-Money Laundering and Anti-Terrorism Financing Act 2001\ul0\nosupersub\cf10\f11\fs19 , s 66B(8). \up0 \expndtw-2\cha rscalex100 \ul0\super\cf9\f10\fs18 135\ul0\nosupersub\cf10\f11\fs19 Norhashimah , above n 51, 67. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charsc alex100 \ul0\super\cf9\f10\fs18 136\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersu b\cf11\f12\fs19 Anti-Money Laundering and Anti-Terrorism Financing Act 2001\ul0\ nosupersub\cf10\f11\fs19 , s 66B(10). \par\pard\ql \li2205\sb2\sl-218\slmult0 \u p0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 137\ul0\nosupersub\cf10\f11\ fs19 \ul0\nosupersub\cf11\f12\fs19 Anti-Money Laundering and Anti-Terrorism Fin ancing Act 2001\ul0\nosupersub\cf10\f11\fs19 , s 66B(10)(a). \par\pard\ql \li104 49\sb15\sl-251\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 108 {\shp {\*\shpinst\shpleft2205\shptop13033\shpright5006\shpbottom13053\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz190\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g118}{\bkmkend Pg118}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i911\sb249\sl-400\slmult0\fi0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf1\ f2\fs23 Charter.\ul0\super\cf8\f9\fs23 138\ul0\nosupersub\cf1\f2\fs23 Currently , the government has issued orders to all licensed financial institutions, \line \up0 \expndtw0\charscalex103 both onshore and offshore, to freeze the accounts of persons associated with Osama Bin \line \up0 \expndtw0\charscalex108 Laden, t he Taliban and the Al-Qaeda based on the UN Security Council Resolution \line \u p0 \expndtw-3\charscalex100 (UNSCR) 1267. \par\pard\qj \li2205\sb0\sl-400\slmult 0 \par\pard\qj\li2205\ri916\sb20\sl-400\slmult0 \up0 \expndtw-1\charscalex100 Se ction 66D empowers the Minister of Home Affairs, by order published in the Gazet te, to \up0 \expndtw0\charscalex102 require any person or class of persons to de termine within a period specified in the order \up0 \expndtw0\charscalex109 whet her they are in possession or control of terrorist property or property owned or \up0 \expndtw-3\charscalex100 controlled by or on behalf any specified entity.\ ul0\super\cf8\f9\fs23 139 \par\pard\qj \li2205\ri914\sb399\sl-402\slmult0 \up0 \

expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs23 Section 66E allows the releva nt regulatory or supervisory authority to issue guidelines on \up0 \expndtw0\cha rscalex111 carrying out a UN Security Council decision. Notably, an institution to which the \up0 \expndtw0\charscalex105 guidelines are issued shall comply wit h the guidelines notwithstanding any other duty \up0 \expndtw-1\charscalex100 im posed on the institution by any rule of law, written law or contract.\ul0\super\ cf8\f9\fs23 140\ul0\nosupersub\cf1\f2\fs23 The authority must \up0 \expndtw-2\c harscalex100 also report to both the Home Affairs Minister and Finance Minister every six months of any \up0 \expndtw0\charscalex107 action it has taken under t his section. In November 2006, a set of revised AML/CFT \up0 \expndtw0\charscale x102 Guidelines were issued to the banking and financial institutions to replace the guidelines \up0 \expndtw0\charscalex102 issued in 1995 and 2001 respectivel y.\ul0\super\cf8\f9\fs23 141 \par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\q j\li2205\ri915\sb20\sl-400\slmult0 \up0 \expndtw0\charscalex106 \ul0\nosupersub\ cf1\f2\fs23 Clearly, Malaysia has undertaken significant measures to combat terr orism financing \line \up0 \expndtw-1\charscalex100 activities. Part VIA of AMLA TFA and Part VIA of the Penal Code contain comprehensive \line \up0 \expndtw0\ch arscalex110 measures for the prevention of terrorism financing. These include th e new tools to \line \up0 \expndtw0\charscalex108 confiscate the terrorist prope rty and property involved in, or derived from terrorism \line \up0 \expndtw-3\ch arscalex100 financing activities. \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\p ard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\par d\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\l i2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb191\sl-218\slmult0 \up0 \expndtw2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 138\ul0\nosupersu b\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Anti-Money Laundering and Anti-Te rrorism Financing Act 2001\ul0\nosupersub\cf10\f11\fs19 , s 66C(1). \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs1 8 139\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Anti-Money Lau ndering and Anti-Terrorism Financing Act 2001\ul0\nosupersub\cf10\f11\fs19 , s 6 6D(1). \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul 0\super\cf9\f10\fs18 140\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\ fs19 Anti-Money Laundering and Anti-Terrorism Financing Act 2001\ul0\nosupersub\ cf10\f11\fs19 , s 66E(2). \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw2\charscalex100 \ul0\super\cf9\f10\fs18 141\ul0\nosupersub\cf10\f11\fs19 Bank N egara Malaysia, Financial Stability and Payment Systems Report 2006, 38. \par\pa rd\ql \li10449\sb15\sl-251\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub \cf1\f2\fs23 109 {\shp {\*\shpinst\shpleft2205\shptop13480\shpright5006\shpbottom13500\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz163\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g119}{\bkmkend Pg119}\par\pard\li2205\sb0\sl-264\slmult0\par\pard\li2205\sb0\sl264\slmult0\par\pard\li2205\sb0\sl-264\slmult0\par\pard\li2205\sb0\sl-264\slmult 0\par\pard\li2205\sb0\sl-264\slmult0\par\pard\li2205\sb254\sl-264\slmult0\fi0\tx 2906 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf4\f5\fs23 3.5\tab \up0 \exp ndtw-3\charscalex100 Summary\par\pard\qj \li2205\sb0\sl-402\slmult0 \par\pard\qj \li2205\ri914\sb67\sl-402\slmult0 \up0 \expndtw0\charscalex103 \ul0\nosupersub\c f1\f2\fs23 Nowadays money laundering and terrorism financing are among the most serious issues \line \up0 \expndtw0\charscalex103 facing the international commu

nity. Therefore, most countries including Malaysia have \line \up0 \expndtw0\cha rscalex103 established measures to combat these menaces. Malaysia passed AMLATFA in 2001 to \line \up0 \expndtw0\charscalex100 help eradicate money laundering a nd terrorism financing. Prior to this, the only legislative \line \up0 \expndtw0 \charscalex103 protection against money laundering in Malaysia was an asset seiz ure law which makes \line \up0 \expndtw0\charscalex100 drug-related money launde ring a criminal offence. This law, however, is narrow in scope \line \up0 \expnd tw-2\charscalex100 and has had only limited success in confiscating drug money. Hence there is a vital need for \line \up0 \expndtw-2\charscalex100 a stronger a nd broader law which covers proceeds from any other criminal activities. \par\pa rd\qj \li2205\ri914\sb397\sl-404\slmult0 \up0 \expndtw-2\charscalex100 The enact ment of AMLATFA fills a gap in the fight against money laundering in Malaysia. \ line \up0 \expndtw0\charscalex100 AMLATFA was formulated after consultations wit h various stakeholders. It translates the \line \up0 \expndtw0\charscalex100 int ernational standards on anti-money laundering measures into national law. AMLATF A \line \up0 \expndtw-1\charscalex100 is considered an innovative and comprehens ive legislation. It covers all aspects of criminal \line \up0 \expndtw0\charscal ex100 proceedings related to money laundering and terrorism financing. However, the Act is not \line \up0 \expndtw0\charscalex104 free from shortcomings. It app ears that the term of imprisonment for money laundering \line \up0 \expndtw0\cha rscalex110 offence is not proportionate to the gravity of the offence. The maxim um five years \line \up0 \expndtw0\charscalex100 imprisonment appears to be sign ificantly lower than the maximum term available for other \line \up0 \expndtw0\c harscalex100 serious crimes such as drugs and corruption offences. It also lower than that in many other \line \up0 \expndtw0\charscalex100 jurisdictions. For e xample, in the UK, the maximum term is 14 years and the US, 20 years. \par\pard\ qj \li2205\ri914\sb400\sl-400\slmult0 \up0 \expndtw0\charscalex100 More importan tly, it must be said that the adoption of anti-terrorism financing policies has \up0 \expndtw-1\charscalex100 far reaching effects on the reporting institutions . The laws could expose the employees and \up0 \expndtw0\charscalex100 managemen t of the reporting institutions to very severe punishment (including death) even \up0 \expndtw0\charscalex103 if they are negligently involved in terrorism fina ncing activities. However, despite these \up0 \expndtw0\charscalex104 arguments, AMLATFA is still considered a major tool for the prevention of Malaysian \up0 \ expndtw-3\charscalex100 financial institutions from being abused by criminals an d terrorists. \par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri916\ sb20\sl-400\slmult0 \up0 \expndtw0\charscalex107 Apart from combating money laun dering and terrorism financing activities, effective \line \up0 \expndtw0\charsc alex107 implementation of the AML/CFT laws would also have a significant impact on other \par\pard\ql \li2205\ri915\sb116\sl-260\slmult0\tx10449 \up0 \expndtw0\ charscalex106 criminal activities, by reducing the ability of criminal organizat ions to finance further \line\tab \up0 \expndtw-3\charscalex100 110 \par\pard\se ct\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart Pg120}{\bkmkend Pg120}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\sl mult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri916\sb249\sl400\slmult0 \up0 \expndtw0\charscalex102 \ul0\nosupersub\cf1\f2\fs23 criminal op erations. More importantly, effective AML/CFT measures could preserve the \up0 \ expndtw0\charscalex102 stability and integrity of the financial institutions in the country. \par\pard\qj \li2205\ri914\sb397\sl-404\slmult0 \up0 \expndtw0\char scalex109 With the implementation of the AML/CFT laws, the responsibilities of Malaysian \up0 \expndtw0\charscalex100 supervisory and regulatory agencies as w ell as the enforcement agencies and the reporting \up0 \expndtw0\charscalex107 i nstitutions are greater than before. Effective implementation of the laws will r equire \up0 \expndtw-1\charscalex100 considerable supervisory and enforcement re sources. It is not clear at this stage whether the \up0 \expndtw-1\charscalex100 relevant agencies have the necessary resources, or expertise, to carry out thei r very onerous \up0 \expndtw-2\charscalex100 responsibilities. This is an area that requires further research. \par\pard\qj \li2205\ri912\sb395\sl-406\slmult0 \up0 \expndtw-4\charscalex100 AMLATFA is relatively new, therefore it remains to be seen whether the Act could become \up0 \expndtw0\charscalex100 a practical,

workable and an effective legislation. Although much has been done, there is \up 0 \expndtw0\charscalex100 still more to be done by the government to prevent the suspicious flows of \u8216?dirty\u8217? money \up0 \expndtw-1\charscalex100 and terrorist funds in Malaysia. \par\pard\ql \li10449\sb0\sl-264\slmult0 \par\pard \ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \par\pard \ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \par\pard \ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \par\pard \ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \par\pard \ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \par\pard \ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \par\pard \ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \par\pard \ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \par\pard \ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \par\pard \ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \par\pard \ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \par\pard \ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \par\pard \ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \par\pard \ql\li10449\sb144\sl-264\slmult0 \up0 \expndtw-3\charscalex100 111 \par\pard\sec t\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart Pg121}{\bkmkend Pg121}\par\pard\ql \li5571\sb0\sl-264\slmult0 \par\pard\ql\li5571\sb0\sl-264\slm ult0 \par\pard\ql\li5571\sb0\sl-264\slmult0 \par\pard\ql\li5571\sb0\sl-264\slmul t0 \par\pard\ql\li5571\sb0\sl-264\slmult0 \par\pard\ql\li5571\sb0\sl-264\slmult0 \par\pard\ql\li5571\sb217\sl-264\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nos upersub\cf4\f5\fs23 CHAPTER FOUR \par\pard\ql \li2336\ri1048\sb264\sl-400\slmult 0\tx4833 \up0 \expndtw-3\charscalex100 THE IMPACT OF THE MALAYSIAN ANTI MONEY LA UNDERING LAWS ON \line\tab \up0 \expndtw-3\charscalex100 THE OPERATIONS OF BANKS \par\pard\li2205\sb0\sl-264\slmult0\par\pard\li2205\sb0\sl-264\slmult0\par\pard \li2205\sb0\sl-264\slmult0\par\pard\li2205\sb23\sl-264\slmult0\fi0\tx2905 \up0 \ expndtw-3\charscalex100 4.1\tab \up0 \expndtw-3\charscalex100 Introduction\par\p ard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri915\sb82\sl-400\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs23 It has been recognised that the banking system has long been the central element of money \up0 \expndtw 0\charscalex100 laundering\ul0\nosupersub\cf6\f7\fs23 .\ul0\nosupersub\cf1\f2\fs 23 This is in part due to the complexity and confidentiality of the banking sys tem \up0 \expndtw0\charscalex102 itself. The BCCI collapse in 1991, the Citibank and Bank of New York scandals in 1999 \up0 \expndtw0\charscalex100 and the Rigg s Bank scandal in 2002 have exposed the danger posed by money laundering \up0 \e xpndtw0\charscalex105 to the banking system. As such, many of the efforts to com bat money laundering have \up0 \expndtw-2\charscalex100 concentrated on the proc edures adopted by banks and financial institutions. \par\pard\qj \li2205\sb0\sl400\slmult0 \par\pard\qj\li2205\ri913\sb20\sl-400\slmult0 \up0 \expndtw0\charsca lex100 It must be said that effective anti-money laundering (AML) measures adopt ed by banks \up0 \expndtw-1\charscalex100 will make it tougher for criminals to get their \u8216?dirty money\u8217? into the financial system. For \up0 \expndtw 0\charscalex100 this reason, AML laws require banks to establish a number of cou nter-measures such as \up0 \expndtw0\charscalex100 customer identification and due diligence, reporting suspicious transactions, record \up0 \expndtw-1\ charscalex100 keeping, appointment of compliance officers and anti-money launder ing training. In fact, \up0 \expndtw-1\charscalex100 for law enforcement agencie s, banks are considered to be an important source of valuable \up0 \expndtw-2\ch arscalex100 information for the detection of money laundering. \par\pard\qj \li2 205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri913\sb20\sl-400\slmult0 \up0 \expnd tw0\charscalex100 However, from the banks\u8217? perspective, the main reason fo r their existence is to make as \line \up0 \expndtw-2\charscalex100 much profits as possible. Hence, their cultural and commercial interests are totally distinc t \line \up0 \expndtw0\charscalex104 from that of the law enforcement authoritie s. Undoubtedly, AML laws create a major \line \up0 \expndtw0\charscalex100 dilem ma for banks as they produce a significant shift in the way banks interact with their \line \up0 \expndtw0\charscalex106 customers. Furthermore, the implementat ion of the laws not only creates significant \line \up0 \expndtw-3\charscalex100

compliance problems for banks, but also has the potential to adversely affect t he operations \line \up0 \expndtw-4\charscalex100 of banks. \par\pard\ql \li1025 6\sb0\sl-264\slmult0 \par\pard\ql\li10256\sb0\sl-264\slmult0 \par\pard\ql\li1025 6\sb0\sl-264\slmult0 \par\pard\ql\li10256\sb41\sl-264\slmult0 \up0 \expndtw-5\ch arscalex100 112 \par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-24 0{\bkmkstart Pg122}{\bkmkend Pg122}\par\pard\qj \li2205\sb0\sl-402\slmult0 \par\ pard\qj\li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205\sb0\sl-402\slmult0 \par\pa rd\qj\li2205\ri914\sb241\sl-402\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupe rsub\cf1\f2\fs23 Following the September 11 tragedy, the fight against money lau ndering has extended to \line \up0 \expndtw-3\charscalex100 include terrorism fi nancing. This development has made the problems faced by banks more \line \up0 \ expndtw0\charscalex107 acute as detecting terrorism financing activities is more difficult. This is due to the \line \up0 \expndtw0\charscalex100 differences b etween how money laundering and terrorism financing are conducted. It is \line \ up0 \expndtw-2\charscalex100 undeniable that compliance with AML laws would prot ect banks\u8217? reputation and integrity. \line \up0 \expndtw0\charscalex104 Ho wever, it is legitimate to ask whether these laws are effective in preventing mo ney \line \up0 \expndtw0\charscalex100 launderers from using banks, or whether t hey simply put an unreasonable burden on the \line \up0 \expndtw0\charscalex100 banks and their customers? \par\pard\qj \li2205\ri914\sb398\sl-403\slmult0 \up0 \expndtw-3\charscalex100 This chapter will look into these issues and will analy se them against the background of the \up0 \expndtw0\charscalex100 Malaysian AML laws\ul0\nosupersub\cf6\f7\fs23 . \ul0\nosupersub\cf1\f2\fs23 As such, this cha pter will examine the relevant provisions of the \up0 \expndtw0\charscalex109 la ws that directly affect banks and their operations. To give a better picture of the \up0 \expndtw-2\charscalex100 implications of the laws on banks, it is neces sary to highlight some experiences from other \up0 \expndtw0\charscalex106 count ries with comparable legislation. This is vital because, at this stage , the \up0 \expndtw0\charscalex104 implementation of the AML laws in Malaysia i s comparatively new and there is little \up0 \expndtw-3\charscalex100 published literature on the subject. \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\ li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb224\sl-264\slmult0\tx2905 \up0 \ expndtw-3\charscalex100 \ul0\nosupersub\cf4\f5\fs23 4.2 \tab \up0 \expndtw-5\cha rscalex100 Overview of the Banking System in Malaysia \par\pard\qj \li2205\sb0\s l-402\slmult0 \par\pard\qj\li2205\ri913\sb80\sl-402\slmult0 \up0 \expndtw0\chars calex105 \ul0\nosupersub\cf1\f2\fs23 The banking system in Malaysia comprises mo netary and non-monetary institutions. \line \up0 \expndtw0\charscalex106 Monetar y institutions are those institutions whose principal liabilities are generally \line \up0 \expndtw0\charscalex102 accepted as money and the only institutions allowed to operate current accounts.\ul0\super\cf8\f9\fs23 1\ul0\nosupersub\cf1\ f2\fs23 They \line \up0 \expndtw0\charscalex108 include the central bank, comme rcial banks and Islamic banks. The non-monetary \line \up0 \expndtw-1\charscalex 100 institutions are those institutions which are closely linked to the monetary institutions and \line \up0 \expndtw0\charscalex102 whose liabilities are gener ally accepted as near-money, and fee-based activities.\ul0\super\cf8\f9\fs23 2\u l0\nosupersub\cf1\f2\fs23 They \line \up0 \expndtw-1\charscalex100 include a wi de range of financial institutions such as finance companies, merchant banks, \l ine \up0 \expndtw0\charscalex100 discount houses, foreign banks representative o ffices, saving institutions, provident and \line \up0 \expndtw0\charscalex100 pe nsion funds, insurance companies and offshore banks. Both monetary and non-monet ary \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmul t0 \par\pard\ql\li2205\sb134\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\s uper\cf9\f10\fs19\ul0\super\cf9\f10\fs18 1\ul0\nosupersub\cf10\f11\fs19 Azali M ohamed, \u8216?The Malaysian Economy and the Monetary Policy\u8217? (2000) \par\ pard\ql \li2205\sb22\sl-218\slmult0 \up0 \expndtw-2\charscalex100 <{\field{\*\fl dinst {HYPERLINK "http://www.econ.upm.edu.my/~azali/fn.pdf /" }}{\fldrslt {\ul0\ nosupersub\cf29\f30\fs19\ul www.econ.upm.edu.my/~azali/FN.pdf\ul0\nosupersub\cf1 0\f11\fs19 }}}\ul0\nosupersub\cf10\f11\fs19 > at 20 August 2008. \par\pard\ql \ li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 2\ul0\nosupersub\cf10\f11\fs19 Ibid. \par\pard\ql \li10256\sb104\sl-264\slmult0

\up0 \expndtw-5\charscalex100 \ul0\nosupersub\cf1\f2\fs23 113 {\shp {\*\shpinst\shpleft2205\shptop13592\shpright5006\shpbottom13612\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz182\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g123}{\bkmkend Pg123}\par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205 \sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\s b0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb2 41\sl-264\slmult0\tx9037 \up0 \expndtw0\charscalex107 \ul0\nosupersub\cf1\f2\fs2 3 institutions come under the supervision of Bank Negara Malaysia \tab \up0 \exp ndtw0\charscalex106 (BNM) and other \par\pard\ql \li2205\sb136\sl-264\slmult0 \u p0 \expndtw-3\charscalex100 relevant government departments, such as the Securit ies Commission. \par\pard\qj \li2205\sb0\sl-405\slmult0 \par\pard\qj\li2205\ri91 5\sb15\sl-405\slmult0 \up0 \expndtw0\charscalex102 BNM is the central bank of Ma laysia. Under section 35 of the Central Bank of Malaysia \up0 \expndtw0\charscal ex102 Act 1958, BNM has a legal duty to foster higher standards of banking and f inance in the \up0 \expndtw0\charscalex104 country. Therefore, in cooperation wi th the banks and financial institutions institutions, \up0 \expndtw0\charscalex1 05 BNM has a legal duty to use its best endeavours to promote and maintain banki ng and \up0 \expndtw-3\charscalex100 financial services for the public. \par\par d\qj \li2205\ri914\sb395\sl-405\slmult0 \up0 \expndtw0\charscalex100 Furthermore , with the exception of the offshore banks, BNM is empowered by the Central \lin e \up0 \expndtw0\charscalex100 Bank of Malaysia Act 1958 and the Banking and Fin ancial Institutions Act 1989 (BAFIA) \line \up0 \expndtw0\charscalex104 to super vise the banking and financial institutions in Malaysia. Under BAFIA, BNM is \li ne \up0 \expndtw0\charscalex104 authorized to regulate and supervise three group s of banking and financial institutions. \line \up0 \expndtw-3\charscalex100 The y are: \par\pard\li2556\sb138\sl-264\slmult0\fi0\tx2906 \up0 \expndtw-3\charscal ex100 \u-3913?\tab \up0 \expndtw-2\charscalex100 \u8216?Licensed institutions\u8 217? namely, the commercial banks, finance companies, merchant\par\pard\li2556\s b136\sl-264\slmult0\fi350 \up0 \expndtw-3\charscalex100 banks, discount houses a nd money brokers;\par\pard\ql \li2556\sb150\sl-264\slmult0\tx2906 \up0 \expndtw0 \charscalex80 \u-3913? \tab \up0 \expndtw0\charscalex102 \u8216?Scheduled instit utions\u8217? namely, the credit and charge card companies, building \par\pard\q j \li2906\ri914\sb24\sl-400\slmult0 \up0 \expndtw0\charscalex102 societies or th ose which carry on building credit business, factoring and leasing \up0 \expndtw -5\charscalex100 companies, and development financial institutions; and \par\par d\ql \li2556\sb133\sl-264\slmult0\tx2906 \up0 \expndtw0\charscalex80 \u-3913? \t ab \up0 \expndtw-3\charscalex100 \u8216?Non-scheduled institutions\u8217? as pre scribed under section 2 of BAFIA.\ul0\super\cf8\f9\fs23 3 \par\pard\qj \li2205\s b0\sl-410\slmult0 \par\pard\qj\li2205\ri913\sb6\sl-410\slmult0 \up0 \expndtw-2\c harscalex100 \ul0\nosupersub\cf1\f2\fs23 BAFIA is the most important legislation governing the Malaysian banking system and was \up0 \expndtw0\charscalex100 ena cted to provide for an integrated and well-supervised banking and financial syst em in \up0 \expndtw-1\charscalex100 Malaysia.\ul0\super\cf8\f9\fs23 4\ul0\nosupe rsub\cf1\f2\fs23 It deals with: \par\pard\ql \li2556\ri913\sb19\sl-400\slmult0\ tx2906 \up0 \expndtw-1\charscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\n osupersub\cf1\f2\fs23 the licensing and regulation of institutions carrying on banking, finance company, \line\tab \up0 \expndtw-2\charscalex100 merchant bank ing, discount house and money-broking businesses; \par\pard\ql \li2205\sb0\sl-21 8\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\ slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb179\sl-218\

slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\ fs18 3\ul0\nosupersub\cf10\f11\fs19 The institutions refer to: \par\pard\ql \li 2555\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 (a) any statutory body; or \par\pard\ql \li2555\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 (b) any p erson being an individual, or a body or organisation, not being a statutory body , whether \par\pard\qj \li2906\ri1007\sb1\sl-220\slmult0 \up0 \expndtw-2\charsca lex100 corporate or unincorporated, whether or not licensed, registered or autho rised under any written law, \line \up0 \expndtw-2\charscalex100 who or which is neither liable to be licensed under this Act, nor subject to the provisions of Part III. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 4\ul0\nosupersub\cf10\f11\fs19 Lee Mei Pheng and Detta Samen, \ul0\nosupersub\cf11\f12\fs19 Banking Law\ul0\nosupersub\cf10\f11\fs19 (3\ul0\super\cf9\f10\fs18 rd\ul0\nosupersub\cf10\f11\fs19 ed, 2006) 13. \par\p ard\ql \li10256\sb15\sl-251\slmult0 \up0 \expndtw-5\charscalex100 \ul0\nosupersu b\cf1\f2\fs23 114 {\shp {\*\shpinst\shpleft2205\shptop13033\shpright5006\shpbottom13053\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz180\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g124}{\bkmkend Pg124}\par\pard\ql \li2556\sb0\sl-405\slmult0 \par\pard\ql\li2556 \sb0\sl-405\slmult0 \par\pard\ql\li2556\sb0\sl-405\slmult0 \par\pard\ql\li2556\r i914\sb250\sl-405\slmult0\tx2906\tx2906\tx2906 \up0 \expndtw0\charscalex103 \ul0 \nosupersub\cf1\f2\fs23 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1 \f2\fs23 the regulation of institutions carrying on certain other financial bu sinesses like \line\tab \up0 \expndtw-4\charscalex100 building credit, developme nt finance, factoring and leasing businesses; \line \up0 \expndtw0\charscalex106 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 restrictions on the carrying on of the business of taking deposits, except by a \line\tab \u p0 \expndtw0\charscalex102 licensed institution carrying on banking, finance com pany, merchant banking or \line\tab \up0 \expndtw0\charscalex102 discount house business; \par\pard\ql \li2556\sb132\sl-264\slmult0 \up0 \expndtw-3\charscalex10 0 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 powers of s upervision and control over licensed institutions; \par\pard\ql \li2556\ri900\sb 39\sl-406\slmult0\tx2906\tx2906 \up0 \expndtw-2\charscalex100 \u-3913?\ul0\nosup ersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 secrecy, and authorised disclos ure, of information held by financial institutions; and \line \up0 \expndtw0\cha rscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 ot her matters such as indemnity, receipt of gifts and commissions, compensation, \ line\tab \up0 \expndtw0\charscalex105 power to issue guidelines, compounding and prosecution of offence and \line\tab \up0 \expndtw-5\charscalex100 reg ulations.\ul0\super\cf8\f9\fs23 5 \par\pard\qj \li2205\sb0\sl-400\slmult0 \par\p ard\qj\li2205\ri916\sb19\sl-400\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupe rsub\cf1\f2\fs23 By virtue of section 2(1) of BAFIA, the word \u8216?bank\u8217? refers to \u8216?a person which carries on \up0 \expndtw-1\charscalex100 bankin g business\u8217?. Furthermore, \u8216?banking business\u8217? means: \par\pard\ ql \li2906\sb113\sl-264\slmult0 \up0 \expndtw-3\charscalex100 (a) The business o f -\par\pard\qj \li3606\ri914\sb24\sl-400\slmult0 \up0 \expndtw0\charscalex100 r eceiving deposits on current account, deposit account, savings account or \up0 \ expndtw-1\charscalex100 other similar account; \par\pard\qj \li3606\ri1790\sb0\s l-400\slmult0 \up0 \expndtw-5\charscalex100 paying or collecting cheques drawn b y or paid in by customers; and \up0 \expndtw-5\charscalex100 provision of financ e; or \par\pard\qj \li2906\ri917\sb20\sl-400\slmult0 \up0 \expndtw0\charscalex10

7 (b) Such other business as the BNM, with the approval of the Minister, may \up 0 \expndtw-5\charscalex100 prescribe. \par\pard\qj \li2205\ri912\sb397\sl-404\sl mult0 \up0 \expndtw-1\charscalex100 Under section 4 of BAFIA, no person shall ca rry on banking business unless it is a public \up0 \expndtw-1\charscalex100 comp any incorporated in Malaysia and holds a valid license granted under section 6(4 ) of \up0 \expndtw0\charscalex102 the BAFIA to carry on such business. Furthermo re, under section 15 of the BAFIA, no \up0 \expndtw0\charscalex100 other institu tions can use the word \u8216?bank\u8217? without the written consent of the Min ister of \up0 \expndtw-3\charscalex100 Finance. The idea of restricting the use of the word bank is to ensure that only properly run \up0 \expndtw-4\charscalex1 00 and adequately resourced financial institutions can operate as banks. \par\pa rd\qj \li2205\ri918\sb400\sl-400\slmult0 \up0 \expndtw-2\charscalex100 BAFIA pro vides BNM with all the powers, functions and duties necessary to regulate and \l ine \up0 \expndtw0\charscalex109 control the banking and financial activities in Malaysia. For instance, section \up0 \expndtw-3\charscalex100 126 \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb213\sl-218\slmult0 \up0 \expndt w-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 5\ul0\nosupersu b\cf10\f11\fs19 Ibid 14. \par\pard\ql \li10256\sb104\sl-264\slmult0 \up0 \expnd tw-5\charscalex100 \ul0\nosupersub\cf1\f2\fs23 115 {\shp {\*\shpinst\shpleft2205\shptop14040\shpright5006\shpbottom14060\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz194\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g125}{\bkmkend Pg125}\par\pard\qj \li2205\sb0\sl-405\slmult0 \par\pard\qj\li2205 \sb0\sl-405\slmult0 \par\pard\qj\li2205\sb0\sl-405\slmult0 \par\pard\qj\li2205\r i916\sb230\sl-405\slmult0 \up0 \expndtw0\charscalex105 \ul0\nosupersub\cf1\f2\fs 23 empowers BNM to issue guidelines, circulars or notes in respect of the conduc t of the \line \up0 \expndtw0\charscalex100 banks. Part X of BAFIA provides BNM with extensive powers of supervision and control \line \up0 \expndtw0\charscalex 100 over the banking institutions. Furthermore, Part XI entrusts BNM with signif icant powers \line \up0 \expndtw0\charscalex100 in respect of investigation into BAFIA offences and search and seizure in relation to such \line \up0 \expndtw0\ charscalex100 investigation. \par\pard\qj \li2205\ri914\sb398\sl-402\slmult0\fi0 \up0 \expndtw0\charscalex100 The Fourth Schedule of BAFIA lists down the penalt ies for the various offences and non-\line \up0 \expndtw-1\charscalex100 complia nce with the Act. The maximum penalty is a fine of RM10 million and a maximum \l ine \up0 \expndtw0\charscalex100 imprisonment of a term of 10 years.\ul0\super\c f8\f9\fs23 6\ul0\nosupersub\cf1\f2\fs23 In cases of offences for which no penal ty is listed in \line \up0 \expndtw-1\charscalex100 the Fourth Schedule, the fin e shall be an amount not exceeding RM500,000 and in the case \line \up0 \expndtw 0\charscalex108 of a continuing offence an additional daily fine of RM1,000.\ul0 \super\cf8\f9\fs23 7\ul0\nosupersub\cf1\f2\fs23 In addition to this, the \line \up0 \expndtw-1\charscalex100 Governor of BNM is authorized to compound any offe nces committed and to impose a fine \line \up0 \expndtw0\charscalex100 not excee ding 50 percent of the maximum fine provided under BAFIA for that offence.\ul0\s uper\cf8\f9\fs23 8\ul0\nosupersub\cf1\f2\fs23 It \line \up0 \expndtw-1\charscal ex100 is clear that banks and financial institutions may face serious consequenc es for any BAFIA \line \up0 \expndtw-2\charscalex100 contravention. \par\pard\qj \li2205\ri915\sb278\sl-402\slmult0\fi0 \up0 \expndtw0\charscalex100 It must be noted that the provisions of BAFIA do not apply to Islamic banks and offshore \u p0 \expndtw0\charscalex108 banks. Islamic banks are regulated under the Islamic Banking Act 1983 (IBA). IBA \up0 \expndtw0\charscalex106 provides BNM with simil

ar regulatory and supervisory powers as provided under the \up0 \expndtw0\charsc alex100 BAFIA.\ul0\super\cf8\f9\fs23 9\ul0\nosupersub\cf1\f2\fs23 It is interes ting to note that the commercial banks are allowed to provide Islamic \up0 \expn dtw-1\charscalex100 banking products and services although they remain governed by BAFIA.\ul0\super\cf8\f9\fs23 10\ul0\nosupersub\cf1\f2\fs23 In this respect, \up0 \expndtw0\charscalex107 the banks are required, from time to time, to seek the advice of the Syariah Advisory \up0 \expndtw0\charscalex102 Council on the o perations of their business in order to ensure that it does not involve any \up0 \expndtw0\charscalex102 element which is not approved by the Religion of Islam. \ul0\super\cf8\f9\fs23 11 \par\pard\qj \li2205\ri916\sb260\sl-400\slmult0 \up0 \ expndtw-1\charscalex100 \ul0\nosupersub\cf1\f2\fs23 The offshore banks in the In ternational Offshore Financial Centre of Labuan are supervised \line \up0 \expnd tw-1\charscalex100 by the Labuan Offshore Financial Service Authority under the Offshore Banking Act 1990 \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\l i2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2 205\sb97\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul 0\super\cf9\f10\fs18 6\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs 19 Banks and Financial Institutions Act 1989\ul0\nosupersub\cf10\f11\fs19 , s103 . \par\pard\ql \li2205\sb22\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\su per\cf9\f10\fs18 7\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 B anks and Financial Institutions Act 1989,\ul0\nosupersub\cf10\f11\fs19 s104. \p ar\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\c f9\f10\fs18 8\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Banks and Financial Institutions Act 1989,\ul0\nosupersub\cf10\f11\fs19 s108. \par\p ard\qj \li2205\ri3809\sb1\sl-220\slmult0 \up0 \expndtw-2\charscalex100 \ul0\supe r\cf9\f10\fs18 9\ul0\nosupersub\cf10\f11\fs19 Bank Negara Malaysia, \u8216?Over view of the Islamic Banking in Malaysia\u8217?. \line \up0 \expndtw-2\charscalex 100 <{\field{\*\fldinst {HYPERLINK "http://www.bnm.gov.my/" }}{\fldrslt {\ul0\no supersub\cf29\f30\fs19\ul http://www.bnm.gov.my}}}\ul0\nosupersub\cf10\f11\fs19 > at 12 April 2008. \par\pard\li2205\sb17\sl-218\slmult0\fi0 \up0 \expndtw-2\cha rscalex100 \ul0\super\cf9\f10\fs18 10\ul0\nosupersub\cf10\f11\fs19 \ul0\nosuper sub\cf11\f12\fs19 Banks and Financial Institutions Act 1989\ul0\nosupersub\cf10 \f11\fs19 , s 124 (1).\par\pard\li2205\sb5\sl-218\slmult0\fi0 \up0 \expndtw-2\ch arscalex100 \ul0\super\cf9\f10\fs18 11\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupe rsub\cf11\f12\fs19 Banks and Financial Institutions Act 1989\ul0\nosupersub\cf1 0\f11\fs19 , s 124 (3).\par\pard\li2205\sb3\sl-264\slmult0\fi8050 \up0 \expndtw3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 116 {\shp {\*\shpinst\shpleft2205\shptop12810\shpright5006\shpbottom12830\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz190\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g126}{\bkmkend Pg126}\par\pard\qj \li2205\sb0\sl-404\slmult0 \par\pard\qj\li2205 \sb0\sl-404\slmult0 \par\pard\qj\li2205\sb0\sl-404\slmult0 \par\pard\qj\li2205\r i915\sb234\sl-404\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs 23 (OBA) other relevant offshore legislation. OBA contains the legislative frame work for the \line \up0 \expndtw0\charscalex100 licensing and regulation of offs hore banking businesses. In addition to OBA, the offshore \line \up0 \expndtw0\c harscalex106 banks which are offshore companies or foreign offshore companies ar e subject to the \line \up0 \expndtw0\charscalex100 requirements of the Offshore Companies Act 1990. It is important to note that the offshore \line \up0 \expnd tw0\charscalex100 banking institutions are governed by a set of laws which provi des sufficient safeguards for \line \up0 \expndtw0\charscalex100 ensuring that t

he offshore banks are not open to abuse by any form of criminal activities. \par \pard\qj \li2205\ri916\sb398\sl-402\slmult0 \up0 \expndtw-1\charscalex100 It is clear that a well-developed supervisory and regulatory framework has been establ ished \line \up0 \expndtw0\charscalex100 by the Malaysian government for adminis tering its banking and financial institutions. This \line \up0 \expndtw0\charsca lex100 is imperative in ensuring a robust functioning of the financial system wh ich is considered \line \up0 \expndtw0\charscalex104 one of the key components o f economic progress. It is believed that a sound and strong \line \up0 \expndtw0 \charscalex109 financial system is vital to bring confidence for investors to in vest in Malaysia and \line \up0 \expndtw0\charscalex102 therefore create wealth, incomes and employment. In contrast, any abuse of the financial \line \up0 \exp ndtw0\charscalex104 system would undermine public confidence in the financial sy stem with all its negative \line \up0 \expndtw-3\charscalex100 consequences.\ul0 \super\cf8\f9\fs23 12 \par\pard\qj \li2205\ri915\sb398\sl-403\slmult0 \up0 \expn dtw0\charscalex110 \ul0\nosupersub\cf1\f2\fs23 For this reason, the Malaysian go vernment does not condone banks and financial \line \up0 \expndtw0\charscalex106 institutions that are associated with any form of criminal activities including money \line \up0 \expndtw0\charscalex100 laundering and terrorism financing. Si nce January 2002, banks have to comply with the \line \up0 \expndtw-2\charscalex 100 Anti-Money Laundering and Anti-Terrorism Financing Act 2001 (AMLATFA). Under the \line \up0 \expndtw0\charscalex105 legislation, banks are required to compl y with specific obligations which include the \line \up0 \expndtw0\charscalex102 identification of customers, reporting of significant and suspicious transactio ns, record \line \up0 \expndtw-3\charscalex100 keeping, retention of records and compliance programme. Notably, AMLATFA is a federal \line \up0 \expndtw-1\chars calex100 legislation and it applies to financial institutions carrying all types of banking business in \line \up0 \expndtw0\charscalex100 Malaysia, ranging fro m conventional banking and Islamic banking to offshore banking. \line \up0 \expn dtw-2\charscalex100 Although this thesis will focus on banks, much of its conten ts will generally apply to other \line \up0 \expndtw0\charscalex104 financial in stitutions as well. The words \u8216?bank\u8217? and \u8216?banking institution\ u8217? will be used \line \up0 \expndtw-5\charscalex100 interchangeably in this thesis. \par\pard\qj \li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\s lmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slm ult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\ri938\sb89\sl-22 0\slmult0 \up0 \expndtw0\charscalex103 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10 \fs18 12\ul0\nosupersub\cf10\f11\fs19 Zeti Akhtar Aziz, \u8216?Governor\u8217?s Opening Remarks at the ASEAN Anti-Money Laundering Workshop\u8217? \up0 \expndt w0\charscalex103 \ul0\nosupersub\cf11\f12\fs19 ASEAN Anti-Money Laundering Works hop\ul0\nosupersub\cf10\f11\fs19 (Kuala Lumpur, 28 July 2003). \par\pard\ql \li 10256\sb14\sl-252\slmult0 \up0 \expndtw-5\charscalex100 \ul0\nosupersub\cf1\f2\f s23 117 {\shp {\*\shpinst\shpleft2205\shptop13928\shpright5006\shpbottom13948\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz175\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g127}{\bkmkend Pg127}\par\pard\li2205\sb0\sl-264\slmult0\par\pard\li2205\sb0\sl264\slmult0\par\pard\li2205\sb0\sl-264\slmult0\par\pard\li2205\sb0\sl-264\slmult 0\par\pard\li2205\sb0\sl-264\slmult0\par\pard\li2205\sb254\sl-264\slmult0\fi0\tx 2964 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf4\f5\fs23 4.3\tab \up0 \exp ndtw-3\charscalex100 Anti-Money Laundering Measures Prior to AMLATFA\par\pard\qj \li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205\ri915\sb67\sl-402\slmult0\fi0 \u

p0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs23 As mentioned in the previ ous chapter, measures to protect banks from money laundering \line \up0 \expndtw -3\charscalex100 have been in place even before the enactment of AMLATFA. Using the powers granted by \line \up0 \expndtw0\charscalex105 BAFIA, BNM had issued i ts \u8216?Know Your Customer Policy\u8217? in 1989. The policy was \line \up0 \e xpndtw-1\charscalex100 adopted from the \ul0\nosupersub\cf7\f8\fs23 \u8216?State ment on Prevention of Criminal Use of the Banking System for the \line \up0 \exp ndtw0\charscalex100 Purpose of Money Laundering\u8217?\ul0\nosupersub\cf1\f2\fs2 3 issued by the Basle Committee on Banking Regulations \line \up0 \expndtw-3\ch arscalex100 and Supervisory Practices. In 1993, BNM revised its \u8216?Know Your Customer Policy\u8217? to take \line \up0 \expndtw0\charscalex100 into account the 40 Recommendations of FATF\ul0\super\cf8\f9\fs23 13\ul0\nosupersub\cf1\f2\fs 23 and replaced it with the \u8216?Guidelines on \line \up0 \expndtw0\charscale x100 Money Laundering and Know Your Customer Policy\u8217? \up0 \expndtw0\ charscalex100 (more popularly known as \par\pard\ql \li2205\sb112\sl-264\slmu lt0 \up0 \expndtw-3\charscalex100 BNM/GP9). \par\pard\qj \li2205\sb0\sl-400\slmu lt0 \par\pard\qj\li2205\ri914\sb44\sl-400\slmult0 \up0 \expndtw0\charscalex106 B asically, BNM/GP9 consists of four parts. Part One defines money laundering and \line \up0 \expndtw-1\charscalex100 explains the well known three stages of laun dering. It also specifically states the standard \line \up0 \expndtw-2\charscale x100 principles of \u8216?Know Your Customer Policy\u8217? issued by the Basle C ommittee. Part Two sets \line \up0 \expndtw-1\charscalex100 out policies and pro cedures for preventing money laundering. It provides that the banking \line \up0 \expndtw0\charscalex102 institutions should establish a \u8216?Know Your Custom er Policy\u8217? which should contain the \line \up0 \expndtw-5\charscalex100 fo llowing elements:\ul0\super\cf8\f9\fs23 14 \par\pard\ql \li2205\sb113\sl-264\slm ult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 (a)\ul0\nosupersu b\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 Develop and communicate group policie s relating to money laundering; \par\pard\qj \li2205\ri917\sb8\sl-420\slmult0\tx 2555 \up0 \expndtw0\charscalex105 (b)\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersu b\cf1\f2\fs23 Set minimum requirements, and maintain records of identification d ocuments for \line\tab \up0 \expndtw-5\charscalex100 opening of account; \par\pa rd\ql \li2205\sb109\sl-264\slmult0 \up0 \expndtw-4\charscalex100 (c)\ul0\nosuper sub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 Maintain records of transactions; \ par\pard\ql \li2205\sb136\sl-264\slmult0 \up0 \expndtw-4\charscalex100 (d)\ul0\n osupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 Comply with relevant legislat ion; \par\pard\qj \li2205\ri916\sb24\sl-400\slmult0\tx2555 \up0 \expndtw0\charsc alex100 (e)\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 Facilitate c ooperation with the relevant law enforcement authorities, including timely \line \tab \up0 \expndtw-1\charscalex100 disclosure of information; \par\pard\qj \li22 05\ri917\sb0\sl-400\slmult0\tx2555 \up0 \expndtw0\charscalex100 (f)\ul0\nosupers ub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 Audit or inspect compliance with pol icies, procedures and controls relating to money \line\tab \up0 \expndtw-1\chars calex100 laundering; \par\pard\qj \li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205 \sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\s b0\sl-220\slmult0 \par\pard\qj\li2205\ri944\sb9\sl-220\slmult0 \up0 \expndtw-2\c harscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 13\ul0\nosupersub\cf 10\f11\fs19 The FATF\u8217?s 40 Recommendations set out the basic framework for anti-money laundering which cover the \line \up0 \expndtw0\charscalex104 crimin al justice system, law enforcement, the financial system and its regulation and also international \line \up0 \expndtw0\charscalex104 cooperation. These recomme ndations are now the internationally accepted standards to counter money \line \ up0 \expndtw-2\charscalex100 laundering. \par\pard\li2205\sb20\sl-218\slmult0\fi 0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 14\ul0\nosupersub\cf10\f 11\fs19 Para I of Part Two of the BNM/GP9.\par\pard\li2205\sb3\sl-264\slmult0\f i8050 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 118 {\shp {\*\shpinst\shpleft2205\shptop13256\shpright5006\shpbottom13276\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz223\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{

\sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g128}{\bkmkend Pg128}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i916\sb249\sl-400\slmult0\tx2556 \up0 \expndtw0\charscalex107 \ul0\nosupersub\cf 1\f2\fs23 (g)\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 Provide tr aining and guidance to staff in the operation of procedures and controls \line\t ab \up0 \expndtw-3\charscalex100 relating to money laundering; and \par\pard\qj \li2205\ri917\sb0\sl-400\slmult0\tx2556 \up0 \expndtw0\charscalex104 (h)\ul0\nos upersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 Monitor compliance by subsidiar ies and overseas branches with group policies and \line\tab \up0 \expndtw-3\char scalex100 controls relating to money laundering. \par\pard\qj \li2205\sb0\sl-402 \slmult0 \par\pard\qj\li2205\ri913\sb17\sl-402\slmult0\fi0 \up0 \expndtw-1\chars calex100 Part Three of BNM/GP9 deals with the reporting of suspicious transactio ns. A suspicious \line \up0 \expndtw0\charscalex103 transaction is considered to be any transaction which is inconsistent with a customer\u8217?s \line \up0 \ex pndtw0\charscalex102 known, legitimate business, or personal activities. As such , banks are required to know \line \up0 \expndtw0\charscalex105 their customers\ u8217? business to recognize that a transaction or a series of transactions is \ line \up0 \expndtw-3\charscalex100 unusual or suspicious.\ul0\super\cf8\f9\fs23 15\ul0\nosupersub\cf1\f2\fs23 Examples of suspicious transactions are given in Appendix I under \line \up0 \expndtw0\charscalex103 the following sub-headings : Money Laundering Using Cash Transaction; Money \line \up0 \expndtw0\char scalex103 Laundering Using Bank Accounts; Money Laundering Using Investme nt Related \line \up0 \expndtw-1\charscalex100 Transactions; Money Laundering b y Off-shore International Activity; Money Laundering \line \up0 \expndtw-2\chars calex100 Involving Financial Institution Employees and Agents and Money Launderi ng by Secured \line \up0 \expndtw-3\charscalex100 and Unsecured Lending.\ul0\sup er\cf8\f9\fs23 16 \par\pard\qj \li2205\ri915\sb395\sl-406\slmult0\fi0 \up0 \expn dtw0\charscalex103 \ul0\nosupersub\cf1\f2\fs23 BNM/GP9 also requires banks to co ntinually monitor suspicious transactions. For this \up0 \expndtw0\charscalex110 reason, each banking institution is required to formally designate an officer t o be \up0 \expndtw0\charscalex100 responsible for money laundering recognition a nd reporting procedures.\ul0\super\cf8\f9\fs23 17\ul0\nosupersub\cf1\f2\fs23 Ba nks are also \up0 \expndtw0\charscalex100 required to report immediately to BNM all cases of suspicious transactions.\ul0\super\cf8\f9\fs23 18 \par\pard\qj \li2 205\ri916\sb399\sl-400\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf1 \f2\fs23 Part Four of BNM/GP9 outlines education and training packages for the e mployees so that \line \up0 \expndtw0\charscalex109 they are fully aware of thei r responsibilities to prevent the flow of \up0 \expndtw0\charscalex101 \u8216?di rty\u8217? money. \par\pard\qj \li2205\ri917\sb0\sl-400\slmult0 \up0 \expndtw0\c harscalex104 BNM/GP9 specifically recommends effective training to be given to n ew employees, \up0 \expndtw-5\charscalex100 cashiers, new client personnel, oper ations supervisors and managers.\ul0\super\cf8\f9\fs23 19 \par\pard\ql \li2205\s b0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0 \sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\s l-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl218\slmult0 \par\pard\ql\li2205\sb5\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 15\ul0\nosupersub\cf10\f11\fs19 Para I of Part Three o f the BNM/GP9. \par\pard\qj \li2205\ri949\sb1\sl-220\slmult0 \up0 \expndtw0\char scalex103 \ul0\super\cf9\f10\fs18 16\ul0\nosupersub\cf10\f11\fs19 The details c an be found in BNM/GP9 \u8216?Guidelines on Money Laundering and Know Your Custo mer \line \up0 \expndtw-4\charscalex100 Policy\u8217?. \par\pard\ql \li2205\sb2\ sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 17\ul0\nosu

persub\cf10\f11\fs19 Ibid. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndt w-2\charscalex100 \ul0\super\cf9\f10\fs18 18\ul0\nosupersub\cf10\f11\fs19 Ibid Part II. \par\pard\li2205\sb20\sl-218\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 19\ul0\nosupersub\cf10\f11\fs19 Para II of Part Four of the BNM/GP9.\par\pard\li2205\sb3\sl-264\slmult0\fi8050 \up0 \expndtw-3\charscal ex100 \ul0\nosupersub\cf1\f2\fs23 119 {\shp {\*\shpinst\shpleft2205\shptop13033\shpright5006\shpbottom13053\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz202\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g129}{\bkmkend Pg129}\par\pard\qj \li2205\sb0\sl-404\slmult0 \par\pard\qj\li2205 \sb0\sl-404\slmult0 \par\pard\qj\li2205\sb0\sl-404\slmult0 \par\pard\qj\li2205\r i914\sb234\sl-404\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\f s23 It is important to note that there is a penalty for non-compliance with BNM/ GP9. By virtue \up0 \expndtw-2\charscalex100 of sections 103 and 104 of BAFIA, a ny person who contravenes BNM/GP9 shall be guilty \up0 \expndtw-1\charscalex100 of an offence and shall be liable to be punished with a fine not exceeding RM500 ,000. In \up0 \expndtw-3\charscalex100 the case of a continuing offence, the per son shall, in addition, be liable to be punished with \up0 \expndtw0\charscalex1 03 a daily fine not exceeding RM1,000 for every day during which the offence con tinues. \up0 \expndtw-4\charscalex100 \u8216?Person\u8217? is defined in BAFIA t o include an individual or corporation.\ul0\super\cf8\f9\fs23 20 \par\pard\ql \l i2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2 205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb180\sl-264\slmult0\tx2905 \up0 \exp ndtw-3\charscalex100 \ul0\nosupersub\cf4\f5\fs23 4.4 \tab \up0 \expndtw-3\charsc alex100 AML/CTF Obligations and their Impact on the Operations of Banks \par\par d\qj \li2205\sb0\sl-405\slmult0 \par\pard\qj\li2205\ri914\sb75\sl-405\slmult0 \u p0 \expndtw-1\charscalex100 \ul0\nosupersub\cf1\f2\fs23 To fulfil its internatio nal obligations and as a demonstration of its commitment to the war \line \up0 \ expndtw-2\charscalex100 on money laundering, Malaysia passed the Anti-Money Laun dering Act (AMLA) in 2001. \line \up0 \expndtw-1\charscalex100 AMLA criminalizes money laundering and imposes specific obligations on the banks and \line \up0 \ expndtw-1\charscalex100 financial institutions. It also provides for the freezin g, seizure and forfeiture of properties \line \up0 \expndtw0\charscalex100 that have been derived from the proceeds of criminal activities. In response to the g lobal \line \up0 \expndtw0\charscalex100 fight against terrorism, AMLA has been amended by the Anti-Money Laundering \line \up0 \expndtw-3\charscalex10 0 (Amendment) Act in 2003. This Act brings terrorism financing within the ambit of the anti-\line \up0 \expndtw0\charscalex100 money laundering regulatory regim e.\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 As a result, since 6 March 2007, AMLA has been \line \up0 \expndtw0\charscalex102 renamed as the A nti-Money Laundering and Anti-Terrorism Financing Act \up0 \expndtw-3\chars calex100 2001 \par\pard\ql \li2205\sb112\sl-264\slmult0 \up0 \expndtw-5\charscal ex100 (AMLATFA). \par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri9 15\sb24\sl-400\slmult0 \up0 \expndtw0\charscalex107 Part IV of the AMLATFA impos es specific obligations on banks to counter money \line \up0 \expndtw0\charscale x100 laundering and terrorism financing activities. These obligations include th e obligation to \line \up0 \expndtw0\charscalex100 identify and verify customers , report cash and suspicious transactions, keep records and \line \up0 \expndtw0 \charscalex100 establish compliance program. They have been applied to the banki ng industry since 15 \line \up0 \expndtw0\charscalex100 January 2002. \par\pard\ qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri913\sb20\sl-400\slmult0 \up0

\expndtw-2\charscalex100 Given the complex nature of money laundering operation s and the emergence of terrorism \line \up0 \expndtw-1\charscalex100 financing a ctivities, BNM/GP9 had to be reviewed. As a result, in November 2006, BNM \line \up0 \expndtw-1\charscalex100 issued a new set of guidelines, namely Standard Gu idelines on Anti-Money Laundering and \par\pard\ql \li2205\sb0\sl-218\slmult0 \p ar\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb55\sl-218\slmult0 \up 0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 20\ul0 \nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Banking and Financial I nstitutions Act 1989\ul0\nosupersub\cf10\f11\fs19 , s 2. \par\pard\ql \li10256\s b15\sl-251\slmult0 \up0 \expndtw-5\charscalex100 \ul0\nosupersub\cf1\f2\fs23 120 {\shp {\*\shpinst\shpleft2205\shptop14151\shpright5006\shpbottom14171\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz163\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g130}{\bkmkend Pg130}\par\pard\qj \li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205 \sb0\sl-402\slmult0 \par\pard\qj\li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205\r i913\sb241\sl-402\slmult0 \up0 \expndtw0\charscalex107 \ul0\nosupersub\cf1\f2\fs 23 Counter Financing of Terrorism (Standard Guidelines) and Sectoral Guidelines 1 for \up0 \expndtw0\charscalex103 Banking and Financial Institutions (Sectoral Guidelines). The Standard Guidelines were \up0 \expndtw0\charscalex107 establish ed and formulated to address the requirements that must be complied by the \up0 \expndtw0\charscalex107 reporting institutions under AMLATFA to effectively comb at money laundering and \up0 \expndtw0\charscalex100 terrorism financing activit ies. The Sectoral Guidelines were formulated to supplement the \up0 \expndtw0\ch arscalex102 requirements of the Standard Guidelines. As such, they are incomplet e on their own and \up0 \expndtw0\charscalex100 must be read together with the S tandard Guidelines. This set of revised guidelines replaces \up0 \expndtw-1\char scalex100 BNM/GP9. More importantly, they are in line with the international ant i-money laundering \up0 \expndtw-2\charscalex100 and terrorism financing best pr actices issued by FATF. \par\pard\qj \li2205\ri914\sb396\sl-405\slmult0 \up0 \ex pndtw0\charscalex108 The Standard and Sectoral Guidelines were issued under sect ions 66E and 83 of the \up0 \expndtw-2\charscalex100 AMLATFA. Section 66E empowe rs BNM to issue relevant guidelines in order to discharge \up0 \expndtw-2\charsc alex100 any international obligations binding on Malaysia. Section 83 on the oth er hand specifically \up0 \expndtw0\charscalex108 refers to power of BNM to issu e relevant guidelines when exercising its function as \up0 \expndtw-3\charscalex 100 Financial Intelligence Unit. \par\pard\qj \li2205\ri913\sb397\sl-403\slmult0 \up0 \expndtw0\charscalex102 This section will critically analyze key obligatio ns imposed on banks under AMLATFA, \up0 \expndtw-1\charscalex100 Standard Guidel ines and the Sectoral Guidelines. As such, it will focus on the requirements \up 0 \expndtw0\charscalex100 relating to customer acceptance policy; customer ident ification and due diligence; record\up0 \expndtw0\charscalex102 keeping; ongoing monitoring; reporting suspicious and cash transactions; combating the \up0 \exp ndtw0\charscalex106 financing of terrorism and the anti-money laundering and cou nter terrorism financing \up0 \expndtw0\charscalex103 (AML/CTF) compliance pro gram. The impact of the legislative provisions on the \up0 \expndtw0\cha rscalex103 operational of banks will also be highlighted. \par\pard\ql \li2205\s b0\sl-264\slmult0 \par\pard\ql\li2205\sb248\sl-264\slmult0 \up0 \expndtw-1\chars calex100 \ul0\nosupersub\cf4\f5\fs23 4.4.1 Customer Acceptance Policy \par\par d\qj \li2205\sb0\sl-406\slmult0 \par\pard\qj\li2205\ri918\sb13\sl-406\slmult0 \u p0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs23 Part 4 of the Standard Gu

idelines requires banks to develop a customer acceptance policy \line \up0 \expn dtw0\charscalex104 before establishing a business relationship with customers. F or this reason, banks must \line \up0 \expndtw0\charscalex104 create a risk prof ile of each customer. This is vital especially for identifying the type of \line \up0 \expndtw-2\charscalex100 customers associated with high risk of money laun dering and terrorism financing. \par\pard\ql \li10256\sb0\sl-264\slmult0 \par\pa rd\ql\li10256\sb0\sl-264\slmult0 \par\pard\ql\li10256\sb0\sl-264\slmult0 \par\pa rd\ql\li10256\sb40\sl-264\slmult0 \up0 \expndtw-3\charscalex100 121 \par\pard\se ct\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart Pg131}{\bkmkend Pg131}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\sl mult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri917\sb249\sl400\slmult0 \up0 \expndtw0\charscalex102 \ul0\nosupersub\cf1\f2\fs23 When creati ng a risk profile of a particular customer, a bank must consider the following \ line \up0 \expndtw0\charscalex102 factors: \par\pard\qj \li2205\ri4362\sb4\sl-42 0\slmult0 \up0 \expndtw-3\charscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul 0\nosupersub\cf1\f2\fs23 the origin of the customer and location of business; \up0 \expndtw-3\charscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupers ub\cf1\f2\fs23 background of the customer; \par\pard\ql \li2205\sb129\sl-264\s lmult0 \up0 \expndtw-3\charscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\n osupersub\cf1\f2\fs23 nature of the customer\u8217?s business; \par\pard\ql \l i2205\sb156\sl-264\slmult0 \up0 \expndtw-3\charscalex100 \u-3913?\ul0\nosupersub \cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 structure of ownership for a corpora te customer; and \par\pard\ql \li2205\sb156\sl-264\slmult0 \up0 \expndtw-2\chars calex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 any other information suggesting that the customer is of higher risk.\ul0\super\cf8\ f9\fs23 21 \par\pard\qj \li2205\sb0\sl-403\slmult0 \par\pard\qj\li2205\ri914\sb1 9\sl-403\slmult0 \up0 \expndtw0\charscalex106 \ul0\nosupersub\cf1\f2\fs23 Clearl y, there are a lot of factors to be considered in ensuring that banks know their \up0 \expndtw-3\charscalex100 customer well so that they can assess risks and d etect any suspicious activities. This means \up0 \expndtw-3\charscalex100 that b anks should place greater effort in obtaining information about the customer. As such, \up0 \expndtw-2\charscalex100 this process should result in the implement ation of a number of effective risk management \up0 \expndtw0\charscalex100 arra ngements. Furthermore, part 3.1 of the Sectoral Guidelines requires banks to rev iew \up0 \expndtw0\charscalex100 and update their customers\u8217? profile regul arly, especially when there are changes in their \up0 \expndtw-5\charscalex100 e mployment or nature of business. \par\pard\qj \li2205\ri915\sb397\sl-403\slmult0 \up0 \expndtw-1\charscalex100 Clearly, Malaysian banks are required to apply AM L/CTF measures to their customers in \up0 \expndtw0\charscalex106 accordance wit h the risk perceived. The adoption of a risk-based AML/CTF regime \up0 \expndtw0 \charscalex100 recognizes that banks are in the best position to design AML/CTF programs that address \up0 \expndtw0\charscalex106 the specific risks that they may face. This is because banks know their business and \up0 \expndtw-2\charscal ex100 customers better than any government agency. A risk-based regime also give s banks more \up0 \expndtw-1\charscalex100 flexibility in implementation of the AML/CTF measures. This could in turn lead result in \up0 \expndtw-2\charscalex10 0 cost-savings and greater customer satisfaction. \par\pard\qj \li2205\ri914\sb3 96\sl-405\slmult0 \up0 \expndtw0\charscalex109 Under the risk-based approach, ba nks have to demonstrate that the extent of their \up0 \expndtw0\charscalex100 AM L/CTF controls is appropriate to the level of risk in their business operations. More \up0 \expndtw-2\charscalex100 importantly, banks need to focus on the hig her risk customers and transactions such as the \up0 \expndtw0\charscalex100 pol itically exposed persons, wire transfers, private banking, correspondent banking and \up0 \expndtw-5\charscalex100 non-face to face transactions. \par\pard\li22 05\sb0\sl-218\slmult0\par\pard\li2205\sb0\sl-218\slmult0\par\pard\li2205\sb0\sl218\slmult0\par\pard\li2205\sb0\sl-218\slmult0\par\pard\li2205\sb76\sl-218\slmul t0\fi0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\f s18 21\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Standard Guid elines on Anti-Money Laundering and Counter Financing of Terrorism\ul0\nosupersu b\cf10\f11\fs19 , para 4.2.1.\par\pard\li2205\sb3\sl-264\slmult0\fi8050 \up0 \ex

pndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 122 {\shp {\*\shpinst\shpleft2205\shptop14151\shpright5006\shpbottom14171\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz200\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g132}{\bkmkend Pg132}\par\pard\qj \li2205\sb0\sl-403\slmult0 \par\pard\qj\li2205 \sb0\sl-403\slmult0 \par\pard\qj\li2205\sb0\sl-403\slmult0 \par\pard\qj\li2205\r i914\sb238\sl-403\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\f s23 This approach, which was previously not explicitly stated in the BNM/GP9, ma kes it easier \up0 \expndtw-1\charscalex100 for banks to establish effective AML /CTF systems and controls. Instead of a \u8216?one size fits \up0 \expndtw-2\cha rscalex100 all\u8217? approach, banks are now have the flexibility to implement systems and controls in the \up0 \expndtw-1\charscalex100 most appropriate way i n accordance to the real money laundering risk perceived by them. \up0 \expndtw0 \charscalex102 For instance, banks will conduct enhanced due diligence for high risk customers where \up0 \expndtw-2\charscalex100 more detailed information fro m the customer must be obtained. On the other hand, for low \up0 \expndtw-3\char scalex100 risk customers, a less stringent approach would be sufficient. \par\pa rd\qj \li2205\ri913\sb398\sl-402\slmult0\fi0 \up0 \expndtw0\charscalex103 While the risk-based AML regime has been welcomed by the banking industry, it still \u p0 \expndtw0\charscalex105 leaves more room for interpretation. For instance, th e way that risk is conceptualized \up0 \expndtw0\charscalex100 remains uncertain .\ul0\super\cf8\f9\fs23 22\ul0\nosupersub\cf1\f2\fs23 Therefore, the effectiven ess of risk-based regulation depends on the \up0 \expndtw0\charscalex105 regulat ed agreeing with the regulators about what risks need to be controlled and the \ up0 \expndtw-3\charscalex100 manner of control.\ul0\super\cf8\f9\fs23 23\ul0\nos upersub\cf1\f2\fs23 This is critical in ensuring that the financial system of a country can be \up0 \expndtw-2\charscalex100 protected in the best possible aff ordable way.\ul0\super\cf8\f9\fs23 24\ul0\nosupersub\cf1\f2\fs23 Indeed, the co ncept of risk-based approach \up0 \expndtw0\charscalex108 is based on sound prin ciples. However, the real challenge is to generate a flexible, \up0 \expndtw-3\c harscalex100 workable, high level and effective framework.\ul0\super\cf8\f9\fs23 25 \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmul t0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb120\sl-264\slmul t0 \up0 \expndtw-4\charscalex100 \ul0\nosupersub\cf4\f5\fs23 4.4.2 Customer Id entification and Due Diligence \par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard \qj\li2205\ri914\sb44\sl-400\slmult0 \up0 \expndtw0\charscalex103 \ul0\nosupersu b\cf1\f2\fs23 Customer identification and due diligence procedures are vital for obtaining sufficient \line \up0 \expndtw0\charscalex100 reliable information to determine the true identity of customers. They are considered the \line \up0 \e xpndtw0\charscalex104 key element of AML regime. Besides, from a wider prudentia l and financial integrity \line \up0 \expndtw0\charscalex102 objective, adequat e customer identification and due diligence procedures are also \line \u p0 \expndtw0\charscalex102 significant as they would protect banks from reputati onal, credit, operational, legal and \par\pard\qj \li2205\sb0\sl-220\slmult0 \pa r\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\ pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\ri940\sb189\sl-220\slmult0 \up0 \expndtw0\charscalex102 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 22\ ul0\nosupersub\cf10\f11\fs19 Stuart Ross and Michelle Hannan, \u8216?Money Laun dering Regulation and Risk-Based Decision-Making\u8217? \up0 \expndtw0\charscale x102 (2007) 10(1) \ul0\nosupersub\cf11\f12\fs19 Journal of Money Laundering Cont rol\ul0\nosupersub\cf10\f11\fs19 106, 112. \par\pard\qj \li2205\ri944\sb20\sl-2

20\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 23\ul0\nosupers ub\cf10\f11\fs19 Sam Stewart, \u8216?Coping with the FSA\u8217?s Risk-based App roach\u8217? (2005) 13(1) \ul0\nosupersub\cf11\f12\fs19 Journal of Financial Reg ulation \up0 \expndtw-3\charscalex100 and Compliance\ul0\nosupersub\cf10\f11\fs1 9 43, 46. \par\pard\qj \li2205\ri932\sb0\sl-220\slmult0\tx3548 \up0 \expndtw0\c harscalex113 \ul0\super\cf9\f10\fs18 24\ul0\nosupersub\cf10\f11\fs19 Jos de Wit , \tab \up0 \expndtw0\charscalex105 \u8216?A Risk-Based Approach to AML: A Contr oversy between Financial Institutions and \up0 \expndtw-2\charscalex100 Regulato rs\u8217? (2007) 15(2) \ul0\nosupersub\cf11\f12\fs19 Journal of Financial Regula tion and Compliance\ul0\nosupersub\cf10\f11\fs19 156, 165. \par\pard\qj \li2205 \ri936\sb0\sl-220\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 25\ul0\nosupersub\cf10\f11\fs19 Angela Veng Mei Leong, \u8216?Anti-Money Launde ring Measures in the United Kingdom: A Review of Recent \up0 \expndtw-2\charscal ex100 Legislation and FSA\u8217?s Risk-Based Approach\u8217? (2007) 28(2) \ul0\n osupersub\cf11\f12\fs19 Company Lawyer\ul0\nosupersub\cf10\f11\fs19 35, 42. \pa r\pard\ql \li10256\sb14\sl-252\slmult0 \up0 \expndtw-5\charscalex100 \ul0\nosupe rsub\cf1\f2\fs23 123 {\shp {\*\shpinst\shpleft2205\shptop12585\shpright5006\shpbottom12605\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz156\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g133}{\bkmkend Pg133}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i913\sb249\sl-400\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs 23 concentration risks.\ul0\super\cf8\f9\fs23 26\ul0\nosupersub\cf1\f2\fs23 The refore, they not only help banks detect, deter and counter money \up0 \expndtw0\ charscalex100 laundering and terrorism financing, but they also provide tangible benefits to the banks, its \up0 \expndtw-1\charscalex100 customers and the fina ncial systems as a whole.\ul0\super\cf8\f9\fs23 27 \par\pard\qj \li2205\sb0\sl-4 02\slmult0 \par\pard\qj\li2205\ri915\sb17\sl-402\slmult0 \up0 \expndtw0\charscal ex107 \ul0\nosupersub\cf1\f2\fs23 Sections 16 and 18 of AMLATFA impose obligatio ns on banks to conduct customer \line \up0 \expndtw-1\charscalex100 identificati on and due diligence. Under section 16(1), a bank must maintain accounts in the \line \up0 \expndtw0\charscalex111 name of the account holder. A bank is also pr ohibited from opening, operating or \line \up0 \expndtw0\charscalex102 maintaini ng any anonymous accounts, or accounts in fictitious, false or incorrect names. \line \up0 \expndtw0\charscalex102 Additionally, section 18 prohibits any person from opening, operating or authorising the \line \up0 \expndtw0\charscalex100 o pening or operation of such accounts with a bank. Therefore, if a customer is co mmonly \line \up0 \expndtw0\charscalex107 known by two or more different names, he or she shall not use one of those names in \line \up0 \expndtw0\charscalex102 opening an account unless he or she has previously disclosed the other name or names to \line \up0 \expndtw0\charscalex100 the bank.\ul0\super\cf8\f9\fs23 28\u l0\nosupersub\cf1\f2\fs23 Clearly, the effect of these provisions is to prevent the use of conduit accounts \line \up0 \expndtw0\charscalex100 by criminals and terrorists. \par\pard\qj \li2205\ri914\sb398\sl-402\slmult0\fi0 \up0 \expndtw0\ charscalex104 Section 16(2) (a) requires a bank to verify the identity of a cust omer, by reliable means \line \up0 \expndtw0\charscalex104 such as the identity card, passport or business constituent documents,\ul0\super\cf8\f9\fs23 29\ul0\n osupersub\cf1\f2\fs23 and include the \line \up0 \expndtw0\charscalex104 verifi cation details in a record.\ul0\super\cf8\f9\fs23 30\ul0\nosupersub\cf1\f2\fs23 Section 5(1) of the Anti-Money Laundering and Anti-\line \up0 \expndtw0\charsca

lex102 Terrorism Financing (Reporting Obligations) Regulations 2007 (AMLATF Regu lations) \line \up0 \expndtw-2\charscalex100 specifies that customer due diligen ce measures must be conducted when there is a suspicion \line \up0 \expndtw-2\ch arscalex100 of money laundering or when there is a doubt about the veracity or a dequacy of information \line \up0 \expndtw-1\charscalex100 on the identity of th e account holder which it has obtained previously. Furthermore, section \line \u p0 \expndtw0\charscalex100 5(2) (b) of the AMLATF Regulations requires a bank to identify and verify the identity of \line \up0 \expndtw-1\charscalex100 the ben eficial owner of its customer. \par\pard\qj \li2205\sb0\sl-220\slmult0 \par\pard \qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\q j\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\ li2205\ri945\sb149\sl-220\slmult0 \up0 \expndtw0\charscalex100 \ul0\super\cf9\f1 0\fs19\ul0\super\cf9\f10\fs18 26\ul0\nosupersub\cf10\f11\fs19 KPMG Internationa l (2004), Global Anti-Money Laundering Survey 2004: How Banks Are Facing Up to \ up0 \expndtw0\charscalex100 the Challenge, 2. \par\pard\ql \li2205\sb2\sl-218\sl mult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 27\ul0\nosupersub\cf 10\f11\fs19 P A Schott, \ul0\nosupersub\cf11\f12\fs19 Reference Guide to Anti-M oney Laundering and the Financing of Terrorism\ul0\nosupersub\cf10\f11\fs19 (20 06) VI-3. \par\pard\ql \li2205\sb22\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 28\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f 12\fs19 Anti-Money Laundering and Anti-Terrorism Financing Act 2001\ul0\nosupers ub\cf10\f11\fs19 , s 18(2). \par\pard\qj \li2205\ri935\sb1\sl-220\slmult0 \up0 \ expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 29\ul0\nosupersub\cf10\f11\fs19 Under section 3(1) of AMLATFA, a \u8216?constituent document\u8217? includes th e statute, charter, memorandum of \up0 \expndtw-2\charscalex100 association and article of association, rules and by-laws, partnership agreement, or other instr ument, under or \up0 \expndtw0\charscalex102 by which the institution is establi shed and its governing and administrative structure and the scope of its \up0 \e xpndtw0\charscalex102 functions and business are set out, whether contained in o ne or more documents. \par\pard\li2205\sb20\sl-218\slmult0\fi0 \up0 \expndtw-2\c harscalex100 \ul0\super\cf9\f10\fs18 30\ul0\nosupersub\cf10\f11\fs19 \ul0\nosup ersub\cf11\f12\fs19 Anti-Money Laundering and Anti-Terrorism Financing Act 2001\ ul0\nosupersub\cf10\f11\fs19 , s 16(2)(b).\par\pard\li2205\sb3\sl-264\slmult0\fi 8050 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 124 {\shp {\*\shpinst\shpleft2205\shptop12362\shpright5006\shpbottom12382\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz193\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g134}{\bkmkend Pg134}\par\pard\ql \li2205\sb0\sl-406\slmult0 \par\pard\ql\li2205 \sb0\sl-406\slmult0 \par\pard\ql\li2205\sb0\sl-406\slmult0 \par\pard\ql\li2205\r i898\sb226\sl-406\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs 23 The requirements to conduct customer due diligence are reiterated in paragrap h 5 of the \up0 \expndtw-3\charscalex100 Standard Guidelines and Part 4 of the S ectoral Guidelines. Paragraph 5.1.2 of the Standard \up0 \expndtw-2\charscalex1 00 Guidelines provides that a bank must conduct due diligence procedures when: \ line \up0 \expndtw-3\charscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nos upersub\cf1\f2\fs23 establishing a business relationship with any customer; \p ar\pard\qj \li2205\ri914\sb19\sl-400\slmult0\tx2556 \up0 \expndtw0\charscalex105 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 carrying out a cash or occasional transaction that involves a sum in excess of the \line\tab \up0 \expndtw-3\charscalex100 amount specified by the BNM; \par\pard\ql \li2205 \sb133\sl-264\slmult0 \up0 \expndtw-2\charscalex100 \u-3913?\ul0\nosupersub\cf6\

f7\fs23 \ul0\nosupersub\cf1\f2\fs23 it has any suspicion of money laundering or financing of terrorism; or \par\pard\ql \li2205\sb156\sl-264\slmult0 \up0 \ex pndtw-2\charscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f 2\fs23 it has any doubts about the veracity or adequacy of previously obtained information. \par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri914\ sb44\sl-400\slmult0 \up0 \expndtw0\charscalex100 In circumstances where the risk of money laundering and terrorism financing are low, a \up0 \expndtw0\charscale x100 bank may allow its customer due diligence process to be conducted no later than 14 days \up0 \expndtw-1\charscalex100 after the business relationship has b een established.\ul0\super\cf8\f9\fs23 31 \par\pard\qj \li2205\ri917\sb400\sl-40 0\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs23 The Standard Guidelines also state that the customer due diligence procedures should at \up0 \expndtw0\charscalex100 least comprise the following: \par\pard\ql \li2205\sb133 \sl-264\slmult0 \up0 \expndtw-3\charscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs2 3 \ul0\nosupersub\cf1\f2\fs23 identify and verify the customer; \par\pard\ql \li2205\sb156\sl-264\slmult0 \up0 \expndtw-2\charscalex100 \u-3913?\ul0\nosupers ub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 identify and verify beneficial own ership and control of the transaction; \par\pard\ql \li2205\ri906\sb36\sl-410\sl mult0\tx2555 \up0 \expndtw-2\charscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 obtain information on the purpose and intended nat ure of the banking relationship; and \up0 \expndtw0\charscalex100 \u-3913?\ul0\n osupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 conduct on-going due dilige nce and scrutiny in ensuring the information provided is \line\tab \up0 \expndtw 0\charscalex100 updated and relevant.\ul0\super\cf8\f9\fs23 32 \par\pard\qj \li2 205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri913\sb19\sl-400\slmult0\fi0 \up0 \e xpndtw0\charscalex108 \ul0\nosupersub\cf1\f2\fs23 If a customer fails to comply with the due diligence procedures, a bank should not \up0 \expndtw-1\charscalex1 00 commence any business relations or perform any transactions with the customer , or in the \up0 \expndtw-3\charscalex100 case of an existing customer, a bank s hould terminate such business relations. Additionally, \up0 \expndtw0\charscalex 100 a bank should consider lodging a suspicious transactions report to the FIU.\ ul0\super\cf8\f9\fs23 33\ul0\nosupersub\cf1\f2\fs23 In fact, the \up0 \expndtw2\charscalex100 unwillingness of the customer to provide the information request ed and to cooperate in the \up0 \expndtw-3\charscalex100 due diligence process m ay itself be a factor of suspicion.\ul0\super\cf8\f9\fs23 34 \par\pard\ql \li220 5\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\ sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb 159\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 31\ul0\ nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Standard Guidelines on A nti-Money Laundering and Counter Financing of Terrorism,\ul0\nosupersub\cf10\f11 \fs19 para 5.1.6. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\chars calex100 \ul0\super\cf9\f10\fs18 32\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersu b\cf11\f12\fs19 Standard Guidelines on Anti-Money Laundering and Counter Financi ng of Terrorism\ul0\nosupersub\cf10\f11\fs19 , para 5.1.3. \par\pard\ql \li2205 \sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 33\ul0 \nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Standard Guidelines on Anti-Money Laundering and Counter Financing of Terrorism,\ul0\nosupersub\cf10\f1 1\fs19 para 5.1.5. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\char scalex100 \ul0\super\cf9\f10\fs18 34\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupers ub\cf11\f12\fs19 Standard Guidelines on Anti-Money Laundering and Counter Financ ing of Terrorism,\ul0\nosupersub\cf10\f11\fs19 para 5.1.4. \par\pard\ql \li1025 6\sb15\sl-251\slmult0 \up0 \expndtw-5\charscalex100 \ul0\nosupersub\cf1\f2\fs23 125 {\shp {\*\shpinst\shpleft2205\shptop13480\shpright5006\shpbottom13500\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz250\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276

8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g135}{\bkmkend Pg135}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i914\sb249\sl-400\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs 23 It must be noted that the Guidelines adopt a risk-based approach to customer due diligence \up0 \expndtw0\charscalex109 requirements. As such, banks will hav e the flexibility to implement the obligations \up0 \expndtw0\charscalex100 depe nding on the type of customers, type of transaction undertaken and type of servi ce or \up0 \expndtw0\charscalex100 products involved. \par\pard\qj \li2205\sb0\s l-400\slmult0 \par\pard\qj\li2205\ri915\sb20\sl-400\slmult0 \up0 \expndtw0\chars calex104 For higher risk customers, a bank is required to conduct enhanced due d iligence.\ul0\super\cf8\f9\fs23 35\ul0\nosupersub\cf1\f2\fs23 This \line \up0 \ expndtw0\charscalex100 means a bank must obtain more detailed information from t he customer. A bank must also \line \up0 \expndtw0\charscalex104 obtain approval from its senior management before establishing a business relationship \line \u p0 \expndtw-1\charscalex100 with such customers. The Standard Guidelines set out examples of higher risk customers as \line \up0 \expndtw-2\charscalex100 follow s:\ul0\super\cf8\f9\fs23 36 \par\pard\qj \li2205\ri6413\sb4\sl-420\slmult0\fi0 \ up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 \u-3913?\ul0\nosupersub \cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 high net worth individuals;\ul0\sup er\cf8\f9\fs23 37 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 \u-3 913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 non-resident cust omers; \par\pard\qj \li2205\ri916\sb17\sl-400\slmult0\tx2555 \up0 \expndtw0\char scalex109 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 cus tomers from locations known for high crime rates such as drug producing, \line\t ab \up0 \expndtw-5\charscalex100 trafficking and smuggling;\ul0\super\cf8\f9\fs2 3 38 \par\pard\qj \li2205\ri917\sb20\sl-400\slmult0\tx2556 \up0 \expndtw0\charsc alex100 \ul0\nosupersub\cf1\f2\fs23 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\no supersub\cf1\f2\fs23 customers from countries or jurisdictions with inad equate AML/CTF laws and \line\tab \up0 \expndtw0\charscalex100 regulations su ch as the Non-Cooperative Countries and Territories. \par\pard\ql \li2205\sb133\ sl-264\slmult0 \up0 \expndtw-3\charscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 Politically Exposed Persons;\ul0\super\cf8\f9\fs 23 39 \par\pard\qj \li2205\ri3152\sb28\sl-420\slmult0 \up0 \expndtw-3\charscalex 100 \ul0\nosupersub\cf1\f2\fs23 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupe rsub\cf1\f2\fs23 Legal arrangements that are complex such as trust and nominee ; \up0 \expndtw-3\charscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupe rsub\cf1\f2\fs23 Cash based businesses; and \par\pard\ql \li2205\sb129\sl-264\ slmult0 \up0 \expndtw-3\charscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\ nosupersub\cf1\f2\fs23 Unregulated industry. \par\pard\qj \li2205\sb0\sl-405\s lmult0 \par\pard\qj\li2205\ri915\sb15\sl-405\slmult0 \up0 \expndtw0\charscalex10 0 It appears that the examples of higher risk customers under the Standard Guide lines are \line \up0 \expndtw0\charscalex104 inadequate. For example, high net w orth individuals and unregulated industry are not \line \up0 \expndtw-2\charscal ex100 clearly defined. Examples of countries with known high crime rates are als o not provided. \line \up0 \expndtw-1\charscalex100 As such, in ensuring effecti ve implementation of the Guidelines, more detailed guidelines \line \up0 \expndt w-2\charscalex100 are needed. \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql \li2205\sb96\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs1 9\ul0\super\cf9\f10\fs18 35\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f 12\fs19 Standard Guidelines on Anti-Money Laundering and Counter Financing of Te rrorism,\ul0\nosupersub\cf10\f11\fs19 para 5.10.1. \par\pard\ql \li2205\sb22\sl -218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 36\ul0\nosupe rsub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Standard Guidelines on Anti-Mo ney Laundering and Counter Financing of Terrorism,\ul0\nosupersub\cf10\f11\fs19

para 5.10.3. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex 100 \ul0\super\cf9\f10\fs18 37\ul0\nosupersub\cf10\f11\fs19 This may include pr ivate banking customers. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2 \charscalex100 \ul0\super\cf9\f10\fs18 38\ul0\nosupersub\cf10\f11\fs19 This may refer to Afghanistan, Bolivia and Columbia. \par\pard\qj \li2205\ri936\sb1\sl-2 20\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 39\ul0\nosupers ub\cf10\f11\fs19 The Standard Guidelines define PEPs as foreign individuals who have been entrusted with prominent public \up0 \expndtw0\charscalex100 function s, such as heads of state or government, senior politicians, senior government o fficials, judicial or \up0 \expndtw-1\charscalex100 military officials and senio r executives of public organisations. \par\pard\ql \li10256\sb14\sl-252\slmult0 \up0 \expndtw-5\charscalex100 \ul0\nosupersub\cf1\f2\fs23 126 {\shp {\*\shpinst\shpleft2205\shptop12810\shpright5006\shpbottom12830\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz238\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g136}{\bkmkend Pg136}\par\pard\qj \li2205\sb0\sl-404\slmult0 \par\pard\qj\li2205 \sb0\sl-404\slmult0 \par\pard\qj\li2205\sb0\sl-404\slmult0 \par\pard\qj\li2205\s b0\sl-404\slmult0 \par\pard\qj\li2205\ri914\sb230\sl-404\slmult0\fi0 \up0 \expnd tw0\charscalex107 \ul0\nosupersub\cf1\f2\fs23 The Sectoral Guidelines require ba nks to conduct enhanced due diligence for private \up0 \expndtw-1\charscalex100 banking services.\ul0\super\cf8\f9\fs23 40\ul0\nosupersub\cf1\f2\fs23 This is v ital because it has been identified that private banking could be \up0 \expndtw1\charscalex100 exploited by criminals particularly the corrupt politically expo sed persons (PEPs) and their \up0 \expndtw0\charscalex106 associates in launderi ng their illicit funds.\ul0\super\cf8\f9\fs23 41\ul0\nosupersub\cf1\f2\fs23 Sec toral Guidelines also require banks to \up0 \expndtw0\charscalex109 undertake an independent review of the conduct and development of such business \up0 \expndt w-3\charscalex100 relationship, at least annually.\ul0\super\cf8\f9\fs23 42 \par \pard\ql \li2205\ri901\sb395\sl-406\slmult0 \up0 \expndtw-3\charscalex100 \ul0\n osupersub\cf1\f2\fs23 For existing customers, banks are required to take the nec essary measures to ensure that the \up0 \expndtw0\charscalex100 customers\u8217? records are updated and remain relevant.\ul0\super\cf8\f9\fs23 43\ul0\nosupersu b\cf1\f2\fs23 Additionally, banks must conduct \up0 \expndtw-4\charscalex100 re gular reviews on the customers\u8217? record in the following circumstances: \li ne \up0 \expndtw-5\charscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosup ersub\cf1\f2\fs23 When a significant transaction is to take place; \par\pard\q l \li2205\sb132\sl-264\slmult0 \up0 \expndtw-2\charscalex100 \u-3913?\ul0\nosupe rsub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 When there is a material change in the way the account is operated; \par\pard\ql \li2205\sb156\sl-264\slmult0 \u p0 \expndtw-2\charscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub \cf1\f2\fs23 When the customer\u8217?s documentation standards change substant ially; or \par\pard\ql \li2205\sb156\sl-264\slmult0 \up0 \expndtw-2\charscalex10 0 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 When it dis covers that the information held on the customer is insufficient.\ul0\super\cf8\ f9\fs23 44 \par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri914\sb4 4\sl-400\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf1\f2\fs23 It ap pears that the issue of low risk customers is not directly mentioned under AMLAT FA \up0 \expndtw0\charscalex100 and the Guidelines. Therefore, it can be said th at banks are required to apply a standard \up0 \expndtw-1\charscalex100 approach in relation to the identification and due diligence procedures to all but high risk \up0 \expndtw0\charscalex100 customers. The Security Commission\u8217?s Ant

i-Money Laundering Guidelines provides the \up0 \expndtw-1\charscalex100 followi ng examples of low risk customers: \par\pard\ql \li2205\ri901\sb12\sl-410\slmult 0\tx2556 \up0 \expndtw-1\charscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0 \nosupersub\cf1\f2\fs23 Financial institutions that are authorised and supervi sed by the Security Commission, \line\tab \up0 \expndtw-4\charscalex100 Bank Neg ara Malaysia or equivalent authority in the FATF member jurisdiction; \line \up0 \expndtw-5\charscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\c f1\f2\fs23 Public companies subject to regulatory disclosure requirements; \pa r\pard\qj \li2205\ri916\sb19\sl-400\slmult0\tx2555 \up0 \expndtw-3\charscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 Government o r government-related organizations in non-NCCT jurisdictions where the \line\tab \up0 \expndtw-4\charscalex100 money laundering risk is judged to be low.\ul0\su per\cf8\f9\fs23 45 \par\pard\qj \li2205\sb0\sl-230\slmult0 \par\pard\qj\li2205\s b0\sl-230\slmult0 \par\pard\qj\li2205\ri938\sb81\sl-230\slmult0 \up0 \expndtw-2\ charscalex100 \ul0\super\cf9\f10\fs18 40\ul0\nosupersub\cf10\f11\fs19 Private b anking services refer to preferential banking services provided to high net wort h individuals. These \up0 \expndtw-3\charscalex100 services are administered by a relationship manager and his support team who could establish a strong rapport \up0 \expndtw-4\charscalex100 and intricate knowledge of the client\u8217?s fin ancial affairs. \par\pard\ql \li2205\sb0\sl-218\slmult0 \up0 \expndtw-2\charscal ex100 \ul0\super\cf9\f10\fs18 41\ul0\nosupersub\cf10\f11\fs19 FATF Report on Mo ney Laundering Typologies 2001-2002,12. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 42\ul0\nosupersub\cf10\f11 \fs19 \ul0\nosupersub\cf11\f12\fs19 Sectoral Guidelines 1 for Banking and Finan cial Institutions,\ul0\nosupersub\cf10\f11\fs19 para 4.11. \par\pard\ql \li2205 \sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 43\ul0 \nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Standard Guidelines on Anti-Money Laundering and Counter Financing of Terrorism,\ul0\nosupersub\cf10\f1 1\fs19 para 5.11.1. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\cha rscalex100 \ul0\super\cf9\f10\fs18 44\ul0\nosupersub\cf10\f11\fs19 \ul0\nosuper sub\cf11\f12\fs19 Standard Guidelines on Anti-Money Laundering and Counter Finan cing of Terrorism,\ul0\nosupersub\cf10\f11\fs19 para 5.11.2. \par\pard\ql \li22 05\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 45\u l0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 The Security Commissi on Anti-Money Laundering Guidelines,\ul0\nosupersub\cf10\f11\fs19 para 7.2.2. \ par\pard\ql \li10256\sb15\sl-251\slmult0 \up0 \expndtw-5\charscalex100 \ul0\nosu persub\cf1\f2\fs23 127 {\shp {\*\shpinst\shpleft2205\shptop12585\shpright5006\shpbottom12605\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz256\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g137}{\bkmkend Pg137}\par\pard\qj \li2205\sb0\sl-403\slmult0 \par\pard\qj\li2205 \sb0\sl-403\slmult0 \par\pard\qj\li2205\sb0\sl-403\slmult0 \par\pard\qj\li2205\s b0\sl-403\slmult0 \par\pard\qj\li2205\ri914\sb235\sl-403\slmult0 \up0 \expndtw-1 \charscalex100 \ul0\nosupersub\cf1\f2\fs23 It is important to note that in accor dance with the international standards on AML/CTF, the \line \up0 \expndtw0\char scalex103 customer identification and due diligence procedures under the Sectora l Guidelines also \line \up0 \expndtw0\charscalex100 focus on certain customers and transactions including wire transfers, beneficiary account, \line \up0 \exp ndtw0\charscalex100 non-face to face business relationship, foreign politically exposed persons (PEPs), private \line \up0 \expndtw-2\charscalex100 banking and correspondent banking. This measure is necessary because such customers and \lin

e \up0 \expndtw0\charscalex108 transactions are considered vulnerable to money l aundering and terrorism financing \line \up0 \expndtw-3\charscalex100 activities . \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb248\sl-264\slmul t0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf4\f5\fs23 a) Wire transfer \p ar\pard\qj \li2205\ri913\sb21\sl-404\slmult0\fi0 \up0 \expndtw0\charscalex109 \u l0\nosupersub\cf1\f2\fs23 Wire transfers are widely used in commercial transacti ons because they provide an \line \up0 \expndtw0\charscalex100 efficient, low co st and high-volume payment system. However, it has been recognized that \line \u p0 \expndtw-1\charscalex100 wire transfers is one of the most efficient methods of laundering criminal proceeds.\ul0\super\cf8\f9\fs23 46\ul0\nosupersub\cf1\f2\ fs23 It has \line \up0 \expndtw0\charscalex109 been reported that large banks p rovide a more secure environment to send the wire \line \up0 \expndtw0\charscale x108 transfers, along with the ability to route the transactions through multipl e hubs in an \line \up0 \expndtw-2\charscalex100 attempt to lose the money trail before funds arrive at their ultimate destination.\ul0\super\cf8\f9\fs23 47 \pa r\pard\qj \li2205\ri915\sb396\sl-404\slmult0 \up0 \expndtw-1\charscalex100 \ul0\ nosupersub\cf1\f2\fs23 The flows of dirty money via wire transfers are almost im possible to detect because of their \line \up0 \expndtw0\charscalex100 frequency , volume or complexity. The Sectoral Guidelines provide detailed procedures to \ line \up0 \expndtw-1\charscalex100 be complied by the banking institution when d ealing with wire transfers. These procedures \line \up0 \expndtw0\charscalex106 are aimed at ensuring that a bank has greater information about the beneficiary of the \line \up0 \expndtw0\charscalex106 transfer and that as much information as possible is supplied through out the payment \line \up0 \expndtw-3\charscalex 100 chain. \par\pard\qj \li2205\ri914\sb395\sl-406\slmult0 \up0 \expndtw-3\chars calex100 When a bank is the ordering institution, it should obtain the originato r\u8217?s information for the \line \up0 \expndtw-4\charscalex100 purpose of cus tomer due diligence. The information includes the name, nationality, national \l ine \up0 \expndtw-3\charscalex100 identification number, account number and addr ess of the originator. The information must \line \up0 \expndtw-3\charscalex100 be transmitted in the wire transfer message.\ul0\super\cf8\f9\fs23 48\ul0\nosupe rsub\cf1\f2\fs23 However, for a domestic wire transfer, the \par\pard\qj \li220 5\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\ sb0\sl-220\slmult0 \par\pard\qj\li2205\ri938\sb88\sl-220\slmult0 \up0 \expndtw-3 \charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 46\ul0\nosupersub\ cf10\f11\fs19 J R Richards, \ul0\nosupersub\cf11\f12\fs19 Transnational Crimina l Organizations, Cybercrime and Money Laundering: A Handbook for \up0 \expndtw-3 \charscalex100 Law Enforcement Officers, Auditors and Financial Investigators \u l0\nosupersub\cf10\f11\fs19 (1998) 81. \par\pard\li2205\sb17\sl-218\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 47\ul0\nosupersub\cf10\f11 \fs19 See the APG Yearly Typologies Report 2005-2006, 21.\par\pard\li2205\sb5\s l-218\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 48\ul0\n osupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Sectoral Guidelines 1 for Banking and Financial Institutions,\ul0\nosupersub\cf10\f11\fs19 para 4.4.1.\p ar\pard\li2205\sb3\sl-264\slmult0\fi8050 \up0 \expndtw-3\charscalex100 \ul0\nosu persub\cf1\f2\fs23 128 {\shp {\*\shpinst\shpleft2205\shptop13480\shpright5006\shpbottom13500\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz159\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g138}{\bkmkend Pg138}\par\pard\qj \li2205\sb0\sl-404\slmult0 \par\pard\qj\li2205 \sb0\sl-404\slmult0 \par\pard\qj\li2205\sb0\sl-404\slmult0 \par\pard\qj\li2205\r

i915\sb234\sl-404\slmult0\fi0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf1\ f2\fs23 ordering institution may include only the originator\u8217?s account num ber within the message \line \up0 \expndtw0\charscalex106 or payment form. This is only permitted if at any time when requested, the ordering \line \up0 \expndt w0\charscalex103 institution would be able to provide the originator\u8217?s inf ormation within three business \line \up0 \expndtw0\charscalex108 days.\ul0\supe r\cf8\f9\fs23 49\ul0\nosupersub\cf1\f2\fs23 It has been recognized that transac tions that contain full information of the \line \up0 \expndtw0\charscalex100 or iginator could assist beneficiary financial institutions to identify potentially suspicious \line \up0 \expndtw-1\charscalex100 transactions.\ul0\super\cf8\f9\f s23 50 \par\pard\qj \li2205\ri915\sb398\sl-402\slmult0\fi0 \up0 \expndtw0\charsc alex102 \ul0\nosupersub\cf1\f2\fs23 When acting as intermediary to a wire transf er transaction, a bank must ensure that the \line \up0 \expndtw-2\charscalex100 accompanying originator\u8217?s information is retained with the wire transfer.\ ul0\super\cf8\f9\fs23 51\ul0\nosupersub\cf1\f2\fs23 When a bank is \line \up0 \ expndtw0\charscalex100 the beneficiary institution, it must adopt an effective r isk-based approach to identify any \line \up0 \expndtw0\charscalex100 wire trans fer with incomplete originator\u8217?s information and to decide whether to proc eed, \line \up0 \expndtw0\charscalex104 stop or request for the missing or iginator\u8217?s information from the corresponding \line \up0 \expndtw-3\ch arscalex100 institution.\ul0\super\cf8\f9\fs23 52\ul0\nosupersub\cf1\f2\fs23 Wi re transfers with incomplete originator\u8217?s information may be considered as \line \up0 \expndtw-2\charscalex100 a factor for suspicion and where appropriat e, the bank must lodge a suspicious transaction \line \up0 \expndtw-3\charscalex 100 report.\ul0\super\cf8\f9\fs23 53 \par\pard\qj \li2205\ri913\sb398\sl-402\slm ult0 \up0 \expndtw0\charscalex102 \ul0\nosupersub\cf1\f2\fs23 Banks must also be extra vigilant in dealing with high risk customers by examining the \up0 \expnd tw0\charscalex100 name of the beneficiary, destination and the amount of wire tr ansfer.\ul0\super\cf8\f9\fs23 54\ul0\nosupersub\cf1\f2\fs23 Furthermore, if a \ up0 \expndtw-1\charscalex100 wire transfer does not appear to be consistent with the usual business of the customer, the \up0 \expndtw-3\charscalex100 customer should be asked to provide further explanation of the nature of the wire transfe r.\ul0\super\cf8\f9\fs23 55 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2 \fs23 For a domestic wire transfer, the bank may include only the originator\u82 17?s account number or \up0 \expndtw0\charscalex100 if there is no account numbe r, a unique identifier, within the message or payment form. \up0 \expndtw-3\char scalex100 This is only permitted if, at any time when requested, the bank would be able to provide the \up0 \expndtw-4\charscalex100 originator\u8217?s informat ion within three business days.\ul0\super\cf8\f9\fs23 56 \par\pard\ql \li2205\sb 0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\ sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl -218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb162\sl -218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 49\ul0\nosupe rsub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Sectoral Guidelines 1 for Bank ing and Financial Institutions,\ul0\nosupersub\cf10\f11\fs19 para 4.4.9. \par\p ard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f 10\fs18 50\ul0\nosupersub\cf10\f11\fs19 FATF, Report on Money Laundering Typolo gies 2003-2004, 6. \par\pard\ql \li2205\sb22\sl-218\slmult0 \up0 \expndtw-2\char scalex100 \ul0\super\cf9\f10\fs18 51\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupers ub\cf11\f12\fs19 Sectoral Guidelines 1 for Banking and Financial Institutions\ul 0\nosupersub\cf10\f11\fs19 , para 4.4.3. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 52\ul0\nosupersub\cf10\f1 1\fs19 \ul0\nosupersub\cf11\f12\fs19 Sectoral Guidelines 1 for Banking and Fina ncial Institutions,\ul0\nosupersub\cf10\f11\fs19 para 4.4.4. \par\pard\ql \li22 05\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 53\u l0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Sectoral Guidelines 1 for Banking and Financial Institutions,\ul0\nosupersub\cf10\f11\fs19 para 4.4. 5. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\su per\cf9\f10\fs18 54\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Sectoral Guidelines 1 for Banking and Financial Institutions,\ul0\nosupersub\cf1

0\f11\fs19 para 4.4.6. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\ charscalex100 \ul0\super\cf9\f10\fs18 55\ul0\nosupersub\cf10\f11\fs19 \ul0\nosu persub\cf11\f12\fs19 Sectoral Guidelines 1 for Banking and Financial Institution s,\ul0\nosupersub\cf10\f11\fs19 para 4.4.7. \par\pard\ql \li2205\sb2\sl-218\slm ult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 56\ul0\nosupersub\cf1 0\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Sectoral Guidelines 1 for Banking and Financial Institutions,\ul0\nosupersub\cf10\f11\fs19 para 4.4.9. \par\pard\ql \ li10256\sb15\sl-251\slmult0 \up0 \expndtw-5\charscalex100 \ul0\nosupersub\cf1\f2 \fs23 129 {\shp {\*\shpinst\shpleft2205\shptop12585\shpright5006\shpbottom12605\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz204\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g139}{\bkmkend Pg139}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i912\sb249\sl-400\slmult0 \up0 \expndtw0\charscalex107 \ul0\nosupersub\cf1\f2\fs 23 The Asia/Pacific Group on Money Laundering (APG) Report identified a number o f \line \up0 \expndtw-2\charscalex100 activities which could be used as indicato rs for the abuse of wire transfers. These include: \par\pard\li2205\sb147\sl-264 \slmult0\fi0\tx2556 \up0 \expndtw-2\charscalex100 \u-3913?\tab \up0 \expndtw-1\c harscalex100 Structuring the amount of the transactions so that they fall just b elow reporting limits.\par\pard\li2205\sb155\sl-264\slmult0\fi0\tx2556 \up0 \exp ndtw-2\charscalex100 \u-3913?\tab \up0 \expndtw-1\charscalex100 Stated occupatio n of customer is not in keeping with the frequency of transactions, for\par\pard \li2205\sb138\sl-264\slmult0\fi350 \up0 \expndtw-2\charscalex100 example, studen ts or unemployed sending multiple transactions.\par\pard\li2205\sb156\sl-264\slm ult0\fi0\tx2556 \up0 \expndtw-2\charscalex100 \u-3913?\tab \up0 \expndtw-1\chars calex100 Multiple customers sharing common identifiers, such as family name, str eet address,\par\pard\li2205\sb138\sl-264\slmult0\fi350 \up0 \expndtw-2\charscal ex100 telephone numbers.\par\pard\li2205\sb156\sl-264\slmult0\fi0\tx2556 \up0 \e xpndtw-2\charscalex100 \u-3913?\tab \up0 \expndtw-1\charscalex100 Transactions c onducted by a group or cluster of customers on the same day, especially\par\pard \li2205\sb138\sl-264\slmult0\fi350 \up0 \expndtw-2\charscalex100 to a common ben eficiary.\par\pard\li2205\sb156\sl-264\slmult0\fi0\tx2556 \up0 \expndtw-2\charsc alex100 \u-3913?\tab \up0 \expndtw-2\charscalex100 Same customers using various addresses when conducting transactions.\par\pard\li2205\sb155\sl-264\slmult0\fi0 \tx2556 \up0 \expndtw-2\charscalex100 \u-3913?\tab \up0 \expndtw-2\charscalex100 Multiple customers sent to a common beneficiary over a period of time\par\pard\ li2205\sb156\sl-264\slmult0\fi0\tx2556 \up0 \expndtw-2\charscalex100 \u-3913?\ta b \up0 \expndtw-1\charscalex100 Regular wire transfers from customers who do not hold accounts with the institution\par\pard\ql \li2556\sb118\sl-264\slmult0 \up 0 \expndtw-5\charscalex100 where the transaction is being conducted. \par\pard\q l \li2205\sb156\sl-264\slmult0\tx2556 \up0 \expndtw0\charscalex80 \u-3913? \tab \up0 \expndtw0\charscalex102 Regular wire transfers by a customer to a known cou ntry of interest, for example, a \par\pard\ql \li2556\sb156\sl-264\slmult0 \up0 \expndtw-3\charscalex100 centre for illegal activity or centre for terrorist act ivity. \par\pard\ql \li2205\sb156\sl-264\slmult0\tx2556 \up0 \expndtw0\charscale x80 \u-3913? \tab \up0 \expndtw0\charscalex102 Inactive accounts which suddenly receive multiple wire transfer deposits which are \par\pard\ql \li2556\sb136\sl264\slmult0 \up0 \expndtw-5\charscalex100 subsequently withdrawn as soon as the funds are available. \par\pard\ql \li2205\sb156\sl-264\slmult0\tx2556 \up0 \expn dtw0\charscalex80 \u-3913? \tab \up0 \expndtw-4\charscalex100 Newly established

accounts receiving multiple wire transfer deposits soon after opening \par\pard\ ql \li2556\sb136\sl-264\slmult0 \up0 \expndtw-3\charscalex100 which are subseque ntly withdrawn as soon as the funds are available.\ul0\super\cf8\f9\fs23 57 \par \pard\qj \li2205\ri914\sb24\sl-400\slmult0 \up0 \expndtw-1\charscalex100 \ul0\no supersub\cf1\f2\fs23 It appears that the Sectoral Guidelines are silent about th e indicators. As such, this can be \up0 \expndtw-2\charscalex100 considered anot her weakness of the Sectoral Guidelines. \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb249\sl-264\slmult0 \up0 \expndtw-5\charscalex100 \ul0\nos upersub\cf4\f5\fs23 b) Beneficiary account \par\pard\qj \li2205\ri913\sb21\sl-40 4\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf1\f2\fs23 It has been recognised that criminals have manipulated the use of beneficiary accounts to \l ine \up0 \expndtw0\charscalex100 launder their ill-gotten gains. According to FA TF, criminals use beneficiary accounts to \line \up0 \expndtw-3\charscalex100 hi de the beneficial owner of the property. A beneficial owner means the natural pe rson who \line \up0 \expndtw0\charscalex102 ultimately owns or controls a custom er and/ or the person whose behalf a transaction is \line \up0 \expndtw-3\charsc alex100 being conducted.\ul0\super\cf8\f9\fs23 58\ul0\nosupersub\cf1\f2\fs23 Ac cording to the Sectoral Guidelines, beneficiary accounts refer to trust \line \u p0 \expndtw-3\charscalex100 accounts, nominee accounts, fiduciary accounts, acco unts opened for companies with \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard \ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb194\sl-218\slmult0 \up0 \exp ndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 57\ul0\nosup ersub\cf10\f11\fs19 APG Yearly Typologies Report 2005-2006, 22. \par\pard\li220 5\sb20\sl-218\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 58\ul0\nosupersub\cf10\f11\fs19 See FATF Methodology, available at {\field{\*\f ldinst {HYPERLINK "http://www.fatf-gafi.org/glossary./" }}{\fldrslt {\ul0\nosupe rsub\cf10\f11\fs19 www.fatf-gafi.org/glossary.}}}\par\pard\li2205\sb3\sl-264\slm ult0\fi8050 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 130 {\shp {\*\shpinst\shpleft2205\shptop13928\shpright5006\shpbottom13948\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz277\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g140}{\bkmkend Pg140}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i916\sb249\sl-400\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf1\f2\f s23 nominee shareholders, accounts for mutual funds and fund managers, accounts for personal \up0 \expndtw0\charscalex102 asset holding vehicles, pooled account s, accounts opened by professional intermediaries \up0 \expndtw0\charscalex102 a nd other relevant accounts. \par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj \li2205\ri912\sb20\sl-400\slmult0\tx3295 \up0 \expndtw-3\charscalex100 Paragraph \tab \up0 \expndtw0\charscalex110 4.5.1 of the Sectoral Guidelines requires ban ks to perform identification \up0 \expndtw0\charscalex113 procedures on the bene ficiaries and the agents or entities acting on behalf of the \up0 \expndtw0\char scalex100 beneficiaries. Verification must be done to ensure that the agents or entities are authorized \up0 \expndtw0\charscalex100 to act on behalf of the ben eficiary. Identification process should be done on an individual \up0 \expndtw0\ charscalex100 basis wherever possible. \par\pard\qj \li2205\ri914\sb396\sl-406\s lmult0 \up0 \expndtw0\charscalex110 In the case of trustee or nominee account, b anks must take reasonable measures to \line \up0 \expndtw0\charscalex100 underst and the relationship among the relevant parties and obtain satisfactory evidence of \line \up0 \expndtw0\charscalex100 the legal status and identity of the trus tee or nominee, and the nature of their capacity and \line \up0 \expndtw0\charsc

alex100 duties.\ul0\super\cf8\f9\fs23 59 \par\pard\qj \li2205\ri915\sb399\sl-400 \slmult0 \up0 \expndtw0\charscalex104 \ul0\nosupersub\cf1\f2\fs23 In the case of professionals, such as legal firms or accountants acting on behalf of their \up 0 \expndtw0\charscalex100 clients, banks must obtain a written undertaking from the professionals that they are aware \up0 \expndtw0\charscalex100 of and have v erified the true identity of their clients and their sources of funds as require d \up0 \expndtw0\charscalex100 by AMLATFA.\ul0\super\cf8\f9\fs23 60 \par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri914\sb20\sl-400\slmult0 \up0 \ expndtw0\charscalex105 \ul0\nosupersub\cf1\f2\fs23 When the person acting on beh alf of the beneficiary is unable or refuses to provide the \up0 \expndtw0\charsc alex104 information on the identity of the beneficiaries, the bank must not perm it that person to \up0 \expndtw0\charscalex103 open a client account and conside r submitting a suspicious transaction report. As for an \up0 \expndtw0\charscale x104 existing customer, the bank must not continue to transact with and for that person until \up0 \expndtw-3\charscalex100 further verification is conducted to its satisfaction.\ul0\super\cf8\f9\fs23 61 \par\pard\qj \li2205\ri916\sb384\sl420\slmult0 \up0 \expndtw0\charscalex104 \ul0\nosupersub\cf1\f2\fs23 The require ment to identify and verify beneficiary account puts a significant burden on \li ne \up0 \expndtw0\charscalex104 Malaysian banks because of the complex nature of such accounts. The average bank \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pa rd\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard \ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb95\sl-218\slmult0 \up0 \expn dtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 59\ul0\nosupe rsub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Standard Guidelines on Anti-Mo ney Laundering and Counter Financing of Terrorism,\ul0\nosupersub\cf10\f11\fs19 para 5.5.2. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex1 00 \ul0\super\cf9\f10\fs18 60\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11 \f12\fs19 Sectoral Guidelines 1 for Banking and Financial Institutions,\ul0\nosu persub\cf10\f11\fs19 para 4.5.4. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \ expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 61\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Sectoral Guidelines 1 for Banking and Financial I nstitutions,\ul0\nosupersub\cf10\f11\fs19 para 4.5.5. \par\pard\ql \li10256\sb 15\sl-251\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 131 {\shp {\*\shpinst\shpleft2205\shptop13704\shpright5006\shpbottom13724\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz164\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g141}{\bkmkend Pg141}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i915\sb249\sl-400\slmult0 \up0 \expndtw0\charscalex102 \ul0\nosupersub\cf1\f2\fs 23 employee needs the training or skills to deal with such accounts. Unless bank employees \up0 \expndtw0\charscalex102 are sufficiently trained, they are unlik ely to be able to discharge their obligations. \par\pard\ql \li2205\sb0\sl-264\s lmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb5\sl-264\slm ult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf4\f5\fs23 c) Non-face to fa ce business relationship \par\pard\qj \li2205\ri914\sb24\sl-400\slmult0 \up0 \ex pndtw0\charscalex102 \ul0\nosupersub\cf1\f2\fs23 The development of information technology has lead to a wide range of modern banking \up0 \expndtw0\charscalex1 08 facilities such as internet banking and other cyber-banking products. These k inds of \up0 \expndtw-1\charscalex100 services eliminate personal contact betwee n banks and customers. Therefore, they could be \up0 \expndtw-2\charscalex100 ma nipulated by criminals and terrorists since they would be able to have unrestric

ted online \up0 \expndtw-2\charscalex100 access and control of their accounts th roughout the world.\ul0\super\cf8\f9\fs23 62 \par\pard\qj \li2205\ri915\sb397\sl -404\slmult0\fi0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf1\f2\fs23 Inter net banking has three characteristic that pose money laundering risks and they a re: the \line \up0 \expndtw0\charscalex100 ease of access through the internet, the depersonalisation of contact between the customer \line \up0 \expndtw-1\cha rscalex100 and the bank, and the rapidity of electronic transactions.\ul0\super\ cf8\f9\fs23 63\ul0\nosupersub\cf1\f2\fs23 Furthermore, when an account is \line \up0 \expndtw0\charscalex108 accessed through the internet, there is no human i ntervention that can help to detect \line \up0 \expndtw0\charscalex103 suspiciou s or unusual activities. Information on access to the account from ot her \line \up0 \expndtw0\charscalex106 geographic locations would also not neces sarily be detectable.\ul0\super\cf8\f9\fs23 64\ul0\nosupersub\cf1\f2\fs23 It is also a challenge \line \up0 \expndtw0\charscalex100 determining the jurisdictio n for the licensing and supervision of financial services offered \line \up0 \ex pndtw0\charscalex106 through the internet. Normally, jurisdictional issues arise when determining where an \line \up0 \expndtw0\charscalex100 online transaction has taken place in order to know where investigative authorities should \line \ up0 \expndtw0\charscalex100 go to seek documentary evidence of transactions link ed to money laundering.\ul0\super\cf8\f9\fs23 65 \par\pard\qj \li2205\ri915\sb40 0\sl-400\slmult0\fi0 \up0 \expndtw0\charscalex106 \ul0\nosupersub\cf1\f2\fs23 In Malaysia, internet banking is regulated by BAFIA and other relevant legislation .\ul0\super\cf8\f9\fs23 66 \line \up0 \expndtw-1\charscalex100 \ul0\nosupersub\c f1\f2\fs23 Section 119 of BAFIA prohibits the commencement or continuation of an y electronic fund \line \up0 \expndtw-2\charscalex100 transfer operations unless BNM has given written authorisation to do so. To enable BNM to \line \up0 \expn dtw0\charscalex100 make a decision to grant or not to grant the authorisation, i t requires the submission of the \line \up0 \expndtw0\charscalex100 scheme of op eration of the system, and the rules, contracts, by-laws and other documents \li ne \up0 \expndtw0\charscalex100 concerning the rights, duties and liabilities of the persons participating in the system. \par\pard\ql \li2205\sb0\sl-218\slmult 0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb77\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super \cf9\f10\fs19\ul0\super\cf9\f10\fs18 62\ul0\nosupersub\cf10\f11\fs19 FATF, Repo rt on Money Laundering Typologies 1999-2000 (2000), 2. \par\pard\ql \li2205\sb2\ sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 63\ul0\nosu persub\cf10\f11\fs19 FATF, Report on Money Laundering Typologies 2000-2001(2001 ), 2. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0 \super\cf9\f10\fs18 64\ul0\nosupersub\cf10\f11\fs19 Ibid 3. \par\pard\ql \li220 5\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 65\ul 0\nosupersub\cf10\f11\fs19 Ibid. \par\pard\qj \li2205\ri940\sb1\sl-220\slmult0 \up0 \expndtw-1\charscalex100 \ul0\super\cf9\f10\fs18 66\ul0\nosupersub\cf10\f11 \fs19 This includes the Digital Signature Act 1997, the Communications and Mult imedia Act 1998, the Computer \up0 \expndtw-2\charscalex100 Crimes 1997 and the Payment Systems Act 2003. \par\pard\ql \li10256\sb14\sl-252\slmult0 \up0 \expndt w-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 132 {\shp {\*\shpinst\shpleft2205\shptop13033\shpright5006\shpbottom13053\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz213\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g142}{\bkmkend Pg142}\par\pard\qj \li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205 \sb0\sl-402\slmult0 \par\pard\qj\li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205\s

b0\sl-402\slmult0 \par\pard\qj\li2205\ri914\sb239\sl-402\slmult0\fi0 \up0 \expnd tw0\charscalex100 \ul0\nosupersub\cf1\f2\fs23 In May 2000, BNM issued the \ul0\n osupersub\cf7\f8\fs23 Minimum Guidelines on the Provision of Internet Banking \l ine \up0 \expndtw0\charscalex100 Services by Licensed\ul0\nosupersub\cf21\f22\fs 23 \ul0\nosupersub\cf7\f8\fs23 Banking Institutions\ul0\nosupersub\cf1\f2\fs23 (the Internet Banking Guidelines). The banking \line \up0 \expndtw0\charscalex1 00 institutions are free to adopt more stringent measures if they wish.\ul0\supe r\cf8\f9\fs23 67\ul0\nosupersub\cf1\f2\fs23 The Internet Banking \line \up0 \ex pndtw0\charscalex104 Guidelines cover several areas including internet banking r isks; active oversight by the \line \up0 \expndtw0\charscalex106 board of dire ctors and senior management; risk management practices; security \line \u p0 \expndtw0\charscalex103 requirements; consumer protection and privacy is sues; and compliance with other \line \up0 \expndtw0\charscalex105 regulator y requirements. Under the Internet Banking Guidelines, banks are required to \li ne \up0 \expndtw0\charscalex102 establish face-to-face interaction with customer s in two situations, i.e. where a customer \line \up0 \expndtw0\charscalex102 op ens an account and where a customer seeks an extension of credit. \par\pard\ql \ li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li 2205\sb4\sl-264\slmult0\tx8825 \up0 \expndtw0\charscalex104 The requirement for face-to-face interaction reinforces paragraph \tab \up0 \expndtw0\charscalex108 5.8 of the Standard \par\pard\qj \li2205\ri914\sb24\sl-400\slmult0 \up0 \expndtw -1\charscalex100 Guidelines, which requires banks to pay special attention when establishing and conducting \up0 \expndtw0\charscalex100 non-face to face busine ss relationship via information communication technology such as, \up0 \expndtw0 \charscalex109 the internet, post, fax or telephone. Therefore, banks should onl y establish business \up0 \expndtw0\charscalex104 relationship upon completion o f the customer due diligence process conducted through \up0 \expndtw-3\charscale x100 face-to-face interaction.\ul0\super\cf8\f9\fs23 68 \par\pard\qj \li2205\ri9 14\sb399\sl-402\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs23 Furthermore, banks must establish appropriate measures for customer verificatio n that are \line \up0 \expndtw0\charscalex103 as stringent as that for face-to-f ace customers, and implement monitoring and reporting \line \up0 \expndtw-2\char scalex100 mechanisms to identify potential money laundering and terrorism financ ing activities.\ul0\super\cf8\f9\fs23 69\ul0\nosupersub\cf1\f2\fs23 The \line \ up0 \expndtw0\charscalex100 implementation of the Standard Guidelines together w ith the Internet Banking Guidelines \line \up0 \expndtw0\charscalex109 provides an effective tool for preventing the abuse of internet banking in Malaysia. \lin e \up0 \expndtw0\charscalex106 However, given the complicated features of intern et banking services, it is critical for \line \up0 \expndtw0\charscalex100 banke rs to continuously be vigilant and aware of any unusual activities arising from such \line \up0 \expndtw0\charscalex100 relationships. \par\pard\ql \li2205\sb0\ sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl -218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-2 18\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218 \slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb46\sl-218\ slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\ fs18 67\ul0\nosupersub\cf10\f11\fs19 Abu Bakar Munir, \ul0\nosupersub\cf11\f12\ fs19 Internet Banking: Law and Practice\ul0\nosupersub\cf10\f11\fs19 (2004) 277 . \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\sup er\cf9\f10\fs18 68\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 S tandard Guidelines on Anti-Money Laundering and Counter Financing of Terrorism,\ ul0\nosupersub\cf10\f11\fs19 para 5.8.2. \par\pard\ql \li2205\sb2\sl-218\slmult 0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 69\ul0\nosupersub\cf10\f 11\fs19 \ul0\nosupersub\cf11\f12\fs19 Standard Guidelines on Anti-Money Launder ing and Counter Financing of Terrorism, \ul0\nosupersub\cf10\f11\fs19 para 5.8.3 . \par\pard\ql \li10256\sb15\sl-251\slmult0 \up0 \expndtw-3\charscalex100 \ul0\n osupersub\cf1\f2\fs23 133 {\shp {\*\shpinst\shpleft2205\shptop13704\shpright5006\shpbottom13724\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz194\shplid0

{\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g143}{\bkmkend Pg143}\par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205 \sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\s b0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb2 41\sl-264\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf4\f5\fs23 d) F oreign politically exposed persons (PEPs) \par\pard\qj \li2205\ri914\sb22\sl-402 \slmult0\fi0 \up0 \expndtw0\charscalex102 \ul0\nosupersub\cf1\f2\fs23 There are concerns that banks may be inadvertently involved in the laundering of illicit \ line \up0 \expndtw-3\charscalex100 funds associated with PEPs. Normally, because of their special status, there is often certain \line \up0 \expndtw-2\charscale x100 amount of discretion afforded by financial institutions to the financial ac tivities carried out \line \up0 \expndtw0\charscalex100 by PEPs. Therefore, if a PEP involved in some sort of criminal activity, such discretion \line \up0 \exp ndtw0\charscalex102 often become an obstacle to bringing them to justice.\ul0\su per\cf8\f9\fs23 70\ul0\nosupersub\cf1\f2\fs23 In countries where corruption is \line \up0 \expndtw0\charscalex100 widespread, it is evident that the PEPs may a buse their public powers and be involved in \line \up0 \expndtw-1\charscalex100 laundering their ill-gotten gains.\ul0\super\cf8\f9\fs23 71\ul0\nosupersub\cf1\f 2\fs23 To make matters worse, corrupt or dishonest PEPs can \line \up0 \expndtw -2\charscalex100 be found in almost any country.\ul0\super\cf8\f9\fs23 72 \par\p ard\qj \li2205\ri915\sb396\sl-405\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nos upersub\cf1\f2\fs23 Paragraph 5.9 of the Standard Guidelines requires banks to c onduct enhanced due diligence \up0 \expndtw0\charscalex104 on PEPs. The Standard Guidelines define PEPs as foreign individuals who have been \up0 \expndtw0\char scalex100 entrusted with prominent public functions, such as heads of state or g overnment, senior \up0 \expndtw-2\charscalex100 politicians, senior government o fficials, judicial or military officials and senior executives \up0 \expndtw-3\c harscalex100 of public organisations.\ul0\super\cf8\f9\fs23 73 \par\pard\qj \li2 205\ri913\sb395\sl-405\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\ f2\fs23 It appears that the definition of PEPs under the Guidelines does not inc lude persons who \up0 \expndtw0\charscalex100 hold prominent functions domestica lly. Therefore, it is clear that Malaysian banks need \up0 \expndtw-3\charscalex 100 only be concerned with foreign PEPs. However, it would be better if the defi nition of PEPs \up0 \expndtw0\charscalex109 could be reviewed to cover domestic PEPs. There is no good reason for making a \up0 \expndtw-3\charscalex100 distinc tion between foreign and domestic PEPs. \par\pard\qj \li2205\ri915\sb400\sl-400\ slmult0 \up0 \expndtw-1\charscalex100 As regards to due diligence on PEPs, the S tandard Guidelines require banks to establish a \line \up0 \expndtw-1\charscalex 100 risk management framework to determine whether current or new customers are PEPs. In \line \up0 \expndtw-2\charscalex100 this respect, banks should gather s ufficient and appropriate information from the customer \line \up0 \expndtw-1\ch arscalex100 and through publicly available information.\ul0\super\cf8\f9\fs23 74 \ul0\nosupersub\cf1\f2\fs23 Once a PEP is identified, banks should take \line \ up0 \expndtw-1\charscalex100 reasonable and appropriate measures to establish th e source of wealth of such a person.\ul0\super\cf8\f9\fs23 75 \par\pard\ql \li22 05\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205 \sb0\sl-218\slmult0 \par\pard\ql\li2205\sb77\sl-218\slmult0 \up0 \expndtw-2\char scalex100 \ul0\super\cf9\f10\fs18 70\ul0\nosupersub\cf10\f11\fs19 FATF, \ul0\no supersub\cf11\f12\fs19 Report on Money Laundering Typologies 2003-2004 \ul0\nosu persub\cf10\f11\fs19 (2004) 19. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \ex pndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 71\ul0\nosupersub\cf10\f11\fs19 I bid. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\

super\cf9\f10\fs18 72\ul0\nosupersub\cf10\f11\fs19 Ibid 23. \par\pard\ql \li220 5\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 73\ul 0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Standard Guidelines on Anti-Money Laundering and Counter Financing of Terrorism, \ul0\nosupersub\cf10\ f11\fs19 para 5.9.1. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\cha rscalex100 \ul0\super\cf9\f10\fs18 74\ul0\nosupersub\cf10\f11\fs19 \ul0\nosuper sub\cf11\f12\fs19 Standard Guidelines on Anti-Money Laundering and Counter Finan cing of Terrorism,\ul0\nosupersub\cf10\f11\fs19 para 5.9.3. \par\pard\ql \li220 5\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 75\ul 0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Standard Guidelines on Anti-Money Laundering and Counter Financing of Terrorism,\ul0\nosupersub\cf10\f 11\fs19 para 5.9.4. \par\pard\ql \li10256\sb15\sl-251\slmult0 \up0 \expndtw-5\c harscalex100 \ul0\nosupersub\cf1\f2\fs23 134 {\shp {\*\shpinst\shpleft2205\shptop13033\shpright5006\shpbottom13053\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz201\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g144}{\bkmkend Pg144}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i913\sb249\sl-400\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf1\f2\f s23 The decision to enter into, or continue, business relationships with PEPs sh ould be made by \up0 \expndtw-2\charscalex100 the senior management of the banks .\ul0\super\cf8\f9\fs23 76 \par\pard\qj \li2205\ri915\sb398\sl-403\slmult0\fi0 \ up0 \expndtw0\charscalex102 \ul0\nosupersub\cf1\f2\fs23 It should be noted that business relationships with family members or close associates of \line \up0 \ex pndtw0\charscalex109 PEPs also involve money laundering risks similar to those w ith PEPs themselves.\ul0\super\cf8\f9\fs23 77 \line \up0 \expndtw0\charscalex107 \ul0\nosupersub\cf1\f2\fs23 Therefore, the Standard Guidelines require banks to conduct due diligence on family \line \up0 \expndtw-1\charscalex100 members or close associates of PEPs who have dealings with the banks.\ul0\super\cf8\f9\fs23 78\ul0\nosupersub\cf1\f2\fs23 Additionally, the \line \up0 \expndtw-1\charscal ex100 Sectoral Guidelines further require banks to monitor accounts which are co nnected to PEPs \line \up0 \expndtw0\charscalex100 in order to detect discrepanc ies in their transactions and accounts activities based on their \line \up0 \exp ndtw0\charscalex100 profiles.\ul0\super\cf8\f9\fs23 79 \par\pard\qj \li2205\sb0\ sl-400\slmult0 \par\pard\qj\li2205\ri915\sb20\sl-400\slmult0 \up0 \expndtw0\char scalex100 \ul0\nosupersub\cf1\f2\fs23 It must be borne in mind that detecting co rrupt PEPs is not an easy task because normally \up0 \expndtw0\charscalex105 the y use intermediaries to conduct financial business on their behalf. Furthermore, the \up0 \expndtw0\charscalex102 concealing of their illegal proceeds often inv olves the use of shell companies or offshore \up0 \expndtw0\charscalex100 banks which makes identification more difficult and burdensome. To make matters worse, \up0 \expndtw0\charscalex100 there is also concern about the potential influenc e PEPs can have on blocking anti-money \up0 \expndtw0\charscalex103 laundering r egimes, influencing the effectiveness of suspicious transaction reporting by \up 0 \expndtw-2\charscalex100 financial institutions and contributing to poor gover nance standards.\ul0\super\cf8\f9\fs23 80 \par\pard\qj \li2205\sb0\sl-400\slmult 0 \par\pard\qj\li2205\ri914\sb20\sl-400\slmult0\fi0 \up0 \expndtw-1\charscalex10 0 \ul0\nosupersub\cf1\f2\fs23 It has been argued that finding out whether a cust omer is a PEP poses particular challenges \up0 \expndtw0\charscalex100 for banks .\ul0\super\cf8\f9\fs23 81\ul0\nosupersub\cf1\f2\fs23 They needed more guidance to determine PEPs. In Australia, for instance, the \up0 \expndtw0\charscalex100

banking community has called the government to issue a list of whom it deems to be PEP \up0 \expndtw0\charscalex109 in order to bring some clarity to the issue . Therefore, it is critical for the Malaysian \up0 \expndtw0\charscalex102 gover nment to provide banks with a similar list of PEPs or some other guidance to avo id \up0 \expndtw0\charscalex104 institutions uncertainties. Even if a list of PE Ps is provided, there is still the problem of \up0 \expndtw-3\charscalex100 tryi ng to determine whether their funds came from illicit sources. \par\pard\ql \li2 205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li220 5\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\ sb0\sl-218\slmult0 \par\pard\ql\li2205\sb41\sl-218\slmult0 \up0 \expndtw-2\chars calex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 76\ul0\nosupersub\cf10\f 11\fs19 \ul0\nosupersub\cf11\f12\fs19 Standard Guidelines on Anti-Money Launder ing and Counter Financing of Terrorism, \ul0\nosupersub\cf10\f11\fs19 para 5.9.5 . \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\sup er\cf9\f10\fs18 77\ul0\nosupersub\cf10\f11\fs19 FATF, \ul0\nosupersub\cf11\f12\ fs19 Report on Money laundering Typologies 2003-2004\ul0\nosupersub\cf10\f11\fs1 9 (2004) 19. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex 100 \ul0\super\cf9\f10\fs18 78\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf1 1\f12\fs19 Standard Guidelines on Anti-Money Laundering and Counter Financing of Terrorism,\ul0\nosupersub\cf10\f11\fs19 para 5.9.6. \par\pard\ql \li2205\sb2\s l-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 79\ul0\nosup ersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Sectoral Guidelines 1 for Ban king and Financial Institutions,\ul0\nosupersub\cf10\f11\fs19 para 4.6.1. \par\ pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\ f10\fs18 80\ul0\nosupersub\cf10\f11\fs19 APG Yearly Typologies Report 2005-2006 , 31. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0 \super\cf9\f10\fs18 81\ul0\nosupersub\cf10\f11\fs19 P A Schott, \ul0\nosupersub \cf11\f12\fs19 Reference Guide to Anti-Money Laundering and the Financing of Ter rorism\ul0\nosupersub\cf10\f11\fs19 (2006) VI-9. \par\pard\ql \li10256\sb15\sl251\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 135 {\shp {\*\shpinst\shpleft2205\shptop13033\shpright5006\shpbottom13053\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz202\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g145}{\bkmkend Pg145}\par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205 \sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\s b0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb2 41\sl-264\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf4\f5\fs23 e) P rivate banking \par\pard\qj \li2205\ri915\sb20\sl-405\slmult0 \up0 \expndtw0\cha rscalex105 \ul0\nosupersub\cf1\f2\fs23 A series of high profile cases of corrupt politicians misappropriating public funds and \up0 \expndtw0\charscalex107 laun dering them through developed country banks has led to greater focus on private \up0 \expndtw-1\charscalex100 banking activities.\ul0\super\cf8\f9\fs23 82\ul0\n osupersub\cf1\f2\fs23 Private banking refers to preferential banking service pr ovided to high \up0 \expndtw0\charscalex109 net worth individuals. This service usually entails a higher degree of discretion and \up0 \expndtw-2\charscalex100 confidentiality for the client in comparison with the ordinary retail customer.\ ul0\super\cf8\f9\fs23 83 \par\pard\qj \li2205\ri915\sb400\sl-400\slmult0\fi0 \up 0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs23 The main area of vulnerabi lity of private banking services that could be exploited is when \up0 \expndtw0\ charscalex108 the private banker simply fails to apply appropriate and thorough due diligence to a \up0 \expndtw0\charscalex107 customer and his activities.\ul0

\super\cf8\f9\fs23 84\ul0\nosupersub\cf1\f2\fs23 In fact, a failure to apply ne cessary due diligence in the \up0 \expndtw-3\charscalex100 private banking may s imply be due to the nature of the service itself. \par\pard\qj \li2205\sb0\sl-40 0\slmult0 \par\pard\qj\li2205\ri914\sb20\sl-400\slmult0\tx2700 \up0 \expndtw-3\c harscalex100 Part \tab \up0 \expndtw0\charscalex107 4.11 of the Sectoral Guideli nes provides that banks must exercise enhanced due \up0 \expndtw0\charscalex107 diligence procedures and more stringent approval process when dealing with priva te \up0 \expndtw0\charscalex103 banking services. Banks must also undertake an i ndependent review of the conduct and \up0 \expndtw-3\charscalex100 development o f such business relationships at least annually.\ul0\super\cf8\f9\fs23 85 \par\p ard\qj \li2205\ri915\sb398\sl-403\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nos upersub\cf1\f2\fs23 In complying with these requirements, it would be worthwhile for Malaysian banks to refer \line \up0 \expndtw0\charscalex100 to the Wolfsber g Principles on the \ul0\nosupersub\cf7\f8\fs23 Global Anti-Money Laundering Gui delines for Private \line \up0 \expndtw-1\charscalex100 Banking\ul0\nosupersub\c f1\f2\fs23 (the Principles) for sound business conduct in international private banking.\ul0\super\cf8\f9\fs23 86\ul0\nosupersub\cf1\f2\fs23 The \line \up0 \e xpndtw0\charscalex103 Principles cover guidelines relating to customer acceptance and identification, \line \up0 \expndtw0\charscalex106 establi shment of beneficial owners for all accounts, due diligence to be performed for \line \up0 \expndtw0\charscalex100 normal and high risk customers (especially wi th regards to PEPs and their associates), the \line \up0 \expndtw0\charscalex10 0 identification of unusual or suspicious transactions and the monitoring of acc ount activity. \par\pard\qj \li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\s l-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl220\slmult0 \par\pard\qj\li2205\ri935\sb149\sl-220\slmult0 \up0 \expndtw-2\chars calex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 82\ul0\nosupersub\cf10\f 11\fs19 For example, the involvement of Citibank in the laundering of corruptio n-related proceeds of Raul Salinas, \up0 \expndtw-2\charscalex100 brother of Mex ico\u8217?s former President in 1996 and General Sani Abacha, Nigerian dictator in 1998. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ ul0\super\cf9\f10\fs18 83\ul0\nosupersub\cf10\f11\fs19 FATF Report on Money Lau ndering Typologies 2001-2002, 12. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \ expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 84\ul0\nosupersub\cf10\f11\fs19 Ibid. \par\pard\ql \li2205\sb22\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \u l0\super\cf9\f10\fs18 85\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\ fs19 Sectoral Guidelines 1 for Banking and Financial Institutions,\ul0\nosupersu b\cf10\f11\fs19 para 4.11.12. \par\pard\qj \li2205\ri939\sb1\sl-220\slmult0 \up 0 \expndtw0\charscalex100 \ul0\super\cf9\f10\fs18 86\ul0\nosupersub\cf10\f11\fs1 9 The Principles were issued by Wolfsberg Group, i.e an association of a number of leading international \line \up0 \expndtw-1\charscalex100 financial institut ions (i.e. ABN AMRO Bank N.V., Banco Santander Central Hispano S.A., Bank of Tok yo-\line \up0 \expndtw-3\charscalex100 Mitsubishi Ltd., Barclays Bank, Citigroup , Credit Suisse Group, Deutsche Bank AG, Goldman Sachs, HSBC, \line \up0 \expndt w0\charscalex100 J.P. Morgan Chase, Socit Generale, UBS AG) which was established in 2000. The Group developed and \line \up0 \expndtw0\charscalex100 agreed to ad here to special anti-money laundering guidelines known as the Wolfberg Principle s. \par\pard\ql \li10256\sb14\sl-252\slmult0 \up0 \expndtw-5\charscalex100 \ul0\ nosupersub\cf1\f2\fs23 136 {\shp {\*\shpinst\shpleft2205\shptop12139\shpright5006\shpbottom12159\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz188\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}}

}}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g146}{\bkmkend Pg146}\par\pard\qj \li2205\sb0\sl-404\slmult0 \par\pard\qj\li2205 \sb0\sl-404\slmult0 \par\pard\qj\li2205\sb0\sl-404\slmult0 \par\pard\qj\li2205\r i914\sb234\sl-404\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf1\f2\f s23 In the case of individual customers, the Principles provide that if doubt ex ists as to whether \line \up0 \expndtw0\charscalex106 the account holder is the beneficial owner, the bank needs to establish the capacity in \line \up0 \expndt w0\charscalex102 which, and on whose behalf, the account holder is acting.\ul0\s uper\cf8\f9\fs23 87\ul0\nosupersub\cf1\f2\fs23 In the case of companies and \li ne \up0 \expndtw0\charscalex100 trust, the private banker must understand the st ructure of the company or trust sufficiently \line \up0 \expndtw0\charscalex105 to determine the provider of funds, principal owners of the shares and those who have \line \up0 \expndtw-3\charscalex100 control over the funds.\ul0\super\cf8\ f9\fs23 88 \par\pard\qj \li2205\ri915\sb280\sl-400\slmult0 \up0 \expndtw0\charsc alex108 \ul0\nosupersub\cf1\f2\fs23 With the implementation of AMLATFA, enhanced due diligence in private banking \line \up0 \expndtw0\charscalex100 services is now becomes a legal requirement in Malaysia. Given the competitive nature of \l ine \up0 \expndtw0\charscalex100 private banking business, a strong compliance c ulture among private bankers is critical for \line \up0 \expndtw0\charscalex100 ensuring that they are not unwittingly involve in the laundering of criminal pro ceeds. \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb129\sl-264\ slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf4\f5\fs23 f) Corresponde nt banking \par\pard\qj \li2205\ri912\sb22\sl-402\slmult0 \up0 \expndtw0\charsca lex106 \ul0\nosupersub\cf1\f2\fs23 Correspondent banking refers to the provision of banking services by one bank (the \line \up0 \expndtw-2\charscalex100 corres pondent bank) to another bank (the respondent bank).This kind of banking service is \line \up0 \expndtw0\charscalex102 easily exploited by money launderers beca use through correspondent relationships, the \line \up0 \expndtw0\charscalex102 correspondent bank provides services for individuals or entities for which it ha s neither \line \up0 \expndtw-4\charscalex100 verified the identities nor obtain ed first hand knowledge of the respondent\u8217?s customers. The \line \up0 \exp ndtw0\charscalex103 correspondent bank must rely on the respondent bank to perfo rm all the necessary due \line \up0 \expndtw0\charscalex100 diligence and contin uous monitoring of its own customer\u8217?s account activity.\ul0\super\cf8\f9\f s23 89\ul0\nosupersub\cf1\f2\fs23 It is very \line \up0 \expndtw-2\charscalex10 0 difficult for a correspondent bank to assess the quality of anti-money launder ing measures \line \up0 \expndtw-3\charscalex100 taken by the respondent bank. \ par\pard\qj \li2205\ri915\sb397\sl-404\slmult0 \up0 \expndtw-3\charscalex100 Sub ject to the approval of BNM, section 31 of BAFIA allows Malaysian banks to estab lish \line \up0 \expndtw0\charscalex100 a correspondent banking relationship wit h any bank in a foreign country. However, they \line \up0 \expndtw0\charscalex10 3 must comply with part 4.14 of the Sectoral Guidelines which specifically provi des for \line \up0 \expndtw0\charscalex100 procedures for the sound business con duct of correspondent banking. Therefore, when a \line \up0 \expndtw0\charscalex 104 bank has a correspondent relationship with another respondent institution, t he bank is \line \up0 \expndtw0\charscalex104 required to take appropriate measu res to ensure that the relationship is not exposed to \par\pard\ql \li2205\sb0\s l-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl218\slmult0 \par\pard\ql\li2205\sb176\sl-218\slmult0 \up0 \expndtw-2\charscalex1 00 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 87\ul0\nosupersub\cf10\f11\fs1 9 Wolfsberg Group, \ul0\nosupersub\cf11\f12\fs19 Global Anti-Money Laundering G uidelines for Private Banking\ul0\nosupersub\cf10\f11\fs19 (2002), para 1.2.2. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super \cf9\f10\fs18 88\ul0\nosupersub\cf10\f11\fs19 Ibid. \par\pard\li2205\sb20\sl-21 8\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 89\ul0\nosup ersub\cf10\f11\fs19 FATF, \ul0\nosupersub\cf11\f12\fs19 Report on Money Launder ing Typologies 2001-2002\ul0\nosupersub\cf10\f11\fs19 (2002) 8.\par\pard\li2205 \sb3\sl-264\slmult0\fi8050 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\ fs23 137

{\shp {\*\shpinst\shpleft2205\shptop13704\shpright5006\shpbottom13724\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz180\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g147}{\bkmkend Pg147}\par\pard\qj \li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205 \sb0\sl-402\slmult0 \par\pard\qj\li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205\r i914\sb241\sl-402\slmult0\fi0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f 2\fs23 money laundering or terrorism financing activities.\ul0\super\cf8\f9\fs23 90\ul0\nosupersub\cf1\f2\fs23 Additionally, the bank must obtain at \line \up0 \expndtw-1\charscalex100 the minimum the relevant information on the respondent bank, which includes information \line \up0 \expndtw0\charscalex100 on the boar d of directors and the management, business activities and products, applicable \line \up0 \expndtw0\charscalex109 legislation, regulations and supervision and AML/CTF measures and control of the \line \up0 \expndtw0\charscalex110 responden t bank.\ul0\super\cf8\f9\fs23 91\ul0\nosupersub\cf1\f2\fs23 The bank should est ablish or continue a correspondent banking \line \up0 \expndtw0\charscalex106 re lationship with the respondent bank only if it is satisfied with the assessment of the \line \up0 \expndtw0\charscalex104 information gathered. Most importantly , the relationship with shell banks is absolutely \line \up0 \expndtw0\charscale x103 prohibited.\ul0\super\cf8\f9\fs23 92\ul0\nosupersub\cf1\f2\fs23 Shell bank s may be defined as banks that have no physical presence in the \line \up0 \expn dtw0\charscalex104 country where they are incorporated and licensed and are not affiliated to any financial \line \up0 \expndtw-2\charscalex100 services group t hat is subject to effective consolidated supervision.\ul0\super\cf8\f9\fs23 93 \ par\pard\qj \li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205\ri914\sb16\sl-402\slm ult0\fi0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs23 Furthermore, w here a correspondent banking relationship involves the maintenance of a \line \u p0 \expndtw0\charscalex105 \u8216?payable-through-account\u8217?,\ul0\super\cf8\ f9\fs23 94\ul0\nosupersub\cf1\f2\fs23 the bank must be satisfied that the respo ndent bank has \line \up0 \expndtw0\charscalex104 performed all the normal oblig ations on its customers that have direct access to such \line \up0 \expndtw0\ch arscalex100 accounts and the respondent bank is able to provide relevant custome r identification data \line \up0 \expndtw0\charscalex107 upon request by the ba nk.\ul0\super\cf8\f9\fs23 95\ul0\nosupersub\cf1\f2\fs23 Additionally, the bank must pay special attention to \line \up0 \expndtw-4\charscalex100 correspond ent banking relationships with respondent institutions from countries which have \line \up0 \expndtw-1\charscalex100 insufficient AML/CTF measures, such as the Non Cooperative Countries and Territories, \line \up0 \expndtw-2\charscalex100 w hich would require enhanced due diligence to assess the money laundering and ter rorism \line \up0 \expndtw-3\charscalex100 financing risks.\ul0\super\cf8\f9\fs2 3 96 \par\pard\qj \li2205\ri914\sb400\sl-400\slmult0 \up0 \expndtw0\charscalex10 6 \ul0\nosupersub\cf1\f2\fs23 It is clear that banks face significant challenges in complying with the customer due \line \up0 \expndtw0\charscalex100 diligence (CDD) requirements. Banks are required to conduct enhanced CDD on PEPs, \line \ up0 \expndtw0\charscalex106 correspondent banking, introduced business and non-f ace to face customers. In this \line \up0 \expndtw0\charscalex104 respect, bank s are provided with a degree of flexibility that was not previously given. \line \up0 \expndtw-3\charscalex100 However, this measure is difficult to be implemen ted because there is no obvious end point \par\pard\ql \li2205\sb0\sl-218\slmult 0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb17\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super \cf9\f10\fs19\ul0\super\cf9\f10\fs18 90\ul0\nosupersub\cf10\f11\fs19 \ul0\nosup ersub\cf11\f12\fs19 Sectoral Guidelines 1 for Banking and Financial Institutions

,\ul0\nosupersub\cf10\f11\fs19 para 4.14.1. \par\pard\ql \li2205\sb2\sl-218\slm ult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 91\ul0\nosupersub\cf1 0\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Sectoral Guidelines 1 for Banking and Financial Institutions,\ul0\nosupersub\cf10\f11\fs19 para 4.14.2. \par\pard\ql \li2205\sb22\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs1 8 92\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Sectoral Guidel ines 1 for Banking and Financial Institutions\ul0\nosupersub\cf10\f11\fs19 , par a 4.14.6. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 93\ul0\nosupersub\cf10\f11\fs19 See {\field{\*\fldinst {HYPERLINK "http://www.bis.org/publ/bcbs95.pdf/" }}{\fldrslt {\ul0\nosupersub\cf 29\f30\fs19\ul www.bis.org/publ/bcbs95.pdf}}} \par\pard\qj \li2205\ri943\sb1\sl220\slmult0 \up0 \expndtw-1\charscalex100 \ul0\super\cf9\f10\fs18 94\ul0\nosuper sub\cf10\f11\fs19 \u8216?Payable through account\u8217? means correspondent acc ounts that are used directly by third parties to transact \up0 \expndtw-2\charsc alex100 business on their own behalf. \par\pard\li2205\sb17\sl-218\slmult0\fi0 \ up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 95\ul0\nosupersub\cf10\f11\ fs19 \ul0\nosupersub\cf11\f12\fs19 Sectoral Guidelines 1 for Banking and Financ ial Institutions,\ul0\nosupersub\cf10\f11\fs19 para 4.14.7.\par\pard\li2205\sb5 \sl-218\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 96\ul0 \nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Sectoral Guidelines 1 f or Banking and Financial Institutions, \ul0\nosupersub\cf10\f11\fs19 para 4.14.8 .\par\pard\li2205\sb3\sl-264\slmult0\fi8050 \up0 \expndtw-3\charscalex100 \ul0\n osupersub\cf1\f2\fs23 138 {\shp {\*\shpinst\shpleft2205\shptop12585\shpright5006\shpbottom12605\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz209\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g148}{\bkmkend Pg148}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i915\sb249\sl-400\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf1\f2\f s23 to the information that would be useful to a bank manager to prevent money l aundering.\ul0\super\cf8\f9\fs23 97\ul0\nosupersub\cf1\f2\fs23 It \up0 \expndtw 0\charscalex100 seems that each bank must interpret the CDD obligation in the co ntext of its business and \up0 \expndtw0\charscalex100 then determine what type of anti-money laundering system to be utilized.\ul0\super\cf8\f9\fs23 98 \par\pa rd\qj \li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205\ri914\sb17\sl-402\slmult0 \ up0 \expndtw0\charscalex102 \ul0\nosupersub\cf1\f2\fs23 Furthermore, if left unc hecked, the CDD requirement may also unnecessarily exacerbate \line \up0 \expndt w0\charscalex102 financial exclusion especially if they are not formulated with care to reflect the reality of \line \up0 \expndtw0\charscalex100 the particular country setting.\ul0\super\cf8\f9\fs23 99\ul0\nosupersub\cf1\f2\fs23 Financia l exclusion refers to the lack of access by certain \line \up0 \expndtw0\charsca lex107 customers to appropriate low cost, fair and safe financial products and s ervices from \line \up0 \expndtw0\charscalex100 mainstream financial institution s.\ul0\super\cf8\f9\fs23 100\ul0\nosupersub\cf1\f2\fs23 A problem for the finan cially excluded is having few \line \up0 \expndtw-1\charscalex100 or none of the normal tokens of identity required under the AML laws for account opening. \lin e \up0 \expndtw0\charscalex107 In Malaysia, illegal immigrants for instance, may fall under this category. Anecdotal \line \up0 \expndtw0\charscalex107 evidence suggests that there is a significant number of illegal immigrants working in \l ine \up0 \expndtw0\charscalex104 Malaysia. As such, it is critical for the AML l aws to create a right balance between the \line \up0 \expndtw0\charscalex105 obj

ective of detecting criminals and the social responsibility of banks to offer ba nking \line \up0 \expndtw-2\charscalex100 services to customers especially for t hose with low level of financial capability. \par\pard\qj \li2205\ri914\sb396\sl -405\slmult0\fi0 \up0 \expndtw0\charscalex103 Notably, financial exclusion may a lso undermine the crime combating objectives of the \up0 \expndtw0\charscalex100 AML regime if it urges criminals and others to use underground banking systems. \ul0\super\cf8\f9\fs23 101\ul0\nosupersub\cf1\f2\fs23 The \up0 \expndtw-1\chars calex100 underground banking systems are considered important conduits for laund ering proceeds of \up0 \expndtw-1\charscalex100 crimes as they leave no paper tr ail. As such, this scenario will create another barrier for law \up0 \expndtw-2\ charscalex100 enforcement authorities to detect and prosecute the launderers. \p ar\pard\qj \li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \pa r\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\ pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pa rd\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard \qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\ri940\sb128\sl-220\slmult0\tx3 491 \up0 \expndtw0\charscalex108 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 97\ul0\nosupersub\cf10\f11\fs19 Jackson A, \tab \up0 \expndtw0\charscalex106 \u 8216?Recognizing and Reporting Money Laundering: How Well Should You Know Your \ up0 \expndtw-2\charscalex100 Customer?\u8217? (2000) 3(4) \ul0\nosupersub\cf11\f 12\fs19 Journal of Money Laundering Control \ul0\nosupersub\cf10\f11\fs19 317. \ par\pard\qj \li2205\ri939\sb20\sl-220\slmult0 \up0 \expndtw-3\charscalex100 \ul0 \super\cf9\f10\fs18 98\ul0\nosupersub\cf10\f11\fs19 Mc Guire B, \u8216?Money La undering: Addressing Serious Compliance Risk with Serious Banking Technology\u82 17? \line \up0 \expndtw-4\charscalex100 (2001)< {\field{\*\fldinst {HYPERLINK "h ttp://www.towegroup.com/" }}{\fldrslt {\ul0\nosupersub\cf29\f30\fs19\ul http://w ww.towegroup.com}}}\ul0\nosupersub\cf10\f11\fs19 > at 18 June 2005. \par\pard\qj \li2205\ri946\sb0\sl-220\slmult0 \up0 \expndtw-1\charscalex100 \ul0\super\cf9\f 10\fs18 99\ul0\nosupersub\cf10\f11\fs19 Louis De Koker, \u8216?Money Laundering Control and Suppression of Financing of Terrorism: Some thoughts \up0 \expndtw0 \charscalex106 on the Impact of Customer Due Diligence measures on Financial Exc lusion\u8217? (2006) 13(1) \ul0\nosupersub\cf11\f12\fs19 Journal of \up0 \expndt w-2\charscalex100 Financial Crime \ul0\nosupersub\cf10\f11\fs19 26. \par\pard\q l \li2205\ri2711\sb0\sl-230\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\super \cf9\f10\fs18 100\ul0\nosupersub\cf10\f11\fs19 R Mohan, \u8216?Economic Growth, Financial Deepening and Financial Inclusion\u8217? (2005). \line \up0 \expndtw2\charscalex100 <{\field{\*\fldinst {HYPERLINK "http://rbidocs.rbi.org.in/rdocs/ speeches/pdfs/73697.pdf /" }}{\fldrslt {\ul0\nosupersub\cf29\f30\fs19\ul http:// rbidocs.rbi.org.in/rdocs/Speeches/PDFs/73697.pdf }}}\ul0\nosupersub\cf10\f11\fs1 9 > at 10 May 2007. \line \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 101\ul0\nosupersub\cf10\f11\fs19 Ibid. \par\pard\ql \li10256\sb94\sl-264\slmul t0 \up0 \expndtw-5\charscalex100 \ul0\nosupersub\cf1\f2\fs23 139 {\shp {\*\shpinst\shpleft2205\shptop12026\shpright5006\shpbottom12046\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz186\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g149}{\bkmkend Pg149}\par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205 \sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\s b0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb2 41\sl-264\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf4\f5\fs23 4.4.3 Record Keeping \par\pard\qj \li2205\sb0\sl-410\slmult0 \par\pard\qj\li2205\ri 916\sb6\sl-410\slmult0 \up0 \expndtw0\charscalex113 \ul0\nosupersub\cf1\f2\fs23

Record keeping is considered an important element of the audit trail that the la w \line \up0 \expndtw0\charscalex107 enforcement agencies seek to establish in m oney laundering and terrorism financing \line \up0 \expndtw0\charscalex101 inves tigation. Section \up0 \expndtw0\charscalex111 13(1) of AMLATFA requires banks t o keep a record of any \par\pard\qj \li2205\ri916\sb0\sl-400\slmult0 \up0 \expnd tw0\charscalex100 transaction involving the domestic currency or any foreign cur rency exceeding the amount \up0 \expndtw0\charscalex104 specified by BNM. Sub se ction (3) sets out the following information to be included in \up0 \expndtw-3\c harscalex100 such a record: \par\pard\ql \li2205\sb132\sl-264\slmult0 \up0 \expn dtw-2\charscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\ fs23 the identity and address of the person in whose name the transaction is c onducted; \par\pard\qj \li2205\ri920\sb44\sl-400\slmult0\tx2556 \up0 \expndtw-4\ charscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 the identity and address of the beneficiary or the person on whose behalf the t ransaction \line\tab \up0 \expndtw-5\charscalex100 is conducted; \par\pard\ql \l i2205\sb133\sl-264\slmult0 \up0 \expndtw-3\charscalex100 \u-3913?\ul0\nosupersub \cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 the identity of the accounts affecte d by the transaction, if any; \par\pard\ql \li2205\ri916\sb44\sl-400\slmult0\tx2 556\tx2556 \up0 \expndtw0\charscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul 0\nosupersub\cf1\f2\fs23 the type of transaction involved, such as deposit, wi thdrawal, exchange of currency, \line\tab \up0 \expndtw0\charscalex100 cheque ca shing, purchase of cashier\u8217?s cheques or money orders or other payment or \ line\tab \up0 \expndtw-5\charscalex100 transfer by, through, or to such reportin g institution; \par\pard\qj \li2205\ri2187\sb4\sl-420\slmult0 \up0 \expndtw-2\ch arscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 t he identity of the reporting institution where the transaction occurred; and \up 0 \expndtw-3\charscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\ cf1\f2\fs23 the date, time and amount of the transaction. \par\pard\qj \li2205 \ri914\sb395\sl-402\slmult0 \up0 \expndtw-2\charscalex100 Section 17(1) of AMLAT FA requires banks to maintain all records for a period of not less \up0 \expndtw 0\charscalex107 than six years from the date an account has been closed or the t ransaction has been \up0 \expndtw0\charscalex100 completed or terminated. Furthe rmore, paragraph 6.1.1 of the Standard Guidelines states \up0 \expndtw-3\charsca lex100 that banks must keep all records and documents of transactions, particula rly those obtained \up0 \expndtw0\charscalex102 during customer due diligence pr ocedures for at least six years after the transaction has \up0 \expndtw-3\charsc alex100 been completed or after the business relations with the customer have en ded. However, the \up0 \expndtw0\charscalex102 records must be retained beyond s uch period when it is subject to money laundering or \up0 \expndtw-5\charscalex1 00 terrorism financing investigation or prosecution.\ul0\super\cf8\f9\fs23 102 \ par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri916\sb20\sl-400\slm ult0 \up0 \expndtw0\charscalex102 \ul0\nosupersub\cf1\f2\fs23 The Standard Guide lines state that the documents and records must be able to create an \line \up0 \expndtw0\charscalex102 audit trail on individual transactions that are traceabl e by BNM and other relevant law \par\pard\li2205\sb0\sl-218\slmult0\par\pard\li2 205\sb0\sl-218\slmult0\par\pard\li2205\sb0\sl-218\slmult0\par\pard\li2205\sb0\sl -218\slmult0\par\pard\li2205\sb57\sl-218\slmult0\fi0 \up0 \expndtw-2\charscalex1 00 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 102\ul0\nosupersub\cf10\f11\fs 19 \ul0\nosupersub\cf11\f12\fs19 Standard Guidelines on Anti-Money Laundering a nd Counter Financing of Terrorism,\ul0\nosupersub\cf10\f11\fs19 para 6.1.2.\par \pard\li2205\sb3\sl-264\slmult0\fi8050 \up0 \expndtw-3\charscalex100 \ul0\nosupe rsub\cf1\f2\fs23 140 {\shp {\*\shpinst\shpleft2205\shptop14151\shpright5006\shpbottom14171\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz226\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}}

{\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g150}{\bkmkend Pg150}\par\pard\ql \li2205\sb0\sl-410\slmult0 \par\pard\ql\li2205 \sb0\sl-410\slmult0 \par\pard\ql\li2205\sb0\sl-410\slmult0 \par\pard\ql\li2205\r i900\sb211\sl-410\slmult0\fi0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f 2\fs23 enforcement agencies.\ul0\super\cf8\f9\fs23 103\ul0\nosupersub\cf1\f2\fs2 3 Additionally, the records must enable the banks to establish the \up0 \expndt w-4\charscalex100 history, circumstances and reconstruction of each transaction. The records must include: \up0 \expndtw-5\charscalex100 \u-3913?\ul0\nosupersub \cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 the identity of the customer; \par\p ard\ql \li2205\sb131\sl-264\slmult0 \up0 \expndtw-3\charscalex100 \u-3913?\ul0\n osupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 the identity of the benefic iary; \par\pard\ql \li2205\ri3249\sb28\sl-420\slmult0 \up0 \expndtw-3\charscalex 100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 the type of transaction (for example, deposit or withdrawal); \up0 \expndtw-3\charscalex1 00 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 the form o f transaction (for example, by cash or by cheque); \up0 \expndtw-3\charscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 the instruct ion, the origin and destination of fund transfers; and \up0 \expndtw-3\charscale x100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 the amou nt and type of currency.\ul0\super\cf8\f9\fs23 104 \par\pard\qj \li2205\ri916\sb 392\sl-406\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 It appears that banks are now required to record more information than they previou sly had \up0 \expndtw0\charscalex106 to in order to comply with the Guidelines. Customer records must contain sufficient \up0 \expndtw0\charscalex100 informatio n to allow reconstruction of individual transactions. This might in turn require \up0 \expndtw0\charscalex100 changes to the banks\u8217? existing file manageme nt and archiving arrangements. \par\pard\qj \li2205\ri914\sb398\sl-402\slmult0\f i0 \up0 \expndtw0\charscalex102 Section 15 requires banks to provide for the cen tralization of the information collected \line \up0 \expndtw0\charscalex102 purs uant to Part IV of AMLATFA. The AMLATF Regulations further specify that the \lin e \up0 \expndtw-1\charscalex100 information must be made available on a timely b asis when required by FIU.\ul0\super\cf8\f9\fs23 105\ul0\nosupersub\cf1\f2\fs23 Failure to \line \up0 \expndtw0\charscalex105 comply with this requirement woul d renders banks liable to a fine not exceeding one \line \up0 \expndtw-2\charsca lex100 million ringgit or to imprisonment for a term not exceeding one year or t o both. In the case \line \up0 \expndtw0\charscalex103 of a continuing offence, a further fine not exceeding one thousand ringgit for each day \line \up0 \expnd tw0\charscalex100 during which the offence continues after conviction would be i mposed.\ul0\super\cf8\f9\fs23 106\ul0\nosupersub\cf1\f2\fs23 The Standard \line \up0 \expndtw-1\charscalex100 Guidelines further require that all documents mus t be retained in a form that is acceptable \line \up0 \expndtw0\charscalex100 un der section 3 of the Evidence Act 1950, and that they are secure and retrievable , upon \line \up0 \expndtw0\charscalex100 request, in a timely manner.\ul0\super \cf8\f9\fs23 107 \par\pard\qj \li2205\ri915\sb400\sl-400\slmult0 \up0 \expndtw0\ charscalex105 \ul0\nosupersub\cf1\f2\fs23 Section 17(4) of AMLATFA provides that failure to comply with the record keeping \line \up0 \expndtw0\charscalex105 re quirement will render banks liable to a fine not exceeding one million ringgit o r to \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmu lt0 \par\pard\ql\li2205\sb195\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\ super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 103\ul0\nosupersub\cf10\f11\fs19 \ul0 \nosupersub\cf11\f12\fs19 Standard Guidelines on Anti-Money Laundering and Count er Financing of Terrorism,\ul0\nosupersub\cf10\f11\fs19 para 6.2.1. \par\pard\q l \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs 18 104\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Standard Guid elines on Anti-Money Laundering and Counter Financing of Terrorism, \ul0\nosuper sub\cf10\f11\fs19 para 6.2.2. \par\pard\qj \li2205\ri932\sb1\sl-220\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 105\ul0\nosupersub\cf10\f11\fs

19 \ul0\nosupersub\cf11\f12\fs19 Anti-Money Laundering and Anti-Terrorism Finan cing (Reporting Obligations) Regulations 2007,\ul0\nosupersub\cf10\f11\fs19 reg u 7. \line \up0 \expndtw0\charscalex100 \ul0\super\cf9\f10\fs18 106\ul0\nosupers ub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Anti-Money Laundering and Anti-T errorism Financing (Reporting Obligations) Regulations 2007\ul0\nosupersub\cf10\ f11\fs19 , regu \line \up0 \expndtw-1\charscalex100 7(2). \par\pard\li2205\sb20\ sl-218\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 107\ul0 \nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Standard Guidelines on Anti-Money Laundering and Counter Financing of Terrorism,\ul0\nosupersub\cf10\f1 1\fs19 para 6. 3.1.\par\pard\li2205\sb3\sl-264\slmult0\fi8050 \up0 \expndtw-3\c harscalex100 \ul0\nosupersub\cf1\f2\fs23 141 {\shp {\*\shpinst\shpleft2205\shptop13033\shpright5006\shpbottom13053\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz242\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g151}{\bkmkend Pg151}\par\pard\qj \li2205\sb0\sl-403\slmult0 \par\pard\qj\li2205 \sb0\sl-403\slmult0 \par\pard\qj\li2205\sb0\sl-403\slmult0 \par\pard\qj\li2205\r i916\sb238\sl-403\slmult0 \up0 \expndtw0\charscalex104 \ul0\nosupersub\cf1\f2\fs 23 imprisonment for a term not exceeding one year or both. It appears that recor d keeping \line \up0 \expndtw0\charscalex103 requirements would be burdensome, e specially in view of the number of transactions in \line \up0 \expndtw0\charscal ex106 banking business. However, the Standard Guidelines have clearly specified important \line \up0 \expndtw0\charscalex102 details which must be kept by banks to facilitate investigation and prosecution of money \line \up0 \expndtw0\chars calex100 launderers. However, as general record keeping requirements have long b een embedded in \line \up0 \expndtw-1\charscalex100 company and tax laws, banks and financial institutions are already very well aware of their \line \up0 \expn dtw-2\charscalex100 obligations.\ul0\super\cf8\f9\fs23 108 \par\pard\ql \li2264\ sb0\sl-264\slmult0 \par\pard\ql\li2264\sb0\sl-264\slmult0 \par\pard\ql\li2264\sb 264\sl-264\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf4\f5\fs23 4.4 .4 Reporting Requirements \par\pard\qj \li2205\ri916\sb268\sl-420\slmult0 \up0 \expndtw0\charscalex103 \ul0\nosupersub\cf1\f2\fs23 Basically, there are two typ es of reports required by AMLATFA which directly affect \up0 \expndtw-2\charscal ex100 banks. They are cash transaction reports and suspicious transaction report s. \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb245\sl-264\slmu lt0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf4\f5\fs23 a) Cash Transactio n Report (CTR) \par\pard\qj \li2205\ri915\sb24\sl-400\slmult0 \up0 \expndtw-2\ch arscalex100 \ul0\nosupersub\cf1\f2\fs23 The assumption that major movements of c ash are connected to money laundering has led \line \up0 \expndtw0\charscalex100 to the introduction of the Cash Transaction Report (CTR). CTR reporting is desi gned to \line \up0 \expndtw-3\charscalex100 expose the laundering process at its most vulnerable \u8216?choke\u8217? points, that is, the points when \line \up0 \expndtw-3\charscalex100 cash enters the financial system and when it is transf erred between financial intermediaries. \par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri914\sb20\sl-400\slmult0 \up0 \expndtw0\charscalex100 CTR r egimes are designed to serve a number of important policing functions. It has be en \up0 \expndtw-3\charscalex100 argued that the system could have the potential to \u8216?trigger\u8217? police investigations, to provide \up0 \expndtw-2\char scalex100 information for on-going investigations, and possibly act as a deterre nt for both the money \up0 \expndtw0\charscalex104 launderer and any financial i ntermediaries who would make themselves vulnerable to \up0 \expndtw-5\charscalex 100 money laundering activities.\ul0\super\cf8\f9\fs23 109 \par\pard\qj \li2205\

ri916\sb392\sl-410\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf1\f2\ fs23 It is submitted that the threshold level should be carefully designed so th at it must be high \line \up0 \expndtw0\charscalex105 enough to screen out insig nificant transactions yet low enough to detect transactions \line \up0 \expndtw1\charscalex100 potentially connected with financial crime. CTRs also should app ly to same-day multiple \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\li2 205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb173\sl-218\slmult0 \up0 \expndtw-2\ charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 108\ul0\nosupersub\ cf10\f11\fs19 APG Mutual Evaluation Report on Malaysia 2007, 111. \par\pard\qj \li2205\ri935\sb1\sl-220\slmult0\fi0 \up0 \expndtw-1\charscalex100 \ul0\super\cf 9\f10\fs18 109\ul0\nosupersub\cf10\f11\fs19 M E Beare, (2001) \u8216?Critique o f a Compliance-Driven Enforcement Strategy: Money Laundering and the \up0 \expnd tw-1\charscalex100 Financial sector\u8217? Draft working paper presented to Tran sparency International, 8. \par\pard\li2205\sb20\sl-218\slmult0\fi0 \up0 \expndt w-2\charscalex100 <{\field{\*\fldinst {HYPERLINK "http://www.transparency.ca/rep orts/bankingethicspaper_margaretbeare.pdf/" }}{\fldrslt {\ul0\nosupersub\cf29\f3 0\fs19\ul http://www.transparency.ca/reports/bankingEthicsPaper_MargaretBeare.PD F}}}\ul0\nosupersub\cf29\f30\fs19\ul >\ul0\nosupersub\cf12\f13\fs19 at\ul0\nosu persub\cf10\f11\fs19 3 December 2006.\par\pard\li2205\sb3\sl-264\slmult0\fi8050 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 142 {\shp {\*\shpinst\shpleft2205\shptop13480\shpright5006\shpbottom13500\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz166\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g152}{\bkmkend Pg152}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i914\sb249\sl-400\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs 23 transactions. This is to prevent \u8216?smurfing\u8217? or \u8216?structuring \u8217? which involves breaking up a \up0 \expndtw0\charscalex100 transaction in to smaller transactions below the threshold amount. \par\pard\qj \li2205\ri916\s b396\sl-406\slmult0\fi0\tx3033 \up0 \expndtw-5\charscalex100 Section \tab \up0 \ expndtw0\charscalex107 14(a) of AMLATFA requires banks to lodge CTRs to FIU in B ank Negara \up0 \expndtw-3\charscalex100 Malaysia. With effect from 1 September 2006, Malaysian banks are required to report cash \up0 \expndtw-1\charscalex100 transactions of RM50,000 and above in a day.\ul0\super\cf8\f9\fs23 110\ul0\nosup ersub\cf1\f2\fs23 In the United States, it is USD10,000, in \up0 \expndtw-2\cha rscalex100 Australia, AUD10,000 and in the United Kingdom, ECU15,000. \par\pard \qj \li2205\ri911\sb396\sl-404\slmult0 \up0 \expndtw0\charscalex102 It appears t hat the Standard Guidelines and the Sectoral Guidelines are silent about the \up 0 \expndtw-1\charscalex100 procedures relating to CTRs. This may be due to the f act that a cash transaction is clearly \up0 \expndtw-2\charscalex100 identifiabl e when compared to a suspicious transaction. The following table identifies the \up0 \expndtw-3\charscalex100 number of CTRs filed by the banking institutions in the first few months of its introduction. \up0 \expndtw-3\charscalex100 It is believed that the increase in reporting from October 2006 was due to the succes s of the \up0 \expndtw-4\charscalex100 awareness programs run in the banking sec tor. \par\pard\li2205\sb0\sl-264\slmult0\par\pard\li2205\sb259\sl-264\slmult0\fi 0\tx4681\tx6005 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf30\f31\fs23\ul Re porting institution\ul0\tab \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf30\f3 1\fs23\ul Sept 2006\ul0\tab \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf30\f3 1\fs23\ul Oct 2006\ul0\nosupersub\cf1\f2\fs23 \ul0\nosupersub\cf30\f31\fs23 \ul Nov 2006\ul0\nosupersub\cf1\f2\fs23 \ul0\nosupersub\cf30\f31\fs23\ul Dec

2006\ul0\nosupersub\cf1\f2\fs23 \ul0\nosupersub\cf30\f31\fs23\ul Total\par\ pard\li2205\sb138\sl-264\slmult0\fi0\tx4681\tx6006\tx7307\tx8617\tx9896 \up0 \ex pndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs23 Commercial banks\tab \up0 \expn dtw0\charscalex100 4,737\tab \up0 \expndtw0\charscalex100 30,646\tab \up0 \expnd tw0\charscalex100 83,175\tab \up0 \expndtw0\charscalex100 95, 274\tab \up0 \expn dtw0\charscalex100 213,832\par\pard\li2205\sb139\sl-264\slmult0\fi0\tx4679\tx600 4\tx7304\tx8614\tx9896 \up0 \expndtw0\charscalex100 Islamic banks\tab \up0 \expn dtw0\charscalex100 5,603\tab \up0 \expndtw0\charscalex100 32, 245\tab \up0 \expn dtw0\charscalex100 85,743\tab \up0 \expndtw0\charscalex100 99,009\tab \up0 \expn dtw0\charscalex100 222, 600\par\pard\ql \li2205\sb120\sl-264\slmult0 \up0 \expnd tw-3\charscalex100 (Source: APG Mutual Evaluation Report on Malaysia, 2007) \par \pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri916\sb44\sl-400\slmult 0 \up0 \expndtw-1\charscalex100 However, there are no statistics available on ho w many of these reports were followed up \up0 \expndtw-1\charscalex100 by the au thorities or how many of them led to the laying of charges. It is also unfortuna te \up0 \expndtw-2\charscalex100 that more recent statistics on CTRs are not ava ilable to the public. \par\pard\li2205\sb0\sl-218\slmult0\par\pard\li2205\sb0\sl -218\slmult0\par\pard\li2205\sb0\sl-218\slmult0\par\pard\li2205\sb0\sl-218\slmul t0\par\pard\li2205\sb0\sl-218\slmult0\par\pard\li2205\sb0\sl-218\slmult0\par\par d\li2205\sb0\sl-218\slmult0\par\pard\li2205\sb0\sl-218\slmult0\par\pard\li2205\s b0\sl-218\slmult0\par\pard\li2205\sb0\sl-218\slmult0\par\pard\li2205\sb0\sl-218\ slmult0\par\pard\li2205\sb0\sl-218\slmult0\par\pard\li2205\sb0\sl-218\slmult0\pa r\pard\li2205\sb0\sl-218\slmult0\par\pard\li2205\sb0\sl-218\slmult0\par\pard\li2 205\sb179\sl-218\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs 19\ul0\super\cf9\f10\fs18 110\ul0\nosupersub\cf10\f11\fs19 Anti-Money Launderin g Act (Invocation of Part IV) Order 2006.\par\pard\li2205\sb3\sl-264\slmult0\fi 8050 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 143 {\shp {\*\shpinst\shpleft2205\shptop14151\shpright5006\shpbottom14171\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz199\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g153}{\bkmkend Pg153}\par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205 \sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\s b0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb2 41\sl-264\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf4\f5\fs23 b) S uspicious Transaction Report (STR) \par\pard\qj \li2205\ri914\sb22\sl-402\slmult 0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf1\f2\fs23 STR refers to a piec e of information which alerts law enforcement that certain activity is in \up0 \ expndtw0\charscalex103 some way suspicious and might indicate money laundering o r terrorism financing.\ul0\super\cf8\f9\fs23 111\ul0\nosupersub\cf1\f2\fs23 In \up0 \expndtw0\charscalex100 Malaysia, the obligation to report suspicious trans actions was introduced in 2002. Section \up0 \expndtw0\charscalex100 14(b) of th e AMLATFA requires banks to make a suspicious transaction report where the \up0 \expndtw0\charscalex104 identity of the persons involved in the transaction, or the transaction itself, or any other \up0 \expndtw0\charscalex106 circumstances concerning that transaction gives reason to suspect that the transaction \up0 \e xpndtw0\charscalex105 involves proceeds of unlawful activity. Notably, the AMLAT F Regulations extend the \up0 \expndtw-3\charscalex100 scope of the reporting ob ligations to attempted transactions.\ul0\super\cf8\f9\fs23 112 \par\pard\qj \li2 205\ri913\sb397\sl-404\slmult0\fi0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub \cf1\f2\fs23 Section 3 of AMLATFA defines \u8216?unlawful activity\u8217? as any activity which is related directly \up0 \expndtw0\charscalex100 or indirectly t

o any serious offence or any foreign serious offence. Furthermore, serious \up0 \expndtw0\charscalex100 offence includes, \ul0\nosupersub\cf7\f8\fs23 inter alia ,\ul0\nosupersub\cf1\f2\fs23 any of the offences specified in the Second Schedu le of the \up0 \expndtw-1\charscalex100 AMLATFA.\ul0\super\cf8\f9\fs23 113\ul0\n osupersub\cf1\f2\fs23 A \u8216?foreign serious offence\u8217? means one that i s against the law of a foreign \up0 \expndtw-2\charscalex100 State as certified by that State and that consists of or includes an act or activity which, if it \ up0 \expndtw-2\charscalex100 had occurred in Malaysia, would have constituted a \u8216?serious offence\u8217?.\ul0\super\cf8\f9\fs23 114\ul0\nosupersub\cf1\f2\f s23 The amendments \up0 \expndtw-3\charscalex100 to AMLATFA in March 2007 has made terrorist financing a predicate offence for reporting \up0 \expndtw0\charsc alex108 purposes. As such, it can be said that banks are also required to report transactions \up0 \expndtw-1\charscalex100 suspected of being linked to terrori sm financing. Parts 8 and 9 of the Standard Guidelines \up0 \expndtw-2\charscale x100 clearly indicate that terrorist financing is a basis for filing STR. \par\p ard\qj \li2205\ri916\sb400\sl-400\slmult0 \up0 \expndtw0\charscalex100 It must b e noted that unclear reasons for suspicion is among the main problems faced by \ line \up0 \expndtw-2\charscalex100 banks in implementing the STR. According to L evi and Gold, suspicion is usually aroused \line \up0 \expndtw-2\charscalex100 b y the sheer size of the transactions in relation to the known financial circumst ances of the \line \up0 \expndtw-2\charscalex100 customer.\ul0\super\cf8\f9\fs23 115\ul0\nosupersub\cf1\f2\fs23 The word \u8216?suspicion\u8217? is not explici tly defined under the AMLATFA. As such \line \up0 \expndtw-2\charscalex100 it is fruitful to refer to two recent decisions of the UK Court of Appeal which consi dered \par\pard\qj \li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slm ult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\ri937\sb9\sl-220 \slmult0\fi0 \up0 \expndtw0\charscalex104 \ul0\super\cf9\f10\fs19\ul0\super\cf9\ f10\fs18 111\ul0\nosupersub\cf10\f11\fs19 M H Fleming, (2005) \u8216?UK Law Enf orcement Agency Use and Management of Suspicious Activity \up0 \expndtw-2\charsc alex100 Reports: Towards Determining the Value of the Regime.\u8217?7. \par\pard \li2205\sb22\sl-218\slmult0\fi0\tx10605 \up0 \expndtw-1\charscalex100 <{\field{\ *\fldinst {HYPERLINK "http://www.jdi.ucl.ac.uk/downloads/pdf/fleming_lea_use_and _magmt_of_sars_june2005.pdf/" }}{\fldrslt {\ul0\nosupersub\cf29\f30\fs19\ul http ://www.jdi.ucl.ac.uk/downloads/pdf/Fleming_LEA_Use_and_Magmt_of_SARs_June2005.pd f}}}\ul0\nosupersub\cf10\f11\fs19 > at\tab \up0 \expndtw-2\charscalex100 13\pa r\pard\li2205\sb5\sl-218\slmult0\fi0 \up0 \expndtw-2\charscalex100 December 2006 .\par\pard\ql \li2205\ri1024\sb0\sl-220\slmult0 \up0 \expndtw-2\charscalex100 \u l0\super\cf9\f10\fs18 112\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12 \fs19 Anti-Money Laundering and Anti-Terrorism Financing (Reporting Obligations) Regulations 2007,\ul0\nosupersub\cf10\f11\fs19 regu 3. \up0 \expndtw-2\charsca lex100 \ul0\super\cf9\f10\fs18 113\ul0\nosupersub\cf10\f11\fs19 There are curre ntly more than 180 predicate offences listed under the Second Schedule of AMLATF A. \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 114\ul0\nosupersub\cf10 \f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Anti-Money Laundering and Anti-Terroris m Financing Act 2001\ul0\nosupersub\cf10\f11\fs19 , s 3(1). \par\pard\ql \li2205 \ri997\sb0\sl-260\slmult0\tx10256 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f 10\fs18 115\ul0\nosupersub\cf10\f11\fs19 M Gold and M Levi, \ul0\nosupersub\cf1 1\f12\fs19 Money laundering in the UK: An Appraisal of Suspicion-Based Reporting \ul0\nosupersub\cf10\f11\fs19 (1994) 88. \line\tab \up0 \expndtw-3\charscalex10 0 \ul0\nosupersub\cf1\f2\fs23 144 {\shp {\*\shpinst\shpleft2205\shptop12585\shpright5006\shpbottom12605\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz190\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s

p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g154}{\bkmkend Pg154}\par\pard\qj \li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205 \sb0\sl-402\slmult0 \par\pard\qj\li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205\r i914\sb241\sl-402\slmult0 \up0 \expndtw0\charscalex106 \ul0\nosupersub\cf1\f2\fs 23 the meaning of \u8216?suspicion\u8217?. In \ul0\nosupersub\cf7\f8\fs23 R v Da Silva \ul0\nosupersub\cf1\f2\fs23 [2006] EWCA Crim 1654, the appellant \line \u p0 \expndtw0\charscalex106 appealed against her conviction for facilitating her husband\u8217?s retention or control of \line \up0 \expndtw-2\charscalex100 proc eeds of his criminal conduct, knowing or suspecting that her husband was or had been \line \up0 \expndtw0\charscalex100 engaged in criminal conduct or had benef ited from it. In dismissing the appeal the Court \line \up0 \expndtw0\charscalex 100 held that the essential element in suspicion was that the defendant had to t hink that there \line \up0 \expndtw-3\charscalex100 was a possibility, which was more than fanciful that the relevant facts existed. Therefore, a \line \up0 \ex pndtw-2\charscalex100 vague feeling of unease would not suffice. But the statute does not require the suspicion to \line \up0 \expndtw0\charscalex100 be \u8216? clear\u8217? or \u8216?firmly grounded and targeted on specific facts\u8217?, or based upon \u8216?reasonable \line \up0 \expndtw0\charscalex100 grounds\u8217?. \par\pard\qj \li2205\ri913\sb398\sl-403\slmult0 \up0 \expndtw-1\charscalex100 I n \ul0\nosupersub\cf7\f8\fs23 K Ltd v Natwest Bank\ul0\nosupersub\cf1\f2\fs23 [ 2006] EWCA Civ 1039, the appellant (K Ltd) appealed against \line \up0 \expndtw0 \charscalex103 the refusal of its application for an interim injunction requirin g the respondent bank to \line \up0 \expndtw-1\charscalex100 comply with payment instructions given by K Ltd. The respondent bank declined to make \line \up0 \e xpndtw0\charscalex100 the payment because it made a suspicious activity report t o the NCIS (the UK Financial \line \up0 \expndtw0\charscalex108 Intelligence Uni t) that the money in K Ltd\u8217?s account was criminal property. In the \line \ up0 \expndtw-1\charscalex100 meantime, the respondent bank sought consent from t he authorities to permit transactions \line \up0 \expndtw-1\charscalex100 on the account to proceed. However, consent was denied by the authorities. In dismissi ng \line \up0 \expndtw-1\charscalex100 the appeal, the Court held that since the law made it a criminal offence to honour K Ltd\u8217?s \line \up0 \expndtw-3\ch arscalex100 mandate in the circumstances, there could be no breach of contract f or the respondent bank \line \up0 \expndtw0\charscalex103 to refuse to honour it s mandate. In its decision, the Court applied the test set out in \ul0\nosupersu b\cf7\f8\fs23 Da \line \up0 \expndtw0\charscalex100 Silva\u8217?s\ul0\nosupersub \cf1\f2\fs23 case and affirmed that that the person must think there is a possi bility, more than \line \up0 \expndtw0\charscalex100 merely fanciful, that the r elevant facts exist, and this suspicion must be of a settled nature. \par\pard\q j \li2205\ri914\sb280\sl-400\slmult0\fi0 \up0 \expndtw-1\charscalex100 It has be en suggested that a suspicious transaction refers to conduct which because of th e \line \up0 \expndtw-3\charscalex100 circumstances, have reached a level of sus picion sufficient to identify a criminal offence.\ul0\super\cf8\f9\fs23 116 \lin e \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 As such, in consider ing a transaction to be suspicious, a banker cannot be expected to know \line \u p0 \expndtw0\charscalex100 the exact nature of the criminal offence or that the particular funds were definitely those \line \up0 \expndtw0\charscalex100 arisin g from a crime. \par\pard\qj \li2205\ri915\sb280\sl-400\slmult0 \up0 \expndtw-2\ charscalex100 For Malaysian banks, FIU provides a wide range of examples of susp icious transactions in \line \up0 \expndtw-2\charscalex100 Appendix III of the S ectoral Guidelines 1.\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf1\f2\fs23 This can be divided into seven sub-headings, i.e. \par\pard\ql \li2205\sb0\sl-21 8\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb35\sl-218 \slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10 \fs18 116\ul0\nosupersub\cf10\f11\fs19 Ibid 89. \par\pard\ql \li10256\sb15\sl-2 51\slmult0 \up0 \expndtw-5\charscalex100 \ul0\nosupersub\cf1\f2\fs23 145 {\shp {\*\shpinst\shpleft2205\shptop14151\shpright5006\shpbottom14171\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz212\shplid0

{\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g155}{\bkmkend Pg155}\par\pard\qj \li2205\sb0\sl-404\slmult0 \par\pard\qj\li2205 \sb0\sl-404\slmult0 \par\pard\qj\li2205\sb0\sl-404\slmult0 \par\pard\qj\li2205\r i915\sb234\sl-404\slmult0\fi0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf1\ f2\fs23 cash transactions; accounts; international banking and trade finance; em ployees and agents; \up0 \expndtw0\charscalex103 private banking and trust servi ces; secured and unsecured lending; and credit cards.\ul0\super\cf8\f9\fs23 117\ ul0\nosupersub\cf1\f2\fs23 It \up0 \expndtw0\charscalex105 appears that these e xamples provide some guidance for a basis of suspicion. However, \up0 \expndtw-1 \charscalex100 since a suspicion is a subjective fact, it can be said that ident ifying suspicious transaction is \up0 \expndtw0\charscalex100 not an easy task. Even if more examples were given, it is doubtful whether they can cover \up0 \ex pndtw0\charscalex100 the entire range of suspicious transaction. \par\pard\qj \l i2205\ri912\sb397\sl-403\slmult0 \up0 \expndtw0\charscalex102 Furthermore, a hig h level of caution must be in place when there is money laundering or \line \up0 \expndtw0\charscalex100 terrorism financing risk. However, the level of such ca ution must not be so restrictive as to \line \up0 \expndtw0\charscalex105 impede day to day financial dealing. The Standard Guidelines provide that banks must \ line \up0 \expndtw0\charscalex107 consider submitting a STR when it is unable to complete the customer due diligence \line \up0 \expndtw0\charscalex100 process on any new or existing customer that is unreasonable evasive or uncooperative. I n \line \up0 \expndtw0\charscalex108 this respect, banks must decide based on no rmal commercial criteria and its internal \line \up0 \expndtw-3\charscalex100 po licy.\ul0\super\cf8\f9\fs23 118 \par\pard\qj \li2205\ri914\sb397\sl-404\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf1\f2\fs23 It must be borne in mi nd that an ineffective STR regime will lead to mistaken reporting and \up0 \expn dtw0\charscalex107 defensive reporting. This would result in a flood of reportin g and resources spent on \up0 \expndtw0\charscalex100 irrelevant files may jeopa rdize the effectiveness of the STR regime. Therefore, to mitigate \up0 \expndtw0 \charscalex106 these problems, banks need to clearly specify the channels for re porting of suspicious \up0 \expndtw0\charscalex100 transactions. For this reason , part 8.2 of the Standard Guidelines specifies comprehensive \up0 \expndtw0\cha rscalex100 reporting mechanisms to be followed by banks. \par\pard\qj \li2205\ri 915\sb400\sl-400\slmult0\fi0 \up0 \expndtw0\charscalex102 Initially, banks must appoint at least one officer at the senior management level to be the \up0 \expn dtw0\charscalex106 compliance officer responsible for the submission of STRs to FIU.\ul0\super\cf8\f9\fs23 119\ul0\nosupersub\cf1\f2\fs23 Each branch or \up0 \ expndtw0\charscalex100 subsidiary must also appoint a compliance officer. The co mpliance officer is responsible, \up0 \expndtw0\charscalex106 inter alia, for ch annelling all internal suspicious transaction reports received from the \up0 \ex pndtw-3\charscalex100 employees of the branch or subsidiary to FIU.\ul0\super\cf 8\f9\fs23 120 \par\pard\qj \li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl -220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-2 20\slmult0 \par\pard\qj\li2205\ri944\sb69\sl-220\slmult0\fi0 \up0 \expndtw-3\cha rscalex100 \ul0\super\cf9\f10\fs18 117\ul0\nosupersub\cf10\f11\fs19 The example s are adopted from \u8216?A Model of Best Practices to Combat Money Laundering i n the Financial \up0 \expndtw-3\charscalex100 Sector\u8217? by the Commonwealth Secretariat. \par\pard\qj \li2205\ri1689\sb0\sl-220\slmult0 \up0 \expndtw-2\char scalex100 \ul0\super\cf9\f10\fs18 118\ul0\nosupersub\cf10\f11\fs19 \ul0\nosuper sub\cf11\f12\fs19 Standard Guidelines on Anti-Money Laundering and Counter Finan cing of Terrorism, \ul0\nosupersub\cf10\f11\fs19 para 8.3.1. \line \up0 \expndtw -2\charscalex100 \ul0\super\cf9\f10\fs18 119\ul0\nosupersub\cf10\f11\fs19 \ul0\

nosupersub\cf11\f12\fs19 Standard Guidelines on Anti-Money Laundering and Counte r Financing of Terrorism,\ul0\nosupersub\cf10\f11\fs19 para 8.2.1. \line \up0 \ expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 120\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Standard Guidelines on Anti-Money Laundering and Counter Financing of Terrorism,\ul0\nosupersub\cf10\f11\fs19 para 8.2.2. \par\ pard\ql \li10256\sb14\sl-252\slmult0 \up0 \expndtw-5\charscalex100 \ul0\nosupers ub\cf1\f2\fs23 146 {\shp {\*\shpinst\shpleft2205\shptop13256\shpright5006\shpbottom13276\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz162\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g156}{\bkmkend Pg156}\par\pard\qj \li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205 \sb0\sl-402\slmult0 \par\pard\qj\li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205\r i913\sb241\sl-402\slmult0\fi0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf1\ f2\fs23 The Standard Guidelines state that upon receiving any internal STR wheth er from the head \line \up0 \expndtw0\charscalex108 office, branch or subsidiary , the compliance officer should evaluate the grounds for \line \up0 \expndtw0\ch arscalex100 suspicion and if suspicion is confirmed, promptly submits the STR to FIU. The STR is to \line \up0 \expndtw-1\charscalex100 be submitted within the next working day. In the case where the compliance officer decides \line \up0 \e xpndtw0\charscalex100 that there are no reasonable grounds for suspicion, he or she must record the decision.\ul0\super\cf8\f9\fs23 121\ul0\nosupersub\cf1\f2\fs 23 It \line \up0 \expndtw0\charscalex104 appears that the effectiveness of the STR system seriously depends on the professional \line \up0 \expndtw-2\charscale x100 knowledge and expertise of the compliance officer. Therefore, it is critica l to ensure that the \line \up0 \expndtw-2\charscalex100 compliance officer is g iven sufficient training on money laundering counter-measures. \par\pard\qj \li2 205\ri914\sb397\sl-404\slmult0\fi0 \up0 \expndtw0\charscalex104 When submitting STRs, utmost care must be undertaken to ensure that such reports are \up0 \expnd tw0\charscalex100 treated with the highest level of confidentiality. The complia nce officer must be given the \up0 \expndtw-1\charscalex100 independence to repo rt STRs to FIU without the need to go through any elaborate approval \up0 \expnd tw0\charscalex103 process.\ul0\super\cf8\f9\fs23 122\ul0\nosupersub\cf1\f2\fs23 Currently, BNM is implementing a significant enhancement to the Financial \up0 \expndtw-1\charscalex100 Intelligence Systems (FINS) to enable banks and other r eporting institutions to submit both \up0 \expndtw-2\charscalex100 STRs and CTRs in a secure online environment. \par\pard\qj \li2205\ri913\sb397\sl-403\slmult0 \up0 \expndtw0\charscalex100 Paragraph 8.2.8 of the Standard Guidelines further requires banks to ensure that the STR \line \up0 \expndtw0\charscalex100 report ing mechanism is operated in a secure environment to maintain confidentiality an d \line \up0 \expndtw0\charscalex100 preservation of secrecy.\ul0\super\cf8\f9\f s23 123\ul0\nosupersub\cf1\f2\fs23 Banks are also required to undertake reasona ble measures to \line \up0 \expndtw0\charscalex109 ensure that all its employees involved in conducting or facilitating the customer\u8217?s \line \up0 \expndtw 0\charscalex100 transaction are aware of these reporting procedures and that fai lure to report STR when \line \up0 \expndtw0\charscalex100 they have reasonable grounds to believe that the transaction is \u8216?suspicious\u8217? is an offenc e \line \up0 \expndtw0\charscalex100 under AMLATFA.\ul0\super\cf8\f9\fs23 124 \p ar\pard\qj \li2205\ri914\sb395\sl-406\slmult0 \up0 \expndtw-1\charscalex100 \ul0 \nosupersub\cf1\f2\fs23 It is important to note that compliance with the obligat ions under AMLATFA also means \line \up0 \expndtw0\charscalex100 that banks have to strike a balance between compliance with the laws, on one hand, and \line \u

p0 \expndtw-1\charscalex100 reasonable protection of customer confidentiality, o n the other hand. However, it appears \line \up0 \expndtw-1\charscalex100 that c ompliance with AMLATFA take precedence over customer confidentiality rules. \par \pard\qj \li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\ pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\ri1689\sb88\sl-220\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 12 1\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Standard Guideline s on Anti-Money Laundering and Counter Financing of Terrorism,\ul0\nosupersub\cf 10\f11\fs19 para 8.2.3. \line \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\ fs18 122\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Standard Gu idelines on Anti-Money Laundering and Counter Financing of Terrorism,\ul0\nosupe rsub\cf10\f11\fs19 para 8.2.6. \line \up0 \expndtw-2\charscalex100 \ul0\super\c f9\f10\fs18 123\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Stan dard Guidelines on Anti-Money Laundering and Counter Financing of Terrorism,\ul0 \nosupersub\cf10\f11\fs19 para 8.2.8. \line \up0 \expndtw-2\charscalex100 \ul0\ super\cf9\f10\fs18 124\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs 19 Standard Guidelines on Anti-Money Laundering and Counter Financing of Terrori sm,\ul0\nosupersub\cf10\f11\fs19 para 8.4.2. \par\pard\ql \li10256\sb14\sl-252\ slmult0 \up0 \expndtw-5\charscalex100 \ul0\nosupersub\cf1\f2\fs23 147 {\shp {\*\shpinst\shpleft2205\shptop13480\shpright5006\shpbottom13500\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz170\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g157}{\bkmkend Pg157}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i916\sb249\sl-400\slmult0 \up0 \expndtw0\charscalex104 \ul0\nosupersub\cf1\f2\fs 23 Section 20 of AMLATFA provides protection for any breach of duty under any wr itten \up0 \expndtw0\charscalex100 laws to keep confidential the information tha t gives rise to the knowledge or suspicion of \up0 \expndtw0\charscalex100 money laundering and terrorist financing activities. \par\pard\qj \li2205\sb0\sl-402\ slmult0 \par\pard\qj\li2205\ri914\sb17\sl-402\slmult0 \up0 \expndtw-3\charscalex 100 Clearly, AMLATFA overrides the banking secrecy rule. It would appear that th e enactment \up0 \expndtw0\charscalex100 of AMLATFA has increased the lists of e xceptions to the secrecy rule in Malaysia. The \up0 \expndtw-2\charscalex100 dut y of the bank to keep its customer\u8217?s information secret has been replaced with the duty \up0 \expndtw0\charscalex100 to disclose. More importantly, AMLATF A stipulates a wider set of circumstances under \up0 \expndtw0\charscalex100 whi ch banks can disclose customer information. In brief, Parts III and IV of AMLATF A \up0 \expndtw0\charscalex100 require disclosure of customers\u8217? informatio n to enable information sharing between law \up0 \expndtw0\charscalex102 enforce ment authorities and sharing of information between financial institutio ns. \up0 \expndtw0\charscalex100 Disclosure is also critical to enable banks and other reporting institutions to comply with \up0 \expndtw-1\charscalex100 the o bligations under the AML laws. Further analysis of how AMLATFA has overridden \u p0 \expndtw-2\charscalex100 banking secrecy will be discussed in the next chapte r. \par\pard\qj \li2205\ri914\sb398\sl-402\slmult0 \up0 \expndtw-2\charscalex100 When complying with the reporting obligations under AMLATFA, banks must ensure that \up0 \expndtw0\charscalex100 they do not tip-off a potential money laundere r, as this will constitutes an offence under \up0 \expndtw-2\charscalex100 secti on 35. Accordingly, where a banker knows or suspects that a report has been made to \up0 \expndtw-2\charscalex100 the law enforcement authorities, it is an offe nce for a banker to make any disclosure which \up0 \expndtw-2\charscalex100 is l

ikely to prejudice any investigation which might be conducted following the maki ng of \up0 \expndtw-1\charscalex100 the report under AMLATFA. The purpose of the tipping off offence is to prevent bankers \up0 \expndtw0\charscalex100 from war ning those about whom they have made a suspicious transaction report. This is \u p0 \expndtw0\charscalex100 vital because such disclosure is likely to prejudice the investigation. \par\pard\qj \li2205\ri914\sb398\sl-403\slmult0 \up0 \expndtw 0\charscalex103 Section 24(1) of AMLATFA protects employees of the bank who repo rt suspicions of \line \up0 \expndtw-1\charscalex100 money laundering from being exposed to civil, criminal or even disciplinary proceedings, \line \up0 \expndt w-3\charscalex100 unless the information was disclosed or supplied in bad faith. Furthermore, subsection (bb) \line \up0 \expndtw-1\charscalex100 states that th e person is protected from any consequences that follows from the reporting. \li ne \up0 \expndtw0\charscalex100 Additionally, section 77(c) of AMLATFA provides that no proceedings shall be brought \line \up0 \expndtw-3\charscalex100 against any person lawfully acting in compliance with any direction, instruction or ord er of \line \up0 \expndtw-3\charscalex100 a director or officer of FIU or the re levant enforcement agency. Therefore, in complying \par\pard\ql \li10256\sb0\sl264\slmult0 \par\pard\ql\li10256\sb168\sl-264\slmult0 \up0 \expndtw-5\charscalex 100 148 \par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmks tart Pg158}{\bkmkend Pg158}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\ li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li 2205\ri915\sb249\sl-400\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf 1\f2\fs23 with the reporting obligations, banks and their employees cannot be su ed by their customers \up0 \expndtw-3\charscalex100 for damages for breach of co ntract or defamation. \par\pard\qj \li2205\ri916\sb384\sl-420\slmult0 \up0 \expn dtw0\charscalex113 Furthermore, the identity of employee making a report to FIU is protected under \up0 \expndtw-3\charscalex100 AMLATFA. Section 5(2) states: \ par\pard\qj \li2731\ri931\sb3\sl-368\slmult0 \up0 \expndtw0\charscalex102 \ul0\n osupersub\cf13\f14\fs21 Where any information relating to an offence under this Act is received by an officer of the \up0 \expndtw0\charscalex103 competent auth ority or reporting institution, the information and the identity of the person \ up0 \expndtw0\charscalex105 giving the information shall be secret between the o fficer and that person and everything \up0 \expndtw0\charscalex100 contained in such information, the identity of that person and all other circumstances relati ng \up0 \expndtw0\charscalex102 to the information, including the place where it was given, shall not be disclosed except for \up0 \expndtw0\charscalex102 the p urposes of subsection 8(1) or section 14. \par\pard\qj \li2205\sb0\sl-400\slmult 0 \par\pard\qj\li2205\ri914\sb6\sl-400\slmult0 \up0 \expndtw0\charscalex100 \ul0 \nosupersub\cf1\f2\fs23 Such protection will encourage bankers to play a more ac tive role in detecting the flows of \up0 \expndtw0\charscalex109 dirty money in the banking systems as they have no fear that their identities will be \up0 \exp ndtw-3\charscalex100 revealed to the criminals. \par\pard\qj \li2205\ri915\sb400 \sl-400\slmult0 \up0 \expndtw0\charscalex102 The following table shows the numbe r of STRs filed by banking institutions in Malaysia \up0 \expndtw0\charscalex102 since the inception of the system in 2002. \par\pard\li2205\sb129\sl-264\slmult 0\fi3239\tx6557\tx7671\tx8785\tx9898 \up0 \expndtw-3\charscalex100 \ul0\nosupers ub\cf30\f31\fs23\ul 2002\ul0\tab \up0 \expndtw-3\charscalex100 \ul0\nosupersub\c f30\f31\fs23\ul 2003\ul0\tab \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf30\ f31\fs23\ul 2004\ul0\tab \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf30\f31\ fs23\ul 2005\ul0\tab \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf30\f31\fs23 \ul 2006\par\pard\li2205\sb144\sl-264\slmult0\fi0\tx5446\tx6558\tx7672\tx8785\tx 9899 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 Commercial banks\ tab \up0 \expndtw-3\charscalex100 485\tab \up0 \expndtw-3\charscalex100 973\tab \up0 \expndtw-3\charscalex100 2,159\tab \up0 \expndtw-3\charscalex100 1,818\tab \up0 \expndtw-3\charscalex100 2,034\par\pard\li2205\sb145\sl-264\slmult0\fi0\tx5 446\tx6558\tx7672\tx8785\tx9899 \up0 \expndtw-3\charscalex100 Islamic banks\tab \up0 \expndtw-3\charscalex100 7\tab \up0 \expndtw-3\charscalex100 21\tab \up0 \e xpndtw-3\charscalex100 24\tab \up0 \expndtw-3\charscalex100 43\tab \up0 \expndtw -3\charscalex100 106\par\pard\li2205\sb145\sl-264\slmult0\fi0\tx5446\tx6559\tx76 72\tx8786\tx9899 \up0 \expndtw-3\charscalex100 Merchant banks\tab \up0 \expndtw-

3\charscalex100 9\tab \up0 \expndtw-3\charscalex100 54\tab \up0 \expndtw-3\chars calex100 11\tab \up0 \expndtw-3\charscalex100 2\tab \up0 \expndtw-3\charscalex10 0 4\par\pard\ql \li2205\sb134\sl-264\slmult0 \up0 \expndtw-3\charscalex100 (Sour ce: APG Mutual Evaluation Report on Malaysia, 2007) \par\pard\qj \li2205\sb0\sl403\slmult0 \par\pard\qj\li2205\ri913\sb19\sl-403\slmult0 \up0 \expndtw0\charsca lex100 It has been noted that the quality of STR reporting has improved in the p ast years, in terms \line \up0 \expndtw0\charscalex103 of both the detail being provided about the transactions and the extent of the analysis to \line \up0 \ex pndtw0\charscalex102 support the suspicion.\ul0\super\cf8\f9\fs23 125\ul0\nosupe rsub\cf1\f2\fs23 The number of STRs submitted by Islamic banks and merchant \li ne \up0 \expndtw0\charscalex107 banks is small by comparison to commercial banks . This is may in part be due to the \line \up0 \expndtw-1\charscalex100 smaller number of Islamic banks and merchant banks operating in Malaysia. There may be \ line \up0 \expndtw0\charscalex105 other reasons and this is an area that requires further investigation and research. \line \up0 \expndtw-2\charscalex 100 Additionally, the sharp increase in numbers for 2006 has been attributed to the expansion of \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb1 72\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\supe r\cf9\f10\fs18 125\ul0\nosupersub\cf10\f11\fs19 APG Mutual Evaluation Report on Malaysia 2007, 119. \par\pard\ql \li10256\sb15\sl-251\slmult0 \up0 \expndtw-3\c harscalex100 \ul0\nosupersub\cf1\f2\fs23 149 {\shp {\*\shpinst\shpleft2205\shptop14151\shpright5006\shpbottom14171\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz204\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g159}{\bkmkend Pg159}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i916\sb249\sl-400\slmult0 \up0 \expndtw0\charscalex106 \ul0\nosupersub\cf1\f2\fs 23 the FINS system to allow direct input from the regional offices of the major financial \up0 \expndtw0\charscalex100 institutions, rather than all reports hav ing to be channelled through the head offices.\ul0\super\cf8\f9\fs23 126\ul0\nos upersub\cf1\f2\fs23 The \up0 \expndtw-1\charscalex100 numbers of STRs are still small in comparison with CTRs. This may be due to the fact that \up0 \expndtw2\charscalex100 it is harder for banks to decide when a STR should be submitted. \par\pard\qj \li2205\sb0\sl-403\slmult0 \par\pard\qj\li2205\ri915\sb15\sl-403\s lmult0\fi0 \up0 \expndtw0\charscalex100 While the STR regime is considered the k ey to detecting money laundering and terrorism \line \up0 \expndtw0\charscalex10 4 activities, the effectiveness of the system is still uncertain. According to L evi, the STR \line \up0 \expndtw0\charscalex102 system could only be targeting t he most unsophisticated cases of laundering but failed to \line \up0 \expndtw-1\ charscalex100 lead to the conviction of sophisticated money launderers.\ul0\supe r\cf8\f9\fs23 127\ul0\nosupersub\cf1\f2\fs23 In 2003, it was found that only \l ine \up0 \expndtw0\charscalex100 eleven percent of STRs contributed to a crimina l justice outcome in the UK and therefore, \line \up0 \expndtw-1\charscalex100 t he regime still need to be improved.\ul0\super\cf8\f9\fs23 128\ul0\nosupersub\cf 1\f2\fs23 Indeed, this may explain why there is no significant \line \up0 \expn dtw-1\charscalex100 relationship between the volume of STRs and the reduction in criminal activities. \par\pard\ql \li2205\ri907\sb389\sl-413\slmult0\tx2556\tx2 556 \up0 \expndtw0\charscalex109 According to Fleming, the STR regime appears to be under-utilised by most legal \line \up0 \expndtw-4\charscalex100 enforcement agencies.\ul0\super\cf8\f9\fs23 129\ul0\nosupersub\cf1\f2\fs23 A number of fac tors contribute to this under-utilisation including: \line\tab \up0 \expndtw-2\c

harscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 Insufficient resources to develop and exploit the information contained in STRs; \line\tab \up0 \expndtw-2\charscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \u l0\nosupersub\cf1\f2\fs23 STR development units often view confiscation and ca sh seizure as competing with \par\pard\ql \li2906\sb111\sl-264\slmult0 \up0 \exp ndtw-5\charscalex100 STR for scarce resources; \par\pard\ql \li2556\sb156\sl-264 \slmult0 \up0 \expndtw-3\charscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0 \nosupersub\cf1\f2\fs23 STR-based cases are difficult to sell to operational t eams; \par\pard\ql \li2556\sb156\sl-264\slmult0 \up0 \expndtw-2\charscalex100 \u -3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 IT systems comm only used allow for only limited STR-related analysis; and \par\pard\ql \li2556\ ri915\sb44\sl-400\slmult0\tx2906 \up0 \expndtw0\charscalex105 \u-3913?\ul0\nosup ersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 STR may contain unclear reasons for suspicion or may relate to non-criminal \line\tab \up0 \expndtw-5\charscale x100 activity. \par\pard\qj \li2205\ri915\sb392\sl-410\slmult0 \up0 \expndtw0\ch arscalex100 A review of the STR regime in the UK by Sir Stephen Lander in 2006 a cknowledged the \up0 \expndtw-2\charscalex100 importance of the regime in combat ing money laundering, but it also noted that the regime \up0 \expndtw-3\charscal ex100 had certain weaknesses. Some of these weaknesses include: \par\pard\qj \li 2205\ri916\sb19\sl-400\slmult0\tx2556 \up0 \expndtw-1\charscalex100 \u-3913?\ul0 \nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 An absence of any single organisational focus for the work and of supporting regime-\line\tab \up0 \expnd tw-2\charscalex100 wide governance arrangements; \par\pard\ql \li2205\sb0\sl-218 \slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb215\sl-218 \slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10 \fs18 126\ul0\nosupersub\cf10\f11\fs19 Ibid. \par\pard\ql \li2205\sb2\sl-218\sl mult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 127\ul0\nosupersub\c f10\f11\fs19 Michael Levi, \u8216?Money Laundering and Its Regulation\u8217? AN NALS, AAPSS (2002) 190. \par\pard\qj \li2205\ri1019\sb1\sl-220\slmult0 \up0 \exp ndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 128\ul0\nosupersub\cf10\f11\fs19 K PMG, \u8216?Money Laundering: Review of the Regime for Handling Suspicious Activ ity Reports\u8217? (2003) 15. \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\f s18 129\ul0\nosupersub\cf10\f11\fs19 M H Fleming, above n 111, 27. \par\pard\ql \li10256\sb14\sl-252\slmult0 \up0 \expndtw-5\charscalex100 \ul0\nosupersub\cf1\ f2\fs23 150 {\shp {\*\shpinst\shpleft2205\shptop13480\shpright5006\shpbottom13500\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz243\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g160}{\bkmkend Pg160}\par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205 \sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\s b0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb2 61\sl-264\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 \u-3 913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 The inconsistent training; \par\pard\ql \li2205\sb156\sl-264\slmult0 \up0 \expndtw-3\charscalex10 0 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 Poor dialog ue between the reporting sectors and the regulators; \par\pard\ql \li2205\sb156\ sl-264\slmult0 \up0 \expndtw-3\charscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 A lack of feedback from law enforcement on the s uccess achieved; \par\pard\qj \li2205\ri916\sb44\sl-400\slmult0\tx2556 \up0 \exp ndtw0\charscalex102 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\ fs23 The limited functionality available to access and manipulate the central

database of \line\tab \up0 \expndtw0\charscalex102 STRs; and \par\pard\qj \li220 5\ri916\sb20\sl-400\slmult0\tx2556 \up0 \expndtw0\charscalex108 \u-3913?\ul0\nos upersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 An uneven law enforcement exp loitation of the opportunities presented by the \line\tab \up0 \expndtw-5\charsc alex100 disclosures made.\ul0\super\cf8\f9\fs23 130 \par\pard\qj \li2205\ri914\s b397\sl-404\slmult0 \up0 \expndtw0\charscalex107 \ul0\nosupersub\cf1\f2\fs23 In Malaysia, to ensure effective functioning of the STR regime, FIU introduced the \line \up0 \expndtw0\charscalex100 Financial Intelligence Systems to enable bank s to submit STRs in a secure environment. \line \up0 \expndtw0\charscalex100 Acc ording to FIU, an effective STR system requires a collaborative relationship bet ween \line \up0 \expndtw-2\charscalex100 FIU, other legal enforcement agencies a nd the banking industry. Upon receipt of the STR, \line \up0 \expndtw0\charscale x100 FIU would gather further intelligence that is necessary to enhance the info rmation held. \line \up0 \expndtw0\charscalex106 More importantly, FIU may condu ct some pre-investigative work to build up a case \line \up0 \expndtw0\charscale x100 sufficiently to identify the underlying criminal activity. FIU then shares the intelligence \line \up0 \expndtw0\charscalex103 with the relevant law enforc ement agency responsible for investigating the underlying \line \up0 \expndtw0\c harscalex100 serious crime. It files the documents involved throughout this proc ess for follow-up and \line \up0 \expndtw-2\charscalex100 future reference and c ontinues to support the investigation by the law enforcement agency \line \up0 \ expndtw-3\charscalex100 concerned.\ul0\super\cf8\f9\fs23 131 \par\pard\qj \li220 5\ri915\sb396\sl-404\slmult0 \up0 \expndtw0\charscalex105 \ul0\nosupersub\cf1\f2 \fs23 Furthermore, FIU and the respective supervisory authorities have issued an adequate \line \up0 \expndtw0\charscalex100 amount of guidance and feedback wit h respect to STR reporting through various means \line \up0 \expndtw-4\charscale x100 including the attachments to the enforceable guidelines, as well as the bri efings provided by \line \up0 \expndtw0\charscalex100 FIU and engagement between FIU and the Compliance Officers Network Groups in the \line \up0 \expndtw0\char scalex102 banking sector. Banks have found the feedback from FIU and the relevan t enforcement \line \up0 \expndtw-4\charscalex100 agencies helpful and have inco rporated it into their staff awareness training programs.\ul0\super\cf8\f9\fs23 132 \par\pard\qj \li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmul t0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\ri946\sb148\sl-220\s lmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 130\ul0\nosuper sub\cf10\f11\fs19 Sir Stephen Lander, Review of the Suspicious Activity Reports Regime, (2006) Serious Organised Crime \up0 \expndtw-3\charscalex100 Agency UK, 1. \par\pard\qj \li2205\ri2433\sb0\sl-220\slmult0 \up0 \expndtw-2\charscalex100 <{\field{\*\fldinst {HYPERLINK "http://www.soca.gov.uk/downloads/socathesarsrev iew_final_web.pdf/" }}{\fldrslt {\ul0\nosupersub\cf29\f30\fs19\ul www.soca.gov.u k/downloads/SOCAtheSARsReview_FINAL_web.pdf}}}\ul0\nosupersub\cf10\f11\fs19 > at 20 May 2007. \line \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 131\ul 0\nosupersub\cf10\f11\fs19 BNM, \ul0\nosupersub\cf11\f12\fs19 AML/CFT Complianc e Handbook\ul0\nosupersub\cf10\f11\fs19 (2005) 50. \par\pard\li2205\sb20\sl-218 \slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 132\ul0\nosup ersub\cf10\f11\fs19 APG Mutual Evaluation Report on Malaysia 2007, 117.\par\par d\li2205\sb3\sl-264\slmult0\fi8050 \up0 \expndtw-3\charscalex100 \ul0\nosupersub \cf1\f2\fs23 151 {\shp {\*\shpinst\shpleft2205\shptop13256\shpright5006\shpbottom13276\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz210\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}}

}}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g161}{\bkmkend Pg161}\par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205 \sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\s b0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb2 41\sl-264\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf4\f5\fs23 4.4. 5 Ongoing Monitoring \par\pard\qj \li2205\sb0\sl-402\slmult0 \par\pard\qj\li22 05\ri914\sb20\sl-402\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2 \fs23 Besides conducting customer identification and verification, AML laws requ ire banks to \line \up0 \expndtw-3\charscalex100 monitor customer activity to id entify any unusual activity during the course of a continuing \line \up0 \expndt w-3\charscalex100 relationship. Transaction monitoring is integral to the risk-b ased AML measures because it \line \up0 \expndtw0\charscalex103 aims to enable b usiness to flow smoothly while recognizing the level of risk posed by \line \up0 \expndtw-3\charscalex100 customers. Without a very clear picture of the custome r\u8217?s financial behavior at any point of \line \up0 \expndtw-1\charscalex100 time, the risk-based approach is operating with a reduced level of information, which can \line \up0 \expndtw0\charscalex106 significantly reduce its effective ness. Therefore, ongoing monitoring throughout the \line \up0 \expndtw-4\charsca lex100 relationship is vital in ensuring that banking services are not being exp loited for the purpose \line \up0 \expndtw-4\charscalex100 of money laundering a nd terrorism financing or any other criminal activities. \par\pard\qj \li2205\sb 0\sl-402\slmult0 \par\pard\qj\li2205\ri915\sb16\sl-402\slmult0\fi0 \up0 \expndtw -3\charscalex100 Part 7 of the Standard Guidelines provides that banks must cond uct on-going customer due \up0 \expndtw-2\charscalex100 diligence to examine and clarify the economic background and purpose of any transaction \up0 \expndtw0\c harscalex104 or business relationship that appears unusual or does not have any apparent economic \up0 \expndtw0\charscalex104 purpose or when the legality of s uch transaction is not clear.\ul0\super\cf8\f9\fs23 133\ul0\nosupersub\cf1\f2\fs 23 In designing effective \up0 \expndtw-3\charscalex100 monitoring procedures, banks must put in place adequate management information systems \up0 \expndtw0\c harscalex108 which could provide them with timely information needed to identify , analyse and \up0 \expndtw0\charscalex102 effectively detect any suspicious activity. Such information would cover multiple \up0 \expndtw0\charscalex1 00 transactions over a certain period, large transactions, anomaly in transactio ns pattern and \up0 \expndtw-1\charscalex100 transactions exceeding any specifie d threshold.\ul0\super\cf8\f9\fs23 134 \par\pard\qj \li2205\ri914\sb397\sl-404\s lmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf1\f2\fs23 The Standar d Guidelines further require banks to establish internal criteria or \u8216?red flags\u8217? to \up0 \expndtw0\charscalex107 detect suspicious transactions.\ul0 \super\cf8\f9\fs23 135\ul0\nosupersub\cf1\f2\fs23 In this respect, banks can re ly on the examples of \up0 \expndtw0\charscalex100 suspicious transactions provi ded by BNM\ul0\super\cf8\f9\fs23 136\ul0\nosupersub\cf1\f2\fs23 and any interna tional organizations. Banks \up0 \expndtw-2\charscalex100 must also conduct inte nsive monitoring on high risk accounts and customers, such as those \up0 \expndt w0\charscalex102 involving individuals or businesses from countries which have i nsufficient anti-money \up0 \expndtw-5\charscalex100 laundering and terrorism fi nancing measures. \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb 0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb96 \sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\ cf9\f10\fs18 133\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Sta ndard Guidelines on Anti-Money Laundering and Counter Financing of Terrorism,\ul 0\nosupersub\cf10\f11\fs19 para 7.1. \par\pard\ql \li2205\sb2\sl-218\slmult0 \u p0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 134\ul0\nosupersub\cf10\f11\ fs19 \ul0\nosupersub\cf11\f12\fs19 Standard Guidelines on Anti-Money Laundering and Counter Financing of Terrorism,\ul0\nosupersub\cf10\f11\fs19 para 7.2. \pa r\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf 9\f10\fs18 135\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Stand ard Guidelines on Anti-Money Laundering and Counter Financing of Terrorism,\ul0\ nosupersub\cf10\f11\fs19 para 7.3. \par\pard\ql \li2205\ri1112\sb0\sl-260\slmu lt0\tx10256 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 136\ul0\nosupe

rsub\cf10\f11\fs19 Appendix III of the Sectoral Guidelines 1 provides examples of transactions that may trigger suspicion. \line\tab \up0 \expndtw-4\charscalex 100 \ul0\nosupersub\cf1\f2\fs23 152 {\shp {\*\shpinst\shpleft2205\shptop13480\shpright5006\shpbottom13500\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz188\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g162}{\bkmkend Pg162}\par\pard\qj \li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205 \sb0\sl-402\slmult0 \par\pard\qj\li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205\s b0\sl-402\slmult0 \par\pard\qj\li2205\ri913\sb239\sl-402\slmult0\fi0 \up0 \expnd tw-2\charscalex100 \ul0\nosupersub\cf1\f2\fs23 It has been reported that transac tion monitoring has been the main cause of increased anti-\line \up0 \expndtw0\c harscalex102 money laundering compliance costs faced by banks.\ul0\super\cf8\f9\ fs23 137\ul0\nosupersub\cf1\f2\fs23 Banks need to spend significant \line \up0 \expndtw0\charscalex104 amounts to install or upgrade sophisticated monitoring s ystems to keep pace with the \line \up0 \expndtw0\charscalex105 increasing regul atory obligations.\ul0\super\cf8\f9\fs23 138\ul0\nosupersub\cf1\f2\fs23 They al so face particular challenges monitoring \line \up0 \expndtw-2\charscalex100 cus tomer\u8217?s transaction and account status across several different countries due to banking \line \up0 \expndtw0\charscalex100 secrecy or data protection rul es.\ul0\super\cf8\f9\fs23 139\ul0\nosupersub\cf1\f2\fs23 As money laundering an d terrorist financing activity \line \up0 \expndtw0\charscalex100 become more so phisticated, more complex transaction monitoring approaches need to be \line \up 0 \expndtw-1\charscalex100 developed. \par\pard\qj \li2205\ri914\sb398\sl-403\sl mult0 \up0 \expndtw-1\charscalex100 According to a KPMG survey undertaken in 200 7, transaction monitoring continues to be \line \up0 \expndtw0\charscalex100 the single greatest area of AML expenditure for banks, and is expected to remain so over \line \up0 \expndtw-1\charscalex100 the next three years. The survey also highlighted that information technology systems are \line \up0 \expndtw-2\charsc alex100 only one component of an effective AML strategy and banks need to unders tand that there \line \up0 \expndtw0\charscalex100 is no substitute for well-tra ined and vigilant staff.\ul0\super\cf8\f9\fs23 140\ul0\nosupersub\cf1\f2\fs23 A s such, despite choosing the right \line \up0 \expndtw0\charscalex105 AML comput er software systems banks must ensure that staff training is adequately \line \u p0 \expndtw-5\charscalex100 provided. \par\pard\ql \li2205\sb0\sl-264\slmult0 \p ar\pard\ql\li2205\sb248\sl-264\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupe rsub\cf4\f5\fs23 4.4.6 Combating the Financing of Terrorism \par\pard\qj \li22 05\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri915\sb44\sl-400\slmult0 \up0 \expndt w0\charscalex102 \ul0\nosupersub\cf1\f2\fs23 Since September 11, 2001, measures to combat terrorism financing has received world \line \up0 \expndtw-2\charscale x100 wide attention because they are considered a central element in the fight a gainst terrorism. \line \up0 \expndtw0\charscalex106 The government of Malaysia also recognizes the risks posed by terrorist groups and \line \up0 \expndtw0\cha rscalex103 terrorism financing. As such, terrorism financing is criminalized und er sections 130N, \line \up0 \expndtw-3\charscalex100 130O, 130P and 130Q of the Malaysian Penal Code. Any person who directly or indirectly \line \up0 \expndtw -1\charscalex100 provides, or makes available financial services or facilities t o facilitate terrorist acts or for \line \up0 \expndtw-1\charscalex100 the benef it of any terrorist or terrorist group, shall be punished with death if the act results \par\pard\qj \li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\s lmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\ri945\sb69\sl220\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\

cf9\f10\fs18 137\ul0\nosupersub\cf10\f11\fs19 KPMG International (2004), Global Anti-Money Laundering Survey 2004: How Banks Are Facing Up to \up0 \expndtw-3\c harscalex100 the Challenge, 22. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \ex pndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 138\ul0\nosupersub\cf10\f11\fs19 Ibid. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0 \super\cf9\f10\fs18 139\ul0\nosupersub\cf10\f11\fs19 Ibid 23. \par\pard\qj \li2 205\ri946\sb1\sl-220\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f1 0\fs18 140\ul0\nosupersub\cf10\f11\fs19 KPMG International (2007), Global AntiMoney Laundering Survey 2004: How Banks Are Facing Up to \up0 \expndtw-3\charsca lex100 the Challenge, 8. \par\pard\ql \li10256\sb14\sl-252\slmult0 \up0 \expndtw -5\charscalex100 \ul0\nosupersub\cf1\f2\fs23 153 {\shp {\*\shpinst\shpleft2205\shptop13033\shpright5006\shpbottom13053\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz180\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g163}{\bkmkend Pg163}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i915\sb249\sl-400\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf1\f2\f s23 in death and with imprisonment for a term of not less than seven years but n ot exceeding 30 \line \up0 \expndtw-3\charscalex100 years. \par\pard\qj \li2205\ ri914\sb396\sl-405\slmult0\fi0 \up0 \expndtw0\charscalex107 In 2003, AMLATFA imp osed on banks a duty to report suspected terrorist financing \up0 \expndtw0\char scalex104 activities. Additionally, the Standard Guidelines require banks to ensure that their \up0 \expndtw0\charscalex103 suspicious reporting system and mechanism also cover terrorism financing activities.\ul0\super\cf8\f9\fs23 141 \up0 \expndtw0\charscalex106 \ul0\nosupersub\cf1\f2\fs23 AMLATFA also extend s the anti-money laundering mechanism for tracing, freezing, \up0 \expndtw-2\cha rscalex100 seizing and forfeiting of assets used for the financing of terrorist acts. \par\pard\qj \li2205\ri916\sb395\sl-406\slmult0 \up0 \expndtw0\charscalex1 02 To ensure the efficient detection of suspected terrorism financing activities , the Standard \up0 \expndtw-1\charscalex100 Guidelines require banks to maintai n a database of names and particulars of terrorists in the \up0 \expndtw0\charsc alex103 United Nation Consolidated List\ul0\super\cf8\f9\fs23 142\ul0\nosupersub \cf1\f2\fs23 and any orders issued under section 66B and 66C of \up0 \expndtw0\ charscalex103 AMLATFA by the Malaysian Minister of Internal Security.\ul0\super\ cf8\f9\fs23 143 \par\pard\qj \li2205\ri915\sb399\sl-400\slmult0 \up0 \expndtw-1\ charscalex100 \ul0\nosupersub\cf1\f2\fs23 The Standard Guidelines further requir e banks to conduct regular checks on the names of \line \up0 \expndtw-2\charscal ex100 new and existing customers against the names in the database. If there is any name match, \line \up0 \expndtw-4\charscalex100 banks should take reasonable and appropriate measures to verify and confirm the identity of \line \up0 \expn dtw0\charscalex102 their customers. If the customer\u8217?s name fully matches a ny name in the database, banks \line \up0 \expndtw-5\charscalex100 should immedi ately: \par\pard\ql \li2205\sb133\sl-264\slmult0 \up0 \expndtw-4\charscalex100 \ u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 Inform FIU; \p ar\pard\qj \li2205\ri3205\sb28\sl-420\slmult0 \up0 \expndtw-3\charscalex100 \u-3 913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 Reject the custom er, if the transaction has not commenced; and \line \up0 \expndtw-3\charscalex10 0 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 Freeze the customer\u8217?s transaction, if it is an on-going customer. \par\pard\ql \li220 5\sb109\sl-264\slmult0 \up0 \expndtw0\charscalex100 Where the bank suspects that a transaction is terrorist-related, it must make a STR to the \par\pard\ql \li2

205\sb185\sl-230\slmult0 \up0 \expndtw-4\charscalex100 FIU.\ul0\super\cf8\f9\fs2 3 144 \par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri915\sb30\sl400\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 It can be said that the obligation to report suspected terrorism financing activities plac es an \line \up0 \expndtw-3\charscalex100 additional burden on banks and their e mployees. It appears that the anti-terrorism financing \line \up0 \expndtw-3\cha rscalex100 law could make bank tellers inadvertently involved in \u8216?terroris t acts\u8217? by handling money as \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\ pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb55\sl-218\slmult0 \up0 \ expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 141\ul0\n osupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Standard Guidelines on An ti-Money Laundering and Counter Financing of Terrorism,\ul0\nosupersub\cf10\f11\ fs19 para 9.1. \par\pard\ql \li2205\ri932\sb1\sl-220\slmult0\fi0 \up0 \expndtw2\charscalex100 \ul0\super\cf9\f10\fs18 142\ul0\nosupersub\cf10\f11\fs19 The Un ited Nation Consolidated List contains a list of individuals and entities that a re considered terrorist \line \up0 \expndtw-2\charscalex100 or terrorist group a nd it includes the Taliban, Osama bin Laden and the Al-Qaeda organisation. \line \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 143\ul0\nosupersub\cf10\f 11\fs19 \ul0\nosupersub\cf11\f12\fs19 Standard Guidelines on Anti-Money Launder ing and Counter Financing of Terrorism,\ul0\nosupersub\cf10\f11\fs19 para 9.3. \line \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 144\ul0\nosupersub\c f10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Standard Guidelines on Anti-Money La undering and Counter Financing of Terrorism,\ul0\nosupersub\cf10\f11\fs19 para 9.5. \par\pard\ql \li10256\sb14\sl-252\slmult0 \up0 \expndtw-5\charscalex100 \ul 0\nosupersub\cf1\f2\fs23 154 {\shp {\*\shpinst\shpleft2205\shptop13256\shpright5006\shpbottom13276\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz196\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g164}{\bkmkend Pg164}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i915\sb249\sl-400\slmult0 \up0 \expndtw0\charscalex103 \ul0\nosupersub\cf1\f2\fs 23 part of their work. To make matters worse, if they are found guilty for the o ffence, they \up0 \expndtw-3\charscalex100 could face severe punishment includin g the death penalty. \par\pard\qj \li2205\ri912\sb398\sl-403\slmult0 \up0 \expnd tw0\charscalex106 Detecting terrorism financing has created a new challenge for the banking industry. \up0 \expndtw0\charscalex102 Terrorism financing counter-m easures are built substantially on anti-money laundering \up0 \expndtw-1\charsca lex100 measures which were designed to detect \u8216?dirty\u8217? money. However , for terrorism financing, \up0 \expndtw-3\charscalex100 the funds generally ori ginate from legitimate sources such as private donation or charitable \up0 \expn dtw-1\charscalex100 contributions, and it only becomes \u8216?dirty\u8217? when they are used for terrorism purposes. This \up0 \expndtw-1\charscalex100 raises the issue whether it is appropriate to use anti-money laundering measures as a b asis \up0 \expndtw-2\charscalex100 for the development of terrorism financing co unter-measures. \par\pard\qj \li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205\ri91 5\sb16\sl-402\slmult0 \up0 \expndtw0\charscalex103 Furthermore, evidence suggest s that funds intended for terrorist activities do not move \line \up0 \expndtw0\ charscalex104 around the financial system like \u8216?dirty\u8217? money. It see ms that terrorist funds generally \line \up0 \expndtw-3\charscalex100 behave lik e ordinary funds and therefore they are almost impossible to identify.\ul0\super \cf8\f9\fs23 145\ul0\nosupersub\cf1\f2\fs23 Besides, \line \up0 \expndtw0\chars

calex100 terrorist operations often require relatively little amounts of money. For instance, it was \line \up0 \expndtw-1\charscalex100 suggested that the Sept ember 11 attack cost merely half a million US dollars.\ul0\super\cf8\f9\fs23 146 \ul0\nosupersub\cf1\f2\fs23 For these \line \up0 \expndtw-2\charscalex100 reaso ns, it is clear that banks will encounter some difficulties identifying terroris t funds. It \line \up0 \expndtw-1\charscalex100 is no exaggeration to say that f ailure to distinguish between terrorist financing and money \line \up0 \expndtw3\charscalex100 laundering could have a devastating impact. It appears that the efficiency of the anti-money \line \up0 \expndtw0\charscalex100 laundering syste ms to effectively counter terrorism financing is still doubtful. As such, it \li ne \up0 \expndtw-4\charscalex100 would be a shame if the laws on terrorism finan cing were developed and applied too fast, to \line \up0 \expndtw-4\charscalex100 the point of being unnecessarily costly, ineffective, unfair or even counter-pr oductive. \par\pard\qj \li2205\ri915\sb400\sl-400\slmult0 \up0 \expndtw0\charsca lex100 Therefore, all that banks can do is to rely on the suspected terrorists l ist published by the \line \up0 \expndtw0\charscalex100 FIU or other competent a uthorities. However, it has been revealed that the complexity of \line \up0 \exp ndtw-2\charscalex100 the list complicate the verification process.\ul0\super\cf8 \f9\fs23 147\ul0\nosupersub\cf1\f2\fs23 For instance, unclear indication as to what is \line \up0 \expndtw-2\charscalex100 the name and surname of the suspects has important implications for the banks\u8217? search \par\pard\qj \li2205\sb0 \sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\s l-220\slmult0 \par\pard\qj\li2205\ri943\sb69\sl-220\slmult0 \up0 \expndtw-2\char scalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 145\ul0\nosupersub\cf10 \f11\fs19 Omer Elagab, \u8216?Control of Terrorist Funds and the Banking System \u8217? (2006) 21(1) \ul0\nosupersub\cf11\f12\fs19 Journal of International \up0 \expndtw-3\charscalex100 Banking Law and Regulation \ul0\nosupersub\cf10\f11\fs 19 38, 44. \par\pard\ql \li2205\sb2\sl-218\slmult0\tx7183 \up0 \expndtw0\charsca lex104 \ul0\super\cf9\f10\fs18 146\ul0\nosupersub\cf10\f11\fs19 Canadian Centre for Intelligence and Security Studies, \tab \up0 \expndtw0\charscalex101 \u8216 ?Terrorism Financing and Financial System \par\pard\ql \li2205\sb2\sl-218\slmult 0 \up0 \expndtw-2\charscalex100 Vulnerabilities: Issues and Challenges\u8217? (2 006) 3 \ul0\nosupersub\cf11\f12\fs19 ITAC Presents\ul0\nosupersub\cf10\f11\fs19 , 5. \par\pard\qj \li2205\ri1386\sb1\sl-220\slmult0\fi0 \up0 \expndtw-2\charscal ex100 \ul0\super\cf9\f10\fs18 147\ul0\nosupersub\cf10\f11\fs19 A Butani, B Chao and NA Session, Commission on Crime Prevention and Criminal Justice (2002), 9. \line \up0 \expndtw-2\charscalex100 < {\field{\*\fldinst {HYPERLINK "http://mode lun1.tripod.com/" }}{\fldrslt {\ul0\nosupersub\cf29\f30\fs19\ul http://modelun1. tripod.com}}}\ul0\nosupersub\cf10\f11\fs19 > at 18 December 2006. \par\pard\ql \ li10256\sb14\sl-252\slmult0 \up0 \expndtw-5\charscalex100 \ul0\nosupersub\cf1\f2 \fs23 155 {\shp {\*\shpinst\shpleft2205\shptop13033\shpright5006\shpbottom13053\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz179\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g165}{\bkmkend Pg165}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i917\sb249\sl-400\slmult0\fi0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f 2\fs23 parameters. One suggestion is the creation of a single international refe rence point for all \up0 \expndtw0\charscalex104 banks to share relevant informa tion relating to terrorism financing.\ul0\super\cf8\f9\fs23 148\ul0\nosupersub\c f1\f2\fs23 Perhaps, this will \up0 \expndtw-3\charscalex100 minimize problems f

aced by the banks in detecting terrorist funds. \par\pard\ql \li2205\sb0\sl-264\ slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb5\sl-264\sl mult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf4\f5\fs23 4.4.7 AML/CTF Compliance Program \par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i915\sb24\sl-400\slmult0 \up0 \expndtw0\charscalex102 \ul0\nosupersub\cf1\f2\fs2 3 The AML/CTF Compliance Program is considered one of the key measures for banks to \line \up0 \expndtw-1\charscalex100 adequately detect and deter money launde ring and terrorism financing risks that affect their \line \up0 \expndtw0\charsc alex104 business. The program must include procedures to ensure high standards o f integrity of \line \up0 \expndtw0\charscalex104 employees, on-going employee t raining programs and an independent audit function to \line \up0 \expndtw-3\char scalex100 check compliance.\ul0\super\cf8\f9\fs23 149 \par\pard\qj \li2205\sb0\s l-402\slmult0 \par\pard\qj\li2205\ri914\sb17\sl-402\slmult0 \up0 \expndtw-3\char scalex100 \ul0\nosupersub\cf1\f2\fs23 Section 19(3) of AMLATFA provides that ban ks must implement the compliance programs \line \up0 \expndtw-3\charscalex100 at their branches and subsidiaries in and outside Malaysia. This requirement is re iterated in \line \up0 \expndtw0\charscalex100 the Standard Guidelines and the S ectoral Guidelines. Part 2.2 of the Standard Guidelines \line \up0 \expndtw0\cha rscalex103 provides that where there is conflict between the Guidelines and the regulatory \line \up0 \expndtw-1\charscalex100 requirements of the ho st country, the more stringent requirements must be adopted, to the \line \up0 \ expndtw-1\charscalex100 extent that it is permitted by the host country\u8217?s laws and regulations. Banks must also pay \line \up0 \expndtw-3\charscalex100 sp ecial attention to their foreign branches or subsidiaries operating in countries which have \line \up0 \expndtw-3\charscalex100 insufficiently implemented the i nternationally accepted AML/CTF measures. \par\pard\qj \li2205\ri913\sb398\sl-40 3\slmult0\fi0 \up0 \expndtw-4\charscalex100 Furthermore, in the event that a ban k\u8217?s foreign branch or subsidiary is unable to observe the \line \up0 \expn dtw-2\charscalex100 more stringent requirements, including the reporting of susp icious transactions to FIU due \line \up0 \expndtw0\charscalex108 to the prohibi tion of the host country\u8217?s laws and regulations, the foreign branch or \li ne \up0 \expndtw0\charscalex100 subsidiary must issue an exception report to the bank, which must then inform FIU. The \line \up0 \expndtw0\charscalex102 bank m ust also place additional AML/CTF controls on the respective foreign branch or \ line \up0 \expndtw0\charscalex107 subsidiary and should map out a timeline for i t to comply with the requirements.\ul0\super\cf8\f9\fs23 150 \line \up0 \expndtw -1\charscalex100 \ul0\nosupersub\cf1\f2\fs23 Additionally, the Board of Director s of the bank may also consider ceasing the operations \par\pard\ql \li2205\sb0\ sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl -218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb98\sl218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\ f10\fs18 148\ul0\nosupersub\cf10\f11\fs19 Omer Elagab, above n 144. \par\pard\q l \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs 18 149\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Anti-Money La undering and Anti-Terrorism Financing Act 2001\ul0\nosupersub\cf10\f11\fs19 , s 19(2). \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul 0\super\cf9\f10\fs18 150\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\ fs19 Standard Guidelines on Anti-Money Laundering and Counter Financing of Terro rism,\ul0\nosupersub\cf10\f11\fs19 para 2.3. \par\pard\ql \li10256\sb15\sl-251\ slmult0 \up0 \expndtw-5\charscalex100 \ul0\nosupersub\cf1\f2\fs23 156 {\shp {\*\shpinst\shpleft2205\shptop13704\shpright5006\shpbottom13724\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz180\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s

p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g166}{\bkmkend Pg166}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i916\sb249\sl-400\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf1\f2\f s23 of the relevant branch or subsidiary that fails to observe the AML/CTF requi rements, or put \up0 \expndtw-2\charscalex100 in place the necessary mitigating controls as described above. \par\pard\qj \li2205\ri916\sb396\sl-406\slmult0 \up 0 \expndtw0\charscalex107 According to the Standard Guidelines, AML/CTF complian ce program must include \line \up0 \expndtw0\charscalex100 internal policies, pr ocedures and controls; staff integrity; compliance officer; staff training \line \up0 \expndtw0\charscalex107 and awareness programs and independent audit. Each of these elements is elaborated \line \up0 \expndtw-3\charscalex100 below. \par \pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb248\sl-264\slmult0 \up 0 \expndtw-3\charscalex100 \ul0\nosupersub\cf4\f5\fs23 a) Internal policies, pro cedures and controls. \par\pard\qj \li2205\ri914\sb22\sl-402\slmult0 \up0 \expnd tw0\charscalex100 \ul0\nosupersub\cf1\f2\fs23 Section 19(1) of AMLATFA provides that banks are required to develop and implement \line \up0 \expndtw0\charscalex 103 internal programs, policies, procedures and controls to guard against and to detect any \line \up0 \expndtw-2\charscalex100 offence under AMLATFA. The Stand ard Guidelines further states that the banks\u8217? board of \line \up0 \expndtw 0\charscalex100 directors and senior management must be aware of the money laund ering and terrorism \line \up0 \expndtw0\charscalex105 financing risks associate d with all its business products and services. They must also \line \up0 \expndt w0\charscalex105 understand the AML/CTF measures required by law, regulations, g uidelines and the \line \up0 \expndtw0\charscalex109 industry\u8217?s standards and best practices as well as the importance of implementing \line \up0 \expndtw -4\charscalex100 AML/CTF measures in combating money laundering and terrorism fi nancing.\ul0\super\cf8\f9\fs23 151 \par\pard\qj \li2205\ri916\sb395\sl-406\slmul t0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 The board of direct ors must be fully committed to establishing an effective internal control \up0 \ expndtw0\charscalex100 system for AML/CTF and the senior management is responsib le to ensure such internal \up0 \expndtw-3\charscalex100 controls are in place a nd implemented effectively, including the mechanism to monitor and \up0 \expndtw -4\charscalex100 detect complex and unusual transactions.\ul0\super\cf8\f9\fs23 152 \par\pard\qj \li2205\ri915\sb395\sl-405\slmult0 \up0 \expndtw-3\charscalex10 0 \ul0\nosupersub\cf1\f2\fs23 Furthermore, the board of directors must ensure th at the bank has, at the minimum, policies \line \up0 \expndtw-3\charscalex100 on AML/CTF procedures and controls. For this purpose, the senior management will a ssist \line \up0 \expndtw-4\charscalex100 the board of directors in formulating the policies and ensure that the policies are in line with \line \up0 \expndtw-2 \charscalex100 the risks associated, nature of business, complexity and volume o f transactions undertaken \line \up0 \expndtw-3\charscalex100 by the bank.\ul0\s uper\cf8\f9\fs23 153 \par\pard\qj \li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205 \sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\s b0\sl-220\slmult0 \par\pard\qj\li2205\ri1592\sb88\sl-220\slmult0 \up0 \expndtw-2 \charscalex100 \ul0\super\cf9\f10\fs18 151\ul0\nosupersub\cf10\f11\fs19 \ul0\no supersub\cf11\f12\fs19 Standard Guidelines on Anti-Money Laundering and Counter Financing of Terrorism,\ul0\nosupersub\cf10\f11\fs19 para 10.1.1. \line \up0 \e xpndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 152\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Standard Guidelines on Anti-Money Laundering and Counter Financing of Terrorism,\ul0\nosupersub\cf10\f11\fs19 para 10.1.2. \line \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 153\ul0\nosupersub\cf10\f 11\fs19 \ul0\nosupersub\cf11\f12\fs19 Standard Guidelines on Anti-Money Launder ing and Counter Financing of Terrorism,\ul0\nosupersub\cf10\f11\fs19 para 10.1. 3. \par\pard\ql \li10256\sb14\sl-252\slmult0 \up0 \expndtw-5\charscalex100 \ul0\ nosupersub\cf1\f2\fs23 157 {\shp {\*\shpinst\shpleft2205\shptop13704\shpright5006\shpbottom13724\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz172\shplid0

{\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g167}{\bkmkend Pg167}\par\pard\qj \li2205\sb0\sl-404\slmult0 \par\pard\qj\li2205 \sb0\sl-404\slmult0 \par\pard\qj\li2205\sb0\sl-404\slmult0 \par\pard\qj\li2205\r i914\sb234\sl-404\slmult0 \up0 \expndtw0\charscalex102 \ul0\nosupersub\cf1\f2\fs 23 Paragraph 10.1.4 of the Standard Guidelines provides that the board of direct ors must set \up0 \expndtw0\charscalex104 minimum standards and approve the poli cies regarding AML/CTF measures within the \up0 \expndtw0\charscalex103 bank, in cluding those required for customer acceptance policy, customer due diligence, \ up0 \expndtw-2\charscalex100 record keeping, ongoing monitoring, reporting of su spicious transactions and the combating \up0 \expndtw0\charscalex104 of terroris m financing. In relation to this, the senior management must ensure that such \u p0 \expndtw-3\charscalex100 procedure are formulated and effectively implemented .\ul0\super\cf8\f9\fs23 154 \par\pard\qj \li2205\ri914\sb400\sl-400\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs23 According to the Standard G uidelines, in ensuring effective implementation, the board of \up0 \expndtw-2\ch arscalex100 directors must define the lines of authority and responsibilities fo r implementing AML/CTF \up0 \expndtw0\charscalex105 measures and ensure that the re is a separation of duty between those implementing the \up0 \expndtw-3\charsc alex100 policies and procedures and those enforcing the controls.\ul0\super\cf8\ f9\fs23 155 \par\pard\qj \li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205\ri915\sb 17\sl-402\slmult0\fi0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 The Standard Guidelines further require banks to review and assess AML/CTF polic ies and \up0 \expndtw0\charscalex102 procedures in line with changes and develop ments in the bank\u8217?s products and services, \up0 \expndtw0\charscalex104 te chnology as well as trends in money laundering and terrorism financing. The seni or \up0 \expndtw-2\charscalex100 management is responsible for implementing the necessary changes to AML/CTF policies \up0 \expndtw-4\charscalex100 and procedur es with the approval of the board of directors to ensure that the current polici es \up0 \expndtw0\charscalex103 are sound and appropriate.\ul0\super\cf8\f9\fs23 156\ul0\nosupersub\cf1\f2\fs23 The board of directors and senior management mu st also \up0 \expndtw0\charscalex107 ensure that there is adequate AML/CTF train ing provided for employees, including \up0 \expndtw-5\charscalex100 promoting em ployees\u8217? awareness of their AML/CTF obligations.\ul0\super\cf8\f9\fs23 157 \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb120\sl-264\slmult0 \up0 \expndtw-5\charscalex100 \ul0\nosupersub\cf4\f5\fs23 b) Staff integrity \pa r\pard\qj \li2205\ri913\sb20\sl-405\slmult0 \up0 \expndtw-2\charscalex100 \ul0\n osupersub\cf1\f2\fs23 Section 19(2) (a) of AMLATFA provides that banks should es tablish procedures to ensure \line \up0 \expndtw0\charscalex109 high standards o f integrity of its employees and a system to evaluate the personal, \line \up0 \ expndtw-3\charscalex100 employment and financial history of these employees. Par t 10.2 of the Standard Guidelines \line \up0 \expndtw-1\charscalex100 provides t hat the senior management must ensure the integrity of the bank\u8217?s employee s at \line \up0 \expndtw-1\charscalex100 all times by establishing an appropriat e employee assessment system that is approved by \par\pard\qj \li2205\sb0\sl-220 \slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\s lmult0 \par\pard\qj\li2205\ri1592\sb88\sl-220\slmult0 \up0 \expndtw-2\charscalex 100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 154\ul0\nosupersub\cf10\f11\f s19 \ul0\nosupersub\cf11\f12\fs19 Standard Guidelines on Anti-Money Laundering and Counter Financing of Terrorism,\ul0\nosupersub\cf10\f11\fs19 para 10.1.4. \ line \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 155\ul0\nosupersub\cf 10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Standard Guidelines on Anti-Money Lau

ndering and Counter Financing of Terrorism,\ul0\nosupersub\cf10\f11\fs19 para 1 0.1.5. \line \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 156\ul0\nosup ersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Standard Guidelines on Anti-M oney Laundering and Counter Financing of Terrorism, \ul0\nosupersub\cf10\f11\fs1 9 para 10.1.6. \line \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 157\u l0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Standard Guidelines o n Anti-Money Laundering and Counter Financing of Terrorism,\ul0\nosupersub\cf10\ f11\fs19 para 10.1.7. \par\pard\ql \li10256\sb14\sl-252\slmult0 \up0 \expndtw-5 \charscalex100 \ul0\nosupersub\cf1\f2\fs23 158 {\shp {\*\shpinst\shpleft2205\shptop13480\shpright5006\shpbottom13500\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz173\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g168}{\bkmkend Pg168}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i915\sb249\sl-400\slmult0 \up0 \expndtw0\charscalex107 \ul0\nosupersub\cf1\f2\fs 23 the board of directors to adequately screen its employees. The system must in clude \up0 \expndtw0\charscalex104 evaluation of each employee\u8217?s perso nal information, including criminal records, \up0 \expndtw-5\charscalex100 e mployment and financial history.\ul0\super\cf8\f9\fs23 158 \par\pard\ql \li2205\ sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb 5\sl-264\slmult0 \up0 \expndtw-5\charscalex100 \ul0\nosupersub\cf4\f5\fs23 c) Co mpliance Officer \par\pard\qj \li2205\ri915\sb22\sl-402\slmult0\fi0\tx3081 \up0 \expndtw-5\charscalex100 \ul0\nosupersub\cf1\f2\fs23 Section \tab \up0 \expndtw0 \charscalex103 19(4) of AMLATFA requires banks to designate compliance o fficers at \up0 \expndtw0\charscalex104 management level in each branch an d subsidiary who will be in charge of the \up0 \expndtw0\charscalex103 i mplementation of AML/CTF compliance programs. Paragraph 10.3.1 of the Standard \ up0 \expndtw0\charscalex100 Guidelines provides that the senior management is responsible for appointing the \up0 \expndtw0\charscalex106 compliance o fficer at senior management level who is fit and proper to carry out his \up0 \e xpndtw-2\charscalex100 AML/CTF responsibilities and can effectively discharge it .\ul0\super\cf8\f9\fs23 159\ul0\nosupersub\cf1\f2\fs23 The banks must inform FI U \up0 \expndtw-1\charscalex100 in writing on the appointment, or change in the appointment of the compliance officer.\ul0\super\cf8\f9\fs23 160 \up0 \expndtw-2 \charscalex100 \ul0\nosupersub\cf1\f2\fs23 The compliance officer is required to ensure the following: \par\pard\qj \li2205\ri4163\sb4\sl-420\slmult0 \up0 \expn dtw-3\charscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\ fs23 the bank\u8217?s compliance with AML/CTF requirements; \up0 \expndtw-3\ch arscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 i mplementation of AML/CTF policies; \par\pard\ql \li2205\sb129\sl-264\slmult0 \up 0 \expndtw-3\charscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\ cf1\f2\fs23 the appropriate AML/CTF procedures are implemented effectively; \p ar\pard\ql \li2205\ri915\sb40\sl-405\slmult0\tx2555\tx2555\tx2555 \up0 \expndtw1\charscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 AML/CTF mechanism is regularly assessed to ensure that it is effective and su fficient \line\tab \up0 \expndtw-4\charscalex100 to address any change in money laundering and terrorism financing trends; \line \up0 \expndtw0\charscalex108 \u -3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 the channel of communication from the respective employees to the branch or \line\tab \up0 \exp ndtw-4\charscalex100 subsidiary compliance officer and subsequently to the compl iance officer is secured and \line\tab \up0 \expndtw-5\charscalex100 that inform

ation is kept confidential; \par\pard\qj \li2205\ri919\sb20\sl-400\slmult0\tx255 5 \up0 \expndtw-2\charscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupe rsub\cf1\f2\fs23 all employees are aware of the bank\u8217?s AML/CTF measures, including policies, control \line\tab \up0 \expndtw-3\charscalex100 mechanism a nd the channel of reporting; \par\pard\ql \li2205\ri916\sb16\sl-405\slmult0\tx25 55\tx2555\tx2555 \up0 \expndtw0\charscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs2 3 \ul0\nosupersub\cf1\f2\fs23 internally generated suspicious transaction reports by the branch or subsidiary \line\tab \up0 \expndtw-4\charscalex10 0 compliance officers are appropriately evaluated before submission to FIU; and \line \up0 \expndtw-2\charscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\no supersub\cf1\f2\fs23 the identification of money laundering and financing of t errorism risks associated with \line\tab \up0 \expndtw0\charscalex102 new produc ts or services arising from the bank\u8217?s operational changes, including the \line\tab \up0 \expndtw-5\charscalex100 introduction of new technology and proce sses.\ul0\super\cf8\f9\fs23 161 \par\pard\qj \li2205\sb0\sl-220\slmult0 \par\par d\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\ri1592\sb188\sl-220\slmult0 \ up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 158\ul0\nosupersub\cf10\f11 \fs19 \ul0\nosupersub\cf11\f12\fs19 Standard Guidelines on Anti-Money Launderin g and Counter Financing of Terrorism,\ul0\nosupersub\cf10\f11\fs19 para 10.2.2. \line \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 159\ul0\nosupersub\ cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Standard Guidelines on Anti-Money L aundering and Counter Financing of Terrorism,\ul0\nosupersub\cf10\f11\fs19 para 10.3.1. \line \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 160\ul0\nos upersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Standard Guidelines on Anti -Money Laundering and Counter Financing of Terrorism,\ul0\nosupersub\cf10\f11\fs 19 para 10.3.2. \line \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 161 \ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Standard Guidelines on Anti-Money Laundering and Counter Financing of Terrorism,\ul0\nosupersub\cf1 0\f11\fs19 para 10.3.3. \par\pard\ql \li10256\sb14\sl-252\slmult0 \up0 \expndtw -5\charscalex100 \ul0\nosupersub\cf1\f2\fs23 159 {\shp {\*\shpinst\shpleft2205\shptop13480\shpright5006\shpbottom13500\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz246\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g169}{\bkmkend Pg169}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\s b0\sl-400\slmult0 \par\pard\qj\li2205\ri915\sb249\sl-400\slmult0 \up0 \expndtw0\ charscalex100 \ul0\nosupersub\cf1\f2\fs23 In addition to this, the Standard Guid elines provide that it is important for the compliance \up0 \expndtw0\charscalex 104 officer to have the necessary knowledge, expertise and required authority to effectively \up0 \expndtw-3\charscalex100 discharge his responsibilities.\ul0\s uper\cf8\f9\fs23 162 \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205 \sb0\sl-264\slmult0 \par\pard\ql\li2205\sb5\sl-264\slmult0 \up0 \expndtw-3\chars calex100 \ul0\nosupersub\cf4\f5\fs23 d) Staff training and awareness programmes \par\pard\qj \li2205\ri914\sb24\sl-400\slmult0 \up0 \expndtw0\charscalex100 \ul0 \nosupersub\cf1\f2\fs23 Section 19(2) (b) of AMLATFA requires banks to establish internal programs that include \line \up0 \expndtw0\charscalex102 on-going empl oyee training programs in relation to record-keeping, reporting suspicious \line \up0 \expndtw0\charscalex100 transactions, customer identification and verifica tion and retention of records. Part 10.4 of \line \up0 \expndtw0\charscalex100 t he Standard Guidelines provides the details of staff training and awareness prog rams. \par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri914\sb20\sl-

400\slmult0 \up0 \expndtw-2\charscalex100 Banks are required to conduct awarenes s and training programs on AML/CTF practices and \line \up0 \expndtw0\charscalex 111 measures for its employees, in particular, front line staff and officers in charge of \line \up0 \expndtw0\charscalex105 processing and accepting new cu stomers as well as staff responsible to monitor \line \up0 \expndtw0\char scalex104 transactions.\ul0\super\cf8\f9\fs23 163\ul0\nosupersub\cf1\f2\fs23 The senior management must ensure that proper channels of \line \up0 \expndtw0\charscalex111 communication are in place to effectively communica te to all levels of employees \line \up0 \expndtw-1\charscalex100 AML/CTF polici es and procedures. The employees should be made aware that they may be \line \up 0 \expndtw-1\charscalex100 held personally liable for any failure to observe the internal AML/CTF requirements.\ul0\super\cf8\f9\fs23 164 \par\pard\ql \li2205\r i899\sb410\sl-413\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf1\f2\f s23 For this reason, the bank should make available its AML/CTF measures for all employees \up0 \expndtw-4\charscalex100 and its documented AML/CTF measures sho uld, at least, contain the following: \line \up0 \expndtw-3\charscalex100 \u-391 3?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 the relevant guidel ines on AML/CTF issued by BNM; and \line \up0 \expndtw-3\charscalex100 \u-3913?\ ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 the bank\u8217?s inter nal AML/CTF policies and procedures.\ul0\super\cf8\f9\fs23 165 \par\pard\qj \li2 205\ri915\sb398\sl-400\slmult0 \up0 \expndtw0\charscalex106 \ul0\nosupersub\cf1\ f2\fs23 Furthermore, training conducted for employees must be appropriate to the ir level of \line \up0 \expndtw0\charscalex102 responsibilities and the risks of money laundering and terrorism financing faced by the \line \up0 \expndtw0\char scalex102 banks. The Guidelines emphasize specific training programs for the fol lowing levels of \line \up0 \expndtw-5\charscalex100 employees: \par\pard\qj \li 2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li22 05\sb0\sl-220\slmult0 \par\pard\qj\li2205\ri1592\sb69\sl-220\slmult0 \up0 \expnd tw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 162\ul0\nosupe rsub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Standard Guidelines on Anti-Mo ney Laundering and Counter Financing of Terrorism,\ul0\nosupersub\cf10\f11\fs19 para 10.3.4. \line \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 163\ul 0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Standard Guidelines on Anti-Money Laundering and Counter Financing of Terrorism, \ul0\nosupersub\cf10\ f11\fs19 para 10.4.1. \line \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs1 8 164\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Standard Guide lines on Anti-Money Laundering and Counter Financing of Terrorism,\ul0\nosupersu b\cf10\f11\fs19 para 10.4.2. \line \up0 \expndtw-2\charscalex100 \ul0\super\cf9 \f10\fs18 165\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Standa rd Guidelines on Anti-Money Laundering and Counter Financing of Terrorism,\ul0\n osupersub\cf10\f11\fs19 para 10.4.3. \par\pard\ql \li10256\sb14\sl-252\slmult0 \up0 \expndtw-5\charscalex100 \ul0\nosupersub\cf1\f2\fs23 160 {\shp {\*\shpinst\shpleft2205\shptop13480\shpright5006\shpbottom13500\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz196\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g170}{\bkmkend Pg170}\par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205 \sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\s b0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb2 61\sl-264\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 \u-3 913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 New employees \pa r\pard\li2205\sb164\sl-264\slmult0\fi0\tx2556 \up0 \expndtw-6\charscalex100 \u-3

913?\tab \up0 \expndtw-6\charscalex100 \u8216?Front-line employees\par\pard\qj \ li2205\ri3066\sb20\sl-420\slmult0 \up0 \expndtw-3\charscalex100 \u-3913?\ul0\nos upersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 Employees who are responsible for acceptance of new customers \up0 \expndtw-3\charscalex100 \u-3913?\ul0\nosu persub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 Supervisors and managers\ul0\s uper\cf8\f9\fs23 166 \par\pard\qj \li2205\ri914\sb395\sl-402\slmult0 \up0 \expnd tw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 A KPMG survey in 2007 showed that 97 percent of banks globally admitted that they were \up0 \expndtw-1\charscalex 100 dependent on the vigilance of staff to monitor and identify suspicious activ ity. For banks, \up0 \expndtw0\charscalex105 properly trained staff is the best AML control, and this is reflected in continued high \up0 \expndtw-3\charscalex1 00 spending on training programs.\ul0\super\cf8\f9\fs23 167\ul0\nosupersub\cf1\f 2\fs23 Despite sophisticated monitoring technology available to \up0 \expndtw-3 \charscalex100 detect and monitor money laundering risks, it appears that banks still greatly depend on the \up0 \expndtw0\charscalex102 vigilance of their staf fs to identify and monitor suspicious activities. Unfortunately, the \up0 \expnd tw0\charscalex108 empirical evidence suggests that there is a serious deficiency of training programs \up0 \expndtw-5\charscalex100 conducted by the UK and Aust ralian banks. \par\pard\qj \li2205\ri912\sb397\sl-404\slmult0\fi0 \up0 \expndtw3\charscalex100 In the UK, 13 percent of respondents admitted they had not recei ved any training in money \line \up0 \expndtw0\charscalex102 laundering identifi cation or prevention. A further 20 percent had received very poor or \line \up0 \expndtw-1\charscalex100 unsatisfactory training.\ul0\super\cf8\f9\fs23 168\ul0\ nosupersub\cf1\f2\fs23 In Australia, only 32.2 percent of respondents had recei ved any \line \up0 \expndtw-2\charscalex100 money laundering training. The surve y also suggested that training sessions typically were \line \up0 \expndtw-1\cha rscalex100 short and not up-to-date.\ul0\super\cf8\f9\fs23 169\ul0\nosupersub\cf 1\f2\fs23 As far as the writer is aware there is no published information \line \up0 \expndtw0\charscalex100 on how much have been spent on training staff in M alaysian banks, or how well the staff \line \up0 \expndtw-3\charscalex100 are eq uipped to detect and monitor money laundering risks. But if the experience of th e UK \line \up0 \expndtw-3\charscalex100 and Australian banks is anything to go by, there is a strong likelihood that Malaysian banks \line \up0 \expndtw0\chars calex100 are no better than their overseas counterparts in respect of training p rograms. Given the \line \up0 \expndtw0\charscalex107 complex and sophisticated nature of money laundering, this deficiency needs to be \line \up0 \expndtw0\cha rscalex107 overcome. Therefore, it is imperative for FIU to ensure that Malaysia n banks establish \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb 0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\ sl-218\slmult0 \par\pard\ql\li2205\sb118\sl-218\slmult0 \up0 \expndtw-2\charscal ex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 166\ul0\nosupersub\cf10\f11 \fs19 \ul0\nosupersub\cf11\f12\fs19 Standard Guidelines on Anti-Money Launderin g and Counter Financing of Terrorism,\ul0\nosupersub\cf10\f11\fs19 para 10.4.4. \par\pard\qj \li2205\ri945\sb0\sl-240\slmult0\fi0 \up0 \expndtw0\charscalex102 \ul0\super\cf9\f10\fs18 167\ul0\nosupersub\cf10\f11\fs19 KPMG International, \ul 0\nosupersub\cf11\f12\fs19 Global Anti-Money Laundering Survey 2004: How Banks A re Facing Up to the \up0 \expndtw0\charscalex102 Challenge\ul0\nosupersub\cf10\f 11\fs19 (2007), 8. \par\pard\qj \li2205\ri948\sb0\sl-220\slmult0\fi0 \up0 \expn dtw0\charscalex100 \ul0\super\cf9\f10\fs18 168\ul0\nosupersub\cf10\f11\fs19 Bos worth-Davies R, \u8216?Living with the law: A survey of Money Laundering Reporti ng Officers and their \line \up0 \expndtw0\charscalex100 attitudes towards the M oney Laundering Regulations.\u8217?(1998) 1(3) \ul0\nosupersub\cf11\f12\fs19 Jou rnal of Money Laundering Control, \line \up0 \expndtw0\charscalex100 \ul0\nosupe rsub\cf10\f11\fs19 245. \par\pard\qj \li2205\ri936\sb0\sl-220\slmult0\fi0 \up0 \ expndtw0\charscalex102 \ul0\super\cf9\f10\fs18 169\ul0\nosupersub\cf10\f11\fs19 Jackie Johnson, \u8216?Fighting Money Laundering: Are Australian Financial Inst itutions Doing Enough?\u8217? \up0 \expndtw0\charscalex102 (2000) 44(3) \ul0\no supersub\cf11\f12\fs19 Journal of Banking and Financial Services\ul0\nosupersub\ cf10\f11\fs19 8. \par\pard\ql \li10256\sb11\sl-233\slmult0 \up0 \expndtw-5\char scalex100 \ul0\nosupersub\cf1\f2\fs23 161

{\shp {\*\shpinst\shpleft2205\shptop12585\shpright5006\shpbottom12605\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz193\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g171}{\bkmkend Pg171}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i918\sb249\sl-400\slmult0 \up0 \expndtw0\charscalex105 \ul0\nosupersub\cf1\f2\fs 23 adequate and effective training for their staff if the AML controls are to be effectively \up0 \expndtw-3\charscalex100 implemented. \par\pard\ql \li2205\sb0 \sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb5\s l-264\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf4\f5\fs23 e) Indep endent Audit \par\pard\qj \li2205\ri915\sb24\sl-400\slmult0 \up0 \expndtw-1\char scalex100 \ul0\nosupersub\cf1\f2\fs23 Section 19(5) of AMLATFA requires banks to develop audit functions to evaluate policies, \line \up0 \expndtw0\charscalex10 6 procedures and controls to test compliance with the measures taken by banks an d the \line \up0 \expndtw0\charscalex105 effectiveness of the measures in combat ing money laundering and terrorism financing \line \up0 \expndtw0\charscalex102 activities. Part 10.5 of the Standard Guidelines outlines comprehensive requirem ents for \line \up0 \expndtw0\charscalex102 independent audit. \par\pard\qj \li2 205\ri916\sb396\sl-405\slmult0 \up0 \expndtw0\charscalex100 Under the Guidelines , the board of directors is responsible for ensuring independent audit \line \up 0 \expndtw0\charscalex102 of the internal AML/CTF measures to determine their ef fectiveness and compliance with \line \up0 \expndtw0\charscalex102 AMLATFA, AMLA TF Regulations and the relevant guidelines on AML/CTF issued by \line \up0 \expn dtw0\charscalex100 BNM as well as the requirements of the relevant laws and regu lations of other supervisory \line \up0 \expndtw-1\charscalex100 authorities.\ul 0\super\cf8\f9\fs23 170 \par\pard\qj \li2205\ri915\sb400\sl-400\slmult0\fi0 \up0 \expndtw0\charscalex103 \ul0\nosupersub\cf1\f2\fs23 The board of directors is a lso required to ensure that the roles and responsibilities of the \line \up0 \ex pndtw0\charscalex103 auditor are clearly defined and documented. The roles and r esponsibilities of an auditor \line \up0 \expndtw-3\charscalex100 include: \par\ pard\qj \li2205\ri917\sb4\sl-420\slmult0\tx2555 \up0 \expndtw0\charscalex100 \u3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 Checking and tes ting compliance with, and effectiveness of, the AML/CTF policies, \line\tab \up0 \expndtw-1\charscalex100 procedures and controls; and \par\pard\qj \li2205\ri91 5\sb17\sl-400\slmult0\tx2555 \up0 \expndtw0\charscalex105 \u-3913?\ul0\nosupersu b\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 Assessing whether current measures are in line with the latest developments and \line\tab \up0 \expndtw-3\charscale x100 changes to the relevant AML/CTF requirements.\ul0\super\cf8\f9\fs23 171 \pa r\pard\qj \li2205\ri914\sb400\sl-400\slmult0 \up0 \expndtw-3\charscalex100 \ul0\ nosupersub\cf1\f2\fs23 The Standard Guidelines require the auditor to submit a w ritten report on the audit findings \line \up0 \expndtw0\charscalex100 to the bo ard of directors, which should be used to highlight inadequacies in any internal \line \up0 \expndtw0\charscalex100 AML/CTF measures and controls and the board of directors must ensure that necessary \line \up0 \expndtw-4\charscalex100 step s are taken to rectify the inadequacies, if any.\ul0\super\cf8\f9\fs23 172\ul0\n osupersub\cf1\f2\fs23 The Guidelines further require banks to \par\pard\qj \li2 205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li220 5\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\ ri1592\sb69\sl-220\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19 \ul0\super\cf9\f10\fs18 170\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f 12\fs19 Standard Guidelines on Anti-Money Laundering and Counter Financing of Te

rrorism,\ul0\nosupersub\cf10\f11\fs19 para 10.5.1. \line \up0 \expndtw-2\charsc alex100 \ul0\super\cf9\f10\fs18 171\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersu b\cf11\f12\fs19 Standard Guidelines on Anti-Money Laundering and Counter Financi ng of Terrorism,\ul0\nosupersub\cf10\f11\fs19 para 10.5.2. \line \up0 \expndtw2\charscalex100 \ul0\super\cf9\f10\fs18 172\ul0\nosupersub\cf10\f11\fs19 \ul0\n osupersub\cf11\f12\fs19 Standard Guidelines on Anti-Money Laundering and Counter Financing of Terrorism,\ul0\nosupersub\cf10\f11\fs19 para 10.5.3. \par\pard\ql \li10256\sb14\sl-252\slmult0 \up0 \expndtw-5\charscalex100 \ul0\nosupersub\cf1\ f2\fs23 162 {\shp {\*\shpinst\shpleft2205\shptop13704\shpright5006\shpbottom13724\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz193\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g172}{\bkmkend Pg172}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i916\sb249\sl-400\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs 23 ensure that such audit findings and reports are submitted to FIU within two w eeks of their \up0 \expndtw-1\charscalex100 submission to its board of directors .\ul0\super\cf8\f9\fs23 173 \par\pard\qj \li2205\ri914\sb397\sl-404\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 Additionally, Part 7.1.1 o f the Sectoral Guidelines provides that the role and function of the \up0 \expnd tw-3\charscalex100 board of directors with regards to the independent audit may be facilitated or assisted by an \up0 \expndtw0\charscalex108 audit committee. T he Sectoral Guidelines further states that the audit committee is \up0 \expndtw0 \charscalex100 responsible for reviewing internal control issues identified by t he auditors and regulatory \up0 \expndtw0\charscalex104 authorities. It is also responsible for evaluating the adequacy and effectiveness of the \up0 \expndtw-2 \charscalex100 bank\u8217?s internal AML/CTF measures. The audit committee must submit a written report on \up0 \expndtw0\charscalex100 the audit findings to th e board of directors on a regular basis. Hence the report should be \up0 \expndt w0\charscalex109 used to highlight inadequacies of any AML/CTF measures and cont rol within the \up0 \expndtw0\charscalex100 institution and the board of directo rs must ensure that necessary steps are taken to rectify \up0 \expndtw0\charscal ex100 the situation. Failure to act may constitute a breach of the director\u821 7?s duty to act with care \up0 \expndtw-1\charscalex100 and diligence and could expose the directors to liability. \par\pard\qj \li2205\ri914\sb398\sl-402\slmul t0\fi0 \up0 \expndtw-4\charscalex100 It is clear that the Guidelines emphasise g ood corporate governance and senior management \line \up0 \expndtw-4\charscalex1 00 accountability. An empirical study of factors affecting money laundering in a 88 developed \line \up0 \expndtw0\charscalex110 and developing countries has s hown that an efficient AML framework with good \line \up0 \expndtw-3\charscalex1 00 governance lower the pervasiveness of money laundering activities.\ul0\super\ cf8\f9\fs23 174\ul0\nosupersub\cf1\f2\fs23 In fact, the failure of \line \up0 \ expndtw-4\charscalex100 AML systems is often symptomatic of overall weaknesses i n a bank\u8217?s corporate governance \line \up0 \expndtw-2\charscalex100 framew ork as such systems cannot be expected to operate in isolation.\ul0\super\cf8\f9 \fs23 175\ul0\nosupersub\cf1\f2\fs23 Clearly, effective \line \up0 \expndtw0\ch arscalex100 AML measures significantly impact on the efficiency of a bank\u8217? s corporate governance \line \up0 \expndtw-3\charscalex100 which is considered a key element in ensuring that the bank is operated in a safe and sound \line \up 0 \expndtw-4\charscalex100 manner. At the end of the day this is the duty that t he bank\u8217?s officials and board of directors \line \up0 \expndtw-5\charscale

x100 owe to their stakeholders. \par\pard\qj \li2205\ri915\sb384\sl-420\slmult0 \up0 \expndtw-3\charscalex100 It is submitted that the AML/CTF measures imposed on the Malaysian banks are subject to \line \up0 \expndtw-3\charscalex100 contin uous change and development. As a result of the increased regulatory requirement s, \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult 0 \par\pard\ql\li2205\sb91\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\sup er\cf9\f10\fs19\ul0\super\cf9\f10\fs18 173\ul0\nosupersub\cf10\f11\fs19 \ul0\no supersub\cf11\f12\fs19 Standard Guidelines on Anti-Money Laundering and Counter Financing of Terrorism,\ul0\nosupersub\cf10\f11\fs19 para 10.5.4. \par\pard\qj \li2205\ri936\sb1\sl-220\slmult0\fi0 \up0 \expndtw-1\charscalex100 \ul0\super\cf 9\f10\fs18 174\ul0\nosupersub\cf10\f11\fs19 Santha Vaithilingan and Mahendran N air, \u8216?Factors Affecting Money Laundering: Lesson for Developing \up0 \expn dtw-2\charscalex100 Countries\u8217? (2007) 10(3) \ul0\nosupersub\cf11\f12\fs19 Journal of Money Laundering Control\ul0\nosupersub\cf10\f11\fs19 352, 364. \par \pard\qj \li2205\ri932\sb0\sl-220\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0 \super\cf9\f10\fs18 175\ul0\nosupersub\cf10\f11\fs19 R Barry Johnston and Ian C arrington, \u8216?Protecting the Financial System from Abuse: Challenges to Bank s \up0 \expndtw-2\charscalex100 in Implementing AML/CFT Standards\u8217? (2006) 9(1) \ul0\nosupersub\cf11\f12\fs19 Journal of Money Laundering Control\ul0\nosup ersub\cf10\f11\fs19 48, 54. \par\pard\ql \li10256\sb14\sl-252\slmult0 \up0 \exp ndtw-5\charscalex100 \ul0\nosupersub\cf1\f2\fs23 163 {\shp {\*\shpinst\shpleft2205\shptop13256\shpright5006\shpbottom13276\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz183\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g173}{\bkmkend Pg173}\par\pard\qj \li2205\sb0\sl-404\slmult0 \par\pard\qj\li2205 \sb0\sl-404\slmult0 \par\pard\qj\li2205\sb0\sl-404\slmult0 \par\pard\qj\li2205\r i915\sb234\sl-404\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf1\f2\f s23 banks have to adopt new procedures to detect and deter money laundering whic h is not only \line \up0 \expndtw0\charscalex102 time-consuming but also very co stly.\ul0\nosupersub\cf22\f23\fs23 \ul0\nosupersub\cf1\f2\fs23 Although there a re no statistics on how much have \line \up0 \expndtw-1\charscalex100 been spent by Malaysian banks complying with their AML/CTF obligations, it appears that \l ine \up0 \expndtw0\charscalex102 the amount could be very significant judging fr om the amounts spent by banks overseas. \line \up0 \expndtw0\charscalex100 For e xample, a recent study\ul0\nosupersub\cf22\f23\fs23 \ul0\nosupersub\cf1\f2\fs23 estimated that the UK and the US banks have spent more than \line \up0 \expndtw 0\charscalex100 100 millions pounds and 600 millions pounds respectively for AML /CTF compliance.\ul0\super\cf8\f9\fs23 176 \par\pard\qj \li2205\ri915\sb280\sl-4 00\slmult0\fi0 \up0 \expndtw0\charscalex108 \ul0\nosupersub\cf1\f2\fs23 A survey conducted by KPMG in 2007 found that banks\u8217? spending on anti-money \up0 \ expndtw0\charscalex100 laundering systems and controls has risen by an average o f 58 percent over the last three \up0 \expndtw-1\charscalex100 years.\ul0\super\ cf8\f9\fs23 177\ul0\nosupersub\cf1\f2\fs23 Notably, this was more than banks ha d expected when the KPMG carried out its \up0 \expndtw-1\charscalex100 2004 surv ey, where at that time, banks predicted costs would only rise by 43 percent over \up0 \expndtw-2\charscalex100 the following three years. \par\pard\qj \li2205\r i912\sb280\sl-401\slmult0\fi0 \up0 \expndtw-1\charscalex100 The main drivers of the increases in costs are transaction monitoring and staff training.\ul0\super\ cf8\f9\fs23 178 \line \up0 \expndtw-4\charscalex100 \ul0\nosupersub\cf1\f2\fs23 Besides, additional costs will arise through increased requirements for verifyin g the identity \line \up0 \expndtw0\charscalex103 of customers. However, despite

the increase compliance costs, banks still consider the \line \up0 \expndtw0\ch arscalex103 regulatory burden as acceptable.\ul0\super\cf8\f9\fs23 179\ul0\nosup ersub\cf1\f2\fs23 This indicates a high degree of commitment by the \line \up0 \expndtw0\charscalex100 financial industry to protect the integrity of the banki ng institutions, as well as to comply \line \up0 \expndtw-4\charscalex100 with t heir legal obligations. However, it must be said that given the increased costs incurred \line \up0 \expndtw-2\charscalex100 by banks, it is likely to see these costs being passed along to the customers. Unfortunately, \line \up0 \expndtw0\ charscalex100 it is still unclear whether these costs outweigh the benefits. In the UK for instance, it has \line \up0 \expndtw-2\charscalex100 been recognised that most of the reporting institutions complied with the AML regulations \line \up0 \expndtw0\charscalex100 in order to avoid sanctions from the authorities an d not because the regulations represent \line \up0 \expndtw0\charscalex100 good business practice or they are effective in preventing the flows of dirty money f rom \line \up0 \expndtw0\charscalex100 their institutions.\ul0\super\cf8\f9\fs23 180 \par\pard\qj \li2205\sb0\sl-240\slmult0 \par\pard\qj\li2205\sb0\sl-240\slmu lt0 \par\pard\qj\li2205\sb0\sl-240\slmult0 \par\pard\qj\li2205\sb0\sl-240\slmult 0 \par\pard\qj\li2205\sb0\sl-240\slmult0 \par\pard\qj\li2205\sb0\sl-240\slmult0 \par\pard\qj\li2205\ri1209\sb92\sl-240\slmult0 \up0 \expndtw-2\charscalex100 \ul 0\super\cf9\f10\fs18 176\ul0\nosupersub\cf10\f11\fs19 Mark Yeandle et al, \ul0 \nosupersub\cf11\f12\fs19 Anti-Money Laundering Requirements: Costs, Benefits an d Perceptions\ul0\nosupersub\cf10\f11\fs19 ( 2005) 20 \line \up0 \expndtw-2\cha rscalex100 <{\field{\*\fldinst {HYPERLINK "http://www.corpooflondon.gov.uk/" }}{ \fldrslt {\ul0\nosupersub\cf29\f30\fs19\ul http://www.corpooflondon.gov.uk}}}\ul 0\nosupersub\cf10\f11\fs19 > at 2 November, 2006. \par\pard\qj \li2205\ri946\sb0 \sl-220\slmult0 \up0 \expndtw0\charscalex102 \ul0\super\cf9\f10\fs18 177\ul0\nos upersub\cf10\f11\fs19 KPMG International, \ul0\nosupersub\cf11\f12\fs19 Global Anti-Money Laundering Survey 2007: How Banks Are Facing Up to the \up0 \expndtw0 \charscalex102 Challenge\ul0\nosupersub\cf10\f11\fs19 (2007), 7. \par\pard\ql \ li2205\sb0\sl-217\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 178\ul0\nosupersub\cf10\f11\fs19 Ibid. \par\pard\ql \li2205\sb3\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 179\ul0\nosupersub\cf10\f1 1\fs19 Ibid. \par\pard\li2205\sb20\sl-218\slmult0\fi0 \up0 \expndtw-2\charscale x100 \ul0\super\cf9\f10\fs18 180\ul0\nosupersub\cf10\f11\fs19 Mark Yeandle, ab ove n 175, 20.\par\pard\li2205\sb3\sl-264\slmult0\fi8050 \up0 \expndtw-3\charsca lex100 \ul0\nosupersub\cf1\f2\fs23 164 {\shp {\*\shpinst\shpleft2205\shptop12810\shpright5006\shpbottom12830\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz186\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g174}{\bkmkend Pg174}\par\pard\qj \li2205\sb0\sl-405\slmult0 \par\pard\qj\li2205 \sb0\sl-405\slmult0 \par\pard\qj\li2205\sb0\sl-405\slmult0 \par\pard\qj\li2205\r i915\sb230\sl-405\slmult0\fi0 \up0 \expndtw0\charscalex112 \ul0\nosupersub\cf1\f 2\fs23 It seems that the benefits of the AML laws may not always be clear to ind ividual \up0 \expndtw-1\charscalex100 institutions because potential AML benefit s tend to benefit a country as a whole rather than \up0 \expndtw0\charscalex100 to individual institutions.\ul0\super\cf8\f9\fs23 181\ul0\nosupersub\cf1\f2\fs23 The benefits include an improved reputation as a fair and law \up0 \expndtw0\c harscalex109 abiding place to do business and improved competitive conditions ar ising from the \up0 \expndtw-3\charscalex100 reduction of illegal and fraudulent behaviour.\ul0\super\cf8\f9\fs23 182 \par\pard\qj \li2205\ri916\sb397\sl-403\sl mult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 Pricewaterhouse

Coopers identified the potential benefits of compliance with AML laws as \up0 \e xpndtw-4\charscalex100 improvements to the level of regulatory compliance; comme rcial benefits through improved \up0 \expndtw-3\charscalex100 customers\u8217? d atabase and an increase in the prevention of financial crime.\ul0\super\cf8\f9\f s23 183\ul0\nosupersub\cf1\f2\fs23 However, these \up0 \expndtw-4\charscalex100 benefits are generally seen as flowing from costs that are otherwise avoided.\u l0\super\cf8\f9\fs23 184\ul0\nosupersub\cf1\f2\fs23 Therefore, it \up0 \expndtw -3\charscalex100 is important to ensure that what is spent in AML compliance can enhance the effectiveness \up0 \expndtw0\charscalex106 of the laws where money launderers will be increasingly prosecuted and their assets \up0 \expndtw-5\char scalex100 seizures will become more frequent. \par\pard\ql \li2205\sb0\sl-264\sl mult0 \par\pard\ql\li2205\sb248\sl-264\slmult0 \up0 \expndtw-3\charscalex100 \ul 0\nosupersub\cf4\f5\fs23 4.4.8 Non-Compliance with the AML Laws \par\pard\qj \ li2205\sb0\sl-404\slmult0 \par\pard\qj\li2205\ri912\sb17\sl-404\slmult0 \up0 \ex pndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 AMLATFA provides various penal ties for non compliance with the AML/CFT obligations \up0 \expndtw0\charscalex10 3 set out under AMLATFA, its regulations and the relevant guidelines. Section 22 (1) of \up0 \expndtw-4\charscalex100 AMLATFA requires a bank\u8217?s official to take all reasonable steps to ensure compliance with \up0 \expndtw0\charscalex10 0 the reporting obligation under Part IV of AMLATFA. Sub-section (2) empowers FI U to \up0 \expndtw-1\charscalex100 obtain an order from the High Court against a ny or all of the officers or employees of the \up0 \expndtw-2\charscalex100 bank s on terms that the Court deems necessary to enforce compliance. \par\pard\qj \l i2205\ri914\sb400\sl-400\slmult0 \up0 \expndtw-1\charscalex100 It is interesting to note that notwithstanding any Court order, FIU may direct or enter into \lin e \up0 \expndtw-1\charscalex100 an agreement with the bank to implement any acti on plan to ensure compliance with Part \line \up0 \expndtw0\charscalex106 IV of AMLATFA. This may suggest that the Malaysian government believes that a \line \u p0 \expndtw-3\charscalex100 coordinated approach between the law enforcement aut horities and the banking institutions \par\pard\qj \li2205\sb0\sl-240\slmult0 \p ar\pard\qj\li2205\ri943\sb233\sl-240\slmult0\fi0 \up0 \expndtw0\charscalex100 \u l0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 181\ul0\nosupersub\cf10\f11\fs19 M artin Gill and Geoff Taylor, \u8216?Preventing Money Laundering or Obstructing B usiness\u8217? (2004) \ul0\nosupersub\cf11\f12\fs19 British \up0 \expndtw0\chars calex100 Journal of Criminology\ul0\nosupersub\cf10\f11\fs19 6. \par\pard\ql \ li2205\sb1\sl-215\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 182\ul0\nosupersub\cf10\f11\fs19 Mark Yeandle, above n175 , 21. \par\pard\qj \li2205\ri947\sb1\sl-220\slmult0\fi0 \up0 \expndtw-1\charscalex100 \ul0\super\cf 9\f10\fs18 183\ul0\nosupersub\cf10\f11\fs19 Pricewaterhouse Coopers LLP, \ul0\n osupersub\cf11\f12\fs19 Anti-Money Laundering Current Customer Review Cost Benef it Analysis \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf10\f11\fs19 (2003) 6 4. \par\pard\qj \li2205\ri3254\sb0\sl-220\slmult0 \up0 \expndtw-2\charscalex100 < {\field{\*\fldinst {HYPERLINK "http://www.fsa.gov.uk/pubs/other/ml_cost-benefi t.pdf/" }}{\fldrslt {\ul0\nosupersub\cf29\f30\fs19\ul http://www.fsa.gov.uk/pubs /other/ml_cost-benefit.pdf}}}\ul0\nosupersub\cf10\f11\fs19 > at 18 December 200 6. \line \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 184\ul0\nosupersu b\cf10\f11\fs19 Ibid. \par\pard\ql \li10256\sb14\sl-252\slmult0 \up0 \expndtw-5 \charscalex100 \ul0\nosupersub\cf1\f2\fs23 165 {\shp {\*\shpinst\shpleft2205\shptop12810\shpright5006\shpbottom12830\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz189\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P

g175}{\bkmkend Pg175}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i917\sb249\sl-400\slmult0 \up0 \expndtw0\charscalex104 \ul0\nosupersub\cf1\f2\fs 23 will result in effective implementation of the AML laws. This is welcome espe cially in \up0 \expndtw0\charscalex100 view of the complex nature of the AML mea sures and the compliance burden faced by the \up0 \expndtw-1\charscalex100 repor ting institutions. \par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i913\sb20\sl-400\slmult0 \up0 \expndtw0\charscalex107 Section 22 (4) of AMLATFA explicitly provides that the failure of an officer to take \line \up0 \expndtw-1 \charscalex100 reasonable steps to ensure compliance with Part IV of AMLATFA, or failure of the bank to \line \up0 \expndtw-1\charscalex100 implement any urgent action plan to ensure compliance, will result in the officer or officers \line \up0 \expndtw0\charscalex100 being personally liable to a fine not exceeding RM1 00,000 or to imprisonment for a term \line \up0 \expndtw0\charscalex100 not exce eding six months or to both. In the case of continuing offence, a further fine m ay \line \up0 \expndtw0\charscalex104 be imposed on the bank not exceeding RM1,0 00 for each day during which the offence \line \up0 \expndtw-3\charscalex100 con tinues after conviction. \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li 2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb5\sl-264\slmult0\tx9949 \up0 \expn dtw0\charscalex109 Apart from significant penalties imposed on the bank\u8217?s officials, section \tab \up0 \expndtw0\charscalex107 21(2) of \par\pard\qj \li22 05\ri916\sb24\sl-400\slmult0 \up0 \expndtw-2\charscalex100 AMLATFA provides that upon the recommendation of FIU, BNM may revoke or suspend \up0 \expndtw-3\chars calex100 the bank\u8217?s licence if it has been convicted under AMLATFA. Clearl y, this is a very serious \up0 \expndtw-4\charscalex100 matter and banks cannot turn a blind eye to the AML/CFT obligations. \par\pard\qj \li2205\ri914\sb397\sl -404\slmult0\tx3045 \up0 \expndtw-5\charscalex100 Section \tab \up0 \expndtw0\ch arscalex107 86 of AMLATFA provides a general penalty for non-compliance with any \up0 \expndtw-1\charscalex100 provisions of AMLATFA or regulations made under A MLATFA, or any specification or \up0 \expndtw0\charscalex100 requirement made, o r any order in writing, direction, instruction, or notice given, or any \up0 \ex pndtw0\charscalex106 limit, term, condition or restriction imposed, in the exerc ise of any power conferred \up0 \expndtw-4\charscalex100 pursuant to any provisi on of AMLATFA. Upon conviction, a person shall be liable to a fine \up0 \expndtw -5\charscalex100 not exceeding RM250,000. \par\pard\qj \li2205\ri916\sb400\sl-40 0\slmult0 \up0 \expndtw0\charscalex100 Section 92 of AMLATFA further empowers BN M to compound, with the consent of the \line \up0 \expndtw0\charscalex100 Public Prosecutor, any offence under AMLATFA or its regulation by accepting from the \ line \up0 \expndtw0\charscalex100 person reasonably suspected of having committe d the offence such amount not exceeding \par\pard\qj \li2205\ri915\sb20\sl-400\s lmult0 \up0 \expndtw-2\charscalex100 50 percent of the amount of the maximum fin e for that offence, including the daily fine, if \up0 \expndtw-3\charscalex100 a ny, in the case of a continuing offence. \par\pard\ql \li2205\sb0\sl-360\slmult0 \par\pard\ql\li2205\ri917\sb74\sl-360\slmult0\tx10256 \up0 \expndtw-3\charscale x100 Furthermore, section 66E(5) of AMLATFA states that the guidelines or direct ion issued by \line \up0 \expndtw0\charscalex102 the relevant regulatory or supervisory authority have legal effect. Therefore, non \line\tab \up0 \ex pndtw-5\charscalex100 166 \par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard \sb0\sl-240{\bkmkstart Pg176}{\bkmkend Pg176}\par\pard\qj \li2205\sb0\sl-400\slm ult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmul t0 \par\pard\qj\li2205\ri918\sb249\sl-400\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf1\f2\fs23 compliance with the Standard Guidelines and the Stan dard Guidelines will render a bank or \up0 \expndtw-2\charscalex100 its official s liable to a fine not exceeding RM100,000. \par\pard\qj \li2205\ri913\sb398\sl403\slmult0\fi0 \up0 \expndtw0\charscalex100 It must be borne in mind that apart from the potential significant penalties from FIU and \line \up0 \expndtw0\char scalex100 BNM, non compliance with the AML/CFT obligations under the laws may al so affect a \line \up0 \expndtw-1\charscalex100 bank\u8217?s reputation. There a re few prominent cases involving large and multinational banks \line \up0 \expnd tw0\charscalex100 from the United States and the United Kingdom. For example, in

2004, Riggs Bank was \line \up0 \expndtw-3\charscalex100 fined \up0 \expndtw0\c harscalex107 $25 million by the US Office of the Comptroller of the Currency for wilfully \line \up0 \expndtw-3\charscalex100 violating its legal obligations to implement adequate anti-money laundering measures.\ul0\super\cf8\f9\fs23 185\ul 0\nosupersub\cf1\f2\fs23 In \line \up0 \expndtw-1\charscalex100 2003, Abbey Nat ional was fined 2.3 million by the UK Financial Services Authority for \line \up0 \expndtw0\charscalex100 serious AML compliance failure.\ul0\super\cf8\f9\fs23 1 86\ul0\nosupersub\cf1\f2\fs23 Both cases attracted significant adverse publicit y for \line \up0 \expndtw0\charscalex102 the banks. Once a bank\u8217?s reputati on is tarnished, it can have serious implications on its \line \up0 \expndtw-3\c harscalex100 business. In the case of Riggs Bank, for instance, the bank was tak en over by another bank. \line \up0 \expndtw-1\charscalex100 Therefore, to avoid these risks, banks have incurred high compliance costs. The resources \line \up 0 \expndtw0\charscalex106 spent on preventing the reputational risks may be grea ter than the cost of the money \line \up0 \expndtw-5\charscalex100 laundering ri sk itself.\ul0\super\cf8\f9\fs23 187 \par\pard\li2205\sb0\sl-264\slmult0\par\par d\li2205\sb0\sl-264\slmult0\par\pard\li2205\sb235\sl-264\slmult0\fi0\tx2906 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf4\f5\fs23 4.5\tab \up0 \expndtw-3\ch arscalex100 Summary\par\pard\qj \li2205\sb0\sl-404\slmult0 \par\pard\qj\li2205\r i912\sb66\sl-404\slmult0 \up0 \expndtw-4\charscalex100 \ul0\nosupersub\cf1\f2\fs 23 The past few years have seen a fundamental change in the legal and regulatory environment \up0 \expndtw-4\charscalex100 relating to anti-money laundering and countering terrorism financing measures in Malaysia. \up0 \expndtw0\charscalex1 03 With the implementation of AML/CTF laws, Malaysian banks have found themselve s \up0 \expndtw0\charscalex110 having to comply with an increasing number of reg ulations and guidelines. More \up0 \expndtw-4\charscalex100 importantly, the law s have put legal and administrative burdens on banks which are onerous \up0 \exp ndtw-4\charscalex100 and may involve serious legal and other liabilities for def icient compliance. \par\pard\qj \li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\s b0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0 \sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\s l-220\slmult0 \par\pard\qj\li2205\ri940\sb128\sl-220\slmult0 \up0 \expndtw0\char scalex102 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 185\ul0\nosupersub\cf10 \f11\fs19 US Senate Permanent Subcommittee on Investigations, \ul0\nosupersub\c f11\f12\fs19 Money Laundering and Foreign Corruption: \up0 \expndtw0\charscalex1 02 Enforcement and Effectiveness of the Patriot Act Report\ul0\nosupersub\cf10\f 11\fs19 (2004) 76. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\char scalex100 \ul0\super\cf9\f10\fs18 186\ul0\nosupersub\cf10\f11\fs19 \u8216?FSA f ines Abbey National Companies 2,320,000\u8217? (FSA Press Release, 10 December, 2003). \par\pard\qj \li2205\ri932\sb1\sl-220\slmult0\fi0 \up0 \expndtw0\charscal ex100 \ul0\super\cf9\f10\fs18 187\ul0\nosupersub\cf10\f11\fs19 J Harvey, \u8216 ?Compliance and Reporting Issues Arising for Financial Institutions from Money L aundering \up0 \expndtw0\charscalex100 Regulations: A Preliminary Cost Benefit S tudy\u8217? (2004) 7(4) \ul0\nosupersub\cf11\f12\fs19 Journal of Money Launderin g Control\ul0\nosupersub\cf10\f11\fs19 336. \par\pard\ql \li10256\sb14\sl-252\s lmult0 \up0 \expndtw-5\charscalex100 \ul0\nosupersub\cf1\f2\fs23 167 {\shp {\*\shpinst\shpleft2205\shptop13256\shpright5006\shpbottom13276\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz173\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g177}{\bkmkend Pg177}\par\pard\qj \li2205\sb0\sl-404\slmult0 \par\pard\qj\li2205 \sb0\sl-404\slmult0 \par\pard\qj\li2205\sb0\sl-404\slmult0 \par\pard\qj\li2205\r

i913\sb234\sl-404\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf1\f2\f s23 Banks need to comply with substantial changes in customer identification and due diligence \line \up0 \expndtw-1\charscalex100 (CDD) procedures.\ul0\nosuper sub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 This requirement produces a signifi cant shift in the ways banks interact \line \up0 \expndtw-1\charscalex100 with t heir existing and potential customers. For example, banks are required to obtain more \line \up0 \expndtw0\charscalex103 detailed information of higher risk cus tomers. However, it appears that the examples of \line \up0 \expndtw0\charscalex 110 higher risk customers are not clearly defined under the laws. Indeed, withou t clear \line \up0 \expndtw-2\charscalex100 guidelines, it is doubtful how banks can effectively implement the CDD requirements. \par\pard\qj \li2205\ri915\sb39 6\sl-404\slmult0 \up0 \expndtw0\charscalex100 Banks are also required to monitor customer activity to identify any unusual activity that \up0 \expndtw0\charscal ex103 may be indicative of money laundering and terrorism financing. However, it has been \up0 \expndtw0\charscalex100 recognised that transaction monitoring ha s been the main cause of increased AML/CTF \up0 \expndtw-1\charscalex100 cost fa ced by banks. Furthermore, experience has shown that banks still face a signific ant \up0 \expndtw-1\charscalex100 challenge in monitoring customer\u8217?s trans action and account status across several different \up0 \expndtw-1\charscalex100 countries particularly due to banking secrecy or data protection rules. \par\pa rd\qj \li2205\ri914\sb398\sl-402\slmult0 \up0 \expndtw0\charscalex105 The requir ement of suspicious transaction report (STR) also poses several issues and \up0 \expndtw-3\charscalex100 challenges. Obviously, it is hard for banks to justify STR because it is very subjective. This \up0 \expndtw-1\charscalex100 problem wo uld also lead to mistaken reporting and defensive reporting. If left unchecked, \up0 \expndtw-3\charscalex100 this would result in a flood of reporting and ther eby may jeopardize the effectiveness of the \up0 \expndtw0\charscalex100 STR reg ime. To make matters worse, the UK experience has shown that the STR system \up0 \expndtw0\charscalex100 has certain weaknesses and is under-utilised by legal e nforcement agencies. Therefore, a \up0 \expndtw-1\charscalex100 continuous colla borative relationship between FIU, other legal enforcement agencies and \up0 \ex pndtw-2\charscalex100 the banking industry is vital to avoid this problem. \par\ pard\qj \li2205\ri915\sb398\sl-403\slmult0 \up0 \expndtw-1\charscalex100 The AML /CTF laws also require banks to report suspected terrorism financing activities. \line \up0 \expndtw-1\charscalex100 However, experience has shown that banks ar e struggling to adapt anti-money laundering \line \up0 \expndtw0\charscalex103 m echanisms to the peculiarities of terrorism financing. Given the differences bet ween \line \up0 \expndtw-2\charscalex100 money laundering and terrorism financin g, it requires deep skills from banks employees to \line \up0 \expndtw-3\charsca lex100 detect the terrorist funds as it needs much closer analysis of sources an d destinations of the \line \up0 \expndtw0\charscalex107 funds. Undoubtedly, th is obligation places an additional burden on banks and their \line \up0 \expndtw -5\charscalex100 employees. \par\pard\ql \li10256\sb0\sl-264\slmult0 \par\pard\q l\li10256\sb0\sl-264\slmult0 \par\pard\ql\li10256\sb0\sl-264\slmult0 \par\pard\q l\li10256\sb40\sl-264\slmult0 \up0 \expndtw-5\charscalex100 168 \par\pard\sect\s ectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart Pg178}{\bkmkend Pg1 78}\par\pard\qj \li2205\sb0\sl-403\slmult0 \par\pard\qj\li2205\sb0\sl-403\slmult 0 \par\pard\qj\li2205\sb0\sl-403\slmult0 \par\pard\qj\li2205\ri912\sb238\sl-403\ slmult0 \up0 \expndtw0\charscalex111 \ul0\nosupersub\cf1\f2\fs23 Banks also face challenges to comply with the requirement of AML/CTF training \up0 \expndtw-1\c harscalex100 programs. While properly trained employees are known as the best AM L/CTF control, it is \up0 \expndtw0\charscalex103 evident that there is a seriou s deficiency of training programs conducted by the UK and \up0 \expndtw-1\charsc alex100 Australian banks. As such, if this evidence is anything to go by, there is a strong likelihood \up0 \expndtw0\charscalex102 that Malaysian banks are no better than their overseas counterparts in respect of training \up0 \expndtw0\ch arscalex100 programs. Given the complex and sophisticated nature of money launde ring and terrorism \up0 \expndtw-1\charscalex100 financing, this deficiency need s to be overcome. \par\pard\qj \li2205\ri916\sb397\sl-404\slmult0 \up0 \expndtw0 \charscalex104 According to a KPMG survey in 2007, banks across the globe have s

pent considerable \up0 \expndtw-1\charscalex100 sums of money on AML/CTF complia nce. Judging from the experience, it appears that the \up0 \expndtw0\charscalex1 00 amounts spent by Malaysian banks could be very significant. More importantly, given the \up0 \expndtw0\charscalex102 increased costs incurred by banks, it is likely to see these costs being passed along to the \up0 \expndtw0\charscalex10 0 customers. Unfortunately, it is still unclear at this stage whether the benefi ts of AML/CTF \up0 \expndtw-1\charscalex100 compliance outweigh its cost. \par\p ard\qj \li2205\ri914\sb398\sl-402\slmult0 \up0 \expndtw0\charscalex105 It is app arent that the laws have had a significant impact on the operations of banks in \up0 \expndtw0\charscalex100 Malaysia. In ensuring effective implementation of t he laws, Malaysian banks are required \up0 \expndtw-1\charscalex100 to adopt a r isk-based AML/CTF regime. While the regime is based on sound principles, the \up 0 \expndtw0\charscalex100 effectiveness of the regime is still unknown. As such, only time will tell whether the banks \up0 \expndtw0\charscalex100 will suffici ently be able to cope with the increased AML/CTF obligations. Obviously, it is \ up0 \expndtw0\charscalex100 critical at this stage, to establish effective coord ination between legislators, regulators and \up0 \expndtw0\charscalex105 the ban king industry in order to minimize problems faced by the banks and thereby to \u p0 \expndtw-3\charscalex100 ensure effective implementation of the laws. \par\pa rd\ql \li10256\sb0\sl-264\slmult0 \par\pard\ql\li10256\sb0\sl-264\slmult0 \par\p ard\ql\li10256\sb0\sl-264\slmult0 \par\pard\ql\li10256\sb0\sl-264\slmult0 \par\p ard\ql\li10256\sb0\sl-264\slmult0 \par\pard\ql\li10256\sb0\sl-264\slmult0 \par\p ard\ql\li10256\sb0\sl-264\slmult0 \par\pard\ql\li10256\sb0\sl-264\slmult0 \par\p ard\ql\li10256\sb0\sl-264\slmult0 \par\pard\ql\li10256\sb0\sl-264\slmult0 \par\p ard\ql\li10256\sb0\sl-264\slmult0 \par\pard\ql\li10256\sb0\sl-264\slmult0 \par\p ard\ql\li10256\sb0\sl-264\slmult0 \par\pard\ql\li10256\sb220\sl-264\slmult0 \up0 \expndtw-3\charscalex100 169 \par\pard\sect\sectd\fs24\paperw11900\paperh16840\ pard\sb0\sl-240{\bkmkstart Pg179}{\bkmkend Pg179}\par\pard\ql \li5624\sb0\sl-264 \slmult0 \par\pard\ql\li5624\sb0\sl-264\slmult0 \par\pard\ql\li5624\sb0\sl-264\s lmult0 \par\pard\ql\li5624\sb0\sl-264\slmult0 \par\pard\ql\li5624\sb0\sl-264\slm ult0 \par\pard\ql\li5624\sb0\sl-264\slmult0 \par\pard\ql\li5624\sb217\sl-264\slm ult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf4\f5\fs23 CHAPTER FIVE \par \pard\ql \li2235\ri948\sb264\sl-400\slmult0\tx4449 \up0 \expndtw-3\charscalex100 ANTI-MONEY LAUNDERING MEASURES IN THE LABUAN INTERNATIONAL \line\tab \up0 \expn dtw-3\charscalex100 BUSINESS AND FINANCIAL CENTRE \par\pard\li2205\sb0\sl-264\sl mult0\par\pard\li2205\sb90\sl-264\slmult0\fi0\tx2905 \up0 \expndtw-3\charscalex1 00 5.1\tab \up0 \expndtw-3\charscalex100 Introduction\par\pard\qj \li2205\sb0\sl -402\slmult0 \par\pard\qj\li2205\ri914\sb79\sl-402\slmult0\fi0 \up0 \expndtw-2\c harscalex100 \ul0\nosupersub\cf1\f2\fs23 An Offshore Financial Centre (OFC) may be defined as a centre which offers a wide range \line \up0 \expndtw0\charscalex 106 of services to their customers in a loose regulatory, supervisory, accountin g and tax \line \up0 \expndtw0\charscalex102 environment.\ul0\super\cf8\f9\fs23 1\ul0\nosupersub\cf1\f2\fs23 More specifically, deposits are not subject to res erve requirements, bank \line \up0 \expndtw0\charscalex100 transactions are most ly tax-exempt or treated under a favourable fiscal regime, and there \line \up0 \expndtw-2\charscalex100 are no interest and exchange rate restrictions. In many cases, offshore banks are exempted \line \up0 \expndtw0\charscalex100 from regu latory scrutiny with respect to liquidity or capital adequacy. These incentives \line \up0 \expndtw-2\charscalex100 attract individuals and businesses to do bu siness in OFCs. Business in OFCs appears to be \line \up0 \expndtw-4\charscalex1 00 booming. Recent report suggests that offshore holdings run between $5 trillio n to $7 trillion \line \up0 \expndtw0\charscalex106 a year.\ul0\super\cf8\f9\fs2 3 2\ul0\nosupersub\cf1\f2\fs23 The Cayman Islands which is an OFC is now believ ed to be the fifth largest \line \up0 \expndtw0\charscalex104 financial centre i n the world - eclipsed only by New York, London, Tokyo and Hong \line \up0 \expn dtw-3\charscalex100 Kong.\ul0\super\cf8\f9\fs23 3\ul0\nosupersub\cf1\f2\fs23 Th is progress has been very good for the OFCs\u8217? economies. \par\pard\qj \li22 05\ri914\sb398\sl-402\slmult0 \up0 \expndtw-1\charscalex100 However, despite the ir impressive achievements, it is widely recognised that for decades, \up0 \expn dtw-4\charscalex100 criminal organizations have been making wide use of the oppo

rtunities offered by the OFCs \up0 \expndtw0\charscalex100 to launder their illgotten gains. To make matters worse, some of the OFCs offer a wide \up0 \expndtw 0\charscalex107 range of services that are designed to hinder detection and inve stigation by the law \up0 \expndtw-3\charscalex100 enforcement authorities. Besi des, the strict application of banking secrecy in OFCs inhibits \up0 \expndtw-2\ charscalex100 the exchange of information relating to criminal investigation. A s such, in the war against \up0 \expndtw-1\charscalex100 money laundering and te rrorist financing, measures taken by the international community \up0 \expndtw-2 \charscalex100 have focused on undermining offshore financial confidentiality. \ par\pard\qj \li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \p ar\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\ri941\sb209\sl-220\slmu lt0 \up0 \expndtw0\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 1\ul0\nosupersub\cf10\f11\fs19 Donato Masciandaro and Alessandro Portolano, \u8 216?Financial Policy: Offshore Centres and Competition in \up0 \expndtw-1\charsc alex100 Regulation: The Laxity Problem\u8217? in Donato Masciandaro (ed), \ul0\n osupersub\cf11\f12\fs19 Global Financial Crime: Terrorism, Money \up0 \expndtw-1 \charscalex100 Laundering & Offshore Centres \ul0\nosupersub\cf10\f11\fs19 (2004 ) 126,126. \par\pard\ql \li2205\sb22\sl-218\slmult0 \up0 \expndtw-2\charscalex10 0 \ul0\super\cf9\f10\fs18 2\ul0\nosupersub\cf10\f11\fs19 Gary Neil, \u8216?Plac es in the Sun\u8217? \ul0\nosupersub\cf11\f12\fs19 The Economist\ul0\nosupersub\ cf10\f11\fs19 , 22 February 2007. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \ expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 3\ul0\nosupersub\cf10\f11\fs19 Ibid. \par\pard\ql \li10449\sb104\sl-264\slmult0 \up0 \expndtw-3\charscalex100 \ ul0\nosupersub\cf1\f2\fs23 170 {\shp {\*\shpinst\shpleft2205\shptop13144\shpright5006\shpbottom13164\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz167\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g180}{\bkmkend Pg180}\par\pard\qj \li2205\sb0\sl-403\slmult0 \par\pard\qj\li2205 \sb0\sl-403\slmult0 \par\pard\qj\li2205\sb0\sl-403\slmult0 \par\pard\qj\li2205\r i915\sb238\sl-403\slmult0 \up0 \expndtw0\charscalex110 \ul0\nosupersub\cf1\f2\fs 23 Malaysia has its own international offshore financial centre, known as the La buan \line \up0 \expndtw0\charscalex102 International Business and Financial Cen tre (IBFC). The Malaysian government aims to \line \up0 \expndtw0\charscalex104 maintain Labuan as a clean, closely supervised and fully functional IBFC. As suc h, the \line \up0 \expndtw0\charscalex103 government has established laws, regul ations and guidelines to promote sound financial \line \up0 \expndtw0\charscalex 100 services practice by the offshore financial institutions in Labuan IBFC. The se include the \line \up0 \expndtw0\charscalex103 implementation of the Anti-Mon ey Laundering and Anti-Terrorism Financing Act 2001 \line \up0 \expndtw0\charsca lex103 (AMLATFA). \par\pard\qj \li2205\ri914\sb397\sl-404\slmult0 \up0 \expndtw0 \charscalex105 This chapter aims to examine the Labuan IBFC in the context of th e control of money \up0 \expndtw0\charscalex104 laundering and terrorism financi ng activities. It will analyze the anti-money laundering \up0 \expndtw0\charscal ex100 laws, regulations and practices applicable to Labuan IBFC, particularly wi th regards to the \up0 \expndtw0\charscalex100 offshore banking sector. Before e xamining these issues, it would be worthwhile to provide \up0 \expndtw0\charscal ex104 some background information on OFCs, their uses and abuses and some of the relevant \up0 \expndtw-3\charscalex100 international initiatives to overcome th ese problems. \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl -264\slmult0 \par\pard\ql\li2205\sb224\sl-264\slmult0\tx2905 \up0 \expndtw-3\cha rscalex100 \ul0\nosupersub\cf4\f5\fs23 5.2 \tab \up0 \expndtw-3\charscalex100 De

finition of an Offshore Financial Centre \par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri914\sb84\sl-400\slmult0\fi0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs23 One definition of an offshore financial centre (OFC) is any financial centre where offshore \line \up0 \expndtw0\charscalex104 activ ity takes place. This definition, however, is too broad as it would include all major \line \up0 \expndtw-2\charscalex100 financial centres in the world because in such centres there may be little distinction between \line \up0 \expndtw0\ch arscalex100 onshore and offshore business.\ul0\super\cf8\f9\fs23 4\ul0\nosupersu b\cf1\f2\fs23 A more practical definition of an OFC is provided by the \line \u p0 \expndtw0\charscalex100 IMF as follows: \par\pard\qj \li2731\ri929\sb29\sl-36 6\slmult0 \up0 \expndtw0\charscalex103 \ul0\nosupersub\cf13\f14\fs21 \u8230?an O FC is a centre where the bulk of financial sector transactions on both sides of the \up0 \expndtw0\charscalex102 balance sheet are with individuals or companies that are not residents of OFCs, where the \up0 \expndtw0\charscalex100 transact ions are initiated elsewhere, and where the majority of the institutions involve d are \up0 \expndtw-1\charscalex100 controlled by non-residents.\ul0\super\cf14\ f15\fs20 5 \par\pard\qj \li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-22 0\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\ slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\sl mult0 \par\pard\qj\li2205\ri2383\sb75\sl-220\slmult0 \up0 \expndtw-2\charscalex1 00 \ul0\super\cf9\f10\fs18 4\ul0\nosupersub\cf10\f11\fs19 International Monetar y Fund, \ul0\nosupersub\cf11\f12\fs19 Offshore Financial Centers-IMF Background Paper\ul0\nosupersub\cf10\f11\fs19 (2000). \line \up0 \expndtw-2\charscalex100 <{\field{\*\fldinst {HYPERLINK "http://www.imf.org/external/np/mae/onshore/2000/ eng/back.html" }}{\fldrslt {\ul0\nosupersub\cf29\f30\fs19\ul http://www.imf.org/ external/np/mae/onshore/2000/eng/back.html}}}\ul0\nosupersub\cf10\f11\fs19 > at 24 April 2006. \par\pard\qj \li2205\ri2677\sb0\sl-220\slmult0\fi0 \up0 \expndtw2\charscalex100 \ul0\super\cf9\f10\fs18 5\ul0\nosupersub\cf10\f11\fs19 Internat ional Monetary Fund, \ul0\nosupersub\cf11\f12\fs19 Offshore Financial Centers: T he Role of the IMF\ul0\nosupersub\cf10\f11\fs19 (2000) \line \up0 \expndtw-2\ch arscalex100 <{\field{\*\fldinst {HYPERLINK "http://www,imf.org/external/np/mae/o shore/2000/eng/role.html" }}{\fldrslt {\ul0\nosupersub\cf29\f30\fs19\ul http://w ww,imf.org/external/np/mae/oshore/2000/eng/role.html}}}\ul0\nosupersub\cf10\f11\ fs19 > at 24 April 2006. \par\pard\ql \li10449\sb14\sl-252\slmult0 \up0 \expndtw -3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 171 {\shp {\*\shpinst\shpleft2205\shptop13480\shpright5006\shpbottom13500\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz168\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g181}{\bkmkend Pg181}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i915\sb249\sl-400\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs 23 This definition is narrower in scope and would exclude from its ambit the vas t majority of \up0 \expndtw-1\charscalex100 major financial centres. \par\pard\q j \li2205\ri914\sb398\sl-403\slmult0 \up0 \expndtw0\charscalex105 There are vari ous factors that attract institutions and investors to OFCs. These include \line \up0 \expndtw0\charscalex100 lower explicit taxation and increase net profit ma rgins; convenient regulatory frameworks \line \up0 \expndtw0\charscalex107 that reduce implicit taxation and increasing profit margins; minimum formalities for \line \up0 \expndtw0\charscalex100 incorporation; the existence of adequate lega l frameworks that safeguards the integrity of \line \up0 \expndtw0\charscalex109 principal-agent relations; the proximity to major financial centres; the reputa

tion of \line \up0 \expndtw0\charscalex105 particular OFC and the specialist ser vices provided; complete freedom from exchange \line \up0 \expndtw-2\charscalex1 00 controls and measures for safeguarding assets from the impact of litigation.\ ul0\super\cf8\f9\fs23 6 \par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2 205\ri914\sb20\sl-400\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\ cf1\f2\fs23 It is generally recognized that OFCs offer more stringent financial confidentiality rules than \line \up0 \expndtw0\charscalex100 onshore financial centres. They provide protection from disclosure to individuals and even \line \ up0 \expndtw0\charscalex107 to government entities. This higher level of confide ntiality is based on the belief that \line \up0 \expndtw0\charscalex105 financia l privacy is a fundamental right. Also, it is considered an essential element fo r \line \up0 \expndtw0\charscalex100 sustaining the economies of the offshore fi nancial centres which depend on the viability of \line \up0 \expndtw0\charscalex 100 their financial sectors.\ul0\super\cf8\f9\fs23 7\ul0\nosupersub\cf1\f2\fs23 This view particularly refers to the small countries which became \line \up0 \e xpndtw0\charscalex100 OFCs and which rely on offshore business as a major source of both government revenues \line \up0 \expndtw-1\charscalex100 and economic ac tivity. \par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri915\sb20\s l-400\slmult0 \up0 \expndtw0\charscalex102 Normally OFCs offer a variety of offs hore financial services including offshore banking, \up0 \expndtw0\charscalex103 offshore funds, trusts, offshore companies, captive insurance and various other financial \up0 \expndtw0\charscalex110 services. However, not all OFCs are the same. On one hand, there are those highly \up0 \expndtw0\charscalex100 reputable OFCs that apply internationally accepted standards, and on the other hand, ther e \up0 \expndtw0\charscalex108 those OFCs which are not well-regulated and provi de a very high level of customer \up0 \expndtw0\charscalex112 confidentiality. C learly, this latter type of OFCs can be used for illegal activities, \up0 \expnd tw-3\charscalex100 particularly tax evasion, money laundering and terrorism fina ncing. \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\sl mult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmu lt0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult 0 \par\pard\ql\li2205\sb83\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\sup er\cf9\f10\fs19\ul0\super\cf9\f10\fs18 6\ul0\nosupersub\cf10\f11\fs19 IMF, abov e n 4. \par\pard\qj \li2205\ri936\sb1\sl-220\slmult0 \up0 \expndtw-2\charscalex1 00 \ul0\super\cf9\f10\fs18 7\ul0\nosupersub\cf10\f11\fs19 G Scott Dowling, \u82 16?Fatal Broadside: The Demise of Caribbean Offshore Financial Confidentiality P ost USA \up0 \expndtw-3\charscalex100 PATRIOT Act\u8217? (2004) 17 \ul0\nosupers ub\cf11\f12\fs19 Transnational Lawyer\ul0\nosupersub\cf10\f11\fs19 259, 270. \p ar\pard\ql \li10449\sb14\sl-252\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosup ersub\cf1\f2\fs23 172 {\shp {\*\shpinst\shpleft2205\shptop13704\shpright5006\shpbottom13724\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz175\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g182}{\bkmkend Pg182}\par\pard\li2205\sb0\sl-264\slmult0\par\pard\li2205\sb0\sl264\slmult0\par\pard\li2205\sb0\sl-264\slmult0\par\pard\li2205\sb0\sl-264\slmult 0\par\pard\li2205\sb0\sl-264\slmult0\par\pard\li2205\sb254\sl-264\slmult0\fi0\tx 2906 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf4\f5\fs23 5.3\tab \up0 \exp ndtw-3\charscalex100 The Uses and Abuses of Offshore Financial Centres\par\pard\ qj \li2205\sb0\sl-404\slmult0 \par\pard\qj\li2205\ri915\sb64\sl-404\slmult0 \up0 \expndtw0\charscalex111 \ul0\nosupersub\cf1\f2\fs23 As was mentioned earlier, t here are many legitimate reasons for corporations and \up0 \expndtw0\charscalex1

00 individuals to transact business in the OFCs. These include minimization of t ax exposure, \up0 \expndtw0\charscalex105 freedom from exchange control and concerns over personal privacy or security. \up0 \expndtw0\charscalex100 A dditionally, OFCs are also an integral part of a capital market system in which funds are \up0 \expndtw0\charscalex107 transferred electronically across the wor ld in search of the highest rate of return. The \up0 \expndtw-3\charscalex100 fo llowing examples describe the uses of an OFC:\ul0\super\cf8\f9\fs23 8 \par\pard\ ql \li2556\sb112\sl-264\slmult0\tx3255 \up0 \expndtw-3\charscalex100 \ul0\nosupe rsub\cf1\f2\fs23 (i) \tab \up0 \expndtw0\charscalex104 The international compani es use OFCs to issue securitised products through \par\pard\ql \li3255\sb136\sl264\slmult0 \up0 \expndtw-2\charscalex100 special purpose vehicles or to protect assets from potential claimants. \par\pard\ql \li2556\sb136\sl-264\slmult0\tx32 55 \up0 \expndtw-3\charscalex100 (ii) \tab \up0 \expndtw0\charscalex103 The inve stors utilize OFCs to minimise income and withholding taxes and to \par\pard\ql \li3255\sb136\sl-264\slmult0 \up0 \expndtw-3\charscalex100 avoid disclosing inve stment positions. \par\pard\ql \li2556\sb156\sl-264\slmult0\tx3255 \up0 \expndtw -3\charscalex100 (iii) \tab \up0 \expndtw-1\charscalex100 The financial institut ions with affiliates in OFCs use its products and services to \par\pard\qj \li32 55\ri918\sb24\sl-400\slmult0 \up0 \expndtw0\charscalex102 minimise income and wi thholding tax and to avoid regulatory requirements in \up0 \expndtw0\charscalex1 02 the onshore jurisdictions in which they operate. \par\pard\ql \li2556\sb113\s l-264\slmult0\tx3255 \up0 \expndtw-3\charscalex100 (iv) \tab \up0 \expndtw0\char scalex106 The insurance companies use OFCs to accumulate reserve in low tax \par\pard\ql \li3255\sb136\sl-264\slmult0 \up0 \expndtw-2\charscalex100 ju risdictions and to conduct business in responsive regulatory environments. \par\ pard\qj \li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205\ri913\sb20\sl-402\slmult0 \fi0 \up0 \expndtw0\charscalex106 Despite their genuine uses, OFCs can also be e xploited for illegitimate purposes. It is \line \up0 \expndtw0\charscalex110 evi dent that the secrecy and low regulations facilitated by the OFCs attract money \line \up0 \expndtw0\charscalex106 launderers and financial crimes. It has been argued that laundering criminal proceeds \line \up0 \expndtw0\charscalex104 thro ugh offshore financial institutions provides a number of practical advantages to the \line \up0 \expndtw0\charscalex104 criminals. Initially, the funds are plac ed beyond the legal reach of the authorities in the \line \up0 \expndtw-1\charsc alex100 jurisdictions where the activity giving rise to the illegal profits occu rred. More importantly, \line \up0 \expndtw0\charscalex106 the offshore financia l institutions offer a wide range of products and services that are \line \up0 \ expndtw0\charscalex103 specifically designed to hide the identity of the benefic ial ownership.\ul0\super\cf8\f9\fs23 9\ul0\nosupersub\cf1\f2\fs23 These include the \line \up0 \expndtw0\charscalex103 international business corporations (IBC s), shell banks and illegal trusts. \par\pard\qj \li2205\sb0\sl-220\slmult0 \par \pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\p ard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\par d\qj\li2205\ri2319\sb9\sl-220\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\c f9\f10\fs19\ul0\super\cf9\f10\fs18 8\ul0\nosupersub\cf10\f11\fs19 Financial Sta bility Forum, Report of the Working Group on Offshore Centres (2000), 11. \line \up0 \expndtw-2\charscalex100 <{\field{\*\fldinst {HYPERLINK "http://www.fsforum .org/publications/ofc_report_-_5_april_2000a.pdf/" }}{\fldrslt {\ul0\nosupersub\ cf29\f30\fs19\ul http://www.fsforum.org/publications/OFC_Report_-_5_April_2000a. pdf}}}\ul0\nosupersub\cf29\f30\fs19\ul > at 22\ul0\nosupersub\cf10\f11\fs19 May 2006. \par\pard\qj \li2205\ri939\sb0\sl-220\slmult0 \up0 \expndtw0\charscalex10 0 \ul0\super\cf9\f10\fs18 9\ul0\nosupersub\cf10\f11\fs19 Barry A K Rider, \u821 6?The Control of Money Laundering-A Bridge too Far?\u8217? in Rose-Marie B Antoi ne (ed), \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf11\f12\fs19 Legal Issue s in Offshore Financial Services\ul0\nosupersub\cf10\f11\fs19 (2004) 156, 163. \par\pard\ql \li10449\sb14\sl-252\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nos upersub\cf1\f2\fs23 173 {\shp {\*\shpinst\shpleft2205\shptop13480\shpright5006\shpbottom13500\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz229\shplid0

{\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g183}{\bkmkend Pg183}\par\pard\qj \li2205\sb0\sl-405\slmult0 \par\pard\qj\li2205 \sb0\sl-405\slmult0 \par\pard\qj\li2205\sb0\sl-405\slmult0 \par\pard\qj\li2205\r i915\sb230\sl-405\slmult0 \up0 \expndtw0\charscalex102 \ul0\nosupersub\cf1\f2\fs 23 It should be noted that IBCs are considered a central tool of money launderin g schemes. \up0 \expndtw0\charscalex107 These anonymous corporations use nominee s as shareholders, officers and directors, \up0 \expndtw0\charscalex108 thereby concealing the beneficial ownership of the entity from law enforcement and \up0 \expndtw-1\charscalex100 regulatory authorities. In fact, the use of IBCs is mou nting and it involves the assistance of \up0 \expndtw-1\charscalex100 profession als such as lawyers and accountants.\ul0\super\cf8\f9\fs23 10 \par\pard\qj \li22 05\ri914\sb398\sl-402\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\ cf1\f2\fs23 Furthermore, it was revealed that a number of offshore jurisdictions have passed trust laws \line \up0 \expndtw-2\charscalex100 that allow the creat ion of a sophisticated grantor trust which can be used to hide assets and \line \up0 \expndtw0\charscalex103 protect them from foreign judgments. The trust inst rument does not identify either the \line \up0 \expndtw-3\charscalex100 grantors or beneficiaries. The real intent of the trust is hidden in side \u8216?letters of wishes\u8217? and \line \up0 \expndtw0\charscalex106 the real control is in the hands of a \u8216?trust protector\u8217? who is not identified in the trust \line \up0 \expndtw0\charscalex100 instrument.\ul0\super\cf8\f9\fs23 11\ul0\nosu persub\cf1\f2\fs23 To make matters worse, the trust laws also include provision s that make a \line \up0 \expndtw0\charscalex106 trust immune from foreign lawsu its once it has been placed for one year. It has been \line \up0 \expndtw0\chars calex106 recommended that this type of trust should be prohibited because it doe s not serve a \line \up0 \expndtw-5\charscalex100 legitimate function.\ul0\super \cf8\f9\fs23 12 \par\pard\qj \li2205\ri916\sb398\sl-403\slmult0\fi0 \up0 \expndt w-1\charscalex100 \ul0\nosupersub\cf1\f2\fs23 Another important tool used in mon ey laundering schemes is the so called \u8216?brass plate\u8217? or \line \up0 \ expndtw0\charscalex102 shell banks. In fact, such institutions are legal fiction s without physical presence.\ul0\super\cf8\f9\fs23 13\ul0\nosupersub\cf1\f2\fs23 The \line \up0 \expndtw0\charscalex100 creation of this type of bank is for th e purpose of booking deposits and loans so that they \line \up0 \expndtw0\charsc alex100 fall outside the regulatory rules of the bank\u8217?s home country. Such institutions have been \line \up0 \expndtw0\charscalex104 protected by the exce ssive banking secrecy rules which criminalize the release of any \line \up0 \exp ndtw0\charscalex100 information about a customer\u8217?s identity or transaction s to law enforcement or regulatory \line \up0 \expndtw-1\charscalex100 authoriti es.\ul0\super\cf8\f9\fs23 14 \par\pard\qj \li2205\ri915\sb400\sl-400\slmult0 \up 0 \expndtw0\charscalex104 \ul0\nosupersub\cf1\f2\fs23 The major money laundering cases revealed that criminals have made wide use of the \line \up0 \expndtw0\ch arscalex110 opportunities offered by OFCs to launder criminal assets. The diffic ulties for law \line \up0 \expndtw0\charscalex103 enforcement agencies are ampli fied by the fact that OFCs enforce very strict financial \par\pard\qj \li2205\sb 0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\ sl-220\slmult0 \par\pard\qj\li2205\ri942\sb69\sl-220\slmult0 \up0 \expndtw0\char scalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 10\ul0\nosupersub\cf10\ f11\fs19 Blum, J. et al, \u8216?Financial Havens, Banking Secrecy and Money Lau ndering\u8217?, \ul0\nosupersub\cf11\f12\fs19 United Nations Office for \up0 \ex pndtw0\charscalex100 Drug Control and Crime Prevention\ul0\nosupersub\cf10\f11\f s19 (1998) 60. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscal ex100 \ul0\super\cf9\f10\fs18 11\ul0\nosupersub\cf10\f11\fs19 Ibid. \par\pard\q

l \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs 18 12\ul0\nosupersub\cf10\f11\fs19 Ibid 61. \par\pard\ql \li2205\sb2\sl-218\slm ult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 13\ul0\nosupersub\cf1 0\f11\fs19 Ibid. \par\pard\li2205\sb20\sl-218\slmult0\fi0 \up0 \expndtw-2\chars calex100 \ul0\super\cf9\f10\fs18 14\ul0\nosupersub\cf10\f11\fs19 Ibid.\par\pard \li2205\sb3\sl-264\slmult0\fi8243 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\ cf1\f2\fs23 174 {\shp {\*\shpinst\shpleft2205\shptop13033\shpright5006\shpbottom13053\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz179\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g184}{\bkmkend Pg184}\par\pard\qj \li2205\sb0\sl-403\slmult0 \par\pard\qj\li2205 \sb0\sl-403\slmult0 \par\pard\qj\li2205\sb0\sl-403\slmult0 \par\pard\qj\li2205\r i914\sb238\sl-403\slmult0 \up0 \expndtw0\charscalex103 \ul0\nosupersub\cf1\f2\fs 23 secrecy rules which effectively hinder detection and investigation by authori ties in their \line \up0 \expndtw0\charscalex107 home countries. The best exampl e of opportunities and immunities offered to money \line \up0 \expndtw-1\charsca lex100 launderers was the Bank of Credit and Commerce International (BCCI) which collapsed in \line \up0 \expndtw0\charscalex100 1991. The collapse of BCCI led to the uncovering of the widest money laundering scheme \line \up0 \expndtw0\cha rscalex100 ever put in place and the seizure of more than USD12 billion. Another prominent case, the \line \up0 \expndtw0\charscalex102 Antigua-based European U nion Bank (EUB) demonstrated that the problem has gained a \line \up0 \expndtw0\ charscalex102 new dimension with the application of modern technologies. EUB des cribed itself as the \line \up0 \expndtw0\charscalex102 first bank on the intern et, offering the chance to open accounts, wire money, order credit \line \up0 \e xpndtw0\charscalex103 cards or write cheques by computer from anywhere in the wo rld, 24 hours a day. It was \line \up0 \expndtw0\charscalex100 founded by two Ru ssians and was alleged to have been used to launder the illicit proceeds \line \ up0 \expndtw0\charscalex104 of Russian organized crime. Subsequently, EUB failed and was closed down in August \line \up0 \expndtw-3\charscalex100 1997.\ul0\sup er\cf8\f9\fs23 15 \par\pard\qj \li2205\ri911\sb399\sl-401\slmult0\fi0 \up0 \expn dtw0\charscalex108 \ul0\nosupersub\cf1\f2\fs23 Besides these two high profile ca ses, there are numerous other examples of money \line \up0 \expndtw-4\charscalex 100 laundering involving the abuse of OFCs. Some of the more interesting cases i nclude the use \line \up0 \expndtw-1\charscalex100 of banking secrecy in Caribbe an banks to launder billions of dollars belonging to Russian \line \up0 \expndtw -3\charscalex100 crime organizations;\ul0\super\cf8\f9\fs23 16\ul0\nosupersub\cf 1\f2\fs23 the association of Citibank in New York and M.A. Bank, an offshore \l ine \up0 \expndtw0\charscalex109 shell bank in drug money laundering operation;\ ul0\super\cf8\f9\fs23 17\ul0\nosupersub\cf1\f2\fs23 and the exploitation of ban ks in \line \up0 \expndtw0\charscalex100 Switzerland and London by former Nigeri an dictator General Sani Abatcha to hide away \line \up0 \expndtw-3\charscalex10 0 his stolen money during his reign.\ul0\super\cf8\f9\fs23 18\ul0\nosupersub\cf1 \f2\fs23 In the money laundering scandal involving the Bank of \line \up0 \expn dtw-1\charscalex100 New York, it was revealed that a substantial amount of the $ 7 billion that passed through \line \up0 \expndtw0\charscalex100 the Bank of New York accounts was routed through accounts maintained in the offshore \line \up0 \expndtw-3\charscalex100 secrecy jurisdictions.\ul0\super\cf8\f9\fs23 19\ul0\no supersub\cf1\f2\fs23 These are some of the evidence to suggest that strict secr ecy laws of \line \up0 \expndtw-3\charscalex100 the OFCs, if left unchecked, cou ld facilitate the criminal activities and threaten the stability \line \up0 \exp

ndtw-4\charscalex100 of the world\u8217?s financial systems. \par\pard\ql \li220 5\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\ sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb 199\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\sup er\cf9\f10\fs18 15\ul0\nosupersub\cf10\f11\fs19 Ibid. \par\pard\qj \li2205\ri93 6\sb0\sl-240\slmult0 \up0 \expndtw-1\charscalex100 \ul0\super\cf9\f10\fs18 16\ul 0\nosupersub\cf10\f11\fs19 Douglas Farah, \u8216?Russian Crime Finds Haven in C aribbean; Columbian Drug Ties Suspected as Secretive \up0 \expndtw-1\charscalex1 00 Banks Proliferate\u8217?, \ul0\nosupersub\cf11\f12\fs19 The Washington Post\u l0\nosupersub\cf10\f11\fs19 (Washington), 7 October 1996, 1. \par\pard\qj \li22 05\ri946\sb0\sl-220\slmult0 \up0 \expndtw-3\charscalex100 \ul0\super\cf9\f10\fs1 8 17\ul0\nosupersub\cf10\f11\fs19 Paul Beckett, \u8216?Citibank to testify at M oney Laundering Hearings\u8217?, \ul0\nosupersub\cf11\f12\fs19 The Wall Street J ournal\ul0\nosupersub\cf10\f11\fs19 (New York), 26 \up0 \expndtw-3\charscalex10 0 February 2001, 1. \par\pard\ql \li2205\sb0\sl-197\slmult0 \up0 \expndtw-2\char scalex100 \ul0\super\cf9\f10\fs18 18\ul0\nosupersub\cf10\f11\fs19 William Hall, \u8216?Swiss Banking Investigation\u8217?, \ul0\nosupersub\cf11\f12\fs19 Financ ial Times\ul0\nosupersub\cf10\f11\fs19 (London), 5 September, 2000, 1. \par\par d\qj \li2205\ri942\sb4\sl-220\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\c f9\f10\fs18 19\ul0\nosupersub\cf10\f11\fs19 Marcy Gordon, \u8216?Correspondent Banking Vulnerable to Laundering, Senate Study Finds\u8217?, \ul0\nosupersub\cf1 1\f12\fs19 Associated Press \up0 \expndtw-3\charscalex100 Newswires\ul0\nosupers ub\cf10\f11\fs19 (Washington), 5 February 2001, 2. \par\pard\ql \li10449\sb14\s l-252\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 175 {\shp {\*\shpinst\shpleft2205\shptop12585\shpright5006\shpbottom12605\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz170\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g185}{\bkmkend Pg185}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i914\sb249\sl-400\slmult0\fi0 \up0 \expndtw0\charscalex106 \ul0\nosupersub\cf1\f 2\fs23 It has been reported that much of the $1.5 trillion a year estimated to b e laundered by \up0 \expndtw0\charscalex109 criminals goes through OFCs.\ul0\sup er\cf8\f9\fs23 20\ul0\nosupersub\cf1\f2\fs23 This inevitably raises questions a bout the policies, \up0 \expndtw-3\charscalex100 regulation and governance of OF Cs. \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmul t0 \par\pard\ql\li2205\sb225\sl-264\slmult0\tx2906 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf4\f5\fs23 5.4 \tab \up0 \expndtw-3\charscalex100 Internationa l Initiatives against Abuse of Offshore Financial Centres \par\pard\qj \li2205\s b0\sl-403\slmult0 \par\pard\qj\li2205\ri915\sb79\sl-403\slmult0 \up0 \expndtw0\c harscalex100 \ul0\nosupersub\cf1\f2\fs23 In response to concerns about the abuse of OFCs, a series of international initiatives have \line \up0 \expndtw0\charsc alex103 been launched by the Financial Stability Forum (FSF), the International Monetary Fund \line \up0 \expndtw0\charscalex105 (IMF), the Organization of Econ omic Cooperation and Development (OECD) and the \line \up0 \expndtw0\charscalex1 05 Financial Action Task Force (FATF). Since the late 1990s, these initiatives h ave been \line \up0 \expndtw0\charscalex100 aimed at curbing OFCs involvement in global financial abuse and address the key areas of \line \up0 \expndtw0\charsc alex100 weakness, namely inadequate anti-money laundering standards, harmful tax practices and \line \up0 \expndtw0\charscalex100 poor financial regulation. \pa r\pard\ql \li2264\sb0\sl-264\slmult0 \par\pard\ql\li2264\sb0\sl-264\slmult0 \par \pard\ql\li2264\sb4\sl-264\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub

\cf4\f5\fs23 5.4.1 The Financial Stability Forum \par\pard\qj \li2205\sb0\sl-40 2\slmult0 \par\pard\qj\li2205\ri915\sb20\sl-402\slmult0 \up0 \expndtw0\charscale x103 \ul0\nosupersub\cf1\f2\fs23 In 2000, the Financial Stability Forum (FSF) es tablished a working group to review the \up0 \expndtw-1\charscalex100 uses and a ctivities of OFCs and their impact on financial stability. The FSF looked at man y \up0 \expndtw0\charscalex102 aspects of regulatory and supervisory policy, but the three key issues identified were the \up0 \expndtw0\charscalex100 quality o f supervision, degree of cooperation and degree of transparency and information \up0 \expndtw0\charscalex108 sharing. The report revealed that there were seriou s concerns on the part of onshore \up0 \expndtw0\charscalex102 supervisors about the quality of supervision and degree of cooperation provided by some \up0 \exp ndtw0\charscalex100 OFCs. It was also revealed that there are some problematic O FCs that are either unable or \up0 \expndtw0\charscalex100 refuse to adhere to i nternational standards, resulting in weak supervisory practices or little \up0 \ expndtw-1\charscalex100 or even no cooperation and transparency.\ul0\super\cf8\f 9\fs23 21 \par\pard\qj \li2205\ri917\sb400\sl-400\slmult0 \up0 \expndtw-1\charsc alex100 \ul0\nosupersub\cf1\f2\fs23 The specific problems of OFCs include inadeq uate disclosure rules; inadequate knowledge \line \up0 \expndtw-1\charscalex100 of activities of financial institutions based in OFCs, including identity of dep ositors and \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-2 18\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb37\sl-21 8\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f1 0\fs18 20\ul0\nosupersub\cf10\f11\fs19 Financial Action Task Force on Money Lau ndering, \ul0\nosupersub\cf11\f12\fs19 Policy Brief: Money Laundering\ul0\nosupe rsub\cf10\f11\fs19 (1999). \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndt w-2\charscalex100 \ul0\super\cf9\f10\fs18 21\ul0\nosupersub\cf10\f11\fs19 Finan cial Stability Forum, Report of the Working Group on Offshore Centres (2000),12. \par\pard\ql \li2205\sb2\sl-219\slmult0 \up0 \expndtw-2\charscalex100 <{\field{ \*\fldinst {HYPERLINK "http://www.fsforum.org/publications/ofc_report_-_5_april_ 2000a.pdf /" }}{\fldrslt {\ul0\nosupersub\cf29\f30\fs19\ul http://www.fsforum.or g/publications/OFC_Report_-_5_April_2000a.pdf }}}\ul0\nosupersub\cf29\f30\fs19\u l > at 22\ul0\nosupersub\cf10\f11\fs19 May 2006. \par\pard\ql \li10449\sb14\sl252\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 176 {\shp {\*\shpinst\shpleft2205\shptop13704\shpright5006\shpbottom13724\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz198\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g186}{\bkmkend Pg186}\par\pard\qj \li2205\sb0\sl-403\slmult0 \par\pard\qj\li2205 \sb0\sl-403\slmult0 \par\pard\qj\li2205\sb0\sl-403\slmult0 \par\pard\qj\li2205\r i915\sb238\sl-403\slmult0\fi0 \up0 \expndtw0\charscalex105 \ul0\nosupersub\cf1\f 2\fs23 counterparties; lack of resources to conduct effective supervision of branches or \up0 \expndtw-2\charscalex100 subsidiaries of foreign financi al institutions by local supervisors; absence of political will to \up0 \expndtw 0\charscalex106 improve the quality of supervision; lack of cooperation with ons hore supervisors and \up0 \expndtw-1\charscalex100 excessive secrecy laws which impede information sharing.\ul0\super\cf8\f9\fs23 22\ul0\nosupersub\cf1\f2\fs23 These problems can affect the \up0 \expndtw-1\charscalex100 home country regula tory and supervision efforts and the ability to rely on OFC supervisors \up0 \ex pndtw0\charscalex100 is often limited. Moreover, investigation by law enforcemen t agencies can be impeded and \up0 \expndtw-1\charscalex100 the tracing of proce eds of criminal activities frustrated.\ul0\super\cf8\f9\fs23 23 \par\pard\qj \li 2205\ri914\sb398\sl-402\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf

1\f2\fs23 FSF listed 42 jurisdictions that it considered as having significant o ffshore activities. These \line \up0 \expndtw0\charscalex108 jurisdictions were divided into three groups. The first group comprised jurisdictions \line \up0 \e xpndtw0\charscalex106 generally viewed as cooperative, with a high quality of su pervision and which largely \line \up0 \expndtw-1\charscalex100 adhere to intern ational standards. It should be noted that the Malaysian OFC fell under this \li ne \up0 \expndtw0\charscalex100 group. The second group comprised jurisdictions generally seen as having procedures for \line \up0 \expndtw0\charscalex100 super vision and cooperation in place, but their actual performance fell below interna tional \line \up0 \expndtw0\charscalex104 standards and there was substantial ro om for improvement. The third group comprised \line \up0 \expndtw0\charscalex106 jurisdictions generally seen as having a low quality of supervision, and/or bei ng non-\line \up0 \expndtw0\charscalex100 cooperative with onshore supervisors a nd with little or no attempt being made to adhere to \line \up0 \expndtw-1\chars calex100 international standards.\ul0\super\cf8\f9\fs23 24 \par\pard\qj \li2205\ sb0\sl-400\slmult0 \par\pard\qj\li2205\ri915\sb20\sl-400\slmult0\fi0 \up0 \expnd tw0\charscalex100 \ul0\nosupersub\cf1\f2\fs23 FSF recommended that priority be g iven to international standards relating to cross-border \line \up0 \expndtw0\ch arscalex100 cooperation and effective information sharing, essential supervisory powers and practices \line \up0 \expndtw-2\charscalex100 as well as customer id entification and record keeping. However, the ultimate goal should be \line \up0 \expndtw0\charscalex100 adherence to all relevant international standards.\ul0\ super\cf8\f9\fs23 25\ul0\nosupersub\cf1\f2\fs23 The report also recommended tha t IMF \line \up0 \expndtw0\charscalex100 take responsibility for developing, org anizing and carrying out an assessment process for \line \up0 \expndtw0\charscal ex100 OFCs. \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-2 18\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218 \slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\s lmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slm ult0 \par\pard\ql\li2205\sb7\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\s uper\cf9\f10\fs19\ul0\super\cf9\f10\fs18 22\ul0\nosupersub\cf10\f11\fs19 Ibid. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super \cf9\f10\fs18 23\ul0\nosupersub\cf10\f11\fs19 Ibid 13. \par\pard\ql \li2205\sb2 \sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 24\ul0\nos upersub\cf10\f11\fs19 IMF above n 4. \par\pard\li2205\sb17\sl-218\slmult0\fi0 \ up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 25\ul0\nosupersub\cf10\f11\ fs19 See the FSF\u8217?s 12 Key Standards for Sound Financial Systems.\par\pard \li2205\sb5\sl-218\slmult0\fi0 \up0 \expndtw-2\charscalex100 < {\field{\*\fldins t {HYPERLINK "http://www.fsfforum.org/standards/keystds.html" }}{\fldrslt {\ul0\ nosupersub\cf29\f30\fs19\ul www.fsfforum.org/Standards/KeyStds.html}}}\ul0\nosup ersub\cf29\f30\fs19\ul > at 22\ul0\nosupersub\cf10\f11\fs19 April 2006.\par\par d\li2205\sb3\sl-264\slmult0\fi8243 \up0 \expndtw-3\charscalex100 \ul0\nosupersub \cf1\f2\fs23 177 {\shp {\*\shpinst\shpleft2205\shptop13256\shpright5006\shpbottom13276\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz187\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g187}{\bkmkend Pg187}\par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205 \sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\s b0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb2 41\sl-264\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf4\f5\fs23 5.4. 2 The International Monetary Fund (IMF) \par\pard\qj \li2205\ri916\sb304\sl-40

0\slmult0 \up0 \expndtw0\charscalex103 \ul0\nosupersub\cf1\f2\fs23 In response t o the recommendation posed by FSF, IMF established the OFC assessment \line \up0 \expndtw0\charscalex103 program which focused primarily on assessing implementa tion of financial supervision, \line \up0 \expndtw0\charscalex100 regulation and integrity standards in OFCs. Besides assessment, the program also provides \lin e \up0 \expndtw0\charscalex105 technical assistance which contributes to the imp rovement of supervisory standards in \line \up0 \expndtw-3\charscalex100 OFCs. \ par\pard\qj \li2205\ri915\sb276\sl-405\slmult0 \up0 \expndtw-1\charscalex100 Sin ce 2002, IMF has assessed nearly 40 offshore financial sectors. A progress repor t on the \line \up0 \expndtw0\charscalex102 ongoing assessments completed in Jul y 2003 concluded that, in general, supervisory and \line \up0 \expndtw0\charscal ex108 regulatory regimes needed to be strengthened. In many regimes, the technic al skills \line \up0 \expndtw0\charscalex106 required to effectively supervise c ompliance with the anti-money laundering laws are \line \up0 \expndtw-2\charscal ex100 lacking, as is the ability to address increasingly complex financial instr uments. \par\pard\qj \li2205\ri915\sb258\sl-402\slmult0 \up0 \expndtw0\charscale x108 IMF also noted that the regulation of the banking sector in OFCs has been g enerally \line \up0 \expndtw0\charscalex108 stronger than the regulation of the insurance sector. As far as the securities sector is \line \up0 \expndtw0\charsc alex108 concerned, about two-thirds of the assessed OFCs have implemented adequa te rules \line \up0 \expndtw0\charscalex107 relating to information sharing and cross-border cooperation. IMF concluded that, in \line \up0 \expndtw0\charscalex 100 general, many of the assessed OFCs lack effective compliance programs. This was due to \line \up0 \expndtw0\charscalex113 inadequate laws or lack of resourc es. It also concluded that compliance with the \line \up0 \expndtw0\charscalex10 2 recommendations relating to terrorism financing was weaker than that relating to money \line \up0 \expndtw0\charscalex102 laundering recommendations.\ul0\supe r\cf8\f9\fs23 26 \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb1 28\sl-264\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf4\f5\fs23 5.4. 3 The Organization of Economic Cooperation and Development \par\pard\qj \li220 5\sb0\sl-404\slmult0 \par\pard\qj\li2205\ri916\sb17\sl-404\slmult0 \up0 \expndtw -3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 The OECD initiative deals with meas ures to crackdown harmful tax competition. It sets out \line \up0 \expndtw0\char scalex100 international rules to reduce tax competition between its members and OFCs. In 1998, a \line \up0 \expndtw-2\charscalex100 report entitled \u8216?Harm ful Tax Competition: An Emerging Global Issue\u8217? was published. The \line \u p0 \expndtw0\charscalex100 report expressed concerns that mobile capital and lab our were being attracted away from \line \up0 \expndtw-3\charscalex100 countries with high taxes to countries with low taxes. OFCs were criticized for engaging in \line \up0 \expndtw-3\charscalex100 what is considered harmful tax competitio n by operating fiscal regimes which facilitate \par\pard\qj \li2205\sb0\sl-220\s lmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\ri943\sb68\sl220\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\ cf9\f10\fs18 26\ul0\nosupersub\cf10\f11\fs19 International Monetary Fund, \u821 6?\ul0\nosupersub\cf11\f12\fs19 Offshore Financial Centers - The Assessment Prog ram: A Progress Report \up0 \expndtw-2\charscalex100 and the Future of the Progr am.\ul0\nosupersub\cf10\f11\fs19 \u8217? (2003). \par\pard\ql \li10449\sb14\sl-2 52\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 178 {\shp {\*\shpinst\shpleft2205\shptop13928\shpright5006\shpbottom13948\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz188\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P

g188}{\bkmkend Pg188}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i916\sb249\sl-400\slmult0 \up0 \expndtw0\charscalex102 \ul0\nosupersub\cf1\f2\fs 23 reduction of tax burdens imposed by the high tax countries. Such activities a re alleged to \up0 \expndtw0\charscalex102 distort trade and investment and erod e national tax bases.\ul0\super\cf8\f9\fs23 27 \par\pard\qj \li2205\ri915\sb396\ sl-405\slmult0 \up0 \expndtw0\charscalex104 \ul0\nosupersub\cf1\f2\fs23 The repo rt set out four key factors that can assist in identifying harmful preferential tax \up0 \expndtw0\charscalex100 regimes. These include the imposition of no, or only nominal taxes; the regime is not open \up0 \expndtw0\charscalex100 to loca ls or for use in the domestic economy; the administrative provisions of the loca l tax \up0 \expndtw0\charscalex104 regime are not transparent; and no effective exchange of information.\ul0\super\cf8\f9\fs23 28\ul0\nosupersub\cf1\f2\fs23 Ba sed on these \up0 \expndtw-2\charscalex100 criteria, 31 offshore jurisdictions h ave been identified as tax havens. \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\ pard\ql\li2205\sb248\sl-264\slmult0 \up0 \expndtw-2\charscalex100 OECD has deman ded that those jurisdictions adopt the following measures:\ul0\super\cf8\f9\fs23 29 \par\pard\ql \li2205\sb136\sl-264\slmult0\tx2906 \up0 \expndtw-2\charscalex1 00 \ul0\nosupersub\cf1\f2\fs23 (i) \tab \up0 \expndtw0\charscalex100 The disallo wance of deductions, exemptions and credits connected to dealing with \par\pard\ ql \li2906\sb156\sl-264\slmult0 \up0 \expndtw-3\charscalex100 uncooperative tax havens; \par\pard\li2205\sb138\sl-264\slmult0\fi0\tx2907 \up0 \expndtw0\charscal ex103 (ii)\tab \up0 \expndtw0\charscalex104 The improvement of audit and enforcement activities as regards to\par\pard\li2205\sb140\sl-264\slm ult0\fi700 \up0 \expndtw0\charscalex103 unaccommodating tax havens; and\par\pard \li2205\sb138\sl-264\slmult0\fi0\tx2906 \up0 \expndtw0\charscalex103 (iii)\tab \ up0 \expndtw0\charscalex104 The imposition of transactional charges on cer tain transactions involving\par\pard\li2205\sb139\sl-264\slmult0\fi700 \up0 \e xpndtw0\charscalex103 uncooperative tax havens.\par\pard\ql \li2205\sb0\sl-264\s lmult0 \par\pard\ql\li2205\sb261\sl-264\slmult0 \up0 \expndtw-1\charscalex100 \u l0\nosupersub\cf4\f5\fs23 5.4.4 The Financial Action Task Force \par\pard\qj \ li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri915\sb44\sl-400\slmult0 \up0 \ex pndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs23 FATF was established to help pr otect financial systems from being used by criminals for \line \up0 \expndtw-1\c harscalex100 laundering their illegal proceeds. It\u8217?s \up0 \expndtw -1\charscalex100 40 Recommendations and Nine Special \par\pard\qj \li220 5\ri914\sb0\sl-403\slmult0 \up0 \expndtw0\charscalex102 Recommendations have bec ome a statement of best practice in the fight against money \line \up0 \expndtw3\charscalex100 laundering and terrorism financing activities. In 1998, FATF est ablished an Ad Hoc Group \line \up0 \expndtw-2\charscalex100 on Non-Cooperative Jurisdictions to evaluate whether jurisdictions were cooperating with \line \up0 \expndtw-4\charscalex100 FATF anti-money laundering standards. Countries that f ailed to cooperate adequately in the \line \up0 \expndtw0\charscalex100 fight a gainst money laundering were classified as Non-Cooperative Countries and \line \up0 \expndtw0\charscalex100 Territories (NCCT). FATF classified NCCTs ba sed on 25 criteria which can be divided \line \up0 \expndtw0\charscalex100 under four headings, namely, loopholes in financial regulations; impediments set by o ther \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmu lt0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb94\sl-218\slmul t0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 27\ul0\nosupersub\cf10\f11\fs19 OECD, \ul0\nosupersub\cf11\f12\fs19 Harmful Tax Competition: An Emerging Global Issues\ul0\nosupersub\cf10\f11\fs19 . (1998), 1 9. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 <{\fiel d{\*\fldinst {HYPERLINK "http://www.oecd.org/dataoecd/33/1/1904184.pdf /" }}{\fl drslt {\ul0\nosupersub\cf29\f30\fs19\ul http://www.oecd.org/dataoecd/33/1/190418 4.pdf\ul0\nosupersub\cf12\f13\fs19 }}}\ul0\nosupersub\cf12\f13\fs19 > \ul0\nosu persub\cf10\f11\fs19 at 23 April, 2006. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 28\ul0\nosupersub\cf10\f11 \fs19 Ibid 26. \par\pard\li2205\sb20\sl-218\slmult0\fi0 \up0 \expndtw-2\charsca lex100 \ul0\super\cf9\f10\fs18 29\ul0\nosupersub\cf10\f11\fs19 Ibid 37.\par\par

d\li2205\sb3\sl-264\slmult0\fi8243 \up0 \expndtw-3\charscalex100 \ul0\nosupersub \cf1\f2\fs23 179 {\shp {\*\shpinst\shpleft2205\shptop13480\shpright5006\shpbottom13500\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz173\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g189}{\bkmkend Pg189}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i917\sb249\sl-400\slmult0\fi0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f 2\fs23 regulatory requirements; obstacles to international cooperation; and ina dequate resources \line \up0 \expndtw0\charscalex107 for preventing, detecting a nd repression money laundering activities.\ul0\super\cf8\f9\fs23 30\ul0\nosupers ub\cf1\f2\fs23 As regards to \line \up0 \expndtw0\charscalex100 loopholes in fi nancial regulations, there are five important criteria that will be assessed by \line \up0 \expndtw-1\charscalex100 FATF, namely,\ul0\super\cf8\f9\fs23 31 \par\ pard\ql \li2205\sb133\sl-264\slmult0\tx2731 \up0 \expndtw-3\charscalex100 \ul0\n osupersub\cf1\f2\fs23 (i) \tab \up0 \expndtw-3\charscalex100 the adequacy of reg ulations and supervision of financial institutions. \par\pard\qj \li2205\ri917\s b24\sl-400\slmult0\tx2731 \up0 \expndtw0\charscalex100 (ii)\ul0\nosupersub\cf6\f 7\fs23 \ul0\nosupersub\cf1\f2\fs23 the adequacy of rules for the licensing an d creation of financial institutions including \line\tab \up0 \expndtw-1\charsca lex100 assessing the backgrounds of their managers and beneficial owners. \par\p ard\qj \li2205\ri1655\sb0\sl-400\slmult0 \up0 \expndtw-1\charscalex100 (iii)\ul0 \nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 the adequacy of customer i dentification requirements for financial institutions. \up0 \expndtw-2\charscale x100 (iv)\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 the secrecy p rovisions regarding financial institutions. \par\pard\ql \li2205\sb113\sl-264\sl mult0 \up0 \expndtw-2\charscalex100 (v)\ul0\nosupersub\cf6\f7\fs23 \ul0\nosuper sub\cf1\f2\fs23 the efficient suspicious transaction reporting system. \par\pa rd\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri915\sb44\sl-400\slmult0 \ up0 \expndtw0\charscalex100 According to Shahin, the criterion relating to secre cy provision was not fully met by most \up0 \expndtw0\charscalex106 of the NCCT entities. In fact, meeting this criterion in itself requires major legislative \ up0 \expndtw-2\charscalex100 changes in rules and regulation governing banking s ecrecy in most countries.\ul0\super\cf8\f9\fs23 32 \par\pard\qj \li2205\ri915\sb 396\sl-405\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf1\f2\fs23 Sin ce 2000, FATF has identified 23 jurisdictions as NCCTs. The jurisdictions are Ba hamas, \up0 \expndtw-1\charscalex100 Cayman Islands, Cook Islands, Dominica, Isr ael, Lebanon, Liechtenstein, Marshall Islands, \up0 \expndtw0\charscalex110 Naur u, Niue, Panama, Philippines, Russia, St. Kitts and Nevis, St. Vincent and the \ up0 \expndtw0\charscalex100 Grenadines, Grenada, Ukraine, Egypt, Guatemala, Hung ary, Indonesia, Myanmar, Nigeria \up0 \expndtw0\charscalex100 and Uruguay.\ul0\s uper\cf8\f9\fs23 33\ul0\nosupersub\cf1\f2\fs23 It is clear that the OFCs have d ominated the NCCTs list. \par\pard\qj \li2205\ri916\sb400\sl-400\slmult0 \up0 \e xpndtw0\charscalex100 It has been argued that by labelling certain jurisdictions as NCCTs, FATF has effectively \up0 \expndtw0\charscalex103 ensured that the OF Cs follow its recommendations. Besides, non-compliance could risk \up0 \expndtw0 \charscalex103 sanctions from the international community and this will have a s ignificant effect on the \up0 \expndtw0\charscalex103 economies of the offshore centres.\ul0\super\cf8\f9\fs23 34 \par\pard\qj \li2205\sb0\sl-220\slmult0 \par\p ard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\par d\qj\li2205\ri932\sb189\sl-220\slmult0 \up0 \expndtw-1\charscalex100 \ul0\super\

cf9\f10\fs18 30\ul0\nosupersub\cf10\f11\fs19 These criteria can be found in Ann ex 1 of the Annual Review of Non-Cooperative Countries and Territories \line \up 0 \expndtw-1\charscalex100 2005-2006 <{\field{\*\fldinst {HYPERLINK "http://www. fatff-gafi.org/data oecd/0/0/37029619.pdf /" }}{\fldrslt {\ul0\nosupersub\cf29\f 30\fs19\ul http://www.fatff-gafi.org/data oecd/0/0/37029619.pdf\ul0\nosupersub\c f10\f11\fs19 }}}\ul0\nosupersub\cf10\f11\fs19 > at 18 April 2006. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 31\ul0\nosupersub\cf10\f11\fs19 Ibid. \par\pard\qj \li2205\ri934\sb21\sl-220\s lmult0 \up0 \expndtw0\charscalex105 \ul0\super\cf9\f10\fs18 32\ul0\nosupersub\cf 10\f11\fs19 Wassim N. Shahin, \u8216?De-listing from NCCTs and Money Laundering Control Measures: A Banking \up0 \expndtw-2\charscalex100 Regulation Perspectiv e.\u8217? (2005) 8(4) \ul0\nosupersub\cf11\f12\fs19 Journal of Money Laundering Control\ul0\nosupersub\cf10\f11\fs19 320, 324. \par\pard\qj \li2205\ri944\sb0\s l-220\slmult0 \up0 \expndtw0\charscalex100 \ul0\super\cf9\f10\fs18 33\ul0\nosupe rsub\cf10\f11\fs19 Financial Action Task Force on Money Laundering, \ul0\nosupe rsub\cf11\f12\fs19 Annual Review of Non-Cooperative Countries and \up0 \expndtw0 \charscalex100 Territories 2005-2006 \ul0\nosupersub\cf10\f11\fs19 (2006). \par\ pard\qj \li2205\ri937\sb0\sl-220\slmult0 \up0 \expndtw-3\charscalex100 \ul0\supe r\cf9\f10\fs18 34\ul0\nosupersub\cf10\f11\fs19 G Scott Dowling, \u8216?Fatal Br oadside: The Demise of Caribbean Offshore Financial Confidentiality Post USA \up 0 \expndtw-4\charscalex100 PATRIOT Act\u8217? (2004) 17 \ul0\nosupersub\cf11\f12 \fs19 Transnational Lawyer\ul0\nosupersub\cf10\f11\fs19 259, 284. \par\pard\ql \li10449\sb14\sl-252\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f 2\fs23 180 {\shp {\*\shpinst\shpleft2205\shptop12362\shpright5006\shpbottom12382\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz243\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g190}{\bkmkend Pg190}\par\pard\qj \li2205\sb0\sl-404\slmult0 \par\pard\qj\li2205 \sb0\sl-404\slmult0 \par\pard\qj\li2205\sb0\sl-404\slmult0 \par\pard\qj\li2205\r i913\sb234\sl-404\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf1\f2\f s23 Since October 2006, all jurisdictions that have been listed as NCCTs are no longer on the \up0 \expndtw-3\charscalex100 list as they have made significant p rogress towards compliance and have strengthened their \up0 \expndtw-2\charscale x100 anti-money laundering and counter-terrorism financing measures. This reflec ts the success \up0 \expndtw0\charscalex106 of the FATF\u8217?s approach and now it is accepted by all jurisdictions that adherence to \up0 \expndtw-1\charscale x100 international standards is vital to countering money laundering and terrori sm financing as \up0 \expndtw-2\charscalex100 well as strengthening the internat ional financial system. \par\pard\qj \li2205\ri914\sb396\sl-404\slmult0 \up0 \ex pndtw-3\charscalex100 It can be seen that all the initiatives undertaken by FSF, IMF, OECD and FATF have had a \line \up0 \expndtw0\charscalex107 positive impac t on OFCs in relation to their international cooperation; exchange of \line \up0 \expndtw0\charscalex105 information; abolition of excessive secrecy rule; antimoney laundering compliance; \line \up0 \expndtw-1\charscalex100 improved legisl ation and elimination of harmful tax practices. These initiatives should be \lin e \up0 \expndtw-2\charscalex100 considered as being highly complementary in thei r efforts to reduce the abuse of OFCs for \line \up0 \expndtw-3\charscalex100 cr iminal purposes. \par\pard\qj \li2205\ri915\sb397\sl-403\slmult0 \up0 \expndtw-2 \charscalex100 In summary, OFCs have responded to international pressure to intr oduce transparency and \up0 \expndtw0\charscalex100 openness into their offshore financial sector. A growing number of offshore jurisdictions \up0 \expndtw0\cha

rscalex102 have enacted anti-money laundering laws that conform to international standards. This \up0 \expndtw0\charscalex102 reflects the view that meeting all the international standards would change the negative \up0 \expndtw0\charscalex 100 perceptions associated with OFCs. It should be borne in mind, however, that more work \up0 \expndtw-2\charscalex100 remains to be done in ensuring the antimoney laundering laws are working and the efforts \up0 \expndtw-3\charscalex100 to combat the abuse of OFCs are fruitful. \par\pard\ql \li2205\sb0\sl-264\slmult 0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb224\sl-264\slmult 0\tx2906 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf4\f5\fs23 5.5 \tab \up0 \expndtw-5\charscalex100 Labuan International Business and Financial Centre \pa r\pard\qj \li2205\ri914\sb280\sl-405\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ ul0\nosupersub\cf1\f2\fs23 Labuan International Business and Financial Centre (L abuan IBFC) is Malaysia\u8217?s offshore \line \up0 \expndtw-2\charscalex100 cen tre. It is located in the island of Labuan, off the eastern cost of Malaysia. La buan IBFC \line \up0 \expndtw0\charscalex103 was created as an offshore financia l hub on October 1990 and was operating under the \line \up0 \expndtw0\charscale x104 name of Labuan International Offshore Financial Centre (IOFC).\ul0\super\cf 8\f9\fs23 35\ul0\nosupersub\cf1\f2\fs23 Labuan IBFC was \line \up0 \expndtw0\ch arscalex104 designed to complement the activities of the onshore financial marke t, to strengthen the \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205 \sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\s b156\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\su per\cf9\f10\fs18 35\ul0\nosupersub\cf10\f11\fs19 Since January 2008, Labuan IOF C has been renamed as Labuan IBFC. \par\pard\ql \li10449\sb104\sl-264\slmult0 \u p0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 181 {\shp {\*\shpinst\shpleft2205\shptop14040\shpright5006\shpbottom14060\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz172\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g191}{\bkmkend Pg191}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i916\sb249\sl-400\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf1\f2\f s23 contribution of financial services to the gross national product of Malaysia and to provide a \up0 \expndtw-2\charscalex100 developmental base for the islan d. \par\pard\qj \li2205\ri912\sb280\sl-400\slmult0\fi0 \up0 \expndtw-2\charscale x100 Labuan possesses a number of features that make it suitable for development as an OFC. It \up0 \expndtw0\charscalex102 shares virtually the same time zone as most of the major financial centres of East Asia, \up0 \expndtw0\charscalex10 0 English is widely spoken, and the accounting standards, business practices and the legal \up0 \expndtw0\charscalex103 system adhere to English standards.\ul0\ super\cf8\f9\fs23 36\ul0\nosupersub\cf1\f2\fs23 It appears that the development of Labuan as an \up0 \expndtw-3\charscalex100 IBFC has led to an improvement in Malaysia\u8217?s financial system. \par\pard\qj \li2205\ri914\sb276\sl-405\slmu lt0 \up0 \expndtw-2\charscalex100 Labuan IBFC offers a wide range of innovative offshore financial products and services to \line \up0 \expndtw0\charscalex100 c ustomers worldwide. The services include banking and investment banking, insuran ce, \line \up0 \expndtw-1\charscalex100 trust business, fund management, investm ent holding, company management and Islamic \line \up0 \expndtw0\charscalex100 b anking products. Recently, Labuan IBFC also became an active international centr e for \line \up0 \expndtw-1\charscalex100 Islamic finance.\ul0\super\cf8\f9\fs23 37 \par\pard\qj \li2205\ri914\sb280\sl-400\slmult0 \up0 \expndtw0\charscalex103 \ul0\nosupersub\cf1\f2\fs23 Special economic incentives have been provided to e

ncourage the development of the \up0 \expndtw-5\charscalex100 offshore centre an d these include:\ul0\super\cf8\f9\fs23 38 \par\pard\li2556\sb0\sl-264\slmult0\pa r\pard\li2556\sb126\sl-264\slmult0\fi0\tx3255 \up0 \expndtw-2\charscalex100 \ul0 \nosupersub\cf1\f2\fs23 (i)\tab \up0 \expndtw-2\charscalex100 no bank reserve re quirements and foreign exchange controls;\par\pard\li2556\sb138\sl-264\slmult0\f i0\tx3255 \up0 \expndtw-2\charscalex100 (ii)\tab \up0 \expndtw-2\charscalex100 l ow annual licensing fees;\par\pard\li2556\sb139\sl-264\slmult0\fi0\tx3255 \up0 \ expndtw-2\charscalex100 (iii)\tab \up0 \expndtw-1\charscalex100 no withholding t ax on income or dividends earned in Malaysia and remitted out;\par\pard\li2556\s b138\sl-264\slmult0\fi0\tx3255 \up0 \expndtw-2\charscalex100 (iv)\tab \up0 \expn dtw-1\charscalex100 option of a three percent annual corporate tax, or a fixed t ax of RM20 000;\par\pard\li2556\sb140\sl-264\slmult0\fi0\tx3255 \up0 \expndtw-2\ charscalex100 (v)\tab \up0 \expndtw-1\charscalex100 no tax on income from \u8216 ?non-trading\u8217? activities such as ownership of securities\par\pard\li2556\s b138\sl-264\slmult0\fi699 \up0 \expndtw-2\charscalex100 and real estate;\par\par d\li2556\sb139\sl-264\slmult0\fi0\tx3255 \up0 \expndtw-2\charscalex100 (vi)\tab \up0 \expndtw-1\charscalex100 absence of stamp duties, value added taxes, death, inheritance or estate duties;\par\pard\li2556\sb138\sl-264\slmult0\fi0\tx3255 \ up0 \expndtw-2\charscalex100 (vii)\tab \up0 \expndtw-2\charscalex100 no restrict ion on foreign ownership limit on Malaysian companies; and\par\pard\ql \li2556\r i915\sb1\sl-410\slmult0\tx3255\tx3255 \up0 \expndtw0\charscalex102 (viii)\ul0\no supersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 offshore entities in Labuan which are declared as non residents for exchange \line\tab \up0 \expndtw-2\chars calex100 control purposes may freely buy, borrow, sell or lend foreign currency with any \line\tab \up0 \expndtw-3\charscalex100 non-resident. \par\pard\qj \li2 205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li220 5\sb0\sl-220\slmult0 \par\pard\qj\li2205\ri934\sb207\sl-220\slmult0 \up0 \expndt w0\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 36\ul0\nosupersu b\cf10\f11\fs19 Jason Abbott, \u8216?Treasure Island or Desert Island? Offshore Finance and Economic Development in Small \up0 \expndtw0\charscalex100 Island E conomies: The Case of Labuan\u8217? (2000) 18 \ul0\nosupersub\cf11\f12\fs19 Deve lopment Policy Review\ul0\nosupersub\cf10\f11\fs19 157, 159. \par\pard\ql \li22 05\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 37\u l0\nosupersub\cf10\f11\fs19 LOFSA Annual Report 2006, 67. \par\pard\ql \li2205\ sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 38\ul0\ nosupersub\cf10\f11\fs19 Ibid. \par\pard\ql \li10449\sb15\sl-251\slmult0 \up0 \ expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 182 {\shp {\*\shpinst\shpleft2205\shptop13480\shpright5006\shpbottom13500\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz234\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g192}{\bkmkend Pg192}\par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205 \sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\s b0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb2 41\sl-264\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf4\f5\fs23 5.5. 1 Legal framework of Labuan IBFC \par\pard\qj \li2205\ri913\sb304\sl-400\slmul t0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs23 As an IBFC, the oper ations of offshore business in Labuan are governed by a separate set \line \up0 \expndtw0\charscalex104 of offshore legislation that provides a strict confident ial business environment, tax and \line \up0 \expndtw0\charscalex103 related ben efits and no exchange control for non-Malaysian residents. These include the \li ne \up0 \expndtw-2\charscalex100 Offshore Banking Act 1990; the Offshore Insuran

ce Act 1990; the Offshore Companies Act \line \up0 \expndtw-1\charscalex100 1990 ; the Labuan Offshore Business Activities Tax Act 1990; the Labuan Trust Compani es \line \up0 \expndtw0\charscalex107 Act 1990; the Labuan Offshore Financial Se rvices Authority Act \up0 \expndtw0\charscalex106 1996; the Labuan \par\pard\qj \li2205\ri916\sb20\sl-400\slmult0 \up0 \expndtw0\charscalex106 Offshore Trust Ac t 1996; the Labuan Offshore Limited Partnership Act 1997 and the \up0 \expndtw-3 \charscalex100 Labuan Offshore Securities Industry Act 1998.\ul0\super\cf8\f9\fs 23 39 \par\pard\qj \li2205\ri915\sb256\sl-405\slmult0\fi0 \up0 \expndtw0\charsca lex103 \ul0\nosupersub\cf1\f2\fs23 Generally, these laws have been enacted with the main objective of providing minimum \up0 \expndtw0\charscalex103 rules and r egulations to enable Labuan IBFC to compete with other renowned IOFCs.\ul0\super \cf8\f9\fs23 40 \up0 \expndtw0\charscalex104 \ul0\nosupersub\cf1\f2\fs23 However it is balanced with prudential requirements in line with accepted international \up0 \expndtw0\charscalex100 regulatory standards and best practices. Furthermo re, the laws also place emphasis on the \up0 \expndtw0\charscalex100 secrecy and confidentiality rules. However, the laws are subject to certain exceptions. For \up0 \expndtw-2\charscalex100 example, disclosure of confidential information c an be made by a court order. This suggests \up0 \expndtw0\charscalex102 that the government of Malaysia is not prepared to allow bank secrecy to be manipulated \up0 \expndtw0\charscalex104 for criminal purposes. More importantly, it demonst rates the availability of the Labuan \up0 \expndtw-3\charscalex100 IBFC only to legitimate customers and businesses. \par\pard\ql \li2205\sb0\sl-264\slmult0 \pa r\pard\ql\li2205\sb108\sl-264\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosuper sub\cf4\f5\fs23 5.5.2 Labuan Offshore Financial Service Authority \par\pard\qj \li2205\ri911\sb302\sl-402\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub \cf1\f2\fs23 In 1996, the Labuan Offshore Financial Service Authority (LOFSA) wa s established with \line \up0 \expndtw-2\charscalex100 the responsibility of spe arheading and coordinating the development of Labuan as an IBFC. \line \up0 \exp ndtw0\charscalex100 It also acts as the single supervisory authority responsible for administering and enforcing \line \up0 \expndtw0\charscalex102 the legislat ion in the Labuan IBFC. In carrying out its supervisory role, LOFSA adopts a \li ne \up0 \expndtw0\charscalex102 risk-based supervisory framework. Under this framework, the supervisory activities \line \up0 \expndtw0\charscalex105 con tinue to require off-site surveillance and on-site examination, including formal and \line \up0 \expndtw-1\charscalex100 informal prudential discussions. The ma in thrust of this framework is to identify and assess \line \up0 \expndtw-1\char scalex100 key risks encountered by the offshore financial institutions and their capacity to mitigate \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\li220 5\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb74\sl-218\slmult0 \up0 \expndtw-2\cha rscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 39\ul0\nosupersub\cf10 \f11\fs19 LOFSA Annual Report 2004, 26. \par\pard\li2205\sb20\sl-218\slmult0\fi 0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 40\ul0\nosupersub\cf10\f 11\fs19 Nik Norzrul Thani, \ul0\nosupersub\cf11\f12\fs19 Legal Aspects of the M alaysia Financial System\ul0\nosupersub\cf10\f11\fs19 (2001) 240.\par\pard\li22 05\sb3\sl-264\slmult0\fi8243 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f 2\fs23 183 {\shp {\*\shpinst\shpleft2205\shptop13928\shpright5006\shpbottom13948\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz199\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g193}{\bkmkend Pg193}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r

i916\sb249\sl-400\slmult0\fi0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf1\ f2\fs23 and manage those risks.\ul0\super\cf8\f9\fs23 41\ul0\nosupersub\cf1\f2\f s23 This approach is in line with the Basel II framework which was \up0 \expndt w0\charscalex103 introduced in 2004 by the Basel Committee on Banking Supervisio n. This approach is \up0 \expndtw0\charscalex105 critical to ensure safe and sou nd financial systems without undermining the financial \up0 \expndtw-5\charscale x100 institutions\u8217? progress. \par\pard\qj \li2205\ri916\sb272\sl-410\slmul t0 \up0 \expndtw-1\charscalex100 The functions and powers of LOFSA are prescribe d under the Labuan Offshore Financial \up0 \expndtw0\charscalex100 Services Auth ority Act 1996 (LOFSA Act). Section 4(1) of the Act sets out the statutory \up0 \expndtw-1\charscalex100 functions of LOFSA as follows: \par\pard\ql \li2556\ri9 15\sb259\sl-400\slmult0\tx3080 \up0 \expndtw-1\charscalex100 (a)\ul0\nosupersub\ cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 To administer, enforce, carry out and give effect to the provisions of the laws and \line\tab \up0 \expndtw-2\charsca lex100 regulations relating to offshore financial services in Labuan. \par\pard\ ql \li2555\ri921\sb0\sl-420\slmult0\tx3080 \up0 \expndtw-1\charscalex100 (b)\ul0 \nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 To exercise, discharge an d perform the powers, duties and functions imposed by \line\tab \up0 \expndtw-1\ charscalex100 the laws and regulations of Malaysia applicable to Labuan. \par\pa rd\ql \li2555\ri917\sb0\sl-400\slmult0\tx3080\tx3080 \up0 \expndtw0\charscalex10 0 (c)\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 To ensure that o ffshore financial transactions are conducted in accordance with \line\tab \up0 \ expndtw0\charscalex102 such laws and regulations and to preserve the good reputa tion of Labuan as an \line\tab \up0 \expndtw-5\charscalex100 IBFC. \par\pard\ql \li2555\ri917\sb0\sl-400\slmult0\tx3080 \up0 \expndtw0\charscalex102 (d)\ul0\nos upersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 To carry out research and com mission studies on offshore financial services in \line\tab \up0 \expndtw-4\char scalex100 Labuan. \par\pard\ql \li2555\ri918\sb0\sl-420\slmult0\tx3080 \up0 \exp ndtw0\charscalex102 (e)\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 To make recommendations for the creation and improvement of any facility to \l ine\tab \up0 \expndtw-5\charscalex100 enhance the attraction of Labuan as IBFC. \par\pard\li2555\sb76\sl-264\slmult0\fi0\tx3080 \up0 \expndtw0\charscalex101 (f) \tab \up0 \expndtw0\charscalex102 To cooperate with offshore financial instituti ons and professional and industry\par\pard\li2555\sb139\sl-264\slmult0\fi524 \up 0 \expndtw0\charscalex102 associations in Labuan and foster high standards of of fshore financial services in\par\pard\li2555\sb138\sl-264\slmult0\fi524 \up0 \ex pndtw0\charscalex101 Labuan.\par\pard\ql \li2555\ri916\sb17\sl-400\slmult0\tx308 0 \up0 \expndtw0\charscalex102 (g)\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\c f1\f2\fs23 To advise the Government on matters relating to offshore financial services in \line\tab \up0 \expndtw-4\charscalex100 Labuan. \par\pard\qj \li2205 \ri912\sb280\sl-400\slmult0 \up0 \expndtw-3\charscalex100 In performing its func tions, LOFSA is empowered to investigate, to collect information and \line \up0 \expndtw-2\charscalex100 to divulge such information. Section 28D of the LOFSA A ct empowers LOFSA to appoint \line \up0 \expndtw-2\charscalex100 any of its offi cer or any other suitable person to be an investigating officer for the purpose \line \up0 \expndtw0\charscalex103 of carrying out investigation of any offence under the Act or under any law relating to \line \up0 \expndtw0\charscalex103 of fshore financial services. Indeed, this power enables LOFSA to effectively enfor ce the \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\sl mult0 \par\pard\ql\li2205\sb175\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul 0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 41\ul0\nosupersub\cf10\f11\fs19 LOF SA Annual Report 2006, 58. \par\pard\ql \li10449\sb15\sl-251\slmult0 \up0 \expnd tw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 184 {\shp {\*\shpinst\shpleft2205\shptop14151\shpright5006\shpbottom14171\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz217\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276

8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g194}{\bkmkend Pg194}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i912\sb249\sl-400\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs 23 offshore legislation under its jurisdiction and to prevent the infiltration o f illegal activities \up0 \expndtw0\charscalex100 into offshore business. \par\p ard\qj \li2205\ri915\sb277\sl-404\slmult0 \up0 \expndtw0\charscalex100 Section 2 8B provides that in exercising its supervisory functions under the LOFSA Act or \up0 \expndtw0\charscalex108 under any other law relating to offshore financial services, LOFSA may require any \up0 \expndtw0\charscalex105 financial instituti on or any corporation related to any financial institution, to submit to \up0 \e xpndtw0\charscalex100 LOFSA any information which it deems necessary or expedien t for the performance of its \up0 \expndtw0\charscalex100 supervisory functions. However, LOFSA is not allowed to require any information which \up0 \expndtw0\c harscalex100 discloses the affairs, identity or account of the customer.\ul0\sup er\cf8\f9\fs23 42 \par\pard\qj \li2205\ri915\sb256\sl-404\slmult0\fi0 \up0 \expn dtw0\charscalex105 \ul0\nosupersub\cf1\f2\fs23 LOFSA is also allowed to disclose the submitted information to the relevant authority \line \up0 \expndtw0\charsc alex106 subject to certain requirements prescribed under the law.\ul0\super\cf8\ f9\fs23 43\ul0\nosupersub\cf1\f2\fs23 It has been argued that the \line \up0 \e xpndtw0\charscalex100 inability of LOFSA to collect information regarding the af fairs, identity or account of the \line \up0 \expndtw0\charscalex106 customer co uld affect the ability of LOFSA to share such important information with \line \ up0 \expndtw0\charscalex107 foreign supervisory authorities.\ul0\super\cf8\f9\fs 23 44\ul0\nosupersub\cf1\f2\fs23 As such, this shortcoming needs to be reviewed by \line \up0 \expndtw-3\charscalex100 LOFSA. \par\pard\ql \li2205\sb0\sl-264\s lmult0 \par\pard\ql\li2205\sb128\sl-264\slmult0\tx4417 \up0 \expndtw-1\charscale x100 Furthermore, section \tab \up0 \expndtw0\charscalex103 28B(5) empowers L OFSA to request the submission of any \par\pard\qj \li2205\ri913\sb22\sl-4 02\slmult0 \up0 \expndtw0\charscalex102 information relating to the affairs, ide ntity or account of a customer of offshore financial \line \up0 \expndtw0\charsc alex106 institution or corporation and may disclose such information to th e domestic law \line \up0 \expndtw0\charscalex100 enforcement agency or foreig n supervisory authority, if LOFSA is satisfied, based on the \line \up0 \expndtw 0\charscalex104 available evidence that fraud or criminal offence has been or is likely to be committed. \line \up0 \expndtw-1\charscalex100 However, it must be noted that the secrecy and confidentiality of the submitted information \line \ up0 \expndtw0\charscalex100 must be preserved.\ul0\super\cf8\f9\fs23 45\ul0\nosu persub\cf1\f2\fs23 Any person who fails to keep such information secret could b e guilty \line \up0 \expndtw0\charscalex114 of an offence and the person could be liable to RM500,000 fine or six months \line \up0 \expndtw-3\charscalex100 imprisonment or both.\ul0\super\cf8\f9\fs23 46 \par\pard\ql \li2205\sb0\sl-218\s lmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slm ult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmul t0 \par\pard\ql\li2205\sb180\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\s uper\cf9\f10\fs18 42\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Labuan Offshore Financial Services Authority Act 1996\ul0\nosupersub\cf10\f11\f s19 , s 28B(1). \par\pard\ql \li2205\sb22\sl-218\slmult0 \up0 \expndtw-2\charsca lex100 \ul0\super\cf9\f10\fs18 43\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\ cf11\f12\fs19 Labuan Offshore Financial Services Authority Act 1996\ul0\nosupers ub\cf10\f11\fs19 , s 28B(2). \par\pard\ql \li2205\ri934\sb1\sl-220\slmult0\fi0 \ up0 \expndtw0\charscalex104 \ul0\super\cf9\f10\fs18 44\ul0\nosupersub\cf10\f11\f s19 International Monetary Fund, \ul0\nosupersub\cf11\f12\fs19 Labuan, Malaysia : Assessment of the Supervision and Regulation of the \line \up0 \expndtw-2\char scalex100 Financial Sector-Review of Financial Sector Regulation and Supervision \ul0\nosupersub\cf10\f11\fs19 , December 2004, 22. \line \up0 \expndtw-2\charsca

lex100 Available at {\field{\*\fldinst {HYPERLINK "http://www.imf.org/external/p ubs/ft/scr/2004/cr0439.pdf/" }}{\fldrslt {\ul0\nosupersub\cf10\f11\fs19 http://w ww.imf.org/external/pubs/ft/scr/2004/cr0439.pdf}}}\ul0\nosupersub\cf10\f11\fs19 (22 May 2006). \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charsca lex100 \ul0\super\cf9\f10\fs18 45\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\ cf11\f12\fs19 Labuan Offshore Financial Services Authority Act 1996\ul0\nosupers ub\cf10\f11\fs19 , s 28B(6). \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expnd tw-2\charscalex100 \ul0\super\cf9\f10\fs18 46\ul0\nosupersub\cf10\f11\fs19 \ul0 \nosupersub\cf11\f12\fs19 Labuan Offshore Financial Services Authority Act 1996\ ul0\nosupersub\cf10\f11\fs19 , s 28B(11). \par\pard\ql \li10449\sb15\sl-251\slmu lt0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 185 {\shp {\*\shpinst\shpleft2205\shptop12810\shpright5006\shpbottom12830\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz174\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g195}{\bkmkend Pg195}\par\pard\qj \li2205\sb0\sl-403\slmult0 \par\pard\qj\li2205 \sb0\sl-403\slmult0 \par\pard\qj\li2205\sb0\sl-403\slmult0 \par\pard\qj\li2205\r i913\sb238\sl-403\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf1\f2\f s23 It appears that LOFSA has recognised the importance of maintaining secrecy r ule as this is \line \up0 \expndtw0\charscalex108 one of the key feature of offs hore financial centre. However, when disclosure of the \line \up0 \expndtw0\char scalex105 confidential information is necessary, especially when there are eleme nts of crime and \line \up0 \expndtw0\charscalex104 fraud available, the secrecy rule will be lifted. Indeed this approach has manifested the \line \up0 \expndt w0\charscalex100 transparency of the Labuan IBFC. Generally, it can be seen that the LOFSA Act provides \line \up0 \expndtw0\charscalex100 adequate authority fo r LOFSA to supervise prudentially the offshore financial institutions \line \up0 \expndtw0\charscalex100 in Labuan. \par\pard\ql \li2205\sb0\sl-264\slmult0 \par \pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\p ard\ql\li2205\sb260\sl-264\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub \cf4\f5\fs23 5.5.3 Offshore Banks in Labuan \par\pard\qj \li2205\ri915\sb302\s l-402\slmult0\fi0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs23 Offsh ore banks are at the heart of any OFC, including the Labuan IBFC. As at April 20 07, \line \up0 \expndtw0\charscalex102 there were 53 offshore banks, including i nvestment banks operating in Labuan IBFC. Of \line \up0 \expndtw0\charscalex106 the total, \up0 \expndtw0\charscalex106 15 were Malaysian-owned banks and 39 wer e foreign-owned banks.\ul0\super\cf8\f9\fs23 47\ul0\nosupersub\cf1\f2\fs23 The \line \up0 \expndtw0\charscalex100 Offshore Banking Act 1990 (OBA) creates the l egislative framework for the licensing and \line \up0 \expndtw0\charscalex100 re gulation of offshore banking business in Labuan. In addition to OBA, the offshor e banks \line \up0 \expndtw0\charscalex106 which are offshore companies or foreign offshore companies are subject to the \line \up0 \expndtw-1\charsc alex100 requirements of the Offshore Companies Act 1990. The Banking and Financi al Institutions \line \up0 \expndtw0\charscalex107 Act 1989 (BAFIA) which regula tes the onshore banks in Malaysia does not apply to \line \up0 \expndtw-3\charsc alex100 offshore banks operating in Labuan.\ul0\super\cf8\f9\fs23 48 \par\pard\q j \li2205\ri915\sb278\sl-402\slmult0\fi0 \up0 \expndtw0\charscalex102 \ul0\nosup ersub\cf1\f2\fs23 Under section 2(1) of OBA, an offshore bank means \u8216?a per son who carries on offshore \line \up0 \expndtw0\charscalex100 banking business or offshore investment banking business.\u8217?\ul0\super\cf8\f9\fs23 49\ul0\nos upersub\cf1\f2\fs23 Offshore banking business \line \up0 \expndtw0\charscalex10 2 means any business of receiving deposits and providing credit facilit

ies, offshore \line \up0 \expndtw0\charscalex100 investment banking service, Is lamic banking business or such other business activities as \line \up0 \expndtw3\charscalex100 LOFSA may specify with the approval by the Minister of Finance.\ ul0\super\cf8\f9\fs23 50\ul0\nosupersub\cf1\f2\fs23 In 2000, changes were \line \up0 \expndtw0\charscalex100 made to the definition of offshore banking busines s to include offshore leasing, factoring \line \up0 \expndtw-3\charscalex100 and credit token activities. Furthermore, section 23G was introduced to allow the o peration \line \up0 \expndtw-3\charscalex100 of electronic funds transfer system s in, from, or through Labuan. If an offshore bank wants \par\pard\ql \li2205\sb 0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb34 \sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\ cf9\f10\fs18 47\ul0\nosupersub\cf10\f11\fs19 LOFSA Annual Report 2006, 36. \par \pard\li2205\sb13\sl-218\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\super\cf 9\f10\fs18 48\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Offsho re Banking Act 1990\ul0\nosupersub\cf10\f11\fs19 , s 30.\par\pard\li2205\sb6\sl218\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 49\ul0\nos upersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Offshore Banking Act 1990\u l0\nosupersub\cf10\f11\fs19 , s 2(1).\par\pard\li2205\sb5\sl-218\slmult0\fi0 \up 0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 50\ul0\nosupersub\cf10\f11\fs 19 \ul0\nosupersub\cf11\f12\fs19 Offshore Banking Act 1990\ul0\nosupersub\cf10\ f11\fs19 , s 2(1).\par\pard\li2205\sb3\sl-264\slmult0\fi8243 \up0 \expndtw-3\cha rscalex100 \ul0\nosupersub\cf1\f2\fs23 186 {\shp {\*\shpinst\shpleft2205\shptop13480\shpright5006\shpbottom13500\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz177\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g196}{\bkmkend Pg196}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i918\sb249\sl-400\slmult0 \up0 \expndtw0\charscalex106 \ul0\nosupersub\cf1\f2\fs 23 to operate such a system, it is required to submit the details of the propose d system to \up0 \expndtw0\charscalex100 LOFSA for approval. This measure is cri tical for ensuring that the system is not be abused \up0 \expndtw-1\charscalex10 0 for criminal purposes. \par\pard\qj \li2205\ri915\sb279\sl-402\slmult0\fi0 \up 0 \expndtw0\charscalex100 Under section 4 of OBA in order to undertake an offsho re banking business in Labuan, a \line \up0 \expndtw0\charscalex103 company must be incorporated as an offshore company or a foreign offshore company \line \up0 \expndtw-2\charscalex100 under the Offshore Companies Act 1990, or it must be a Malaysian bank and holds a valid \line \up0 \expndtw0\charscalex102 licence to carry on such business. An application for the licence can be made by, or on \li ne \up0 \expndtw-3\charscalex100 behalf of the applicant, to the Minister of Fin ance through LOFSA.\ul0\super\cf8\f9\fs23 51\ul0\nosupersub\cf1\f2\fs23 Sectio n 5(2) of OBA \line \up0 \expndtw-1\charscalex100 specifies the necessary inform ation and documents which are required to be submitted by \line \up0 \expndtw-3\ charscalex100 the applicant such as the applicant\u8217?s profile, constituent d ocuments, particulars of directors \line \up0 \expndtw-3\charscalex100 and offic ers and financial statements. It also requires a guarantee and an undertaking by the \line \up0 \expndtw-4\charscalex100 applicant that: \par\pard\ql \li2205\sb 0\sl-264\slmult0 \par\pard\ql\li2205\sb128\sl-264\slmult0\tx2731 \up0 \expndtw-5 \charscalex100 (i) \tab \up0 \expndtw-1\charscalex100 The applicant shall comply with the financial obligations and requirements imposed \par\pard\qj \li2731\ri 917\sb24\sl-400\slmult0 \up0 \expndtw-3\charscalex100 under OBA and shall meet t he applicant\u8217?s liabilities in respect of its offshore banking \up0 \expndt

w-4\charscalex100 business in, from and through Labuan; \par\pard\ql \li2205\ri9 13\sb280\sl-400\slmult0\tx2731\tx2731\tx2731\tx2731 \up0 \expndtw-3\charscalex10 0 (ii) Where the applicant is an offshore company, no participant of the appli cant who holds \line\tab \up0 \expndtw0\charscalex100 ten percent or more of the paid up capital of the applicant shall be changed without \line\tab \up0 \expnd tw0\charscalex100 the prior written approval of LOFSA and where the applicant is a foreign offshore \line\tab \up0 \expndtw0\charscalex100 company, that it shal l promptly notify the LOFSA of any change of its participants \line\tab \up0 \ex pndtw0\charscalex100 who hold ten percent or more of its paid-up capital; and \p ar\pard\ql \li2205\ri915\sb276\sl-406\slmult0\tx2731\tx2731\tx2731 \up0 \expndtw 0\charscalex106 (iii) Every director or the chief executive officer of the appli cant responsible for the \line\tab \up0 \expndtw0\charscalex104 management of it s offshore banking business in Labuan shall be a fit and proper \line\tab \up0 \ expndtw0\charscalex100 person and the appointment of such director or chief exec utive officer shall only be \line\tab \up0 \expndtw-1\charscalex100 made after c onsultation with the LOFSA. \par\pard\qj \li2205\ri916\sb259\sl-400\slmult0 \up0 \expndtw-2\charscalex100 Approval of the licence shall not be granted unless th e offshore bank has a minimum paid-\line \up0 \expndtw-2\charscalex100 up capita l and reserves of ten million ringgit or its equivalent in any other currency.\u l0\super\cf8\f9\fs23 52\ul0\nosupersub\cf1\f2\fs23 It is \par\pard\ql \li2205\s b0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb2 15\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\supe r\cf9\f10\fs18 51\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Of fshore Banking Act 1990\ul0\nosupersub\cf10\f11\fs19 , s 5(1). \par\pard\li2205\ sb20\sl-218\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 52 \ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Offshore Banking Ac t 1990\ul0\nosupersub\cf10\f11\fs19 , s 11.\par\pard\li2205\sb3\sl-264\slmult0\f i8243 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 187 {\shp {\*\shpinst\shpleft2205\shptop13928\shpright5006\shpbottom13948\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz164\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g197}{\bkmkend Pg197}\par\pard\qj \li2205\sb0\sl-404\slmult0 \par\pard\qj\li2205 \sb0\sl-404\slmult0 \par\pard\qj\li2205\sb0\sl-404\slmult0 \par\pard\qj\li2205\r i915\sb234\sl-404\slmult0\fi0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f 2\fs23 important to note that the licence granted is not transferable to any oth er person and shall \up0 \expndtw-1\charscalex100 remain in force until it is su rrendered or revoked by the Minister of Finance.\ul0\super\cf8\f9\fs23 53\ul0\no supersub\cf1\f2\fs23 By virtue of \up0 \expndtw0\charscalex100 section 8(1) of OBA, the Minister of Finance may, upon the recommendation of LOFSA, \up0 \expnd tw0\charscalex100 revoke the licence of the offshore bank if it contravenes any provisions of the OBA or any \up0 \expndtw0\charscalex100 written law, or provid e the LOFSA with false or misleading information or fails to honour \up0 \expndt w-1\charscalex100 any guarantee or undertaking as prescribed by the Act. \par\pa rd\qj \li2205\ri915\sb243\sl-420\slmult0 \up0 \expndtw-2\charscalex100 In summar y, to be eligible for an offshore banking licence, an applicant bank must meet t he \up0 \expndtw-2\charscalex100 following criteria:\ul0\super\cf8\f9\fs23 54 \p ar\pard\qj \li2906\ri3585\sb260\sl-420\slmult0 \up0 \expndtw-3\charscalex100 \ul 0\nosupersub\cf1\f2\fs23 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf 1\f2\fs23 the applicant must be a bank or financial institution; \up0 \expndtw -3\charscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs2 3 it must possess sound track record; \par\pard\ql \li2906\ri1616\sb0\sl-420\s

lmult0 \up0 \expndtw-2\charscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\n osupersub\cf1\f2\fs23 it must be accorded a good credit rating by acceptable r ating agencies; \line \up0 \expndtw-3\charscalex100 \u-3913?\ul0\nosupersub\cf6\ f7\fs23 \ul0\nosupersub\cf1\f2\fs23 it must be supervised by a competent regu latory authority; and \line \up0 \expndtw-2\charscalex100 \u-3913?\ul0\nosupersu b\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 it must conform to generally accept ed standards of international banking. \par\pard\qj \li2205\ri912\sb275\sl-402\s lmult0 \up0 \expndtw0\charscalex105 It is clear that the requirements of licensi ng reflect the commitment of the Malaysian \line \up0 \expndtw0\charscalex110 go vernment to prevent the existence of a rogue bank and to ensure that only well \ line \up0 \expndtw-3\charscalex100 established banks of international standing a re allowed to do business in Labuan IBFC. The \line \up0 \expndtw0\charscalex100 requirement that the banks must be well-regulated by their home countries would reduce \line \up0 \expndtw0\charscalex105 the risk of criminal activity at offs hore banks in Labuan. More importantly, the strict \line \up0 \expndtw-4\charsca lex100 requirements on bank directors would hinder the existence of nominee dire ctors. It has been \line \up0 \expndtw0\charscalex102 recognized that nominee di rectors is one of the tools used by criminals to disguise their \line \up0 \expn dtw0\charscalex100 identity in avoiding detection from law enforcement au thorities. Indeed, the strict \line \up0 \expndtw-2\charscalex100 requirement s of licensing have had considerable success in ensuring that offshore banks in \line \up0 \expndtw-2\charscalex100 Labuan are limited to top-notch financial in stitutions and genuine investors.\ul0\super\cf8\f9\fs23 55 \par\pard\qj \li2205\ ri915\sb280\sl-400\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf1\f2\ fs23 The legislation also imposes certain restrictions on offshore banking. Unde r section 14 of \line \up0 \expndtw-2\charscalex100 OBA, an offshore bank is pro hibited from carrying on offshore banking business in, from, \line \up0 \expndtw -2\charscalex100 or through, any place in Malaysia other than Labuan. If the off shore bank is an offshore \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\l i2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb175\sl-218\slmult0 \up0 \expndtw2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 53\ul0\nosupersub \cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Offshore Banking Act 1990,\ul0\nos upersub\cf10\f11\fs19 s 6(6). \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \exp ndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 54\ul0\nosupersub\cf10\f11\fs19 LO FSA, Guidelines on Entry Criteria for Offshore Bank in Labuan 2001, para II. \pa r\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf 9\f10\fs18 55\ul0\nosupersub\cf10\f11\fs19 Jason Abbott, above n 35, 166. \par\ pard\ql \li10449\sb15\sl-251\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupers ub\cf1\f2\fs23 188 {\shp {\*\shpinst\shpleft2205\shptop13704\shpright5006\shpbottom13724\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz202\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g198}{\bkmkend Pg198}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i913\sb249\sl-400\slmult0 \up0 \expndtw0\charscalex103 \ul0\nosupersub\cf1\f2\fs 23 company, it is also prohibited from opening any office or establishing any su bsidiary in \up0 \expndtw0\charscalex100 Labuan or outside Malaysia except with the consent of LOFSA. Clearly, OBA requires an \up0 \expndtw0\charscalex100 offs hore bank to maintain a physical presence in Labuan. This provision is a welcome one \up0 \expndtw0\charscalex100 as it could prevent shell banks from setting u p operations in Labuan IBFC. \par\pard\qj \li2205\ri914\sb279\sl-402\slmult0\fi0

\up0 \expndtw-4\charscalex100 Section 15 (1) of OBA specifies that an offshore bank is not permitted to accept any monies \line \up0 \expndtw-1\charscalex100 o n deposit, or on loan, which is repayable on demand by cheque, draft, order or a ny other \line \up0 \expndtw0\charscalex103 instrument drawn by the depositor on the licensed offshore bank. This prohibition was \line \up0 \expndtw-3\charscal ex100 imposed to avoid the need to set up a cheque-clearing facility for cheques issued in foreign \line \up0 \expndtw-3\charscalex100 currencies from such curr ent accounts. An offshore bank is also prohibited from opening an \line \up0 \ex pndtw-4\charscalex100 account for a customer whose identity is not known to the bank.\ul0\super\cf8\f9\fs23 56\ul0\nosupersub\cf1\f2\fs23 This reflects the ado ption \line \up0 \expndtw0\charscalex111 of the \up0 \expndtw0\charscalex107 \u8 216?Know Your Customer Policy\u8217? issued by the Basle Committee on Banking \l ine \up0 \expndtw-2\charscalex100 Regulations and Supervisory Practices. More im portantly, it suggests that even prior to the \line \up0 \expndtw0\charscalex100 enactment of AMLATFA, LOFSA has imposed anti-money laundering measures on the \ line \up0 \expndtw0\charscalex100 offshore banks. \par\pard\qj \li2205\ri913\sb2 78\sl-403\slmult0 \up0 \expndtw-2\charscalex100 Section 20 of OBA disallows any dealing by an offshore bank in Malaysian currency. This \line \up0 \expndtw0\cha rscalex100 requirement was reaffirmed in \ul0\nosupersub\cf7\f8\fs23 Megah Sakti Sdn. Bhd v Oversea-Chinese Banking \line \up0 \expndtw0\charscalex103 Corporation Limited.\ul0\super\cf8\f9\fs23 57\ul0\nosupersub\cf1\f2\fs23 Here, the defendant bank granted a loan secured by a personal \line \up0 \expndtw-3\c harscalex100 guarantee and a charge. When the borrower defaulted in payment, the defendant bank filed \line \up0 \expndtw0\charscalex100 an action against the b orrower and the guarantor for recovery of the loan. The defendant \line \up0 \ex pndtw-2\charscalex100 bank had obtained an order for the sale of the charged lan d. However, the plaintiff brought \line \up0 \expndtw0\charscalex104 an action a gainst the defendant bank for a declaration that the charge executed by the \lin e \up0 \expndtw0\charscalex103 plaintiff was null and void on the ground that th e charge document was registered as a \line \up0 \expndtw0\charscalex105 securit y in a foreign currency. The court dismissed the plaintiff\u8217?s claim and hel d that \line \up0 \expndtw-2\charscalex100 because the defendant bank was an off shore bank, it was governed by OBA. Section 20 of \line \up0 \expndtw-4\charscal ex100 OBA clearly prohibits any dealing by the defendant bank in Malaysian curre ncy. Therefore, \line \up0 \expndtw-2\charscalex100 when the charge document was registered as a security in a foreign currency, it was in due \line \up0 \expnd tw-3\charscalex100 compliance with section 20 of OBA. \par\pard\ql \li2205\sb0\s l-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb178\sl218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\ f10\fs18 56\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Offshore Banking Act 1990\ul0\nosupersub\cf10\f11\fs19 , s 15(2). \par\pard\ql \li2205\s b2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 57\ul0\n osupersub\cf10\f11\fs19 [2005] 1 LNS 375. \par\pard\ql \li10449\sb15\sl-251\slm ult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 189 {\shp {\*\shpinst\shpleft2205\shptop13928\shpright5006\shpbottom13948\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz168\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g199}{\bkmkend Pg199}\par\pard\qj \li2205\sb0\sl-403\slmult0 \par\pard\qj\li2205 \sb0\sl-403\slmult0 \par\pard\qj\li2205\sb0\sl-403\slmult0 \par\pard\qj\li2205\r i915\sb238\sl-403\slmult0\fi0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf1\

f2\fs23 Part III of OBA deals with duties of offshore banks in Labuan IBFC. An o ffshore bank is \line \up0 \expndtw0\charscalex102 required to have its account audited annually by an approved auditor. The auditor must \line \up0 \expndtw-1\ charscalex100 submit the audit report together with comments on the accounting s ystem and controls of \line \up0 \expndtw0\charscalex103 the offshore bank to it s shareholders and to LOFSA.\ul0\super\cf8\f9\fs23 58\ul0\nosupersub\cf1\f2\fs23 Besides, an offshore bank must \line \up0 \expndtw0\charscalex102 submit its f inancial statements and information on its assets and liabilities to LOFSA.\ul0\ super\cf8\f9\fs23 59 \line \up0 \expndtw0\charscalex108 \ul0\nosupersub\cf1\f2\f s23 Inspection of such information may be carried out by LOFSA, or the bank\u821 7?s home \line \up0 \expndtw-4\charscalex100 monetary authority, provided that t he secrecy of such information is always preserved. \par\pard\qj \li2205\ri913\s b278\sl-402\slmult0 \up0 \expndtw-1\charscalex100 Part IV of OBA deals with the secrecy rule. Section 21 states that nothing in the Act shall \line \up0 \expndt w0\charscalex104 authorize the Minister of Finance to direct the LOFSA to inquir e specifically into the \line \up0 \expndtw-3\charscalex100 identity, accounts a nd affairs of the customer of an offshore bank. Besides, section 22(1) of \line \up0 \expndtw0\charscalex105 OBA prohibits the director or officer of an offshor e bank or LOFSA from disclosing \line \up0 \expndtw0\charscalex104 information r elating to the affairs or account of any customer of an offshore bank. As \line \up0 \expndtw0\charscalex105 already mentioned, the secrecy rule will also be ap plicable to LOFSA or the relevant \line \up0 \expndtw0\charscalex100 foreign sup ervisory authority when they examine or inspect the submitted information or \li ne \up0 \expndtw0\charscalex104 documents for the purpose of verifying such info rmation under sections 17 and 18 of \line \up0 \expndtw-5\charscalex100 OBA.\ul0 \super\cf8\f9\fs23 60 \par\pard\qj \li2205\ri913\sb398\sl-403\slmult0 \up0 \expn dtw0\charscalex107 \ul0\nosupersub\cf1\f2\fs23 OBA also specifies that section 7 of the Banker\u8217?s Book (Evidence) Act 1949 is not \line \up0 \expndtw-2\cha rscalex100 applicable to the offshore banks.\ul0\super\cf8\f9\fs23 61\ul0\nosupe rsub\cf1\f2\fs23 The section empowers the Court to order the inspection \line \ up0 \expndtw-2\charscalex100 of banker\u8217?s book for the purpose of a legal p roceeding. The term \u8216?banker\u8217?s book\u8217? includes \line \up0 \expnd tw-2\charscalex100 ledgers, day book, cash book, account book and other books us ed in the ordinary business \line \up0 \expndtw0\charscalex102 of the bank.\ul0\ super\cf8\f9\fs23 62\ul0\nosupersub\cf1\f2\fs23 This is evidence to suggest tha t the identities, accounts and affairs of the \line \up0 \expndtw0\charscalex112 customers of the offshore bank cannot be revealed even for the purpose of legal \line \up0 \expndtw-3\charscalex100 proceedings. \par\pard\ql \li2205\sb0\sl-26 4\slmult0 \par\pard\ql\li2205\sb248\sl-264\slmult0 \up0 \expndtw-4\charscalex100 However, disclosures of such information are permitted in the following circums tances: \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\s lmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slm ult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb4\sl-218\slmul t0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 58\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Offshore Banking Act 1990\ul0\nosupersub\cf10\f11\fs19 , s 16. \par\pard\li2205\sb9\sl-218\slmult 0\fi0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 59\ul0\nosupersub\cf 10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Offshore Banking Act 1990,\ul0\nosupe rsub\cf10\f11\fs19 ss 17, 18.\par\pard\li2205\sb6\sl-218\slmult0\fi0 \up0 \expn dtw-2\charscalex100 \ul0\super\cf9\f10\fs18 60\ul0\nosupersub\cf10\f11\fs19 \ul 0\nosupersub\cf11\f12\fs19 Offshore Banking Act 1990\ul0\nosupersub\cf10\f11\fs1 9 , s 23.\par\pard\li2205\sb6\sl-218\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ ul0\super\cf9\f10\fs18 61\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12 \fs19 Offshore Banking Act 1990\ul0\nosupersub\cf10\f11\fs19 , s 22(6).\par\pard \li2205\sb5\sl-218\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\ fs18 62\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Banker\u8217 ?s Books (Evidence) Act 1949\ul0\nosupersub\cf10\f11\fs19 , s 2.\par\pard\li2205 \sb3\sl-264\slmult0\fi8243 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\ fs23 190

{\shp {\*\shpinst\shpleft2205\shptop13256\shpright5006\shpbottom13276\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz171\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g200}{\bkmkend Pg200}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i917\sb249\sl-400\slmult0\tx2731 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf 1\f2\fs23 (a)\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 Where th e customer or his personal representative has authorized the offshore bank in \l ine\tab \up0 \expndtw-1\charscalex100 writing to disclose.\ul0\super\cf8\f9\fs23 63 \par\pard\qj \li2205\ri915\sb0\sl-400\slmult0\tx2731 \up0 \expndtw0\charscal ex105 \ul0\nosupersub\cf1\f2\fs23 (b)\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersu b\cf1\f2\fs23 Where the disclosure is required under an order of the High Cour t made upon the \line\tab \up0 \expndtw-3\charscalex100 application by the follo wing parties:\ul0\super\cf8\f9\fs23 64 \par\pard\ql \li2906\ri914\sb20\sl-400\sl mult0\tx3255\tx3255 \up0 \expndtw0\charscalex110 \ul0\nosupersub\cf1\f2\fs23 (i) an interested party, where the customer is deceased or has been declared \line\ tab \up0 \expndtw0\charscalex100 bankrupt, or if the customer is a corporation, it is being wound up, in or outside \line\tab \up0 \expndtw-1\charscalex100 Mala ysia; \par\pard\ql \li2906\sb113\sl-264\slmult0 \up0 \expndtw-2\charscalex100 (i i) any public officer, in the course of an investigation of any offence; or \par \pard\ql \li2906\ri917\sb24\sl-400\slmult0\tx3255\tx3255 \up0 \expndtw0\charscal ex100 (iii)LOFSA, supported by a certificate under the hand of the Minister char ged with \line\tab \up0 \expndtw0\charscalex105 the responsibility for internal security certifying that the disclosure is in the \line\tab \up0 \expndtw-3\char scalex100 interest of the Internal Security of Malaysia. \par\pard\qj \li2205\sb 0\sl-400\slmult0 \par\pard\qj\li2205\ri916\sb20\sl-400\slmult0 \up0 \expndtw0\ch arscalex110 It appears that the secrecy rule provided under OBA is not absolute. Disclosure of \up0 \expndtw0\charscalex100 confidential information can be made with the consent of the customer or by a court order \up0 \expndtw-1\charscalex 100 arising from an authorized investigation. \par\pard\qj \li2205\ri913\sb396\s l-406\slmult0 \up0 \expndtw0\charscalex100 The provisions governing the business of offshore banks are generally less stringent when \up0 \expndtw-2\charscalex1 00 compared to those regulations imposed on onshore banks under BAFIA. This is b ecause the \up0 \expndtw0\charscalex102 government of Malaysia recognises the ne ed to dichotomise the offshore banking system \up0 \expndtw0\charscalex102 from the onshore banking system. \par\pard\qj \li2205\ri917\sb399\sl-400\slmult0 \up0 \expndtw0\charscalex109 The punishment imposed on any offshore banks that is fo und to be in breach of the \line \up0 \expndtw0\charscalex107 applicable guideli nes is severe. For instance, in \up0 \expndtw0\charscalex106 2005, LOFSA revoked the offshore \par\pard\qj \li2205\ri913\sb0\sl-400\slmult0 \up0 \expndtw-2\char scalex100 investment banking licence granted to the Swift Investment Bank for no n-compliance of the \up0 \expndtw0\charscalex108 Guidelines on Investment Bankin g Business. This is evidence that only genuine and \up0 \expndtw-2\charscalex100 legitimate offshore banks will be allowed to do business in Labuan IBFC. \par\p ard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pa rd\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard \ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\q l\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\ li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb49\sl-218\slmult0 \up0 \expndtw2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 63\ul0\nosupersub \cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Offshore Banking Act 1990,\ul0\nos upersub\cf10\f11\fs19 s 22(3). \par\pard\li2205\sb20\sl-218\slmult0\fi0 \up0 \e

xpndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 64\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Offshore Banking Act 1990\ul0\nosupersub\cf10\f11\ fs19 , s 22(4).\par\pard\li2205\sb3\sl-264\slmult0\fi8243 \up0 \expndtw-3\charsc alex100 \ul0\nosupersub\cf1\f2\fs23 191 {\shp {\*\shpinst\shpleft2205\shptop13928\shpright5006\shpbottom13948\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz192\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g201}{\bkmkend Pg201}\par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205 \sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\s b0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb2 41\sl-264\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf4\f5\fs23 5.5. 4 Development of Anti-Money Laundering Measures in Labuan IBFC \par\pard\qj \l i2205\sb0\sl-404\slmult0 \par\pard\qj\li2205\ri915\sb17\sl-404\slmult0 \up0 \exp ndtw0\charscalex103 \ul0\nosupersub\cf1\f2\fs23 As already noted, the offshore s ector has different regulations for the establishment and \line \up0 \expndtw0\c harscalex112 operation of financial services. However, with regards to the fight against money \line \up0 \expndtw0\charscalex106 laundering and terrorism finan cing activities, there appears to be little difference. The \line \up0 \expndtw0 \charscalex102 offshore sector is also governed by AMLATFA and MACMA. The guidel ines issued by \line \up0 \expndtw0\charscalex100 LOFSA are similar if not ident ical to those issued by BNM for onshore banks. So much of \line \up0 \expndtw0\c harscalex107 what will be discussed in the following sections will repeat what h as been said in the \line \up0 \expndtw0\charscalex100 previous chapter. However , it is felt that for the sake of completeness, it is necessary to set \line \up 0 \expndtw0\charscalex100 out the anti-money laundering measures that apply to o ffshore banks in Labuan IBFC. But \line \up0 \expndtw0\charscalex108 before doin g that it would be useful to provide some background information on the \line \u p0 \expndtw-3\charscalex100 development of anti-money laundering measures in Lab uan IBFC. \par\pard\qj \li2205\ri914\sb400\sl-400\slmult0 \up0 \expndtw0\charsca lex104 Labuan IBFC was assessed by IMF under the Offshore Financial Centres Asse ssment \up0 \expndtw0\charscalex100 Programme in 2002. The assessment was based on Labuan IBFC\u8217?s compliance with the \up0 \expndtw0\charscalex100 anti-mon ey laundering measures, Basel Core Principles for Effective Supervision of the \ up0 \expndtw-4\charscalex100 offshore banking industry and other relevant intern ational standards. Labuan IBFC received \up0 \expndtw0\charscalex103 a generally positive assessment and was praised for providing a structured supervisory \up0 \expndtw-5\charscalex100 framework for offshore financial institutions.\ul0\sup er\cf8\f9\fs23 65 \par\pard\qj \li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205\ri 914\sb17\sl-402\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf1\f2 \fs23 As a result of recommendations made by IMF, LOFSA issued in 2002 the \u821 6?Supplementary \line \up0 \expndtw0\charscalex103 Notes to GP9: Guidelines on M oney Laundering and Know Your Customer Policy\u8217? to \line \up0 \expndtw-3\ch arscalex100 Labuan offshore banks which advocated as a minimum implementation of the \u8216?Know Your \line \up0 \expndtw0\charscalex100 Customer Policy\u8217?. In 2003 Part IV of AMLATFA was invoked on the offshore financial \line \up0 \ex pndtw-2\charscalex100 institutions.\ul0\super\cf8\f9\fs23 66\ul0\nosupersub\cf1\ f2\fs23 Part IV deals with the obligations of the regulated institutions to ide ntify and \line \up0 \expndtw0\charscalex103 verify customers, report suspicious transactions, keep record and establish compliance \line \up0 \expndtw0\charsca lex104 programme as require by AMLATFA. In line with APG\u8217?s recommendations , LOFSA \line \up0 \expndtw-3\charscalex100 issued \u8216?Guidelines on Minimum

Requirements of Trust Companies\u8217? in 2004 to improve the \line \up0 \expndt w-3\charscalex100 supervision of trust companies in Labuan IBFC. The guidelines cover, \ul0\nosupersub\cf7\f8\fs23 inter alia\ul0\nosupersub\cf1\f2\fs23 , the \ par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \p ar\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb136\sl-218\slmult0 \u p0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 65\ul 0\nosupersub\cf10\f11\fs19 LOFSA Annual Report 2004, 26. \par\pard\li2205\sb20\ sl-218\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 66\ul0\ nosupersub\cf10\f11\fs19 LOFSA Annual Report 2003, 25.\par\pard\li2205\sb3\sl-2 64\slmult0\fi8243 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 192 {\shp {\*\shpinst\shpleft2205\shptop13928\shpright5006\shpbottom13948\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz193\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g202}{\bkmkend Pg202}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i916\sb249\sl-400\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf1\f2\f s23 governance standards, management, supervision and controls, rules and regula tions as well \up0 \expndtw-1\charscalex100 as the duties and responsibilities o f trust companies in carrying out their activities.\ul0\super\cf8\f9\fs23 67 \pa r\pard\qj \li2205\ri914\sb392\sl-410\slmult0 \up0 \expndtw-1\charscalex100 \ul0\ nosupersub\cf1\f2\fs23 In 2005, LOFSA introduced additional guidelines for the i nsurance and insurance-related \line \up0 \expndtw-3\charscalex100 companies. Th ey included \u8216?Guidelines on Minimum Requirements for Management Office \li ne \up0 \expndtw0\charscalex104 of Offshore Insurance and Insurance-related Comp anies\u8217?; \up0 \expndtw0\charscalex103 \u8216?Prudential Framework of \par\p ard\qj \li2205\ri916\sb0\sl-400\slmult0 \up0 \expndtw0\charscalex104 Corporate G overnance for Offshore Insurance and Insurance-related Companies\u8217? and \up0 \expndtw0\charscalex100 \u8216?Guidelines on Anti-Money Laundering Measures for Offshore Insurance and Insurance\up0 \expndtw-2\charscalex100 related Companies \u8217?. These guidelines are critical for ensuring that the maintenance of high \up0 \expndtw-2\charscalex100 standards of probity, professionalism and busines s conduct of such companies.\ul0\super\cf8\f9\fs23 68 \par\pard\qj \li2205\sb0\s l-402\slmult0 \par\pard\qj\li2205\ri915\sb16\sl-402\slmult0 \up0 \expndtw-4\char scalex100 \ul0\nosupersub\cf1\f2\fs23 To ensure more effective measures against money laundering, LOFSA established the Anti\up0 \expndtw0\charscalex100 Money L aundering Unit (AMLU) in LOFSA in 2005. AMLU is responsible for ensuring \up0 \e xpndtw-2\charscalex100 that the offshore financial institutions comply with AMLA TFA and monitor all suspicious \up0 \expndtw-2\charscalex100 transaction reports made by such institutions. AMLU is also responsible for reviewing the \up0 \exp ndtw0\charscalex100 adequacy of anti-money laundering and anti-terrorism financi ng measures undertaken by \up0 \expndtw0\charscalex104 offshore financial instit utions in Labuan. In this respect, AMLU will maintain a close \up0 \expndtw0\cha rscalex100 liaison with the Financial Intelligence Unit (FIU) in Bank Negara Mal aysia (BNM).\ul0\super\cf8\f9\fs23 69\ul0\nosupersub\cf1\f2\fs23 It \up0 \expnd tw0\charscalex102 appears that the reporting institutions are required to comply with dual reporting \up0 \expndtw-5\charscalex100 requirement, i.e. to AMLU in LOFSA and FIU in BNM. \par\pard\qj \li2205\ri915\sb400\sl-400\slmult0 \up0 \expndtw0\charscalex106 Anti-money laundering measures in Labuan were furt her enhanced in 2006 with the \line \up0 \expndtw-3\charscalex100 introduction o f \u8217?Standard Guidelines on Anti-Money Laundering and Counter Financing of \ par\pard\li2205\sb123\sl-264\slmult0\fi0\tx3390\tx4797\tx8187 \up0 \expndtw0\cha

rscalex103 Terrorism\u8217?\tab \up0 \expndtw0\charscalex103 (AML/CFT);\tab \up0 \expndtw0\charscalex103 \u8216?AML/CFT Sectoral Guidelines\tab \up0 \expndtw0 \charscalex103 1 for Offshore Financial\par\pard\li2205\sb138\sl-264\slmult0\ fi0\tx8955\tx9710 \up0 \expndtw0\charscalex103 Institutions Licensed or Register ed under Offshore Banking Act\tab \up0 \expndtw0\charscalex103 1990\u8217?;\tab \up0 \expndtw0\charscalex103 \u8216?AML/CFT\par\pard\ql \li2205\sb124\sl-264\slm ult0\tx4265 \up0 \expndtw0\charscalex100 Sectoral Guidelines \tab \up0 \expndtw0 \charscalex105 2 for Offshore Insurance and Insurance-related Companies\u8217? a nd \par\pard\qj \li2205\ri916\sb8\sl-420\slmult0\fi0 \up0 \expndtw0\charscalex10 5 \u8216?AML/CFT Sectoral Guidelines 3 for Capital Market Industries\u8217?.\ul0 \super\cf8\f9\fs23 70\ul0\nosupersub\cf1\f2\fs23 These Guidelines \line \up0 \e xpndtw0\charscalex105 require the reporting entities to have a framework that pr ovide transparent policies and \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard \ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\q l\li2205\sb93\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs 19\ul0\super\cf9\f10\fs18 67\ul0\nosupersub\cf10\f11\fs19 LOFSA Annual Report 2 004, 27. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ ul0\super\cf9\f10\fs18 68\ul0\nosupersub\cf10\f11\fs19 LOFSA Annual Report 2005 , 47. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0 \super\cf9\f10\fs18 69\ul0\nosupersub\cf10\f11\fs19 LOFSA Annual Report 2006, 6 1. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\su per\cf9\f10\fs18 70\ul0\nosupersub\cf10\f11\fs19 Ibid 59. \par\pard\ql \li10449 \sb15\sl-251\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 1 93 {\shp {\*\shpinst\shpleft2205\shptop13480\shpright5006\shpbottom13500\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz213\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g203}{\bkmkend Pg203}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i915\sb249\sl-400\slmult0 \up0 \expndtw0\charscalex103 \ul0\nosupersub\cf1\f2\fs 23 procedures for the implementation and enforcement of effective AML/CFT measur es. It \up0 \expndtw-1\charscalex100 can be said that these latest guidelines pr ovide LOFSA with more effective tools to combat \up0 \expndtw-2\charscalex100 mo ney laundering and terrorism financing activities in Labuan IBFC. \par\pard\qj \ li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri915\sb20\sl-400\slmult0 \up0 \ex pndtw0\charscalex100 It appears that much has been done by LOFSA to ensure that the integrity of Labuan IBFC \up0 \expndtw0\charscalex102 is not tarnished by mo ney laundering and terrorism financing activities. This reflects the \up0 \expnd tw0\charscalex100 commitment of Malaysian government to ensuring that Labuan IBF C develops as an OFC \up0 \expndtw-1\charscalex100 with a reputation for quality and integrity. \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb24 9\sl-264\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf4\f5\fs23 5.5.5 Anti-Money Laundering Measures in Labuan IBFC \par\pard\qj \li2205\sb0\sl-400 \slmult0 \par\pard\qj\li2205\ri917\sb44\sl-400\slmult0 \up0 \expndtw0\charscalex 109 \ul0\nosupersub\cf1\f2\fs23 Offshore banks in Labuan IBFC are subject to thr ee important sets of anti-money \line \up0 \expndtw0\charscalex101 laundering g uidelines. The first set of guidelines is the \up0 \expndtw-2\charscalex1 00 \u8216?Supplementary Notes on \par\pard\qj \li2205\ri913\sb0\sl-402\slmult0 \up0 \expndtw0\charscalex104 BNM/GP9\u8217? which were issued in 2002. They are meant to complement the measures \line \up0 \expndtw-3\charscalex100 prescribed under the BNM/GP9 and are considered an integral part of the BNM/GP9. They \lin

e \up0 \expndtw0\charscalex106 represent the minimum requirements to be observed by the offshore banks. LOFSA \line \up0 \expndtw-2\charscalex100 encourages the banks to adopt more stringent policies as practiced in their home countries. \l ine \up0 \expndtw-3\charscalex100 The guidelines can be divided into four import ant categories, namely; customer acceptance \line \up0 \expndtw0\charscalex107 p olicy; customer identification; on-going monitoring of high risk accounts and ri sk \line \up0 \expndtw0\charscalex100 management. It appears that the guidelines adopt the principles relating to customer due \line \up0 \expndtw0\charscalex10 0 diligence issued by Basel Committee on Banking Supervision in 2001. \par\pard\ qj \li2205\ri914\sb399\sl-400\slmult0 \up0 \expndtw0\charscalex105 The second an d third sets of guidelines are the \u8216?Standard Guidelines on Anti-Money \lin e \up0 \expndtw-3\charscalex100 Laundering and Counter Financing of Terrorism (A ML/CFT)\u8217? and the \u8216?Sectoral Guidelines \par\pard\qj \li2205\ri911\sb0 \sl-406\slmult0 \up0 \expndtw0\charscalex105 1 on AML/CFT\u8217? both of which w ere issued in 2006. These guidelines were issued to \line \up0 \expndtw0\charsca lex104 complement the BNM/GP9 and the Supplementary Notes on GP9. It appears tha t the \line \up0 \expndtw-4\charscalex100 Standard Guidelines and the Sectoral G uidelines 1 are more comprehensive and in line with \line \up0 \expndtw-4\charsc alex100 the revised 40 Recommendations and Nine Special Recommendations issued b y FATF. \par\pard\qj \li2205\ri915\sb395\sl-400\slmult0 \up0 \expndtw-4\charscal ex100 The Standard Guidelines provide wide-ranging AML/CTF procedures to be foll owed by the \line \up0 \expndtw-4\charscalex100 offshore financial institutions in Labuan IBFC. These include customer acceptance policy, \par\pard\ql \li10449\ sb0\sl-264\slmult0 \par\pard\ql\li10449\sb169\sl-264\slmult0 \up0 \expndtw-3\cha rscalex100 194 \par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240 {\bkmkstart Pg204}{\bkmkend Pg204}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\p ard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\par d\qj\li2205\ri916\sb249\sl-400\slmult0 \up0 \expndtw0\charscalex107 \ul0\nosuper sub\cf1\f2\fs23 customer due diligence, record keeping, on-going monitoring, sus picious transaction \up0 \expndtw-2\charscalex100 reporting, counter financing o f terrorism and AML/CFT compliance programme. \par\pard\qj \li2205\ri915\sb384\s l-420\slmult0 \up0 \expndtw-2\charscalex100 The Sectoral Guidelines 1 on AML/CFT was specifically designed for the offshore banks. \line \up0 \expndtw0\charscal ex102 The guidelines were formulated to supplement the requirements of the \up0 \expndtw-3\charscalex100 \u8216?Standard \par\pard\qj \li2205\ri914\sb0 \sl-400\slmult0 \up0 \expndtw-2\charscalex100 Guidelines on AML/CFT\u8217?. The guidelines address the requirements to be complied by the \line \up0 \expndtw0\c harscalex103 offshore banks in Labuan IBFC to effectively counter money launderi ng and terrorism \line \up0 \expndtw-2\charscalex100 financing activities. The g uidelines are incomplete on their own and must be read together \line \up0 \expn dtw0\charscalex107 with the Standard Guidelines on AML/CFT. It should be noted t hat if there are any \line \up0 \expndtw-4\charscalex100 inconsistencies in thes e guidelines, the provisions of the Sectoral Guidelines 1 shall prevail. \par\pa rd\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri913\sb17\sl-400\slmult0 \ up0 \expndtw0\charscalex104 By virtue of section 4(5) of LOFSA Act, all three se ts of guidelines have legal effect. \line \up0 \expndtw-1\charscalex100 Therefor e, any offshore bank that fails to comply with the requirements could be liable as \line \up0 \expndtw-2\charscalex100 follows: \par\pard\ql \li2906\ri916\sb0\s l-400\slmult0\tx3255\tx3255 \up0 \expndtw0\charscalex107 (a)\ul0\nosupersub\cf6\ f7\fs23 \ul0\nosupersub\cf1\f2\fs23 in the case of an individual person, he or she could be liable to a fine not \line\tab \up0 \expndtw0\charscalex103 exceedi ng RM250,000 and for a continuing offence, to a fine not exceeding \line\tab \up 0 \expndtw-4\charscalex100 RM2,500 for every day during which the offence contin ues after conviction; or \par\pard\ql \li2906\ri914\sb0\sl-410\slmult0\tx3255\tx 3255 \up0 \expndtw-2\charscalex100 (b)\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupers ub\cf1\f2\fs23 in the case of a body corporate or partnership, the bank could be liable to a fine \line\tab \up0 \expndtw-2\charscalex100 not exceeding RM500,00 0 and for a continuing offence, to a fine not exceeding \line\tab \up0 \expndtw2\charscalex100 RM5,000 for every day during which the offence continues after c onviction. \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-26

4\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb171\sl-26 4\slmult0\tx2906 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf4\f5\fs23 5.6 \ tab \up0 \expndtw-5\charscalex100 AML/CTF Obligations of the Offshore Banks \par \pard\qj \li2262\sb0\sl-404\slmult0 \par\pard\qj\li2262\ri858\sb77\sl-404\slmult 0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf1\f2\fs23 With the implementat ion of AMLATFA, offshore banks in Labuan IBFC are now subject \line \up0 \expndt w-1\charscalex100 to the Act and are required to satisfy the AML/CTF obligations under Part IV which were \line \up0 \expndtw0\charscalex104 invoked on offshore entities in 15 April 2003. The AML/CTF obligations include the \line \up0 \expn dtw-2\charscalex100 obligations relating to customer identification and verifica tion (section 16); record keeping \line \up0 \expndtw0\charscalex100 (sections 1 3 and 17); reporting cash transactions and suspicious transactions (section 14) \line \up0 \expndtw0\charscalex100 and compliance programme (section 19). Beside s, the offshore banks must also comply \par\pard\ql \li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb184\sl-264\slmult 0 \up0 \expndtw-3\charscalex100 195 \par\pard\sect\sectd\fs24\paperw11900\paperh 16840\pard\sb0\sl-240{\bkmkstart Pg205}{\bkmkend Pg205}\par\pard\qj \li2261\sb0\ sl-400\slmult0 \par\pard\qj\li2261\sb0\sl-400\slmult0 \par\pard\qj\li2261\sb0\sl -400\slmult0 \par\pard\qj\li2261\ri859\sb249\sl-400\slmult0 \up0 \expndtw0\chars calex108 \ul0\nosupersub\cf1\f2\fs23 with the Standard Guidelines on Anti-Money Laundering and Counter Financing of \up0 \expndtw-3\charscalex100 Terrorism (AML /CFT) as well as the Sectoral Guidelines 1 on AML/CFT. \par\pard\ql \li2261\sb0\ sl-264\slmult0 \par\pard\ql\li2261\sb0\sl-264\slmult0 \par\pard\ql\li2261\sb0\sl -264\slmult0 \par\pard\ql\li2261\sb141\sl-264\slmult0 \up0 \expndtw-2\charscalex 100 \ul0\nosupersub\cf4\f5\fs23 5.6.1 Customer Identification and Due Diligence \par\pard\qj \li2261\sb0\sl-400\slmult0 \par\pard\qj\li2261\ri859\sb24\sl-400\s lmult0\fi0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs23 Section 16 o f AMLATFA requires offshore banks to put in place adequate identification \up0 \ expndtw0\charscalex109 and due diligence controls on new and existing customers so that they know their \up0 \expndtw0\charscalex106 customers as well as their customers\u8217? business. This is considered a key element for \up0 \expndtw0\c harscalex100 managing the risks of money laundering and terrorism financing in t he banking systems. \up0 \expndtw-1\charscalex100 Under the Supplementary Notes on GP9, a customer includes: \par\pard\qj \li2731\ri930\sb29\sl-365\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf13\f14\fs21 \u8230?any person or ent ity that keeps an account with a bank and any person or entity on whose \line \u p0 \expndtw0\charscalex107 behalf an account is maintained, as well as beneficia ries of transactions conducted by \line \up0 \expndtw-2\charscalex100 profession al intermediaries. A customer should also include an account holder, the benefic ial \line \up0 \expndtw0\charscalex105 owner of an account, the beneficiary of a trust, an investment fund, a pension fund or a \line \up0 \expndtw-3\charscalex 100 company whose assets are managed by an asset manager, or the grantor of a tr ust.\ul0\super\cf14\f15\fs20 71 \par\pard\qj \li2261\sb0\sl-400\slmult0 \par\par d\qj\li2261\ri859\sb7\sl-400\slmult0 \up0 \expndtw0\charscalex102 \ul0\nosupersu b\cf1\f2\fs23 Therefore, offshore banks are required to identify and verify the identity of the account \up0 \expndtw-2\charscalex100 holder, the identity of th e person in whose name the transaction is conducted as well as the \up0 \expndtw 0\charscalex102 identity of the beneficiary of the transaction. Customer identif ication and due diligence \up0 \expndtw-2\charscalex100 controls must include cu stomer acceptance policy; customer due diligence procedures and \up0 \expndtw-3\ charscalex100 on-going monitoring of high risk accounts. \par\pard\ql \li2205\sb 0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0\ sl-264\slmult0 \par\pard\ql\li2205\sb141\sl-264\slmult0 \up0 \expndtw-5\charscal ex100 \ul0\nosupersub\cf4\f5\fs23 Customer acceptance policy \par\pard\qj \li220 5\ri914\sb24\sl-400\slmult0\fi0 \up0 \expndtw0\charscalex106 \ul0\nosupersub\cf1 \f2\fs23 Before establishing a banking relationship with its customer, an offsho re bank must \line \up0 \expndtw0\charscalex103 develop clear customer acceptanc e policies.\ul0\super\cf8\f9\fs23 72\ul0\nosupersub\cf1\f2\fs23 For this reason , an offshore bank should \line \up0 \expndtw-3\charscalex100 create a risk prof ile of its customer. This is critical for identifying the type of customer and \

line \up0 \expndtw-2\charscalex100 the risks associated with the customer. In cr eating the risk profile, an offshore bank should \line \up0 \expndtw-2\charscale x100 consider the origin of the customer and location of business; background of the customer; \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\s l-218\slmult0 \par\pard\ql\li2205\sb135\sl-218\slmult0 \up0 \expndtw-2\charscale x100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 71\ul0\nosupersub\cf10\f11\f s19 \ul0\nosupersub\cf11\f12\fs19 The Supplementary Notes on GP9\ul0\nosupersub \cf10\f11\fs19 , para II(a). \par\pard\li2205\sb20\sl-218\slmult0\fi0 \up0 \expn dtw-2\charscalex100 \ul0\super\cf9\f10\fs18 72\ul0\nosupersub\cf10\f11\fs19 \ul 0\nosupersub\cf11\f12\fs19 The Standard Guidelines on Anti-Money Laundering and Counter Financing of Terrorism\ul0\nosupersub\cf10\f11\fs19 , para 4.\par\pard\l i2205\sb3\sl-264\slmult0\fi8243 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf 1\f2\fs23 196 {\shp {\*\shpinst\shpleft2205\shptop13928\shpright5006\shpbottom13948\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz175\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g206}{\bkmkend Pg206}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i915\sb249\sl-400\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf1\ f2\fs23 nature of the customer\u8217?s business; structure or ownership for a co rporate customer and any \up0 \expndtw0\charscalex100 other information suggesti ng that the customer is of higher risk.\ul0\super\cf8\f9\fs23 73\ul0\nosupersub\ cf1\f2\fs23 The profile should be \up0 \expndtw0\charscalex100 reviewed and upd ated regularly, especially when there are changes in the employment or \up0 \exp ndtw-1\charscalex100 nature of business of the customer.\ul0\super\cf8\f9\fs23 7 4 \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb5\sl-264\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosup ersub\cf4\f5\fs23 Customer due diligence procedures \par\pard\qj \li2205\ri913\s b22\sl-402\slmult0\fi0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 Customer due diligence procedures is vital for obtaining satisfactory evidence as regards to \up0 \expndtw0\charscalex105 the identity and the legal existence of the customer. It may be defined as a process to \up0 \expndtw-4\charscalex100 identify and verify the customer; identify and verify beneficial ownership and control of the \up0 \expndtw0\charscalex109 transaction; obtain information on t he purpose and intended nature of the banking \up0 \expndtw-1\charscalex100 rela tionship; and conduct on-going due diligence and scrutiny in ensuring the inform ation \up0 \expndtw0\charscalex102 provided is updated and relevant.\ul0\super\c f8\f9\fs23 75\ul0\nosupersub\cf1\f2\fs23 If a customer fails to comply with the due diligence \up0 \expndtw0\charscalex100 requirements, an offshore bank shoul d not commence any banking relationship with, or \up0 \expndtw0\charscalex100 pe rform any transaction for, the customer. In the case of an existing customer, th e bank \up0 \expndtw-3\charscalex100 should terminate the relationship and consi der lodging a suspicious transaction report to the \up0 \expndtw-4\charscalex100 Anti-Money Laundering Unit of LOFSA (AMLU). \par\pard\qj \li2205\ri858\sb398\sl -402\slmult0\fi0 \up0 \expndtw0\charscalex100 In general, the extent of the info rmation required depends on the risks associated with the \line \up0 \expndtw0\c harscalex106 customer; type of transaction undertaken and type of service or pro ducts involved.\ul0\super\cf8\f9\fs23 76 \line \up0 \expndtw0\charscalex106 \ul0 \nosupersub\cf1\f2\fs23 Enhanced due diligence is required for higher risk categ ories of customers, business \line \up0 \expndtw-2\charscalex100 relationship or transactions. Examples of higher risk categories may include high net worth \li

ne \up0 \expndtw-3\charscalex100 individuals; non-resident customers; customers from locations known for its high crime rate \line \up0 \expndtw-2\charscalex100 and NCCTs, Politically Exposed Persons; legal arrangements that are complex; ca sh based \line \up0 \expndtw0\charscalex100 businesses and unregulated industry. \ul0\super\cf8\f9\fs23 77\ul0\nosupersub\cf1\f2\fs23 Since customers of offshor e banks are likely to be \line \up0 \expndtw-2\charscalex100 non-residents of th e OFC, it appears that bank must conduct enhanced due diligence for all \line \u p0 \expndtw-3\charscalex100 their customers. \par\pard\ql \li2205\sb0\sl-218\slm ult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmul t0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb42\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 73\ ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 The Standard Guideli nes on Anti-Money Laundering and Counter Financing of Terrorism\ul0\nosupersub\c f10\f11\fs19 , para 4.2. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2 \charscalex100 \ul0\super\cf9\f10\fs18 74\ul0\nosupersub\cf10\f11\fs19 \ul0\nos upersub\cf11\f12\fs19 The Sectoral Guidelines 1 on Anti-Money Laundering and Co unter Financing of Terrorism,\ul0\nosupersub\cf10\f11\fs19 para 3.1. \par\pard\ ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\f s18 75\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 The Standard Guidelines on Anti-Money Laundering and Counter Financing of Terrorism,\ul0\nosu persub\cf10\f11\fs19 para 5.1.3. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \ expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 76\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 The Sectoral Guidelines 1 on Anti-Money Launderin g and Counter Financing of Terrorism,\ul0\nosupersub\cf10\f11\fs19 para 4.1. \ par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\ cf9\f10\fs18 77\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 The Standard Guidelines on Anti-Money Laundering and Counter Financing of Terrorism\ ul0\nosupersub\cf10\f11\fs19 , para 5.10. \par\pard\ql \li10449\sb15\sl-251\slmu lt0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 197 {\shp {\*\shpinst\shpleft2205\shptop13256\shpright5006\shpbottom13276\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz181\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g207}{\bkmkend Pg207}\par\pard\qj \li2205\sb0\sl-404\slmult0 \par\pard\qj\li2205 \sb0\sl-404\slmult0 \par\pard\qj\li2205\sb0\sl-404\slmult0 \par\pard\qj\li2205\r i859\sb234\sl-404\slmult0\fi0 \up0 \expndtw0\charscalex104 \ul0\nosupersub\cf1\f 2\fs23 However, offshore banks are allowed to apply simplified due diligence mea sures where \line \up0 \expndtw0\charscalex108 there are low risks of money laun dering and terrorism financing, for example where \line \up0 \expndtw0\charscale x110 information on the identity of the customers and their beneficial owners is publicly \line \up0 \expndtw0\charscalex105 available, or where adequate checks and controls exist elsewhere in national systems.\ul0\super\cf8\f9\fs23 78 \lin e \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf1\f2\fs23 However, simplified due diligence measures are not acceptable whenever there is suspicion \line \up0 \expndtw-1\charscalex100 of money laundering or terrorism financing or when a s pecific higher risk scenario arises. \par\pard\qj \li2205\ri915\sb400\sl-400\slm ult0 \up0 \expndtw-2\charscalex100 It would be worthwhile to mention the custome r due diligence procedures prescribed by the \up0 \expndtw-2\charscalex100 AML/C FT Guidelines. \par\pard\ql \li2555\sb0\sl-264\slmult0 \par\pard\ql\li2555\sb0\s l-264\slmult0 \par\pard\ql\li2555\sb5\sl-264\slmult0 \up0 \expndtw-2\charscalex1 00 \ul0\nosupersub\cf4\f5\fs23 a)\ul0\nosupersub\cf23\f24\fs23 \ul0\nosupersub\

cf4\f5\fs23 Individual Customers \par\pard\qj \li2555\ri913\sb24\sl-400\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf1\f2\fs23 In conducting due dil igence on an individual customer, an offshore bank should obtain \line \up0 \exp ndtw0\charscalex100 the customer\u8217?s full name, his or her identity card or passport number, permanent and \line \up0 \expndtw0\charscalex100 mailing addres s, date of birth, nationality, occupation, name of employer and contact \line \u p0 \expndtw0\charscalex110 number. An offshore bank must ensure that the custome r provide the original \line \up0 \expndtw-4\charscalex100 documents and gives a copy of his or her NRIC or passport to be kept by the bank.\ul0\super\cf8\f9\fs 23 79 \par\pard\ql \li2555\sb0\sl-264\slmult0 \par\pard\ql\li2555\sb249\sl-264\s lmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf4\f5\fs23 b)\ul0\nosupers ub\cf23\f24\fs23 \ul0\nosupersub\cf4\f5\fs23 Corporate Customers \par\pard\qj \ li2555\ri915\sb22\sl-402\slmult0 \up0 \expndtw0\charscalex105 \ul0\nosupersub\cf 1\f2\fs23 For corporate customer or business, an offshore bank must obtain the c ustomer\u8217?s \line \up0 \expndtw0\charscalex104 constituents documents such a s memorandum, article, certificate of incorporation; \line \up0 \expndtw0\charsc alex100 identification documents of directors, shareholders or partners; authori sation for any \line \up0 \expndtw-2\charscalex100 person to represent the compa ny or business and identification document of the person \line \up0 \expndtw-2\c harscalex100 authorised to represent the company or business in its dealing with the offshore bank.\ul0\super\cf8\f9\fs23 80 \line \up0 \expndtw0\charscalex106 \ul0\nosupersub\cf1\f2\fs23 It is pertinent to note that if the corporate custom er is a public company which is \line \up0 \expndtw0\charscalex108 subjected to regulatory disclosure with the relevant authorities, it would not be \line \up0 \expndtw-4\charscalex100 necessary for an offshore bank to identify or verify th e identity of any shareholders.\ul0\super\cf8\f9\fs23 81 \par\pard\qj \li2205\sb 0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\ sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl -220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\ri943\sb 29\sl-220\slmult0 \up0 \expndtw-1\charscalex100 \ul0\super\cf9\f10\fs18 78\ul0\n osupersub\cf10\f11\fs19 Financial Action Task Force on Money Laundering, The Fo rty Recommendations: Essential Criteria and \up0 \expndtw-1\charscalex100 Additi onal Elements, 14. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\chars calex100 \ul0\super\cf9\f10\fs18 79\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersu b\cf11\f12\fs19 The Sectoral Guidelines 1 on Anti-Money Laundering and Counter Financing of Terrorism,\ul0\nosupersub\cf10\f11\fs19 para 4.2. \par\pard\ql \li 2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 80 \ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 The Standard Guidel ines on Anti-Money Laundering and Counter Financing of Terrorism\ul0\nosupersub\ cf10\f11\fs19 , para 5.3. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw2\charscalex100 \ul0\super\cf9\f10\fs18 81\ul0\nosupersub\cf10\f11\fs19 \ul0\no supersub\cf11\f12\fs19 The Standard Guidelines on Anti-Money Laundering and Coun ter Financing of Terrorism\ul0\nosupersub\cf10\f11\fs19 , para 5.3.4. \par\pard\ ql \li10449\sb15\sl-251\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf 1\f2\fs23 198 {\shp {\*\shpinst\shpleft2205\shptop13256\shpright5006\shpbottom13276\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz191\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g208}{\bkmkend Pg208}\par\pard\ql \li2556\sb0\sl-264\slmult0 \par\pard\ql\li2556 \sb0\sl-264\slmult0 \par\pard\ql\li2556\sb0\sl-264\slmult0 \par\pard\ql\li2556\s b0\sl-264\slmult0 \par\pard\ql\li2556\sb0\sl-264\slmult0 \par\pard\ql\li2556\sb2

41\sl-264\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf4\f5\fs23 c)\ul 0\nosupersub\cf23\f24\fs23 \ul0\nosupersub\cf4\f5\fs23 Counter-Party \par\pard \qj \li2556\ri913\sb22\sl-402\slmult0\fi0 \up0 \expndtw-3\charscalex100 \ul0\nos upersub\cf1\f2\fs23 The performance of identification procedures for customers c an be time consuming. As \line \up0 \expndtw0\charscalex104 such, an offshore ba nk may rely on the procedures undertaken by an introducer or \line \up0 \expndtw -2\charscalex100 counter-party.\ul0\super\cf8\f9\fs23 82\ul0\nosupersub\cf1\f2\f s23 However, the bank must satisfy itself that its counter-party is properly \l ine \up0 \expndtw0\charscalex100 regulated and supervised. An offshore bank must also ensure that its counter-party\u8217?s \line \up0 \expndtw-2\charscalex100 customer due diligence process is adequate and reliable. As such, the bank must obtain \line \up0 \expndtw-2\charscalex100 a written undertaking from its counte r-party confirming that it has conducted customer \line \up0 \expndtw0\charscale x103 due diligence in accordance with the international accepted standards.\ul0\ super\cf8\f9\fs23 83\ul0\nosupersub\cf1\f2\fs23 It must be \line \up0 \expndtw1\charscalex100 remembered that relying on the due diligence conducted by its co unter-party, does not \line \up0 \expndtw0\charscalex109 in any way remove the u ltimate responsibility of the offshore bank to know its \line \up0 \expndtw-5\ch arscalex100 customers and their business. \par\pard\ql \li2556\sb0\sl-264\slmult 0 \par\pard\ql\li2556\sb0\sl-264\slmult0 \par\pard\ql\li2556\sb4\sl-264\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf4\f5\fs23 d)\ul0\nosupersub\cf23\ f24\fs23 \ul0\nosupersub\cf4\f5\fs23 Wire Transfer \par\pard\qj \li2556\ri911\s b24\sl-400\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 It is widely accepted that wire transfers are a fast and efficient way of moving fu nds for \up0 \expndtw-1\charscalex100 money laundering and terrorism purposes. C omplicated wire transfers will hinder law \up0 \expndtw0\charscalex100 enforceme nt detection because they create complex and confusing trails of financial \up0 \expndtw-1\charscalex100 transactions. For this reason, LOFSA requires offshore banks to pay serious attention \up0 \expndtw-2\charscalex100 to this matter of concern. \par\pard\qj \li2556\sb0\sl-400\slmult0 \par\pard\qj\li2556\ri912\sb20\ sl-400\slmult0 \up0 \expndtw-4\charscalex100 When an offshore bank is the orderi ng institution in a wire transfer, it should obtain as a \line \up0 \expndtw0\ch arscalex103 minimum the following information on the originator\u8217?s name, na tionality, passport \line \up0 \expndtw-2\charscalex100 number, account number a nd address. The information must be transmitted in the wire \line \up0 \expndtw0 \charscalex100 transfer message.\ul0\super\cf8\f9\fs23 84\ul0\nosupersub\cf1\f2\ fs23 Transactions that contain full information of the originator could \line \ up0 \expndtw0\charscalex100 assist beneficiary financial institutions to identif y potentially suspicious transactions.\ul0\super\cf8\f9\fs23 85 \par\pard\qj \li 2556\ri913\sb392\sl-410\slmult0 \up0 \expndtw0\charscalex105 \ul0\nosupersub\cf1 \f2\fs23 When facilitating or acting as intermediary to a wire transfer transact ion, LOFSA \line \up0 \expndtw-1\charscalex100 requires an offshore bank to ensu re that the accompanying originator\u8217?s information is \line \up0 \expndtw-1 \charscalex100 retained with the wire transfer. If the bank is a beneficiary ins titution, it should adopt an \par\pard\qj \li2205\sb0\sl-220\slmult0 \par\pard\q j\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\ri939\sb87\sl-220\slmult0 \up0 \ expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 82\ul0\no supersub\cf10\f11\fs19 The onshore banks are also allowed to do the same. The s imilar procedures are provided under para 4.3 of \up0 \expndtw-2\charscalex100 t he AML/CFT Sectoral Guidelines 1 for Banking and Financial Institutions. \par\pa rd\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f1 0\fs18 83\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 The Sector al Guidelines 1 on Anti-Money Laundering and Counter Financing of Terrorism\ul0 \nosupersub\cf10\f11\fs19 , para 4.3. \par\pard\ql \li2205\sb2\sl-218\slmult0 \u p0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 84\ul0\nosupersub\cf10\f11\f s19 \ul0\nosupersub\cf11\f12\fs19 The Sectoral Guidelines 1 on Anti-Money Laund ering and Counter Financing of Terrorism\ul0\nosupersub\cf10\f11\fs19 , para 4. 4. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\su per\cf9\f10\fs18 85\ul0\nosupersub\cf10\f11\fs19 FATF, Report on Money Launderi ng Typologies 2003-2004, 6. \par\pard\ql \li10449\sb15\sl-251\slmult0 \up0 \expn

dtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 199 {\shp {\*\shpinst\shpleft2205\shptop13256\shpright5006\shpbottom13276\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz216\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g209}{\bkmkend Pg209}\par\pard\qj \li2556\sb0\sl-404\slmult0 \par\pard\qj\li2556 \sb0\sl-404\slmult0 \par\pard\qj\li2556\sb0\sl-404\slmult0 \par\pard\qj\li2556\r i910\sb234\sl-404\slmult0 \up0 \expndtw0\charscalex102 \ul0\nosupersub\cf1\f2\fs 23 effective risk-based approach to identifying any wire transfer with incomplete \up0 \expndtw-3\charscalex100 originator\u8217?s information. An offs hore bank should also check the particulars of a higher \up0 \expndtw-3\charscal ex100 risk customer by considering the name of the beneficiary, destination and the amount of \up0 \expndtw-2\charscalex100 wire transfer. If the transfer does not appear to be consistent with the usual business or \up0 \expndtw-3\charscale x100 activity of the customer, he or she should be asked to provide further expl anation of the \up0 \expndtw-4\charscalex100 nature of the wire transfer.\ul0\su per\cf8\f9\fs23 86 \par\pard\ql \li2556\sb0\sl-264\slmult0 \par\pard\ql\li2556\s b248\sl-264\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf4\f5\fs23 e) \ul0\nosupersub\cf23\f24\fs23 \ul0\nosupersub\cf4\f5\fs23 Beneficiary Account \par\pard\qj \li2555\ri915\sb22\sl-402\slmult0\fi0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs23 According to the AML/CFT Sectoral Guidelines 1, bene ficiary accounts include trust \up0 \expndtw-1\charscalex100 accounts, nominee a ccounts, fiduciary accounts, accounts opened for companies with \up0 \expndtw0\c harscalex103 nominee shareholders, accounts for mutual funds and fund managers, accounts for \up0 \expndtw0\charscalex103 personal asset holding vehicles, poole d accounts, accounts opened by professional \up0 \expndtw-2\charscalex100 interm ediaries and other relevant accounts.\ul0\super\cf8\f9\fs23 87\ul0\nosupersub\cf 1\f2\fs23 It is generally recognised that beneficiary \up0 \expndtw-1\charscale x100 accounts have been used by criminals to avoid customer identification proce dures. As \up0 \expndtw-2\charscalex100 such, LOFSA requires the offshore banks to identify whether the customer is acting on \up0 \expndtw-3\charscalex100 beha lf of another as trustee, nominee or other intermediary. \par\pard\qj \li2555\ri 912\sb398\sl-402\slmult0 \up0 \expndtw0\charscalex102 Identification procedures for beneficiary accounts should be performed on the \line \up0 \expndtw -4\charscalex100 beneficiaries and the agents or entities acting on behalf of th e beneficiaries. Verification \line \up0 \expndtw-1\charscalex100 must be done t o ensure that the agents or entities are authorized to act on behalf of the \lin e \up0 \expndtw0\charscalex105 beneficiaries. Identification process should be d one on individual basis wherever \line \up0 \expndtw-4\charscalex100 possible.\u l0\super\cf8\f9\fs23 88\ul0\nosupersub\cf1\f2\fs23 It should be noted that more rigorous customer identification and verification \line \up0 \expndtw-1\charsca lex100 is required when the transactions involve trust, nominee or fiduciary acc ounts opened \line \up0 \expndtw-3\charscalex100 by professional intermediaries. \ul0\super\cf8\f9\fs23 89\ul0\nosupersub\cf1\f2\fs23 This is vital for ensuring that such accounts are not be \line \up0 \expndtw-4\charscalex100 abused by cri minals. \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\s lmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slm ult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmul t0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb8\sl-218\slmult0 \ up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 86\u l0\nosupersub\cf10\f11\fs19 Ibid. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0

\expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 87\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 The Sectoral Guidelines 1 on Anti-Money Launderi ng and Counter Financing of Terrorism\ul0\nosupersub\cf10\f11\fs19 , para 4. \p ar\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\c f9\f10\fs18 88\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 The S ectoral Guidelines 1 on Anti-Money Laundering and Counter Financing of Terroris m\ul0\nosupersub\cf10\f11\fs19 , para 4.5. \par\pard\ql \li2205\sb2\sl-218\slmul t0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 89\ul0\nosupersub\cf10\ f11\fs19 \ul0\nosupersub\cf11\f12\fs19 The Standard Guidelines on Anti-Money La undering and Counter Financing of Terrorism,\ul0\nosupersub\cf10\f11\fs19 para 5.1.7. \par\pard\ql \li10449\sb15\sl-251\slmult0 \up0 \expndtw-3\charscalex100 \ ul0\nosupersub\cf1\f2\fs23 200 {\shp {\*\shpinst\shpleft2205\shptop13480\shpright5006\shpbottom13500\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz185\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g210}{\bkmkend Pg210}\par\pard\ql \li2556\sb0\sl-264\slmult0 \par\pard\ql\li2556 \sb0\sl-264\slmult0 \par\pard\ql\li2556\sb0\sl-264\slmult0 \par\pard\ql\li2556\s b0\sl-264\slmult0 \par\pard\ql\li2556\sb0\sl-264\slmult0 \par\pard\ql\li2556\sb2 41\sl-264\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf4\f5\fs23 f)\u l0\nosupersub\cf23\f24\fs23 \ul0\nosupersub\cf4\f5\fs23 Politically Exposed Pe rsons (PEPs) \par\pard\qj \li2555\ri914\sb22\sl-402\slmult0 \up0 \expndtw0\chars calex103 \ul0\nosupersub\cf1\f2\fs23 PEPs may be defined as foreign individuals being, or who have been, entrusted with \line \up0 \expndtw0\charscalex103 promi nent public functions, such as heads of state or government, senior politicians, \line \up0 \expndtw-2\charscalex100 senior government officials, judicial or mi litary officials and senior executives of public \line \up0 \expndtw0\charscalex 104 organisations.\ul0\super\cf8\f9\fs23 90\ul0\nosupersub\cf1\f2\fs23 It is ev ident that in countries where corruption is widespread, PEPs \line \up0 \expndtw 0\charscalex102 may abuse their public powers for their own illicit enrichment, through the receipt of \line \up0 \expndtw0\charscalex103 bribes, illegal kickba cks and other directly corruption-related profits. Besides, it was \line \up0 \e xpndtw0\charscalex100 revealed that PEPs have also been involved in embezzlement , tax fraud and organised \line \up0 \expndtw-2\charscalex100 crime activities.\ ul0\super\cf8\f9\fs23 91\ul0\nosupersub\cf1\f2\fs23 It should be emphasized tha t if an offshore bank is found accepting or \line \up0 \expndtw0\charscalex100 m anaging funds from corrupt PEPs, it will affect its reputation and will undermin e the \line \up0 \expndtw-1\charscalex100 public confidence in the ethical stand ards of the offshore bank. \par\pard\qj \li2555\sb0\sl-402\slmult0 \par\pard\qj\ li2555\ri914\sb16\sl-402\slmult0\fi0 \up0 \expndtw0\charscalex100 As such, LOFSA requires an offshore bank to identify whether or not its customer is a \line \u p0 \expndtw0\charscalex108 PEP by gathering sufficient information from the cust omer and through publicly \line \up0 \expndtw0\charscalex111 available informati on. Once a PEP is identified, the offshore bank should take \line \up0 \expndtw0 \charscalex102 appropriate measures to establish the source of wealth and funds of such person. The \line \up0 \expndtw0\charscalex102 offshore bank should also monitor accounts which are connected to the PEP to detect \line \up0 \expndtw0\ charscalex100 any discrepancies in their transactions or accounts.\ul0\super\cf8 \f9\fs23 92\ul0\nosupersub\cf1\f2\fs23 Further, the offshore bank should \line \up0 \expndtw0\charscalex102 also monitor the banking relationship with family m embers or close associates of the \line \up0 \expndtw0\charscalex104 PEP\ul0\sup er\cf8\f9\fs23 93\ul0\nosupersub\cf1\f2\fs23 because PEPs often use intermediar

ies to conduct financial business on their \line \up0 \expndtw-3\charscalex100 b ehalf. \par\pard\ql \li2555\sb0\sl-264\slmult0 \par\pard\ql\li2555\sb248\sl-264\ slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf4\f5\fs23 g)\ul0\nosuper sub\cf23\f24\fs23 \ul0\nosupersub\cf4\f5\fs23 Clubs, Societies and Charities \ par\pard\qj \li2555\ri915\sb24\sl-400\slmult0 \up0 \expndtw0\charscalex104 \ul0\ nosupersub\cf1\f2\fs23 Clubs, societies and charities can also be misused in a v ariety of ways for terrorism \up0 \expndtw0\charscalex103 purposes. For instance , they can be used to raise terrorist funds as well as to transfer \up0 \expndtw 0\charscalex103 funds from one location to another.\ul0\super\cf8\f9\fs23 94\ul0 \nosupersub\cf1\f2\fs23 As such, LOFSA requires offshore banks to be \up0 \expn dtw0\charscalex103 vigilant when dealing with such customers. \par\pard\ql \li22 05\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205 \sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\s b79\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\sup er\cf9\f10\fs18 90\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 T he Standard Guidelines on Anti-Money Laundering and Counter Financing of Terrori sm,\ul0\nosupersub\cf10\f11\fs19 para 5.9.1. \par\pard\ql \li2205\sb2\sl-218\sl mult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 91\ul0\nosupersub\cf 10\f11\fs19 FATF, Report on Money Laundering Typologies 2003-2004, 19. \par\par d\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10 \fs18 92\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 The Sectora l Guidelines 1 on Anti-Money Laundering and Counter Financing of Terrorism,\ul0 \nosupersub\cf10\f11\fs19 para 4.6. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up 0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 93\ul0\nosupersub\cf10\f11\fs 19 \ul0\nosupersub\cf11\f12\fs19 The Standard Guidelines on Anti-Money Launderi ng and Counter Financing of Terrorism,\ul0\nosupersub\cf10\f11\fs19 para 5.9.6. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\supe r\cf9\f10\fs18 94\ul0\nosupersub\cf10\f11\fs19 FATF, Report on Money Laundering Typologies 2003-2004 (2004) 8. \par\pard\ql \li10449\sb15\sl-251\slmult0 \up0 \ expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 201 {\shp {\*\shpinst\shpleft2205\shptop13256\shpright5006\shpbottom13276\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz213\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g211}{\bkmkend Pg211}\par\pard\qj \li2556\sb0\sl-403\slmult0 \par\pard\qj\li2556 \sb0\sl-403\slmult0 \par\pard\qj\li2556\sb0\sl-403\slmult0 \par\pard\qj\li2556\r i913\sb238\sl-403\slmult0 \up0 \expndtw0\charscalex103 \ul0\nosupersub\cf1\f2\fs 23 In conducting customer due diligence on a club, society or charity, an offsho re bank \line \up0 \expndtw0\charscalex106 should require such an organization t o provide the relevant constituent documents \line \up0 \expndtw0\charscalex103 including the certificate of registration and the identification of the office b earer and \line \up0 \expndtw0\charscalex107 authorization for any person to rep resent the organization. Additionally, the bank \line \up0 \expndtw0\charscalex1 00 should verify the identity of at least two signatories of the organization. B anks should \line \up0 \expndtw0\charscalex100 also scrutinize the accounts of t he organization in order to detect any discrepancies in \line \up0 \expndtw0\cha rscalex100 its transactions or accounts. \par\pard\ql \li2556\sb0\sl-264\slmult0 \par\pard\ql\li2556\sb248\sl-264\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nos upersub\cf4\f5\fs23 h)\ul0\nosupersub\cf23\f24\fs23 \ul0\nosupersub\cf4\f5\fs23 Shell Banks and Shell Companies \par\pard\qj \li2556\ri913\sb22\sl-402\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs23 Shell bank are banks in corporated in a country without a physical presence, while shell \line \up0 \exp

ndtw-1\charscalex100 companies are companies that do not conduct any commercial activities, or do not have \line \up0 \expndtw0\charscalex100 any form of commer cial presence in a country. It has been recognised that shell banks \line \up0 \ expndtw-1\charscalex100 and shell companies are among the most important tools i n money laundering schemes. \line \up0 \expndtw0\charscalex106 As a consequence, offshore banks in Labuan IBFC are not allowed to establish or \line \up0 \expnd tw-1\charscalex100 conduct banking relationship with shell banks or shell compan ies. LOFSA requires that \line \up0 \expndtw0\charscalex100 offshore banks ident ify and verify details of the directors, shareholders and authorised \line \up0 \expndtw-1\charscalex100 signatories of companies before establishing any bankin g relationship to ensure that the \line \up0 \expndtw-2\charscalex100 companies are not shell companies.\ul0\super\cf8\f9\fs23 95 \par\pard\ql \li2556\sb0\sl-26 4\slmult0 \par\pard\ql\li2556\sb0\sl-264\slmult0 \par\pard\ql\li2556\sb4\sl-264\ slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf4\f5\fs23 i)\ul0\nosuper sub\cf23\f24\fs23 \ul0\nosupersub\cf4\f5\fs23 Private Banking \par\pard\qj \l i2556\ri914\sb24\sl-400\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1 \f2\fs23 LOFSA requires an offshore bank to initiate enhanced due diligence proc edures when \line \up0 \expndtw0\charscalex106 dealing with private banking serv ices. A more stringent approval process must be \line \up0 \expndtw0\charscalex1 00 adopted and acceptance of a customer for that service must be approved by the senior \line \up0 \expndtw0\charscalex108 management of the offshore bank. Besi des, the offshore bank must undertake an \line \up0 \expndtw0\charscalex104 inde pendent review of the conduct and development of such a banking relationship \li ne \up0 \expndtw-3\charscalex100 annually.\ul0\super\cf8\f9\fs23 96 \par\pard\ql \li2556\sb0\sl-264\slmult0 \par\pard\ql\li2556\sb0\sl-264\slmult0 \par\pard\ql\ li2556\sb5\sl-264\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf4\f5\f s23 j)\ul0\nosupersub\cf23\f24\fs23 \ul0\nosupersub\cf4\f5\fs23 Correspondent Banking \par\pard\qj \li2555\ri918\sb24\sl-400\slmult0 \up0 \expndtw0\charscalex 100 \ul0\nosupersub\cf1\f2\fs23 Enhanced due diligence is also required for corr espondent banking relationships. An \line \up0 \expndtw0\charscalex100 offshore bank should take the appropriate measures to ensure that the relationship is not \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb173\sl-218\slmult 0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 9 5\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 The Sectoral Guide lines 1 on Anti-Money Laundering and Counter Financing of Terrorism, \ul0\nosup ersub\cf10\f11\fs19 para 4.10. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \exp ndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 96\ul0\nosupersub\cf10\f11\fs19 \u l0\nosupersub\cf11\f12\fs19 The Sectoral Guidelines 1 on Anti-Money Laundering a nd Counter Financing of Terrorism, \ul0\nosupersub\cf10\f11\fs19 para 4.11. \pa r\pard\ql \li10449\sb15\sl-251\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupe rsub\cf1\f2\fs23 202 {\shp {\*\shpinst\shpleft2205\shptop13928\shpright5006\shpbottom13948\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz192\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g212}{\bkmkend Pg212}\par\pard\qj \li2555\sb0\sl-402\slmult0 \par\pard\qj\li2555 \sb0\sl-402\slmult0 \par\pard\qj\li2555\sb0\sl-402\slmult0 \par\pard\qj\li2555\r i914\sb241\sl-402\slmult0\fi0 \up0 \expndtw0\charscalex103 \ul0\nosupersub\cf1\f 2\fs23 exposed to money laundering or terrorist financing activities. Therefore, an offshore \line \up0 \expndtw0\charscalex112 bank must capture and assess at the minimum, the relevant information of the \line \up0 \expndtw0\charscalex104 respondent bank. This includes information on the board of directors a

nd the \line \up0 \expndtw0\charscalex102 management; business activities and p roducts; applicable legislation, regulations and \line \up0 \expndtw0\charscalex 100 AML/CFT measures and control of the respondent bank.\ul0\super\cf8\f9\fs23 9 7\ul0\nosupersub\cf1\f2\fs23 Approval for establishment \line \up0 \expndtw0\ch arscalex105 or continuation of a correspondent banking relationship must be made at the senior \line \up0 \expndtw0\charscalex102 management level of the offsho re bank. Most importantly, the relationship with shell \line \up0 \expndtw0\char scalex102 banks is absolutely prohibited.\ul0\super\cf8\f9\fs23 98 \par\pard\qj \li2555\ri915\sb396\sl-405\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub \cf1\f2\fs23 Furthermore, where a correspondent banking relationship involves th e maintenance of a \up0 \expndtw0\charscalex102 \u8216?payable-through-account\u 8217?, the offshore bank must satisfy itself that the respondent \up0 \expndtw-2 \charscalex100 bank has performed all the normal obligations on its customers t hat have direct access \up0 \expndtw-3\charscalex100 to the accounts of the offs hore bank and the respondent bank is able to provide relevant \up0 \expndtw-4\ch arscalex100 customer identification data upon request by the offshore bank.\ul0\ super\cf8\f9\fs23 99 \par\pard\ql \li2556\sb0\sl-264\slmult0 \par\pard\ql\li2556 \sb248\sl-264\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf4\f5\fs23 k)\ul0\nosupersub\cf23\f24\fs23 \ul0\nosupersub\cf4\f5\fs23 Existing Customers \par\pard\qj \li2556\ri913\sb21\sl-404\slmult0 \up0 \expndtw0\charscalex105 \ul0 \nosupersub\cf1\f2\fs23 LOFSA requires offshore banks to take the necessary meas ures to ensure that the \up0 \expndtw0\charscalex103 records of existing custome rs remain updated and relevant. Regular reviews of the \up0 \expndtw-3\charscale x100 records should be conducted particularly when a significant transaction is to take place; \up0 \expndtw0\charscalex112 there is a material change in the wa y the account is operated; the customer\u8217?s \up0 \expndtw-3\charscalex100 do cumentation standards change substantially or when it discovers that the informa tion \up0 \expndtw-4\charscalex100 held on the customer is insufficient.\ul0\sup er\cf8\f9\fs23 100 \par\pard\qj \li2556\ri912\sb396\sl-405\slmult0 \up0 \expndtw 0\charscalex102 \ul0\nosupersub\cf1\f2\fs23 When a customer fails to comply with the customer due diligence requirements, the \up0 \expndtw-3\charscalex100 offs hore bank should terminate the relationship and report it as a suspicious transa ction \up0 \expndtw0\charscalex105 to LOFSA and Bank Negara Malaysia. It is clea r that with the implementation of \up0 \expndtw0\charscalex100 AMLATFA, offshore banks have to adopt more rigorous procedures to identify and \up0 \expndtw0\cha rscalex100 verify their customers. \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\ pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pa rd\ql\li2205\sb96\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f1 0\fs19\ul0\super\cf9\f10\fs18 97\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\c f11\f12\fs19 The Sectoral Guidelines 1 on Anti-Money Laundering and Counter Fin ancing of Terrorism,\ul0\nosupersub\cf10\f11\fs19 para4.13.2. \par\pard\qj \li2 205\ri1231\sb1\sl-220\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\f s18 98\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 The Sectoral Guidelines 1 on Anti-Money Laundering and Counter Financing of Terrorism,\ul0\n osupersub\cf10\f11\fs19 para4.13.6. \line \up0 \expndtw-2\charscalex100 \ul0\su per\cf9\f10\fs18 99\ul0\nosupersub\cf11\f12\fs19 The Sectoral Guidelines 1 on An ti-Money Laundering and Counter Financing of Terrorism,\ul0\nosupersub\cf10\f11 \fs19 para 4.13.7. \line \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 100\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 The Standard Gui delines on Anti-Money Laundering and Counter Financing of Terrorism, \ul0\nosupe rsub\cf10\f11\fs19 para 5.11. \par\pard\ql \li10449\sb14\sl-252\slmult0 \up0 \ex pndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 203 {\shp {\*\shpinst\shpleft2205\shptop13480\shpright5006\shpbottom13500\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz174\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}}

{\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g213}{\bkmkend Pg213}\par\pard\ql \li2261\sb0\sl-264\slmult0 \par\pard\ql\li2261 \sb0\sl-264\slmult0 \par\pard\ql\li2261\sb0\sl-264\slmult0 \par\pard\ql\li2261\s b0\sl-264\slmult0 \par\pard\ql\li2261\sb0\sl-264\slmult0 \par\pard\ql\li2261\sb2 41\sl-264\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf4\f5\fs23 5.6. 2 On-going Monitoring \par\pard\qj \li2261\sb0\sl-405\slmult0 \par\pard\qj\li22 61\ri858\sb15\sl-405\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2 \fs23 Offshore banks must also conduct on-going customer due diligence to examin e and clarify \line \up0 \expndtw0\charscalex105 the economic background and pur pose of any transaction or business relationship that \line \up0 \expndtw0\chars calex102 appears unusual or does not have any apparent economic purpose or when the legality of \line \up0 \expndtw0\charscalex110 such transaction is not clear . This may involve complex transactions or higher risk \line \up0 \expndtw-3\cha rscalex100 customers.\ul0\super\cf8\f9\fs23 101 \par\pard\qj \li2261\ri860\sb395 \sl-406\slmult0 \up0 \expndtw0\charscalex110 \ul0\nosupersub\cf1\f2\fs23 For thi s purpose, offshore banks must ensure that they have adequate management \line \ up0 \expndtw0\charscalex102 information systems which can provide them with time ly information needed to identify, \line \up0 \expndtw0\charscalex108 analyse an d effectively monitor the risk of money laundering and terrorist financing \line \up0 \expndtw-3\charscalex100 activities.\ul0\super\cf8\f9\fs23 102 \par\pard\q j \li2261\ri914\sb397\sl-403\slmult0 \up0 \expndtw0\charscalex102 \ul0\nosupersu b\cf1\f2\fs23 Offshore banks should also establish internal criteria or \u8216?r ed flags\u8217? to detect suspicious \line \up0 \expndtw0\charscalex104 transact ions, and any transaction that matches the \u8216?red flags\u8217? list should b e subject to \line \up0 \expndtw0\charscalex100 enhanced due diligence and on-go ing monitoring. It must be remembered that enhanced \line \up0 \expndtw0\charsca lex105 due diligence and on-going monitoring requirements are also applicable to business \line \up0 \expndtw0\charscalex103 relationships and transactions w ith individuals, business, company and financial \line \up0 \expndtw0\chars calex100 institutions from countries which have insufficient anti-money launderi ng and terrorism \line \up0 \expndtw-1\charscalex100 financing measures.\ul0\sup er\cf8\f9\fs23 103 \par\pard\ql \li2261\sb0\sl-264\slmult0 \par\pard\ql\li2261\s b248\sl-264\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf4\f5\fs23 5. 6.3 Record Keeping\ul0\nosupersub\cf1\f2\fs23 \ul0\nosupersub\cf4\f5\fs23 Requ irement \par\pard\qj \li2261\sb0\sl-400\slmult0 \par\pard\qj\li2261\ri858\sb24\s l-400\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 Offshore banks are required to maintain transactions records as provided under sections 13 \line \up0 \expndtw-3\charscalex100 and 17 of AMLATFA. Therefore, offshore ba nks should keep all records and documents of \line \up0 \expndtw0\charscalex100 transactions, particularly those obtained during customer due diligence procedur es. The \line \up0 \expndtw0\charscalex100 documents should be kept for at least six years after the transaction has been completed. \par\pard\qj \li2205\sb0\sl -220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-2 20\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220 \slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\ri1445\sb69\ sl-220\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\c f9\f10\fs18 101\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 The Standard Guidelines on Anti-Money Laundering and Counter Financing of Terrorism ,\ul0\nosupersub\cf10\f11\fs19 para 7.1. \line \up0 \expndtw-2\charscalex100 \u l0\super\cf9\f10\fs18 102\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12 \fs19 The Standard Guidelines on Anti-Money Laundering and Counter Financing of Terrorism,\ul0\nosupersub\cf10\f11\fs19 para 7.2. \line \up0 \expndtw-2\charsca lex100 \ul0\super\cf9\f10\fs18 103\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub \cf11\f12\fs19 The Standard Guidelines on Anti-Money Laundering and Counter Fina ncing of Terrorism,\ul0\nosupersub\cf10\f11\fs19 para 7.3. \par\pard\ql \li1044 9\sb14\sl-252\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 204

{\shp {\*\shpinst\shpleft2205\shptop13704\shpright5006\shpbottom13724\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz173\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g214}{\bkmkend Pg214}\par\pard\qj \li2261\sb0\sl-400\slmult0 \par\pard\qj\li2261 \sb0\sl-400\slmult0 \par\pard\qj\li2261\sb0\sl-400\slmult0 \par\pard\qj\li2261\r i861\sb249\sl-400\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf1\f2\f s23 Additionally, the records must be retained beyond such period when it is sub ject to a money \up0 \expndtw-3\charscalex100 laundering investigation or prosec ution.\ul0\super\cf8\f9\fs23 104 \par\pard\qj \li2261\ri858\sb398\sl-403\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs23 LOFSA also requires th e offshore banks to ensure that the retained documents and records \line \up0 \e xpndtw0\charscalex106 are able to create an audit trail on individual transactio ns that are traceable by the law \line \up0 \expndtw0\charscalex107 enforcement authorities for money laundering investigation purpose. Essentially, the \line \ up0 \expndtw-1\charscalex100 records must contain the identities of the customer and beneficiary; the form of transaction; \line \up0 \expndtw0\charscalex110 th e instruction, origin and destination of fund transfers and the amount and type of \line \up0 \expndtw0\charscalex107 currency.\ul0\super\cf8\f9\fs23 105\ul0\no supersub\cf1\f2\fs23 It is obvious that the record-keeping requirements could b e burdensome \line \up0 \expndtw-2\charscalex100 especially in view of the large number of transactions in banking business. \par\pard\ql \li2262\sb0\sl-264\slm ult0 \par\pard\ql\li2262\sb0\sl-264\slmult0 \par\pard\ql\li2262\sb4\sl-264\slmul t0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf4\f5\fs23 5.6.4 Reporting Re quirements \par\pard\qj \li2262\sb0\sl-400\slmult0 \par\pard\qj\li2262\ri859\sb2 4\sl-400\slmult0 \up0 \expndtw0\charscalex102 \ul0\nosupersub\cf1\f2\fs23 Under AMLATFA, all banks including offshore banks are required to make two types of \l ine \up0 \expndtw0\charscalex102 reports: \par\pard\ql \li2906\sb113\sl-264\slmu lt0 \up0 \expndtw-3\charscalex100 (a) Cash Transaction Report (CTR) \par\pard\ql \li2906\sb136\sl-264\slmult0 \up0 \expndtw-3\charscalex100 (b) Suspicious Trans action Report (STR) \par\pard\ql \li2262\sb0\sl-264\slmult0 \par\pard\ql\li2262\ sb0\sl-264\slmult0 \par\pard\ql\li2262\sb8\sl-264\slmult0 \up0 \expndtw-3\charsc alex100 \ul0\nosupersub\cf4\f5\fs23 a) Cash Transaction Report (CTR) \par\pard\q j \li2261\sb0\sl-400\slmult0 \par\pard\qj\li2261\ri859\sb44\sl-400\slmult0\fi0 \ up0 \expndtw0\charscalex105 \ul0\nosupersub\cf1\f2\fs23 Section 14(a) of AMLATFA requires offshore banks to lodge CTRs to the Financial \line \up0 \expndtw-3\ch arscalex100 Intelligence Unit (FIU) in Bank Negara Malaysia. Since 1 September 2 006, offshore banks \line \up0 \expndtw0\charscalex102 are required to report ca sh transactions of any person for the amount of RM50,000 and \line \up0 \expndtw 0\charscalex109 above in a day.\ul0\super\cf8\f9\fs23 106\ul0\nosupersub\cf1\f2\ fs23 It must be noted that CTRs also apply to the same-day multiple \line \up0 \expndtw0\charscalex103 transactions. This is critical to prevent \up0 \expndtw0 \charscalex101 \u8216?smurfing\u8217? or \u8216?structuring\u8217? activities by money \par\pard\qj \li2261\ri867\sb0\sl-410\slmult0 \up0 \expndtw-2\charscalex1 00 launderers. \u8216?Smurfing\u8217? or \u8216?structuring\u8217? refer to the techniques used by money launderers to \line \up0 \expndtw0\charscalex109 break up a transaction into small transaction below the threshold amount to avoid \lin e \up0 \expndtw-4\charscalex100 detection.\ul0\super\cf8\f9\fs23 107 \par\pard\q l \li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql \li2205\sb85\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs1 8 104\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 The Standard G uidelines on Anti-Money Laundering and Counter Financing of Terrorism,\ul0\nosup

ersub\cf10\f11\fs19 para 6.1. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \exp ndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 105\ul0\nosupersub\cf10\f11\fs19 \ ul0\nosupersub\cf11\f12\fs19 The Standard Guidelines on Anti-Money Laundering an d Counter Financing of Terrorism, \ul0\nosupersub\cf10\f11\fs19 para 6.2. \par\p ard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f 10\fs18 106\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Anti-Mon ey Laundering and Anti-Terrorism Financing Act 2001\ul0\nosupersub\cf10\f11\fs19 , (Invocation of Part IV) Order 2006. \par\pard\qj \li2205\ri800\sb1\sl-220\slm ult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 107\ul0\nosupersu b\cf10\f11\fs19 In the United States and Australia, the threshold is $10,000 wh ereas in the United Kingdom the threshold is \up0 \expndtw-3\charscalex100 the E uropean Standard of 15,000 Ecu. \par\pard\ql \li10449\sb14\sl-252\slmult0 \up0 \ expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 205 {\shp {\*\shpinst\shpleft2205\shptop13256\shpright5006\shpbottom13276\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz187\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g215}{\bkmkend Pg215}\par\pard\ql \li2261\sb0\sl-264\slmult0 \par\pard\ql\li2261 \sb0\sl-264\slmult0 \par\pard\ql\li2261\sb0\sl-264\slmult0 \par\pard\ql\li2261\s b0\sl-264\slmult0 \par\pard\ql\li2261\sb0\sl-264\slmult0 \par\pard\ql\li2261\sb0 \sl-264\slmult0 \par\pard\ql\li2261\sb0\sl-264\slmult0 \par\pard\ql\li2261\sb113 \sl-264\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf4\f5\fs23 b) Sus picious Transaction Report (STR) \par\pard\qj \li2205\sb0\sl-402\slmult0 \par\pa rd\qj\li2205\ri914\sb20\sl-402\slmult0\fi0 \up0 \expndtw0\charscalex102 \ul0\nos upersub\cf1\f2\fs23 Section 14(b) of AMLATFA sets out the statutory obligation o f offshore banks to report \line \up0 \expndtw0\charscalex104 any suspicious tra nsactions. When there is a reason to suspect any transaction as being \line \up0 \expndtw0\charscalex103 related directly or indirectly to any of the serious of fence, or foreign serious offence, an \line \up0 \expndtw0\charscalex100 offshor e bank has to file a STR to FIU and AMLU. Serious offences are prescribed in the \line \up0 \expndtw0\charscalex100 Second Schedule of AMLATFA.\ul0\super\cf8\f9 \fs23 108\ul0\nosupersub\cf1\f2\fs23 Foreign serious offence means an offence a gainst the \line \up0 \expndtw0\charscalex105 law of a foreign state and that co nsists of or includes an act or activity which, if it had \line \up0 \expndtw-1\ charscalex100 occurred in Malaysia, would have constituted a serious offence.\ul 0\super\cf8\f9\fs23 109\ul0\nosupersub\cf1\f2\fs23 The reporting should be \lin e \up0 \expndtw-1\charscalex100 conducted by the money laundering reporting offi cer of the bank (MLRO).\ul0\super\cf8\f9\fs23 110 \par\pard\qj \li2205\sb0\sl-40 0\slmult0 \par\pard\qj\li2205\ri915\sb20\sl-400\slmult0\fi0 \up0 \expndtw0\chars calex112 \ul0\nosupersub\cf1\f2\fs23 Information to be included in the STR would comprise information of the person \line \up0 \expndtw0\charscalex109 conductin g the transaction, information on the account holder or beneficiary of the \line \up0 \expndtw0\charscalex107 transaction, details of the transaction and descri ption of the suspicious transaction.\ul0\super\cf8\f9\fs23 111 \line \up0 \expnd tw0\charscalex100 \ul0\nosupersub\cf1\f2\fs23 Failure to report any suspicious t ransaction is an offence and upon conviction, the person \line \up0 \expndtw0\ch arscalex107 could be liable to a fine not exceeding RM100,000 or to imprisonment for a term not \line \up0 \expndtw0\charscalex102 exceeding 6 months or both. I f there is a continuing offence, a further fine not exceeding \line \up0 \expndt w0\charscalex102 RM1,000 for each day the offence continues after conviction, ca n be imposed.\ul0\super\cf8\f9\fs23 112 \par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri913\sb20\sl-400\slmult0 \up0 \expndtw0\charscalex104 \ul0\

nosupersub\cf1\f2\fs23 In ensuring the effectiveness of the STR mechanism and to avoid non-compliance, it is \line \up0 \expndtw0\charscalex110 critical for the offshore banks to ensure that their employees know how to identify \line \up0 \ expndtw0\charscalex107 suspicious transactions and how to address such reports. In response to this concern, \line \up0 \expndtw0\charscalex103 LOFSA requires offshore banks to establish an effective reporting mechanism by \line \ up0 \expndtw0\charscalex104 appointing at least one officer at senior management level to be the compliance officer \line \up0 \expndtw0\charscalex102 responsib le for the submission of STRs to FIU and AMLU. Initially, upon receiving any \li ne \up0 \expndtw0\charscalex102 internal STRs, the compliance officer should eva luate the grounds for suspicion and if it is \par\pard\qj \li2205\sb0\sl-240\slm ult0 \par\pard\qj\li2205\ri944\sb233\sl-240\slmult0\fi0 \up0 \expndtw0\charscale x100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 108\ul0\nosupersub\cf10\f11\ fs19 In 2005, the number of predicate offences in the Second Schedule was incre ased from 168 to 185 serious \up0 \expndtw-1\charscalex100 offences from 27 piec es of legislation. \par\pard\ql \li2205\sb1\sl-215\slmult0 \up0 \expndtw-2\chars calex100 \ul0\super\cf9\f10\fs18 109\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupers ub\cf11\f12\fs19 Anti-Money Laundering and Anti-Terrorism Financing Act 2001\ul0 \nosupersub\cf10\f11\fs19 , s 3(1). \par\pard\qj \li2205\ri888\sb1\sl-220\slmult 0\fi0 \up0 \expndtw0\charscalex100 \ul0\super\cf9\f10\fs18 110\ul0\nosupersub\cf 10\f11\fs19 Section 19(4) of AMLATFA requires reporting institutions to designa te a MLRO, at management level in \up0 \expndtw-1\charscalex100 each branch and subsidiary. \par\pard\qj \li2205\ri2854\sb0\sl-220\slmult0 \up0 \expndtw-2\chars calex100 \ul0\super\cf9\f10\fs18 111\ul0\nosupersub\cf10\f11\fs19 Bank Negara M alaysia, \ul0\nosupersub\cf11\f12\fs19 Anti-Money Laundering Measures in Malaysi a\ul0\nosupersub\cf10\f11\fs19 ( 2005) 49. \up0 \expndtw-2\charscalex100 \ul0\s uper\cf9\f10\fs18 112\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs1 9 Anti-Money Laundering and Anti-Terrorism Financing Act 2001\ul0\nosupersub\cf1 0\f11\fs19 , s 22(4). \par\pard\ql \li10449\sb14\sl-252\slmult0 \up0 \expndtw-3\ charscalex100 \ul0\nosupersub\cf1\f2\fs23 206 {\shp {\*\shpinst\shpleft2205\shptop12810\shpright5006\shpbottom12830\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz183\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g216}{\bkmkend Pg216}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i915\sb249\sl-400\slmult0\fi0 \up0 \expndtw0\charscalex103 \ul0\nosupersub\cf1\f 2\fs23 confirmed, submits the STR to FIU and AMLU.\ul0\super\cf8\f9\fs23 113\ul0 \nosupersub\cf1\f2\fs23 In this respect, it is important for the \up0 \expndtw0 \charscalex103 compliance officer to have sufficient knowledge and training to a ssess these reports and \up0 \expndtw0\charscalex103 lodge the genuine report to FIU and AMLU. \par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri916 \sb20\sl-400\slmult0\fi0 \up0 \expndtw0\charscalex109 LOFSA also requires offsho re banks to undertake reasonable measures to establish \line \up0 \expndtw0\char scalex100 sufficient training for the employees to identify suspicious transacti ons and to address the \line \up0 \expndtw0\charscalex105 reports effectively.\u l0\super\cf8\f9\fs23 114\ul0\nosupersub\cf1\f2\fs23 Proper training of staff wo uld prevent the problems of mistaken \line \up0 \expndtw0\charscalex104 reportin g and defensive reporting. These kinds of reporting must be avoided because it \ line \up0 \expndtw0\charscalex107 could jeopardise innocent customers. Additiona lly, it could result in the enforcement \line \up0 \expndtw-2\charscalex100 agen cies being inundated with reports and this could ultimately hinder the effective

analysis \line \up0 \expndtw-3\charscalex100 of the information. \par\pard\qj \ li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205\ri914\sb17\sl-402\slmult0 \up0 \ex pndtw-1\charscalex100 Furthermore, LOFSA requires the offshore banks to ensure t hat the suspicious transaction \line \up0 \expndtw0\charscalex104 reporting mec hanism is operated in a secure environment to maintain customer \line \ up0 \expndtw-3\charscalex100 confidentiality and secrecy.\ul0\super\cf8\f9\fs23 115\ul0\nosupersub\cf1\f2\fs23 This is in line with section 79 of AMLATFA which requires \line \up0 \expndtw0\charscalex100 the offshore banks and its employee to preserve the customer\u8217?s confidential information \line \up0 \expndtw0\ charscalex103 except when complying with the reporting obligations under the Act . Any person who \line \up0 \expndtw-3\charscalex100 contravenes this provision commits an offence and upon conviction, shall be liable to a fine \line \up0 \ex pndtw-2\charscalex100 not exceeding one million ringgit or to imprisonment for a term not exceeding one year or \line \up0 \expndtw-3\charscalex100 to both. \pa r\pard\qj \li2205\ri916\sb398\sl-403\slmult0 \up0 \expndtw0\charscalex104 It mus t be noted that the reporting of suspicious transactions under AMLATFA takes \li ne \up0 \expndtw-3\charscalex100 precedence over the banking secrecy rule. Secti on 20 of the Act provides protection for any \line \up0 \expndtw0\charscalex100 breach of any duty under any written law to keep confidential the information th at gives \line \up0 \expndtw-2\charscalex100 rise to the knowledge or suspicion of money laundering. Therefore, in complying with the \line \up0 \expndtw0\chars calex100 reporting obligations under AMLATFA, an offshore bank and its employees will not be \line \up0 \expndtw0\charscalex100 subject to the banking secrecy r ule laid down in sections 22 of the Offshore Banking Act \line \up0 \expndtw-1\c harscalex100 1990 and under common law. \par\pard\qj \li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \p ar\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\ri1348\sb89\sl-220\slmu lt0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 113\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 The Standard Gu idelines on Anti-Money Laundering and Counter Financing of Terrorism,\ul0\nosupe rsub\cf10\f11\fs19 para 8.2. \line \up0 \expndtw-2\charscalex100 \ul0\super\cf9 \f10\fs18 114\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 The St andard Guidelines on Anti-Money Laundering and Counter Financing of Terrorism,\u l0\nosupersub\cf10\f11\fs19 para 8.4. \line \up0 \expndtw-2\charscalex100 \ul0\ super\cf9\f10\fs18 115\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs 19 The Standard Guidelines on Anti-Money Laundering and Counter Financing of Ter rorism,\ul0\nosupersub\cf10\f11\fs19 para 8.2.8. \par\pard\ql \li10449\sb14\sl252\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 207 {\shp {\*\shpinst\shpleft2205\shptop13704\shpright5006\shpbottom13724\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz201\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g217}{\bkmkend Pg217}\par\pard\qj \li2261\sb0\sl-400\slmult0 \par\pard\qj\li2261 \sb0\sl-400\slmult0 \par\pard\qj\li2261\sb0\sl-400\slmult0 \par\pard\qj\li2261\r i948\sb249\sl-400\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf1\f2\f s23 It must be remembered that\ul0\nosupersub\cf24\f25\fs23 \ul0\nosupersub\cf1 \f2\fs23 suspicion is rather subjective and is not specifically defined in \up0 \expndtw0\charscalex105 AMLATFA. It is generally accepted that unclear reasons f or suspicion are among the \up0 \expndtw0\charscalex103 issues faced by bankers in implementing the reporting requirement. According to Bank \up0 \expndtw0\char scalex103 Negara Malaysia, suspicion should arise in the following circumstances :\ul0\super\cf8\f9\fs23 116 \par\pard\qj \li2413\ri943\sb20\sl-400\slmult0\tx273

1 \up0 \expndtw0\charscalex108 \ul0\nosupersub\cf1\f2\fs23 i)\ul0\nosupersub\cf6 \f7\fs23 \ul0\nosupersub\cf1\f2\fs23 When transactions conducted are out of ch aracter with the usual conduct of an \line\tab \up0 \expndtw-3\charscalex100 acc ount or profile of the customer; \par\pard\ql \li2348\sb113\sl-264\slmult0 \up0 \expndtw-2\charscalex100 ii)\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\ fs23 When transactions do not make any economic sense; \par\pard\ql \li2283\ri9 46\sb24\sl-400\slmult0\tx2731\tx2731 \up0 \expndtw0\charscalex106 iii)\ul0\nosup ersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 When transactions are suspected to be related directly or indirectly to any of the \line\tab \up0 \expndtw0\char scalex106 serious offences listed in the Second Schedule of AMLATFA or foreign s erious \line\tab \up0 \expndtw-3\charscalex100 offences; \par\pard\ql \li2296\sb 113\sl-264\slmult0 \up0 \expndtw-1\charscalex100 iv)\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 When customer is evasive or unwilling to provide i nformation when requested. \par\pard\qj \li2205\sb0\sl-402\slmult0 \par\pard\qj\ li2205\ri859\sb40\sl-402\slmult0 \up0 \expndtw0\charscalex105 Besides, BNM/GP9 g ives examples of suspicious transactions in its Appendix I. The \up0 \expndtw-3\ charscalex100 examples are divided into the following categories, namely; Money Laundering Using Cash \up0 \expndtw0\charscalex102 Transaction; Money Launderi ng Using Bank Accounts; Money Laundering Using \up0 \expndtw-1\charscalex1 00 Investment Related Transactions; Money Laundering by Off-shore International Activity; \up0 \expndtw0\charscalex104 Money Laundering Involving Financial Inst itution Employees and Agents and Money \up0 \expndtw0\charscalex100 Laundering b y Secured and Unsecured Lending. It must be noted that these examples are \up0 \ expndtw0\charscalex100 inserted in Appendix I of the AML/CFT Sectoral Guidelines 1 issued by LOFSA. These \up0 \expndtw0\charscalex100 examples are welcome beca use they can be very helpful to offshore banks\u8217? employees in \up0 \expndtw -1\charscalex100 identifying transactions which are considered suspicious. \par\ pard\qj \li2205\ri858\sb397\sl-404\slmult0 \up0 \expndtw-2\charscalex100 It is i mportant to note that when complying with their reporting obligations, offshore banks \line \up0 \expndtw0\charscalex102 must ensure that they do not to tip-off their customers, as this will constitute an offence \line \up0 \expndtw-3\chars calex100 under section 35 of AMLATFA. Under section 35, where a banker knows or suspects that a \line \up0 \expndtw0\charscalex102 report has been made to the l aw enforcement authorities, it is an offence for a banker to \line \up0 \expndtw 0\charscalex109 make any disclosure which is likely to prejudice any investigati on which might be \line \up0 \expndtw-3\charscalex100 conducted following the ma king of the report. Upon conviction, a banker shall be liable to a \par\pard\li2 205\sb0\sl-218\slmult0\par\pard\li2205\sb0\sl-218\slmult0\par\pard\li2205\sb0\sl -218\slmult0\par\pard\li2205\sb0\sl-218\slmult0\par\pard\li2205\sb0\sl-218\slmul t0\par\pard\li2205\sb0\sl-218\slmult0\par\pard\li2205\sb120\sl-218\slmult0\fi0 \ up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 116\ ul0\nosupersub\cf10\f11\fs19 Bank Negara Malaysia, \u8216?Core Compliance Stand ards\u8217? in \ul0\nosupersub\cf11\f12\fs19 AML/CFT Compliance Handbook\ul0\nos upersub\cf10\f11\fs19 (2005) 5.\par\pard\li2205\sb3\sl-264\slmult0\fi8243 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 208 {\shp {\*\shpinst\shpleft2205\shptop14151\shpright5006\shpbottom14171\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz201\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g218}{\bkmkend Pg218}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i868\sb249\sl-400\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf1\f2\f

s23 fine not exceeding one million ringgit or to imprisonment for a term not exc eeding one year \up0 \expndtw-2\charscalex100 or both.\ul0\super\cf8\f9\fs23 117 \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb141\sl-264\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf4\f5\fs23 5.6.5 Measures to Co unter Terrorism Financing \par\pard\qj \li2205\sb0\sl-402\slmult0 \par\pard\qj\l i2205\ri914\sb20\sl-402\slmult0\fi0 \up0 \expndtw0\charscalex100 \ul0\nosupersub \cf1\f2\fs23 As pointed out earlier, AMLATFA was amended in 2003 to include the measures against \line \up0 \expndtw-2\charscalex100 terrorism financing. As a r esult, besides reporting suspicious flows of dirty money, offshore \line \up0 \e xpndtw0\charscalex104 banks also have a responsibility to prevent the transfers of terrorist funds. LOFSA also \line \up0 \expndtw0\charscalex104 requires banks to freeze the accounts of persons associated with Osama Bin Laden, the \line \u p0 \expndtw-2\charscalex100 Taliban and the Al-Qaeda based on the UN Security Co uncil Resolution (UNSCR) 1267. In \line \up0 \expndtw0\charscalex100 ensuring ef ficient detection of suspected financing of terrorism, the offshore banks should \line \up0 \expndtw-1\charscalex100 maintain a database of names and particular s of terrorists, based on the list, and ensure that \line \up0 \expndtw-2\charsc alex100 the database is updated, relevant and accessible.\ul0\super\cf8\f9\fs23 118\ul0\nosupersub\cf1\f2\fs23 Additionally, the offshore banks must be \line \ up0 \expndtw-2\charscalex100 aware of any current lists issued by the Minister o f Internal Security. \par\pard\qj \li2205\ri915\sb397\sl-404\slmult0 \up0 \expnd tw0\charscalex100 Terrorism financing is different from money laundering. Althou gh to a certain extent, the \up0 \expndtw0\charscalex100 funds for terrorism fin ancing are derived from illegal sources, most of the time, the money \up0 \expnd tw0\charscalex102 originates from legitimate sources, such as private donations or charitable contributions. \up0 \expndtw0\charscalex108 Besides, terrorist ope rations often require relatively little money, for example it was \up0 \expndtw1\charscalex100 suggested that the September 11 attacks cost merely half a milli on dollars.\ul0\super\cf8\f9\fs23 119\ul0\nosupersub\cf1\f2\fs23 The funds are \up0 \expndtw-2\charscalex100 therefore relatively easy to conceal and can easil y escape detection. \par\pard\qj \li2205\ri913\sb396\sl-405\slmult0 \up0 \expndt w0\charscalex104 It has been argued that the traditional money laundering measur es which focus on the \line \up0 \expndtw0\charscalex102 detection of \u8216?dir ty\u8217? money at the placement stages is not relevant to detecting terrorism \ line \up0 \expndtw0\charscalex104 financing. This is because terrorism financing is intended to assist the commission of \line \up0 \expndtw-3\charscalex100 ter rorism, which occurs at the final stage of the operation. Therefore, it is criti cal to identify \line \up0 \expndtw-3\charscalex100 the recipient of the funds, and only then the sponsor of the terrorism can be located.\ul0\super\cf8\f9\fs23 120 \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmu lt0 \par\pard\ql\li2205\sb94\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\s uper\cf9\f10\fs18 117\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs1 9 Anti-Money Laundering and Anti-Terrorism Financing Act 2001,\ul0\nosupersub\cf 10\f11\fs19 s 35(1). \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\ch arscalex100 \ul0\super\cf9\f10\fs18 118\ul0\nosupersub\cf10\f11\fs19 \ul0\nosup ersub\cf11\f12\fs19 The Standard Guidelines on Anti-Money Laundering and Counter Financing of Terrorism,\ul0\nosupersub\cf10\f11\fs19 para 9. \par\pard\qj \li2 205\ri935\sb1\sl-220\slmult0\fi0 \up0 \expndtw0\charscalex105 \ul0\super\cf9\f10 \fs18 119\ul0\nosupersub\cf10\f11\fs19 Canadian Centre for Intelligence and Sec urity Studies, Terrorism Financing and Financial System \up0 \expndtw-2\charscal ex100 Vulnerabilities: Issues and Challenges, (2006) 3 \ul0\nosupersub\cf11\f12\ fs19 ITAC Presents\ul0\nosupersub\cf10\f11\fs19 , 5. \par\pard\ql \li2205\sb2\sl -218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 120\ul0\nosup ersub\cf10\f11\fs19 Ibid. \par\pard\ql \li10449\sb15\sl-251\slmult0 \up0 \expnd tw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 209 {\shp {\*\shpinst\shpleft2205\shptop13256\shpright5006\shpbottom13276\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz169\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{

\sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g219}{\bkmkend Pg219}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i916\sb249\sl-400\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs 23 However, given the speed and borderless nature of the current payment systems , detecting \up0 \expndtw0\charscalex100 terrorist funds is not an easy task and this poses a major challenge to banks. \par\pard\qj \li2205\ri913\sb397\sl-404\ slmult0 \up0 \expndtw0\charscalex102 Offshore banks and their employees are most affected by sections 130N and 130O of the \line \up0 \expndtw0\charscalex102 Pe nal Code. Section 130N makes it an offence to provide or collect property for te rrorist \line \up0 \expndtw0\charscalex106 acts, and section 130O makes it an of fence to provide financial services for terrorism \line \up0 \expndtw-1\charscal ex100 purposes. In fact, both sections provide severe punishment, including deat h, for breach. As \line \up0 \expndtw-1\charscalex100 a result, the offshore ban ks must be aware of the risks that they face and this could provide \line \up0 \ expndtw-1\charscalex100 an incentive for them to comply with the anti-terrorism financing obligations. \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li22 05\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb4\sl-264\slmult0 \up0 \expndtw-2\cha rscalex100 \ul0\nosupersub\cf4\f5\fs23 5.6.6 AML/CTF Compliance Programme \par \pard\ql \li2205\sb0\sl-410\slmult0 \par\pard\ql\li2205\ri859\sb6\sl-410\slmult0 \tx2731 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 In order to co mply with the reporting obligations under AMLATFA, offshore banks have to \line \up0 \expndtw-5\charscalex100 establish a compliance framework that meets the fo llowing criteria:\ul0\super\cf8\f9\fs23 121 \line \tab \up0 \expndtw-4\charscale x100 \ul0\nosupersub\cf1\f2\fs23 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosup ersub\cf1\f2\fs23 Develop and implement internal programmes, policies, procedu res and controls to \par\pard\ql \li3080\sb111\sl-264\slmult0 \up0 \expndtw-5\ch arscalex100 guard against and detect any offence under AMLATFA; \par\pard\ql \li 2731\ri860\sb44\sl-400\slmult0\tx3080 \up0 \expndtw0\charscalex100 \u-3913?\ul0\ nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 Establish on-going employe e training programs and instruct employees on their \line\tab \up0 \expndtw-1\ch arscalex100 responsibilities; \par\pard\ql \li2731\ri859\sb16\sl-406\slmult0\tx3 080\tx3080 \up0 \expndtw0\charscalex102 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul 0\nosupersub\cf1\f2\fs23 Designate a compliance officer at management le vel in each branch and \line\tab \up0 \expndtw-4\charscalex100 subsidiary, w ith responsibility for the anti-money laundering program; and, \line \up0 \expnd tw0\charscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs 23 Develop an independent audit function to check and test the effectiveness o f the \line\tab \up0 \expndtw-1\charscalex100 compliance program. \par\pard\ql \ li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li 2205\sb4\sl-264\slmult0 \up0 \expndtw-5\charscalex100 \ul0\nosupersub\cf4\f5\fs2 3 a) Internal Policies, Procedures and Control \par\pard\qj \li2205\ri914\sb24\s l-400\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf1\f2\fs23 Generall y, it is the responsibility of the board of directors (BOD) of the offshore bank s to \line \up0 \expndtw0\charscalex102 establish internal programmes, polici es, procedures and controls to detect money \line \up0 \expndtw0\charscale x103 laundering and terrorist financing activities. These include the policies a nd procedures \line \up0 \expndtw-1\charscalex100 relating to customer acceptanc e policy; customer due diligence; record-keeping; on-going \line \up0 \expndtw0\ charscalex100 monitoring; reporting suspicious transactions and combating the terrorist financing. \line \up0 \expndtw0\charscalex100 Furthermore, it is the duty of the senior management of the offshore banks to ensure the \par\pard \ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\

ql\li2205\sb115\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\ fs19\ul0\super\cf9\f10\fs18 121\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf 11\f12\fs19 Anti-Money Laundering and Anti-Terrorism Financing Act 2001\ul0\nosu persub\cf10\f11\fs19 , s 19(2). \par\pard\ql \li10449\sb15\sl-251\slmult0 \up0 \ expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 210 {\shp {\*\shpinst\shpleft2205\shptop14151\shpright5006\shpbottom14171\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz205\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g220}{\bkmkend Pg220}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i914\sb249\sl-400\slmult0\fi0 \up0 \expndtw0\charscalex102 \ul0\nosupersub\cf1\f 2\fs23 effective implementation of such measures.\ul0\super\cf8\f9\fs23 122\ul0\ nosupersub\cf1\f2\fs23 LOFSA requires the BOD of the offshore \line \up0 \expnd tw0\charscalex109 banks to review and assess the AML/CTF measures when there are any changes or \line \up0 \expndtw-1\charscalex100 development to their product s and services, or to money laundering and terrorism financing \line \up0 \expnd tw-2\charscalex100 trends. \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\ li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb5\sl-264\slmult0 \up0 \expndtw-3 \charscalex100 \ul0\nosupersub\cf4\f5\fs23 b) Staff Training and Awareness Progr ams \par\pard\qj \li2205\ri915\sb22\sl-402\slmult0 \up0 \expndtw0\charscalex102 \ul0\nosupersub\cf1\f2\fs23 The BOD and senior management of offshore banks must ensure that there is adequate \line \up0 \expndtw0\charscalex107 AML/CTF traini ng provided for their employees and must promote the employees\u8217? \line \up0 \expndtw0\charscalex103 awareness of their AML/CTF obligations. Generally, the training conducted should be \line \up0 \expndtw0\charscalex100 appropriate to t he level of employees\u8217? responsibilities and the risks of money laundering \line \up0 \expndtw0\charscalex103 and terrorist financing activities. Normally, priority should be given to the \u8216?front-line\u8217? \line \up0 \expndtw0\c harscalex103 employees, officers in charge of processing new customers as well as employees \line \up0 \expndtw0\charscalex100 responsible for monitorin g transactions. More importantly, the employees must be made \line \up0 \expndtw 0\charscalex103 aware that they may be held personally liable for any failure to observe the AML/CTF \line \up0 \expndtw-5\charscalex100 requirements.\ul0\super \cf8\f9\fs23 123 \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb2 48\sl-264\slmult0 \up0 \expndtw-5\charscalex100 \ul0\nosupersub\cf4\f5\fs23 c) C ompliance Officer \par\pard\qj \li2205\ri915\sb20\sl-405\slmult0\fi0 \up0 \expnd tw0\charscalex100 \ul0\nosupersub\cf1\f2\fs23 The BOD of offshore banks should e nsure that a compliance officer at head office and at \up0 \expndtw-4\charscalex 100 each branch or subsidiary is appointed. Usually, the compliance officer acts as the reference \up0 \expndtw0\charscalex105 point for AML/CTF matters, partic ularly with regards to the employees training and \up0 \expndtw0\charscalex102 r eporting of suspicious transactions.\ul0\super\cf8\f9\fs23 124\ul0\nosupersub\cf 1\f2\fs23 The roles and responsibilities of the compliance \up0 \expndtw-5\char scalex100 officer can be described as follows:\ul0\super\cf8\f9\fs23 125 \par\pa rd\qj \li2731\ri1861\sb3\sl-420\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosup ersub\cf1\f2\fs23 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs 23 To ensure that the offshore banks comply with AML/CTF requirements; \up0 \e xpndtw-3\charscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\ f2\fs23 To ensure the implementation of AML/CTF policies; \par\pard\ql \li2731 \sb129\sl-264\slmult0 \up0 \expndtw-3\charscalex100 \u-3913?\ul0\nosupersub\cf6\ f7\fs23 \ul0\nosupersub\cf1\f2\fs23 To ensure that the AML/CTF measures are i

mplemented effectively; \par\pard\ql \li2731\ri915\sb44\sl-400\slmult0\tx3080 \u p0 \expndtw0\charscalex102 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\ cf1\f2\fs23 To assess AML/CTF mechanism regularly and address any changes in m oney \line\tab \up0 \expndtw-5\charscalex100 laundering and terrorist financing trends; \par\pard\ql \li2205\sb0\sl-220\slmult0 \par\pard\ql\li2205\sb0\sl-220\s lmult0 \par\pard\ql\li2205\sb0\sl-220\slmult0 \par\pard\ql\li2205\sb0\sl-220\slm ult0 \par\pard\ql\li2205\ri1251\sb209\sl-220\slmult0 \up0 \expndtw-2\charscalex1 00 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 122\ul0\nosupersub\cf10\f11\fs 19 \ul0\nosupersub\cf11\f12\fs19 The Standard Guidelines on Anti-Money Launderi ng and Counter Financing of Terrorism,\ul0\nosupersub\cf10\f11\fs19 para 10.1. \line \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 123\ul0\nosupersub\c f11\f12\fs19 The Standard Guidelines on Anti-Money Laundering and Counter Financ ing of Terrorism,\ul0\nosupersub\cf10\f11\fs19 para 10.4. \line \up0 \expndtw-2 \charscalex100 \ul0\super\cf9\f10\fs18 124\ul0\nosupersub\cf10\f11\fs19 \ul0\no supersub\cf11\f12\fs19 The Standard Guidelines on Anti-Money Laundering and Coun ter Financing of Terrorism,\ul0\nosupersub\cf10\f11\fs19 para 10.3.1. \line \up 0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 125\ul0\nosupersub\cf10\f11\f s19 \ul0\nosupersub\cf11\f12\fs19 The Standard Guidelines on Anti-Money Launder ing and Counter Financing of Terrorism\ul0\nosupersub\cf10\f11\fs19 , para 10.3. 3. \par\pard\ql \li10449\sb14\sl-252\slmult0 \up0 \expndtw-3\charscalex100 \ul0\ nosupersub\cf1\f2\fs23 211 {\shp {\*\shpinst\shpleft2205\shptop13480\shpright5006\shpbottom13500\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz198\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g221}{\bkmkend Pg221}\par\pard\ql \li2731\sb0\sl-400\slmult0 \par\pard\ql\li2731 \sb0\sl-400\slmult0 \par\pard\ql\li2731\sb0\sl-400\slmult0 \par\pard\ql\li2731\r i915\sb269\sl-400\slmult0\tx3080 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf 1\f2\fs23 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 To ensure that the channel of communication from the respective employees to \line\ tab \up0 \expndtw-1\charscalex100 the compliance officer is secured. \par\pard\q l \li2731\ri916\sb20\sl-400\slmult0\tx3080 \up0 \expndtw-2\charscalex100 \u-3913 ?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 To ensure that all e mployees are aware of AML/CTF measures, particularly with \line\tab \up0 \expndt w-3\charscalex100 regards to the policies, controls and channel of reporting; \p ar\pard\ql \li2731\ri915\sb20\sl-400\slmult0\tx3080 \up0 \expndtw0\charscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 To evaluate internal suspicious transactions reports before submit them to FIU \line\tab \up 0 \expndtw0\charscalex100 and AMLU; and \par\pard\ql \li2731\ri915\sb20\sl-400\s lmult0\tx3080 \up0 \expndtw-4\charscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 To identify the money laundering and terrorist fi nancing risks associated with new \line\tab \up0 \expndtw-4\charscalex100 produc ts or services or arising from the offshore bank\u8217?s operational changes. \p ar\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \pa r\pard\ql\li2205\sb5\sl-264\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersu b\cf4\f5\fs23 d) Independent Audit \par\pard\qj \li2205\ri914\sb22\sl-403\slmult 0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs23 LOFSA allows the offs hore banks to appoint an audit committee to assist their board of \up0 \expndtw0 \charscalex102 directors fulfil their responsibilities relating to regular indep endent audit of the internal \up0 \expndtw-3\charscalex100 AML/CTF measures of t he offshore banks. Therefore, the audit committee must ensure the \up0 \expndtw3\charscalex100 effectiveness of the internal audit function in assessing and ev

aluating AML/CTF measures \up0 \expndtw0\charscalex100 and their compliance with AMLATFA and the relevant Guidelines. The committee must \up0 \expndtw0\charscal ex106 also assess whether AML/CTF measures are in line with the latest developme nt and \up0 \expndtw-3\charscalex100 changes to the AML/CTF requirements.\ul0\su per\cf8\f9\fs23 126 \par\pard\qj \li2205\ri916\sb398\sl-402\slmult0 \up0 \expndt w0\charscalex108 \ul0\nosupersub\cf1\f2\fs23 AML/CTF measures undertaken by the offshore banks are based on the risk-based \line \up0 \expndtw-2\charscalex100 a pproach. The offshore banks must identify the money laundering and terrorism fin ancing \line \up0 \expndtw0\charscalex104 risks that are relevant to their busin ess. Then the offshore banks must assess the risks \line \up0 \expndtw-3\charsca lex100 associated with the type of customers, services and products involved. Fu rther, the offshore \line \up0 \expndtw-1\charscalex100 banks must design and im plement controls to manage and mitigate the risks effectively. It \line \up0 \ex pndtw0\charscalex100 is believed that this framework would help to produce a mor e cost effective system as it \line \up0 \expndtw0\charscalex103 focuses on the effort where it is needed and will have the most impact. Ultimately, the \line \ up0 \expndtw-3\charscalex100 effectiveness of this approach greatly depends on t he proper judgement of the management \line \up0 \expndtw-4\charscalex100 of the offshore banking institutions. \par\pard\li2205\sb0\sl-218\slmult0\par\pard\li2 205\sb0\sl-218\slmult0\par\pard\li2205\sb0\sl-218\slmult0\par\pard\li2205\sb0\sl -218\slmult0\par\pard\li2205\sb0\sl-218\slmult0\par\pard\li2205\sb0\sl-218\slmul t0\par\pard\li2205\sb0\sl-218\slmult0\par\pard\li2205\sb0\sl-218\slmult0\par\par d\li2205\sb24\sl-218\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f1 0\fs19\ul0\super\cf9\f10\fs18 126\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\ cf11\f12\fs19 The Sectoral Guidelines 1 on Anti-Money Laundering and Counter Fin ancing of Terrorism,\ul0\nosupersub\cf10\f11\fs19 para 7.1.\par\pard\li2205\sb3 \sl-264\slmult0\fi8243 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 212 {\shp {\*\shpinst\shpleft2205\shptop14151\shpright5006\shpbottom14171\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz214\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g222}{\bkmkend Pg222}\par\pard\ql \li2261\sb0\sl-264\slmult0 \par\pard\ql\li2261 \sb0\sl-264\slmult0 \par\pard\ql\li2261\sb0\sl-264\slmult0 \par\pard\ql\li2261\s b0\sl-264\slmult0 \par\pard\ql\li2261\sb0\sl-264\slmult0 \par\pard\ql\li2261\sb2 41\sl-264\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf4\f5\fs23 5.6. 7 Effect of Non-Compliance with the AML/CTF Obligations \par\pard\qj \li2261\sb 0\sl-405\slmult0 \par\pard\qj\li2261\ri858\sb15\sl-405\slmult0 \up0 \expndtw0\ch arscalex100 \ul0\nosupersub\cf1\f2\fs23 If an offshore bank and its employees fa il to comply with the AML/CTF obligations under \up0 \expndtw-1\charscalex100 AM LATFA, they will commit an offence under section 22(4) of the Act. Upon convicti on, \up0 \expndtw0\charscalex102 they could be liable for a fine not exceeding R M100,000 or be imprisoned for a term not \up0 \expndtw0\charscalex102 exceeding 6 months or both. If there is a continuing offence, a further fine not exceeding \up0 \expndtw0\charscalex102 RM1,000 can be imposed for each day the offence co ntinues. \par\pard\qj \li2261\ri858\sb395\sl-405\slmult0\tx3825 \up0 \expndtw0\c harscalex100 Under section \tab \up0 \expndtw0\charscalex103 86 of AMLATFA, any person who contravenes any provisions of \line \up0 \expndtw0\charscal ex105 AMLATFA or its regulations or any specification or requirement or any writ ten order, \line \up0 \expndtw0\charscalex105 direction, instruction or notice g iven under AMLATFA or its regulations, commits an \line \up0 \expndtw0\charscale x105 offence and upon conviction, could be liable to a fine not exceeding RM250,

000, if no \line \up0 \expndtw-2\charscalex100 penalty is expressly provided for the offence under AMLATFA or its regulations. \par\pard\qj \li2205\ri858\sb398\ sl-402\slmult0 \up0 \expndtw-1\charscalex100 An offshore bank is vicariously lia ble for its employee\u8217?s money laundering offence if it is \line \up0 \expnd tw0\charscalex104 carried out in the course of his or her employment under secti on 88(a) of AMLATFA. \line \up0 \expndtw-1\charscalex100 Furthermore, section 92 of AMLATFA empowers LOFSA to compound, with the consent \line \up0 \expndtw-2\c harscalex100 of the Public Prosecutor, any offence under the AMLATFA or its regu lations by accepting \line \up0 \expndtw0\charscalex100 from the person reasonab ly suspected of having committed the offence such amount not \line \up0 \expndtw -1\charscalex100 exceeding fifty percent of the amount of the maximum fine for t hat offence, including the \line \up0 \expndtw-4\charscalex100 daily fine, if an y, in the case of continuing offence. To make matters worse, upon conviction \li ne \up0 \expndtw0\charscalex100 of an offence under the AMLATFA, LOFSA may revok e or suspend the offshore bank\u8217?s \line \up0 \expndtw-1\charscalex100 licen ce.\ul0\super\cf8\f9\fs23 127 \par\pard\qj \li2205\ri859\sb397\sl-404\slmult0 \u p0 \expndtw0\charscalex107 \ul0\nosupersub\cf1\f2\fs23 AMLATFA provides statutor y protection for an offshore bank and its employee for \line \up0 \expndtw-2\cha rscalex100 complying with their obligations under the Act. Firstly, section 20 o f AMLATFA provides \line \up0 \expndtw0\charscalex105 protection for any breach of any duty under any written laws to keep confidential the \line \up0 \expndtw2\charscalex100 information that gives rise to the knowledge or suspicion of mon ey laundering and terrorist \line \up0 \expndtw-1\charscalex100 financing activi ties. As such, an offshore bank and its employees will not be subject to the \li ne \up0 \expndtw-1\charscalex100 secrecy rule under section 22 of the Offshore B anking Act 1990 and the common law. \par\pard\ql \li2205\sb0\sl-218\slmult0 \par \pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb174\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 127\ul0 \nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Anti-Money Laundering a nd Anti-Terrorism Financing Act 2001\ul0\nosupersub\cf10\f11\fs19 , s21(2). \par \pard\ql \li10449\sb15\sl-251\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosuper sub\cf1\f2\fs23 213 {\shp {\*\shpinst\shpleft2205\shptop14151\shpright5006\shpbottom14171\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz164\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g223}{\bkmkend Pg223}\par\pard\qj \li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205 \sb0\sl-402\slmult0 \par\pard\qj\li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205\s b0\sl-402\slmult0 \par\pard\qj\li2205\ri859\sb239\sl-402\slmult0 \up0 \expndtw0\ charscalex106 \ul0\nosupersub\cf1\f2\fs23 Secondly, an offshore bank and its emp loyee are protected from any civil, criminal or \line \up0 \expndtw0\charscalex1 00 disciplinary proceeding under section 24(1) of AMLATFA. Furthermore, section 24(1)(bb) \line \up0 \expndtw0\charscalex103 states that the person is protected from any consequences that follow from the reporting. \line \up0 \expndtw0\char scalex100 Thirdly, section 77(c) of AMLATFA protects the offshore bank and its e mployee from any \line \up0 \expndtw0\charscalex105 proceedings when they lawful ly acting in compliance with any direction, instruction or \line \up0 \expndtw0\ charscalex106 order from LOFSA or FIU or the relevant enforcement authorities. I n other words, the \line \up0 \expndtw-1\charscalex100 offshore banks and their employees cannot be sued by customers for damages for breach of \line \up0 \expn dtw-2\charscalex100 contract and defamation resulting from the discharge of thei r reporting obligations under the \line \up0 \expndtw-3\charscalex100 anti-money

laundering law. \par\pard\li2205\sb0\sl-264\slmult0\par\pard\li2205\sb0\sl-264\ slmult0\par\pard\li2205\sb240\sl-264\slmult0\fi0\tx2906 \up0 \expndtw-3\charscal ex100 \ul0\nosupersub\cf4\f5\fs23 5.7\tab \up0 \expndtw-3\charscalex100 Summary\ par\pard\qj \li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205\ri914\sb64\sl-402\slm ult0 \up0 \expndtw0\charscalex104 \ul0\nosupersub\cf1\f2\fs23 OFCs are more popu larly known as financial centres which provide low taxation, light \up0 \expndtw 0\charscalex107 financial regulation, banking secrecy and anonymity. It is for t hese reasons that most \up0 \expndtw0\charscalex102 businesses and investors con tinue to do business in OFCs. Unfortunately, these facilities \up0 \expndtw0\cha rscalex102 also attract money launderers and financial crimes. In response to th is problem, there are \up0 \expndtw0\charscalex100 calls for OFCs to observe int ernational standards and best practices on financial regulation \up0 \expndtw0\c harscalex102 and supervision as well as on information sharing in criminal matte rs. Nowadays, OFCs \up0 \expndtw-2\charscalex100 are also obliged to implement anti-money laundering and anti-terrorism financing laws. It is \up0 \expndtw0\ch arscalex103 believed that with the implementation of these laws criminals will f ind that hiding their \up0 \expndtw-3\charscalex100 illegal proceeds is not an e asy task anymore. \par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri 914\sb20\sl-400\slmult0 \up0 \expndtw-2\charscalex100 Malaysia has its own offsh ore financial centre known as Labuan IBFC which offers various \line \up0 \expnd tw0\charscalex108 innovative products and services, including offshore banking. The offshore banking \line \up0 \expndtw0\charscalex103 institutions are governe d by a set of laws which are considered less stringent than those \line \up0 \ex pndtw-1\charscalex100 governing onshore banks. However, sufficient safeguards ha ve been imposed to ensure that \line \up0 \expndtw0\charscalex102 the offshore b anks are not open to abuse by any form of criminal activities. Even prior to \li ne \up0 \expndtw-1\charscalex100 the enactment of AML/CTF laws, offshore banks i n Labuan IBFC have already taken steps \line \up0 \expndtw-1\charscalex100 to co mbat money laundering activities under the specific guidelines issued by LOFSA. \par\pard\ql \li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb25\sl-264\slmult0 \up0 \expndtw-3\charscalex100 214 \par \pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart Pg224}{ \bkmkend Pg224}\par\pard\qj \li2205\sb0\sl-405\slmult0 \par\pard\qj\li2205\sb0\s l-405\slmult0 \par\pard\qj\li2205\sb0\sl-405\slmult0 \par\pard\qj\li2205\ri913\s b230\sl-405\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs23 Whi le the offshore and onshore banks have different regulations for the establishme nt and \line \up0 \expndtw-1\charscalex100 operation of their business, it appea rs that they are governed by the very similar AML/CTF \line \up0 \expndtw0\chars calex100 laws. This can be considered a good approach given the negative percept ion that OFCs are \line \up0 \expndtw0\charscalex108 commonly used to facilitate money laundering. More importantly, it will reflect the \line \up0 \expndtw-2\c harscalex100 transparency of Labuan IBFC as a clean and reputable centre for int ernational business. \par\pard\qj \li2205\ri913\sb397\sl-403\slmult0\fi0 \up0 \e xpndtw0\charscalex107 Like the onshore banks, it appears that the offshore banks will also face a significant \line \up0 \expndtw0\charscalex111 challenge in co mplying with the AML/CTF obligations. Banks have to adopt new \line \up0 \expndt w0\charscalex104 procedures to detect and deter money laundering and terrorism f inancing which are not \line \up0 \expndtw0\charscalex103 only costly but also t ime-consuming. To make matters worse, severe punishment awaits \line \up0 \expnd tw-1\charscalex100 those who fail to comply with the laws. Unfortunately, it can be said that this is the price to \line \up0 \expndtw-2\charscalex100 be paid g iven the risks posed by money laundering and terrorism financing to the banks an d \line \up0 \expndtw-3\charscalex100 financial systems. \par\pard\ql \li10449\s b0\sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\s b0\sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\s b0\sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\s b0\sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\s b0\sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\s b0\sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\s b0\sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\s

b0\sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\s b0\sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\s b0\sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\s b0\sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\s b0\sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\s b0\sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\s b0\sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\s b0\sl-264\slmult0 \par\pard\ql\li10449\sb16\sl-264\slmult0 \up0 \expndtw-3\chars calex100 215 \par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\ bkmkstart Pg225}{\bkmkend Pg225}\par\pard\ql \li5708\sb0\sl-264\slmult0 \par\par d\ql\li5708\sb0\sl-264\slmult0 \par\pard\ql\li5708\sb0\sl-264\slmult0 \par\pard\ ql\li5708\sb0\sl-264\slmult0 \par\pard\ql\li5708\sb0\sl-264\slmult0 \par\pard\ql \li5708\sb0\sl-264\slmult0 \par\pard\ql\li5708\sb217\sl-264\slmult0 \up0 \expndt w-3\charscalex100 \ul0\nosupersub\cf4\f5\fs23 CHAPTER SIX \par\pard\ql \li2326\r i1037\sb264\sl-400\slmult0\tx3798 \up0 \expndtw-5\charscalex100 THE IMPACT OF TH E MALAYSIAN ANTI-MONEY LAUNDERING LAWS ON \line\tab \up0 \expndtw-5\charscalex10 0 THE BANKS\u8217? RELATIONSHIP WITH OUTSIDERS \par\pard\li2205\sb0\sl-264\slmul t0\par\pard\li2205\sb90\sl-264\slmult0\fi0\tx2905 \up0 \expndtw-3\charscalex100 6.1\tab \up0 \expndtw-3\charscalex100 Introduction\par\pard\qj \li2205\sb0\sl-40 1\slmult0 \par\pard\qj\li2205\ri914\sb81\sl-401\slmult0 \up0 \expndtw-1\charscal ex100 \ul0\nosupersub\cf1\f2\fs23 AML/CTF laws impose a number of obligations on banks such as customer identification \line \up0 \expndtw0\charscalex105 and du e diligence, reporting suspicious transactions, record keeping, appointment of \ line \up0 \expndtw0\charscalex100 compliance officers and AML/CTF training. It i s clear from the findings in the previous \line \up0 \expndtw0\charscalex100 cha pters that compliance with these obligations can increase the costs and complexi ty of \line \up0 \expndtw-3\charscalex100 banking operations. In this chapter we will examine how compliance with these obligations \line \up0 \expndtw-3\charsc alex100 can affect banks\u8217? relationships with customers and other banks. Fo r example, the obligation \line \up0 \expndtw-2\charscalex100 to report suspicio us transactions can undermine customer trust. Similarly, the obligation to \line \up0 \expndtw-4\charscalex100 avoid tipping off a customer suspected of money l aundering can expose the bank to liability \line \up0 \expndtw-3\charscalex100 a s a constructive trustee. The stringent rules relating to the establishment of correspondent \line \up0 \expndtw-3\charscalex100 banking relationships can curt ail the ability of banks to expand their correspondent banking \line \up0 \expnd tw0\charscalex100 networks and overseas business. This chapter will explore how the AML/CTF laws have \line \up0 \expndtw-1\charscalex100 altered the way Malays ian banks deal with outsiders and the problems they face trying to \line \up0 \e xpndtw-1\charscalex100 strike a balance between discharging their legal obligati ons and servicing their customers. \line \up0 \expndtw0\charscalex107 This chapt er will deal with these issues in three areas, namely, banking secrecy, \li ne \up0 \expndtw-5\charscalex100 correspondent banking and constructive trustees hip. \par\pard\li2205\sb0\sl-264\slmult0\par\pard\li2205\sb0\sl-264\slmult0\par\ pard\li2205\sb244\sl-264\slmult0\fi0\tx2906 \up0 \expndtw-3\charscalex100 \ul0\n osupersub\cf4\f5\fs23 6.2\tab \up0 \expndtw-3\charscalex100 Inroads into Banking Secrecy\par\pard\qj \li2205\ri913\sb285\sl-400\slmult0 \up0 \expndtw-1\charscal ex100 \ul0\nosupersub\cf1\f2\fs23 It has been pointed out that the reporting of fraud against banks, the investigation of fraud \line \up0 \expndtw0\charscalex1 00 and the tracing and confiscation of criminal proceeds have intruded into the principles of \line \up0 \expndtw0\charscalex100 banking secrecy.\ul0\super\cf8\ f9\fs23 1\ul0\nosupersub\cf1\f2\fs23 The inroads into banking secrecy present s erious threats to democracy, \par\pard\qj \li2205\sb0\sl-220\slmult0 \par\pard\q j\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\ li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li 2205\ri942\sb49\sl-220\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\ fs19\ul0\super\cf9\f10\fs18 1\ul0\nosupersub\cf10\f11\fs19 Michael Levi, \u8216 ?Regulating Money Laundering: The Death of Bank Secrecy in the UK\u8217? (1991) 31(2) \ul0\nosupersub\cf11\f12\fs19 British \up0 \expndtw-3\charscalex100 Journa l of Criminology\ul0\nosupersub\cf10\f11\fs19 109, 120. \par\pard\ql \li10449\s

b14\sl-252\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 216 {\shp {\*\shpinst\shpleft2205\shptop13928\shpright5006\shpbottom13948\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz158\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g226}{\bkmkend Pg226}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i917\sb249\sl-400\slmult0\fi0 \up0 \expndtw0\charscalex105 \ul0\nosupersub\cf1\f 2\fs23 and more importantly, to the traditional banker-customer relationship.\ul 0\super\cf8\f9\fs23 2\ul0\nosupersub\cf1\f2\fs23 Indeed, it puts \up0 \expndtw 0\charscalex110 banks in a difficult position, especially when the effectiveness of the AML laws in \up0 \expndtw-3\charscalex100 combating money laundering is still unclear. \par\pard\qj \li2205\ri914\sb279\sl-402\slmult0 \up0 \expndtw-2\c harscalex100 It is generally accepted that the fight against money laundering an d terrorist financing is in \up0 \expndtw-2\charscalex100 conflict with the secr ecy rule. Banking secrecy is a customer privilege whereas combating \up0 \expndt w0\charscalex104 crime is critical for public safety and security. Indeed, achie ving a proper balance is a \up0 \expndtw-3\charscalex100 desirable goal. But how do we go about achieving such a balance is a question encountered \up0 \expndtw 0\charscalex102 by many law enforcement authorities. Therefore, this section wil l examine the effect of \up0 \expndtw-3\charscalex100 disclosure under the Malay sian anti-money laundering laws on the traditional duty of banks \up0 \expndtw0\ charscalex102 to keep the customer\u8217?s information confidential. More import antly, it will also analyze \up0 \expndtw0\charscalex102 whether the Malaysian l aws provide a right balance between a duty to keep customer\u8217?s \up0 \expndt w0\charscalex104 information secret and a duty to disclose such information in t he fight against money \up0 \expndtw0\charscalex100 laundering. Before examinin g these issues, it would be worthwhile to review in general \up0 \expndtw0\chars calex100 terms banking secrecy and its effect on money laundering. \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\l i2205\sb4\sl-264\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf4\f5\fs 23 6.2.1 Nature of Banking Secrecy \par\pard\qj \li2205\sb0\sl-402\slmult0 \pa r\pard\qj\li2205\ri914\sb20\sl-402\slmult0\fi0 \up0 \expndtw0\charscalex105 \ul0 \nosupersub\cf1\f2\fs23 The duty of secrecy is an implied duty which arises from the contractual relationship \line \up0 \expndtw0\charscalex100 between the ban ker and its customer. The general principle of this duty was laid down in \line \up0 \expndtw0\charscalex100 the landmark English case, \ul0\nosupersub\cf7\f8\f s23 Tournier v National Provincial and Union Bank of England.\ul0\super\cf8\f9\f s23 3 \line \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf1\f2\fs23 There the plaintiff who was a customer of the defendant bank, entered into an arrangement \line \up0 \expndtw0\charscalex100 with the bank to repay the amount that he had withdrawn in installments. However, after \line \up0 \expndtw0\charscalex104 th ree installments, he ceased to make any further payments. Meanwhile, the plaint iff \line \up0 \expndtw-1\charscalex100 entered into a contract of employment wi th a particular company as a traveling salesman. \line \up0 \expndtw0\charscalex 100 The bank came across a cheque drawn by another customer of the bank in favou r of the \line \up0 \expndtw0\charscalex100 plaintiff, who instead of paying it into his own account indorsed it to a third person who \line \up0 \expndtw0\char scalex103 had an account at another bank. On the return of the cheque to the def endant bank, the \line \up0 \expndtw-2\charscalex100 manager discovered that the cheque was from a bookmaker. The defendant bank disclosed \par\pard\qj \li2205\

sb0\sl-240\slmult0 \par\pard\qj\li2205\sb0\sl-240\slmult0 \par\pard\qj\li2205\ri 939\sb92\sl-240\slmult0 \up0 \expndtw-3\charscalex100 \ul0\super\cf9\f10\fs19\ul 0\super\cf9\f10\fs18 2\ul0\nosupersub\cf10\f11\fs19 Paul Latimer, \u8216?Bank S ecrecy in Australia: Terrorism Legislation as the New Exception to the Tournier Rule\u8217? \up0 \expndtw-4\charscalex100 (2004) 8(1) \ul0\nosupersub\cf11\f12\f s19 Journal of Money Laundering Control\ul0\nosupersub\cf10\f11\fs19 56, 65. \p ar\pard\ql \li2205\sb1\sl-215\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\c f9\f10\fs18 3\ul0\nosupersub\cf10\f11\fs19 [1924] 1 KB 461. \par\pard\ql \li104 49\sb105\sl-264\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs2 3 217 {\shp {\*\shpinst\shpleft2205\shptop13592\shpright5006\shpbottom13612\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz179\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g227}{\bkmkend Pg227}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i915\sb249\sl-400\slmult0 \up0 \expndtw0\charscalex106 \ul0\nosupersub\cf1\f2\fs 23 the information to the plaintiff\u8217?s employer who later refused to renew the plaintiff\u8217?s \line \up0 \expndtw-2\charscalex100 employment. The plaint iff brought an action against the bank for slander and for breach of \line \up0 \expndtw-3\charscalex100 contract. \par\pard\qj \li2205\sb0\sl-400\slmult0 \par\ pard\qj\li2205\ri915\sb20\sl-400\slmult0 \up0 \expndtw-3\charscalex100 In his ju dgment, Bankes L.J. held that the bank had a contractual duty to keep the affair s of \up0 \expndtw0\charscalex100 his customer confidential. However, the duty w hich was an implied term of the banking \up0 \expndtw0\charscalex103 contract wa s not an absolute duty but a qualified one. The bank could in the following \up0 \expndtw0\charscalex103 circumstances breach that duty:\ul0\super\cf8\f9\fs23 4 \par\pard\ql \li2205\sb133\sl-264\slmult0 \up0 \expndtw-3\charscalex100 \ul0\no supersub\cf1\f2\fs23 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2 \fs23 Where disclosure is under compulsion by law; \par\pard\ql \li2205\sb156\ sl-264\slmult0 \up0 \expndtw-3\charscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 Where there is a duty to the public to disclose; \par\pard\ql \li2205\sb156\sl-264\slmult0 \up0 \expndtw-3\charscalex100 \u-3913 ?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 Where the interest o f the bank requires disclosure; and \par\pard\ql \li2205\sb156\sl-264\slmult0 \u p0 \expndtw-2\charscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub \cf1\f2\fs23 Where the disclosure is made by express or implied consent of the customer. \par\pard\qj \li2205\sb0\sl-406\slmult0 \par\pard\qj\li2205\ri914\sb1 3\sl-406\slmult0 \up0 \expndtw0\charscalex104 The court also established that th e duty of secrecy is not only confined to information \line \up0 \expndtw0\chars calex100 derived from the state of the customer\u8217?s account but also informa tion derived from other \line \up0 \expndtw0\charscalex105 sources as a result o f the banker and customer relationship. The duty arises from the \line \up0 \exp ndtw-2\charscalex100 commencement of the relationship and continues even after t he relationship has ended.\ul0\super\cf8\f9\fs23 5 \par\pard\qj \li2205\ri912\sb 397\sl-403\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf1\f2\fs23 It is widely accepted that banking secrecy is one of the cardinal principles of banking law. \line \up0 \expndtw0\charscalex106 The commercial success of the b anking business and the sanctity of the relationship \line \up0 \expndtw0\charsc alex102 between banker and customer are based on this principle.\ul0\super\cf8\f 9\fs23 6\ul0\nosupersub\cf1\f2\fs23 Banking secrecy ensures the \line \up0 \exp ndtw0\charscalex100 safety and soundness of the banking system by preventing the

disclosure of information \line \up0 \expndtw0\charscalex100 which could weaken the public confidence in banks.\ul0\super\cf8\f9\fs23 7\ul0\nosupersub\cf1\f2\f s23 It also protects banks and financial \line \up0 \expndtw0\charscalex103 ins titutions in an environment of fluctuating trade and market pressure.\ul0\super\ cf8\f9\fs23 8\ul0\nosupersub\cf1\f2\fs23 According to \line \up0 \expndtw-3\cha rscalex100 Durcan and Riordan:\ul0\super\cf8\f9\fs23 9 \par\pard\ql \li2205\sb0\ sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl -218\slmult0 \par\pard\ql\li2205\sb116\sl-218\slmult0 \up0 \expndtw-3\charscalex 100 \ul0\super\cf9\f10\fs18 4\ul0\nosupersub\cf10\f11\fs19 Ibid 473. \par\pard\ ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-3\charscalex100 \ul0\super\cf9\f10\f s18 5\ul0\nosupersub\cf10\f11\fs19 Ibid 485. \par\pard\qj \li2205\ri942\sb0\sl240\slmult0 \up0 \expndtw-1\charscalex100 \ul0\super\cf9\f10\fs18 6\ul0\nosupers ub\cf10\f11\fs19 Sarabdeen Jawahitha, \u8216?Banking Confidentiality- A Compara tive Analysis of Malaysian Banking Statutes\u8217? \up0 \expndtw-2\charscalex100 (2002) \ul0\nosupersub\cf11\f12\fs19 17(3) Arab Law Quarterly\ul0\nosupersub\cf 10\f11\fs19 255, 255. \par\pard\ql \li2205\sb1\sl-196\slmult0 \up0 \expndtw-2\c harscalex100 \ul0\super\cf9\f10\fs18 7\ul0\nosupersub\cf10\f11\fs19 Ibid. \par\ pard\qj \li2205\ri938\sb5\sl-220\slmult0 \up0 \expndtw0\charscalex103 \ul0\super \cf9\f10\fs18 8\ul0\nosupersub\cf10\f11\fs19 Carl Edward, \u8216?The Effects of Domestic Money Laundering Countermeasures on the Banker\u8217?s Duty of \up0 \e xpndtw0\charscalex103 Confidentiality\u8217? (1998) 13 \ul0\nosupersub\cf11\f12\ fs19 Banking and Finance Law Review\ul0\nosupersub\cf10\f11\fs19 25, 27. \par\p ard\qj \li2205\ri940\sb0\sl-220\slmult0 \up0 \expndtw0\charscalex103 \ul0\super\ cf9\f10\fs18 9\ul0\nosupersub\cf10\f11\fs19 Laurie Durcan and Bruce K Riordan, \u8216?Banking Disclosures, Financial Privacy and the Public Interest\u8217? \up 0 \expndtw0\charscalex103 (1987) \ul0\nosupersub\cf11\f12\fs19 6 Annual Review o f Banking Law\ul0\nosupersub\cf10\f11\fs19 391, 391. \par\pard\ql \li10449\sb14 \sl-252\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 218 {\shp {\*\shpinst\shpleft2205\shptop12362\shpright5006\shpbottom12382\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz201\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g228}{\bkmkend Pg228}\par\pard\qj \li2731\sb0\sl-375\slmult0 \par\pard\qj\li2731 \sb0\sl-375\slmult0 \par\pard\qj\li2731\sb0\sl-375\slmult0 \par\pard\qj\li2731\r i931\sb325\sl-375\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf13\f14 \fs21 Confidentiality protects banking institutions from rapid or severe market reactions that could \up0 \expndtw-1\charscalex100 have dramatic impact on the f inancial system\u8217?s stability. The banking system, as an integral \up0 \expn dtw-3\charscalex100 part of our society, is considered too sensitive to remain s table if subject to fluctuating market \up0 \expndtw0\charscalex108 forces. Ulti mately, the principle of confidentiality of financial records rests upon the \up 0 \expndtw-3\charscalex100 commonly held notion that the banking business requir es special treatment\ul0\nosupersub\cf1\f2\fs23 . \par\pard\qj \li2205\sb0\sl-40 2\slmult0 \par\pard\qj\li2205\ri913\sb1\sl-402\slmult0 \up0 \expndtw0\charscalex 108 From a customer\u8217?s perspective, banking secrecy may be viewed as a priv ilege that \up0 \expndtw0\charscalex100 safeguards their financial information f rom being invaded by other parties.\ul0\super\cf8\f9\fs23 10\ul0\nosupersub\cf1\ f2\fs23 In fact, it is \up0 \expndtw-1\charscalex100 evident that this principl e has already greatly assisted countless people who, for example, \up0 \expndtw3\charscalex100 have become victims of dictatorial regimes.\ul0\super\cf8\f9\fs2 3 11\ul0\nosupersub\cf1\f2\fs23 It has been argued that a bank has to preserve \up0 \expndtw0\charscalex105 the duty of secrecy because the bank has a very det

ailed knowledge of its customer\u8217?s \up0 \expndtw0\charscalex100 financial a ffairs.\ul0\super\cf8\f9\fs23 12\ul0\nosupersub\cf1\f2\fs23 Although there are many advantages arising from the secrecy rule, it \up0 \expndtw0\charscalex102 must be remembered that banking secrecy is also open to abuse. Criminals rely on it to \up0 \expndtw-2\charscalex100 launder their ill-gotten gain. For this rea son, banking secrecy sometimes needs to be lifted \up0 \expndtw-1\charscalex100 to detect the criminals and their illicit profits, and more importantly to preve nt the flow of \up0 \expndtw-2\charscalex100 criminal proceeds through the finan cial system. \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl264\slmult0 \par\pard\ql\li2205\sb4\sl-264\slmult0 \up0 \expndtw-4\charscalex100 \ul0\nosupersub\cf4\f5\fs23 6.2.2 \ul0\nosupersub\cf1\f2\fs23 \ul0\nosupersu b\cf4\f5\fs23 Role of Banking Secrecy in Money Laundering \par\pard\qj \li2205\s b0\sl-400\slmult0 \par\pard\qj\li2205\ri915\sb24\sl-400\slmult0\fi0 \up0 \expndt w0\charscalex103 \ul0\nosupersub\cf1\f2\fs23 It is notable that criminals and mo ney launderers have taken full advantage of banking \up0 \expndtw-2\charscalex10 0 secrecy to launder the proceeds of crime. In fact, for criminals, banking secr ecy provisions \up0 \expndtw-1\charscalex100 provide a welcome relief because th ey can be exploited to avoid detection.\ul0\super\cf8\f9\fs23 13\ul0\nosupersub\ cf1\f2\fs23 There is also \up0 \expndtw-2\charscalex100 evidence that banking s ecrecy and customer confidentiality is used as a barrier against the \up0 \expnd tw-2\charscalex100 obtaining of information and cooperation in criminal investig ation. \par\pard\qj \li2205\sb0\sl-240\slmult0 \par\pard\qj\li2205\sb0\sl-240\sl mult0 \par\pard\qj\li2205\sb0\sl-240\slmult0 \par\pard\qj\li2205\sb0\sl-240\slmu lt0 \par\pard\qj\li2205\sb0\sl-240\slmult0 \par\pard\qj\li2205\sb0\sl-240\slmult 0 \par\pard\qj\li2205\sb0\sl-240\slmult0 \par\pard\qj\li2205\ri946\sb133\sl-240\ slmult0 \up0 \expndtw0\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\f s18 10\ul0\nosupersub\cf10\f11\fs19 He Ping, \u8216?Banking Secrecy and Money L aundering\u8217? (2004) 7(4) \ul0\nosupersub\cf11\f12\fs19 Journal of Money Laun dering Control \line \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf10\f11\fs19 376, 378. \par\pard\qj \li2205\ri943\sb0\sl-220\slmult0 \up0 \expndtw-1\charscal ex100 \ul0\super\cf9\f10\fs18 11\ul0\nosupersub\cf10\f11\fs19 William Frei, \u8 216?The Protection of Privacy and the Prevention of Financial Crime\u8217? (2004 ) 11(4) \ul0\nosupersub\cf11\f12\fs19 Journal of \up0 \expndtw-1\charscalex100 F inancial Crime\ul0\nosupersub\cf10\f11\fs19 397, 397. \par\pard\ql \li2205\sb0\ sl-217\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 12\ul0\nosu persub\cf10\f11\fs19 Nik Norzrul Thani, \ul0\nosupersub\cf11\f12\fs19 Legal Asp ects of the Malaysia Financial System\ul0\nosupersub\cf10\f11\fs19 (2001) 210. \par\pard\qj \li2205\ri938\sb1\sl-220\slmult0 \up0 \expndtw0\charscalex100 \ul0\ super\cf9\f10\fs18 13\ul0\nosupersub\cf10\f11\fs19 Mohd Eusoff Chin, \u8216?Ban k Secrecy and Confidentiality Laws-Their Impacts on the Control of Economic \up0 \expndtw-1\charscalex100 Crime in the Modern World.\u8217? (1995) \ul0\nosupers ub\cf11\f12\fs19 3 Malayan Law Journal\ul0\nosupersub\cf10\f11\fs19 iii, iv. \p ar\pard\ql \li10449\sb14\sl-252\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosup ersub\cf1\f2\fs23 219 {\shp {\*\shpinst\shpleft2205\shptop12810\shpright5006\shpbottom12830\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz184\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g229}{\bkmkend Pg229}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i916\sb249\sl-400\slmult0 \up0 \expndtw0\charscalex103 \ul0\nosupersub\cf1\f2\fs 23 According to a study conducted by the United Nations in 1998, bank secrecy is

used by \up0 \expndtw-3\charscalex100 criminals to launder illegal proceeds in the following ways;\ul0\super\cf8\f9\fs23 14 \par\pard\ql \li2205\ri917\sb20\sl400\slmult0\tx2556\tx2556 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf1\f2\f s23 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 Through a nonymous accounts where no one in the bank can possibly know, unless the \line\t ab \up0 \expndtw0\charscalex102 customers themselves reveal the information rega rding the beneficial owners of the \line\tab \up0 \expndtw-5\charscalex100 accou nts. \par\pard\ql \li2205\ri915\sb14\sl-408\slmult0\tx2556\tx2556\tx2556\tx2556 \up0 \expndtw-3\charscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupers ub\cf1\f2\fs23 Through accounts in which a lawyer interposes himself or hersel f between the bank and \line\tab \up0 \expndtw0\charscalex100 the customer, ther eby protecting the customer\u8217?s identity, first, by any secrecy laws of \lin e\tab \up0 \expndtw-4\charscalex100 the country and secondly, by an additional l ayer of lawyer-client privilege. \line \up0 \expndtw0\charscalex103 \u-3913?\ul 0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 Through accounts protect ed both by bank secrecy laws and the informal device of \line\tab \up0 \expndtw0 \charscalex100 nominee ownership in which the nominee and the beneficial owner a re connected by \line\tab \up0 \expndtw-1\charscalex100 civil contract or a bond of trust. \par\pard\ql \li2205\ri916\sb19\sl-400\slmult0\tx2556\tx2556 \up0 \ex pndtw0\charscalex108 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2 \fs23 Through owner held accounts which are coded in such a way that only the top \line\tab \up0 \expndtw-2\charscalex100 management of the bank knows who the beneficial owner is, and secrecy laws prevent \line\tab \up0 \expndtw-3\charsca lex100 the management from revealing that information. \par\pard\ql \li2205\sb0\ sl-380\slmult0 \par\pard\ql\li2205\ri923\sb37\sl-380\slmult0\tx2731\tx2731\tx273 1\tx2731 \up0 \expndtw0\charscalex103 Obviously, the continuing evolution of the financial systems and their vulnerability to \line \up0 \expndtw-4\charscalex10 0 abuse by criminals require the secrecy rule to be lifted. As the Basle Committ ee noted:\ul0\super\cf8\f9\fs23 15 \line\tab \up0 \expndtw0\charscalex100 \ul0\n osupersub\cf13\f14\fs21 [The] existing national laws on banking secrecy were mos tly drawn up when international \line\tab \up0 \expndtw-1\charscalex100 banking was not so widespread and before international cooperation in banking supervisio n \line\tab \up0 \expndtw0\charscalex111 had developed to great extent. These la ws may not be fully appropriate for present \line\tab \up0 \expndtw-4\charscalex 100 circumstances. \par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i915\sb4\sl-400\slmult0 \up0 \expndtw0\charscalex102 \ul0\nosupersub\cf1\f2\fs23 Banking secrecy should be excluded when the disclosure of confidential informat ion is \up0 \expndtw0\charscalex100 critical for the detection and prosecution o f criminals. This is to ensure that the banking \up0 \expndtw0\charscalex102 sys tem is not manipulated by criminals in any way. Unless the integrity of the bank ing \up0 \expndtw-4\charscalex100 systems is well protected, public confidence i n the systems would be diminished. \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\ pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pa rd\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard \ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\q l\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb107\sl-218\slmult0 \up0 \expnd tw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 14\ul0\nosuper sub\cf10\f11\fs19 Ibid. \par\pard\qj \li2205\ri1683\sb1\sl-220\slmult0 \up0 \exp ndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 15\ul0\nosupersub\cf10\f11\fs19 Ba sel Committee, \ul0\nosupersub\cf11\f12\fs19 Banking Secrecy and International C ooperation in Banking Supervision \ul0\nosupersub\cf10\f11\fs19 (1981). \line \u p0 \expndtw-2\charscalex100 < {\field{\*\fldinst {HYPERLINK "http://www.bis.org/ publ/bcbsorf.pdf/" }}{\fldrslt {\ul0\nosupersub\cf29\f30\fs19\ul http://www.bis. org/publ/bcbsorf.pdf}}}\ul0\nosupersub\cf10\f11\fs19 > at 5 April 2007. \par\pa rd\ql \li10449\sb14\sl-252\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub \cf1\f2\fs23 220 {\shp {\*\shpinst\shpleft2205\shptop13704\shpright5006\shpbottom13724\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz193\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{

\sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g230}{\bkmkend Pg230}\par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205 \sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\s b0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb2 41\sl-264\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf4\f5\fs23 6.2. 3 International Initiatives to Overcome the Problem of Bank Secrecy \par\pard\ qj \li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205\ri915\sb20\sl-402\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs23 Money laundering is a crime that is global in nature as it involves several countries, many \line \up0 \exp ndtw-1\charscalex100 entities and numerous bank accounts. This makes the investi gation and prosecution process \line \up0 \expndtw0\charscalex100 cumbersome and time consuming because of the cross-border nature of money laundering \line \up 0 \expndtw0\charscalex100 activities and the difference in legal systems. Invest igation of money laundering cases also \line \up0 \expndtw0\charscalex109 involv es the exchange of information about banking activities between the relevant \li ne \up0 \expndtw0\charscalex103 authorities. However, it has been recognized tha t banking secrecy is being used in many \line \up0 \expndtw-2\charscalex100 inst ances to obstruct cooperation and information sharing in money laundering prosec ution. \line \up0 \expndtw0\charscalex103 Therefore, banking secrecy is clearly one of the biggest problems in the struggle against \line \up0 \expndtw0\charsca lex103 money laundering. \par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li 2205\ri913\sb20\sl-400\slmult0\fi0 \up0 \expndtw0\charscalex100 The last two dec ades have seen the emergence of various international initiatives to tackle \lin e \up0 \expndtw0\charscalex100 the problem of banking secrecy. For example, the Vienna Convention 1988 concluded that \line \up0 \expndtw-1\charscalex100 all pa rticipating countries had to empower their courts or other relevant authorities to order \line \up0 \expndtw0\charscalex105 that bank, financial or commercial r ecords be made available. In addition to this, each \line \up0 \expndtw0\charsca lex100 participating country should not decline to act on the ground of bank sec recy.\ul0\super\cf8\f9\fs23 16\ul0\nosupersub\cf1\f2\fs23 This was a \line \up0 \expndtw0\charscalex112 major breakthrough as it compelled banks to cooperate i n the war against money \line \up0 \expndtw-3\charscalex100 laundering. \par\par d\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri914\sb20\sl-400\slmult0 \u p0 \expndtw0\charscalex100 Another international initiative is the EC Directive 1991. Article 6 of the Directive obliges \up0 \expndtw0\charscalex111 banks to g ive full cooperation to the authorities responsible for combating money \up0 \ex pndtw0\charscalex100 laundering, with regards to all information, documents or r ecords at their request. In these \up0 \expndtw0\charscalex104 circumstances, b anks cannot invoke the principle of banking secrecy to withhold \up0 \e xpndtw-3\charscalex100 information from the authorities.\ul0\super\cf8\f9\fs23 1 7 \par\pard\qj \li2205\ri916\sb384\sl-420\slmult0 \up0 \expndtw0\charscalex102 \ ul0\nosupersub\cf1\f2\fs23 The Financial Action Task Force also shares the view that the banking secrecy should be \line \up0 \expndtw0\charscalex102 lifted so that it will not inhibit the implementation of FATF Recommendations. Therefore, \par\pard\qj \li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \ par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\ri946\sb86\sl-220\slmu lt0 \up0 \expndtw0\charscalex104 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 16\ul0\nosupersub\cf10\f11\fs19 The United Nations Convention against Illicit T raffic in Narcotic Drugs and Psychotropic Substances \up0 \expndtw-2\charscalex1 00 (1988), para 3. \par\pard\qj \li2205\ri948\sb0\sl-220\slmult0 \up0 \expndtw-1 \charscalex100 \ul0\super\cf9\f10\fs18 17\ul0\nosupersub\cf10\f11\fs19 EC Direc tive 1991 on Prevention of the Use of the Financial System for the Purpose of Mo ney Laundering, \line \up0 \expndtw-2\charscalex100 Art. 6. \par\pard\ql \li1044

9\sb14\sl-252\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 221 {\shp {\*\shpinst\shpleft2205\shptop13480\shpright5006\shpbottom13500\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz177\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g231}{\bkmkend Pg231}\par\pard\qj \li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205 \sb0\sl-402\slmult0 \par\pard\qj\li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205\r i914\sb241\sl-402\slmult0\fi0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f 2\fs23 secrecy law needs to be excluded to enable the sharing of information bet ween competent \up0 \expndtw0\charscalex103 authorities and the sharing of infor mation between financial institutions.\ul0\super\cf8\f9\fs23 18\ul0\nosupersub\c f1\f2\fs23 Furthermore, \up0 \expndtw0\charscalex103 FATF Recommendation 14 sta tes that financial institutions, their directors, officers and \up0 \expndtw0\ch arscalex100 employees should be protected by law from both criminal and civil li ability for breach of \up0 \expndtw0\charscalex100 any restrictions on disclosur e of information imposed by any legislation provided that the \up0 \expndtw0\cha rscalex102 disclosure is made in good faith. Interestingly, this protection shou ld be available even if \up0 \expndtw0\charscalex103 they did not know precisely what the underlying criminal activity was and regardless of \up0 \expndtw0\char scalex103 whether illegal activity actually occurred or not. \par\pard\qj \li220 5\ri914\sb397\sl-404\slmult0 \up0 \expndtw-1\charscalex100 It can be seen that t he Vienna Convention and the EC Convention highlight the importance \up0 \expndt w0\charscalex100 of lifting banking secrecy for the purpose of information shari ng and mutual assistance in \up0 \expndtw0\charscalex100 money laundering invest igation. The FATF Recommendations reinforce the importance of \up0 \expndtw0\cha rscalex100 this approach and emphasize that banking secrecy need to be excluded for the purpose of \up0 \expndtw-1\charscalex100 information sharing as well as to enable banks and financial institutions to comply with the \up0 \expndtw-2\ch arscalex100 reporting obligations under money laundering legislation. \par\pard\ ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb248\sl-264\slmult0 \up0 \exp ndtw-1\charscalex100 \ul0\nosupersub\cf4\f5\fs23 6.2.4 Banking Secrecy in Mala ysia \par\pard\qj \li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205\ri915\sb20\sl-4 02\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 The common law principle on banking secrecy has been incorporated into the Banking and \lin e \up0 \expndtw-3\charscalex100 Financial Institutions Act 1989 (BAFIA). It is i mportant to note that besides banks, BAFIA \line \up0 \expndtw-1\charscalex100 e xtends the application of secrecy rule to all licensed institutions. Generally, the rationale \line \up0 \expndtw0\charscalex102 for the banking secrecy provisi ons in BAFIA is to foster the confidence of the banking \line \up0 \expndtw-2\ch arscalex100 public on the sanctity of their accounts and affairs.\ul0\super\cf8\ f9\fs23 19\ul0\nosupersub\cf1\f2\fs23 In \ul0\nosupersub\cf7\f8\fs23 Wako Merch ant Bank (Singapore) \line \up0 \expndtw0\charscalex100 Ltd v Lim Lean Heng & Or s, \ul0\super\cf8\f9\fs23 20\ul0\nosupersub\cf1\f2\fs23 Abdul Aziz Mohamad J. n oted that \u8216?it is obvious that the \line \up0 \expndtw-1\charscalex100 inte ntion of Parliament in enacting s.97 is to protect the secrecy of the affairs an d account \line \up0 \expndtw0\charscalex100 of a customer of a financial instit ution\u8230?\u8217? Further, in \ul0\nosupersub\cf7\f8\fs23 Tan Lay Soon v Kam M ah Theatres \line \up0 \expndtw0\charscalex100 Sdn Bhd (Malayan United Finance B hd, Intervener),\ul0\super\cf8\f9\fs23 21\ul0\nosupersub\cf7\f8\fs23 \ul0\nosup ersub\cf1\f2\fs23 Edgar Joseph Jr. S.J.C. held that \par\pard\ql \li2205\sb0\sl218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-21

8\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\ slmult0 \par\pard\ql\li2205\sb80\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \u l0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 18\ul0\nosupersub\cf10\f11\fs19 Th e FATF 40 Recommendations on Money Laundering, Recommendation 4. \par\pard\ql \l i2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 1 9\ul0\nosupersub\cf10\f11\fs19 Nik Norzrul Thani, above n12, 212. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 20\ul0\nosupersub\cf10\f11\fs19 [2000] 4 CLJ 223, 226. \par\pard\li2205\sb20\s l-218\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 21\ul0\n osupersub\cf10\f11\fs19 [1993] 1 CLJ 83.\par\pard\li2205\sb3\sl-264\slmult0\fi8 243 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 222 {\shp {\*\shpinst\shpleft2205\shptop13480\shpright5006\shpbottom13500\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz196\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g232}{\bkmkend Pg232}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i914\sb249\sl-400\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs 23 banking secrecy is the privilege of the customer. Therefore, disclosure of th e customer\u8217?s \line \up0 \expndtw0\charscalex100 information without his or her consent would appear to be in contravention with the law. \par\pard\qj \li2 205\ri914\sb397\sl-404\slmult0 \up0 \expndtw-2\charscalex100 Thus, if a bank bre aches its duty of secrecy, it could be liable for common law damages as \line \u p0 \expndtw-2\charscalex100 well as be prosecuted for an offence under BAFIA. Ad ditionally, when there is a breach of \line \up0 \expndtw0\charscalex105 the dut y of secrecy, the customer also has a right to sue the bank for defamation. For \line \up0 \expndtw0\charscalex103 example, in \ul0\nosupersub\cf7\f8\fs23 Tan E ng Seong v Malayan Banking Berhad,\ul0\super\cf8\f9\fs23 22\ul0\nosupersub\cf7\f 8\fs23 \ul0\nosupersub\cf1\f2\fs23 the plaintiff commenced an \line \up0 \expnd tw0\charscalex100 action against the defendant bank for breach of the bank\u8217 ?s duty of confidentiality and for \line \up0 \expndtw-3\charscalex100 defamatio n when the bank disclosed information about his bank account to his brother. The \line \up0 \expndtw0\charscalex107 court held that the plaintiff could succeed on the claim based on an implied duty of \line \up0 \expndtw-1\charscalex100 con fidentiality between him and the defendant bank. On the basis that the plaintiff did not \line \up0 \expndtw0\charscalex102 give evidence as to the harm that ha d been caused to him by the disclosure and that the \line \up0 \expndtw0\charsca lex100 defendant bank had admitted and apologized to the plaintiff, he was entit led to nominal \line \up0 \expndtw-4\charscalex100 damages only. However, the pl aintiff failed in his claim for defamation. \par\pard\qj \li2205\ri916\sb400\sl400\slmult0 \up0 \expndtw0\charscalex104 Sections 97 to 102 of BAFIA deal with t he issue of banking secrecy.\ul0\nosupersub\cf20\f21\fs23 \ul0\nosupersub\cf1\f 2\fs23 Section 97(1) of \up0 \expndtw0\charscalex100 BAFIA which contains the ge neral prohibition on disclosure of confidential information \up0 \expndtw-1\char scalex100 reads as follows: \par\pard\qj \li2731\ri929\sb27\sl-368\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf13\f14\fs21 No director or officer of any licensed institution or of any external bureau established, or any \line \u p0 \expndtw0\charscalex102 agent appointed, by the licensed institution to under take any part of its business, whether \line \up0 \expndtw0\charscalex100 during his tenure of office, or during his employment, or thereafter, and no person wh o for \line \up0 \expndtw-1\charscalex100 any reason, has by any means access to any record, book, register, correspondence, or other \line \up0 \expndtw-2\char

scalex100 document whatsoever, or material, relating to the affairs or, in parti cular, the account, of any \line \up0 \expndtw0\charscalex108 particular custome r of the institution, shall give, produce, divulge, reveal, publish or \line \up 0 \expndtw0\charscalex102 otherwise disclose, to any person, or make a record fo r any person, of any information or \line \up0 \expndtw-3\charscalex100 document whatsoever relating to the affairs or account of such customer. \par\pard\qj \l i2205\ri915\sb330\sl-420\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\c f1\f2\fs23 It is an offence under section 97(1) to disclose any information or d ocument relating to the \up0 \expndtw-3\charscalex100 affairs or account of a cu stomer. \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\s lmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slm ult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb217\sl-218\slm ult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs1 8 22\ul0\nosupersub\cf10\f11\fs19 [1997] 2 CLJ Supp 552. \par\pard\ql \li10449\ sb15\sl-251\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 22 3 {\shp {\*\shpinst\shpleft2205\shptop14151\shpright5006\shpbottom14171\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz184\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g233}{\bkmkend Pg233}\par\pard\qj \li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205 \sb0\sl-402\slmult0 \par\pard\qj\li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205\r i914\sb241\sl-402\slmult0\fi0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f 2\fs23 Section 97(1) prohibits a director or an officer of a bank or other regul ated institution and \line \up0 \expndtw0\charscalex106 any other person who has access to any document or material relating to the affairs or \line \up0 \expnd tw0\charscalex100 account of the customer from disclosing the information. This prohibition, however, is not \line \up0 \expndtw0\charscalex108 applicable if th e information is, or has already been publicly available at the time of \line \u p0 \expndtw0\charscalex102 disclosure from any other source, other than the lice nsed institution.\ul0\super\cf8\f9\fs23 23\ul0\nosupersub\cf1\f2\fs23 In additi on to this, \line \up0 \expndtw-1\charscalex100 under section 97(3) it is an off ence if any person discloses the information about the affairs \line \up0 \expnd tw0\charscalex103 or account of a customer, if to his or her knowledge the infor mation had originally been \line \up0 \expndtw-1\charscalex100 disclosed in cont ravention of section 97(1).\ul0\super\cf8\f9\fs23 24\ul0\nosupersub\cf1\f2\fs23 Anyone found to have contravened section 97 \line \up0 \expndtw-1\charscalex100 could be liable to criminal liability under this Act. The penalty is three year s imprisonment \line \up0 \expndtw-2\charscalex100 or a fine of three million ri nggit or both.\ul0\super\cf8\f9\fs23 25 \par\pard\qj \li2205\sb0\sl-401\slmult0 \par\pard\qj\li2205\ri913\sb18\sl-401\slmult0\fi0 \up0 \expndtw0\charscalex100 \ ul0\nosupersub\cf1\f2\fs23 It is important to note that section 97 has no extraterritorial effect, therefore, if a person \line \up0 \expndtw0\charscalex100 di scloses a customer\u8217?s information in the courts outside Malaysia, he or she could not be \line \up0 \expndtw-2\charscalex100 held liable for breach of secr ecy rule. In the case of \ul0\nosupersub\cf7\f8\fs23 The Attorney General of Hon g Kong v \line \up0 \expndtw-2\charscalex100 Zauyah Wan Chik\ul0\nosupersub\cf1\ f2\fs23 ,\ul0\super\cf8\f9\fs23 26\ul0\nosupersub\cf1\f2\fs23 the first and sec ond respondents were officers of the third respondent \line \up0 \expndtw0\chars calex103 bank. They were potential witnesses to certain criminal proceeding befo re the court in \line \up0 \expndtw0\charscalex106 Hong Kong. The respondents ex pressed their willingness to give evidence but were \line \up0 \expndtw0\charsca

lex100 concerned with the implications of giving evidence. The primary issue was whether the \line \up0 \expndtw-2\charscalex100 disclosure of confidential info rmation, if made by them in the proceedings in Hong Kong, \line \up0 \expndtw0\c harscalex100 could expose them to any liability in Malaysia under section 97(1) of BAFIA. The court \line \up0 \expndtw-1\charscalex100 held that the responden ts had a legitimate excuse for breaching the duty of confidentiality \line \up0 \expndtw-2\charscalex100 because they were bound by the law to make the disclosu re. No action therefore would lie \line \up0 \expndtw-1\charscalex100 against th em in respect of the disclosure made in the course of giving evidence before the \line \up0 \expndtw0\charscalex103 court. Moreover, section 97 of BAFIA is not expressed to have extra-territorial effect. \line \up0 \expndtw-3\charscalex100 Therefore, in the circumstances of the case, a disclosure even if made in contra vention of it \line \up0 \expndtw-4\charscalex100 cannot found the basis of crim inal liability. \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\ sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl -218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb41\sl218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\ f10\fs18 23\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Banking and Financial Institutions Act 1989\ul0\nosupersub\cf10\f11\fs19 , s. 97(2). \pa r\pard\qj \li2205\ri947\sb1\sl-220\slmult0 \up0 \expndtw0\charscalex102 \ul0\sup er\cf9\f10\fs18 24\ul0\nosupersub\cf10\f11\fs19 See dictum Abdul Aziz Mohamad J in \ul0\nosupersub\cf11\f12\fs19 Wako Merchant Bank (Singapore) Ltd v Lim Lean Heng & Ors \up0 \expndtw0\charscalex102 \ul0\nosupersub\cf10\f11\fs19 (2000) 4 C LJ 223, 226. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex1 00 \ul0\super\cf9\f10\fs18 25\ul0\nosupersub\cf10\f11\fs19 See \ul0\nosupersub\ cf11\f12\fs19 Banking and Financial Institutions Act 1989\ul0\nosupersub\cf10\f1 1\fs19 , s 97(1) read with s 103 and the Fourth Schedule. \par\pard\qj \li2205\r i947\sb1\sl-220\slmult0 \up0 \expndtw-1\charscalex100 \ul0\super\cf9\f10\fs18 26 \ul0\nosupersub\cf10\f11\fs19 [1995] 3 CLJ 35. See also \ul0\nosupersub\cf11\f1 2\fs19 Attorney General of Hong Kong v Lorraine Esme Osman & Ors\ul0\nosupersub\ cf10\f11\fs19 [1994] 3 MLJ \line \up0 \expndtw-2\charscalex100 480. \par\pard\q l \li10449\sb14\sl-252\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1 \f2\fs23 224 {\shp {\*\shpinst\shpleft2205\shptop13033\shpright5006\shpbottom13053\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz191\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g234}{\bkmkend Pg234}\par\pard\qj \li2205\sb0\sl-403\slmult0 \par\pard\qj\li2205 \sb0\sl-403\slmult0 \par\pard\qj\li2205\sb0\sl-403\slmult0 \par\pard\qj\li2205\r i915\sb238\sl-403\slmult0\fi0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\ f2\fs23 It is interesting to note that information relating to a customer\u8217? s account obtained in breach \line \up0 \expndtw0\charscalex105 of section \up0 \expndtw0\charscalex110 97 of BAFIA is still admissible as evidence. In \ul0\nos upersub\cf7\f8\fs23 Wako Merchant Bank \line \up0 \expndtw0\charscalex100 (Singa pore) Ltd v Lim Lean Heng & Ors,\ul0\super\cf8\f9\fs23 27\ul0\nosupersub\cf1\f2\ fs23 the plaintiff had obtained a judgment against \line \up0 \expndtw-1\charsc alex100 the first defendant in Singapore. Fearing that the first defendant would dissipate his assets \line \up0 \expndtw0\charscalex105 to avoid satisfying the judgment, the plaintiff subsequently filed an application for a \line \up0 \exp ndtw-1\charscalex100 \ul0\nosupersub\cf7\f8\fs23 Mareva\ul0\nosupersub\cf1\f2\fs 23 injunction to restrain him from disposing of his assets. Among the assets af fected \line \up0 \expndtw0\charscalex106 by the \ul0\nosupersub\cf7\f8\fs23 ex

parte Mareva\ul0\nosupersub\cf1\f2\fs23 injunction were several bank accounts w hose existence was \line \up0 \expndtw0\charscalex100 discovered by a private in vestigator engaged by the plaintiff. The defendants alleged that \line \up0 \exp ndtw0\charscalex100 the information about the accounts were obtained in breach o f section 97 of BAFIA and \line \up0 \expndtw0\charscalex100 therefore inadmissi ble as evidence. The court held, \ul0\nosupersub\cf7\f8\fs23 inter alia\ul0\nos upersub\cf1\f2\fs23 , that section 97 of the Act \line \up0 \expndtw-3\charscale x100 does not expressly deal with the question of admissibility of any informati on or documents \line \up0 \expndtw0\charscalex106 obtained in contravention of the Act. It was therefore irrelevant that the information \line \up0 \expndtw-3\ charscalex100 obtained by the defendants was in breach of the Act. Moreover, it is a matter of general law \line \up0 \expndtw-3\charscalex100 that evidence ill egally obtained is nonetheless admissible if relevant. \par\pard\ql \li2205\sb0\ sl-264\slmult0 \par\pard\ql\li2205\sb248\sl-264\slmult0 \up0 \expndtw-3\charscal ex100 Sections 98 and 99 of BAFIA set out the exceptions to the banking secrecy rule. Section 98 \par\pard\qj \li2205\ri914\sb20\sl-405\slmult0 \up0 \expndtw-1\ charscalex100 (1)(a) excludes the application of the secrecy rule to Bank Negara Malaysia (BNM)\ul0\nosupersub\cf8\f9\fs15 28\ul0\nosupersub\cf1\f2\fs23 and \l ine \up0 \expndtw0\charscalex103 its officials for the purpose of enabling or as sisting the BNM to discharge its function. \line \up0 \expndtw-3\charscalex100 A dditionally, disclosure is permitted to any person rendering professional servic es to BNM \line \up0 \expndtw0\charscalex100 in relation to law, accountancy, va luation or other matters after being duly authorized in \line \up0 \expndtw0\cha rscalex100 writing by BNM.\ul0\super\cf8\f9\fs23 29 \par\pard\qj \li2205\ri915\s b400\sl-400\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs23 Sec tion 99 of BAFIA lists down the circumstances under which banking secrecy will b e \up0 \expndtw0\charscalex100 lifted. They are as follows: \par\pard\li2205\sb1 25\sl-264\slmult0\fi0\tx2906 \up0 \expndtw-1\charscalex100 (i)\tab \up0 \expndtw 0\charscalex100 Where the customer or the customer\u8217?s personal representati ve has given permission\par\pard\li2205\sb140\sl-264\slmult0\fi700 \up0 \expndtw -1\charscalex100 in writing to disclose;\par\pard\li2205\sb138\sl-264\slmult0\fi 0\tx2908 \up0 \expndtw-1\charscalex100 (ii)\tab \up0 \expndtw0\charscalex100 Whe re a customer is declared bankrupt or in the case of a corporation, it is wound\ par\pard\li2205\sb139\sl-264\slmult0\fi700 \up0 \expndtw-1\charscalex100 up;\par \pard\li2205\sb0\sl-218\slmult0\par\pard\li2205\sb0\sl-218\slmult0\par\pard\li22 05\sb0\sl-218\slmult0\par\pard\li2205\sb126\sl-218\slmult0\fi0 \up0 \expndtw0\ch arscalex103 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 27\ul0\nosupersub\cf1 0\f11\fs19 [2000] 4 CLJ 223. See also \ul0\nosupersub\cf11\f12\fs19 Lim Lean He ng v Wako Merchant Bank (Singapore) Ltd & Other Appeals\par\pard\li2205\sb6\sl218\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf10\f11\fs19 [200 4] 3 CLJ 9.\par\pard\li2205\sb6\sl-218\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 28\ul0\nosupersub\cf10\f11\fs19 Means the Central Bank of Malaysia.\par\pard\li2205\sb5\sl-218\slmult0\fi0 \up0 \expndtw-2\charscalex1 00 \ul0\super\cf9\f10\fs18 29\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11 \f12\fs19 Banking and Financial Institutions Act 1989\ul0\nosupersub\cf10\f11\fs 19 , s 98(1)(b).\par\pard\li2205\sb3\sl-264\slmult0\fi8243 \up0 \expndtw-3\chars calex100 \ul0\nosupersub\cf1\f2\fs23 225 {\shp {\*\shpinst\shpleft2205\shptop13480\shpright5006\shpbottom13500\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz200\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g235}{\bkmkend Pg235}\par\pard\li2205\sb0\sl-264\slmult0\par\pard\li2205\sb0\sl-

264\slmult0\par\pard\li2205\sb0\sl-264\slmult0\par\pard\li2205\sb0\sl-264\slmult 0\par\pard\li2205\sb0\sl-264\slmult0\par\pard\li2205\sb252\sl-264\slmult0\fi0\tx 2906 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs23 (iii)\tab \up0 \ex pndtw0\charscalex100 Where the information is required for bona fide commercial purposes;\par\pard\li2205\sb138\sl-264\slmult0\fi0\tx2906 \up0 \expndtw0\charsc alex100 (iv)\tab \up0 \expndtw0\charscalex100 Where there is an action by the ba nk against a customer;\par\pard\li2205\sb139\sl-264\slmult0\fi0\tx2906 \up0 \exp ndtw0\charscalex100 (v)\tab \up0 \expndtw0\charscalex100 Where a licensed instit ution is served with a garnishee order;\par\pard\li2205\sb139\sl-264\slmult0\fi0 \tx2906 \up0 \expndtw0\charscalex100 (vi)\tab \up0 \expndtw0\charscalex100 Where information relates to credit facilities;\par\pard\li2205\sb139\sl-264\slmult0\ fi0\tx2906 \up0 \expndtw0\charscalex100 (vii)\tab \up0 \expndtw0\charscalex100 W here such disclosure is required by or authorised under BAFIA, such as\par\pard\ qj \li2906\ri915\sb22\sl-400\slmult0 \up0 \expndtw0\charscalex103 disclosures to BNM under sections 43,71,98,102,113 and disclosures to auditors \up0 \expndtw-3 \charscalex100 under section 40(16)(h);\ul0\super\cf8\f9\fs23 30 \par\pard\qj \l i2205\ri2852\sb0\sl-400\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf 1\f2\fs23 (viii)\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 Where such disclosure is authorised under any other statutes; or \line \up0 \expndtw3\charscalex100 (ix) \up0 \expndtw-3\charscalex100 Where such disclosure is auth orised by Bank Negara Malaysia. \par\pard\qj \li2205\ri915\sb396\sl-406\slmult0 \up0 \expndtw-2\charscalex100 Furthermore, banking secrecy does not apply to any disclosure in pursuant to a court order \line \up0 \expndtw-2\charscalex100 und er the Bankers\u8217? Books (Evidence) Act 1949\ul0\super\cf8\f9\fs23 31\ul0\nos upersub\cf1\f2\fs23 and where such disclosure is made in the \line \up0 \expndt w0\charscalex108 course of an examination by an overseas supervisory authority.\ ul0\super\cf8\f9\fs23 32\ul0\nosupersub\cf1\f2\fs23 The effect of the \line \up 0 \expndtw-2\charscalex100 exceptions is that a disclosure falling within the ex ceptions is not an offence under section \par\pard\ql \li2205\sb112\sl-264\slmul t0 \up0 \expndtw-3\charscalex100 97 of BAFIA. \par\pard\qj \li2205\sb0\sl-402\sl mult0 \par\pard\qj\li2205\ri913\sb20\sl-402\slmult0\fi0 \up0 \expndtw-1\charscal ex100 It should be noted that the common law exception that a bank can disclose information in \line \up0 \expndtw-1\charscalex100 the public interest is not co vered in BAFIA.\ul0\super\cf8\f9\fs23 33\ul0\nosupersub\cf1\f2\fs23 However, di sclosure of information in such \line \up0 \expndtw-4\charscalex100 circumstance s will be allowed upon an application to the court. The nature of this exception \line \up0 \expndtw-3\charscalex100 was elaborated in \ul0\nosupersub\cf7\f8\fs 23 Bank Bumiputra Malaysia Bhd v Cheong Yoke Choy; Malaysian Central \line \up0 \expndtw0\charscalex100 Depository Sdn Bhd (Intervener)\ul0\nosupersub\cf1\f2\fs 23 .\ul0\super\cf8\f9\fs23 34\ul0\nosupersub\cf1\f2\fs23 There the plaintiff co mmenced an action against the \line \up0 \expndtw0\charscalex110 defendant, an e mployee of the plaintiff, for committing fraud, breach of trust and \line \up0 \ expndtw0\charscalex106 conversion, as a result of which the court granted three orders. Under the orders, the \line \up0 \expndtw-2\charscalex100 proposed inter vener was required to provide the plaintiff with complete information on the \li ne \up0 \expndtw-2\charscalex100 shares held by the defendant. The proposed inte rvener then filed the application, \ul0\nosupersub\cf7\f8\fs23 inter alia\ul0\no supersub\cf1\f2\fs23 , \line \up0 \expndtw0\charscalex100 to set aside or vary t he orders. The proposed intervener claimed that strict confidentiality \line \up 0 \expndtw0\charscalex100 must be maintained on trading and ownership of securit ies. As such, the disclosure would \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\ pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pa rd\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb78\sl-218\slmult0 \up0 \ex pndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 30\ul0\nosu persub\cf10\f11\fs19 Nik Norzrul Thani , above n 12, 214. \par\pard\ql \li2205\ sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 31\ul0\ nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Banking and Financial In stitutions Act 1989\ul0\nosupersub\cf10\f11\fs19 , s 100. \par\pard\ql \li2205\s b2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 32\ul0\n osupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Banking and Financial Ins

titutions Act 1989\ul0\nosupersub\cf10\f11\fs19 , s 102. \par\pard\ql \li2205\sb 2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 33\ul0\no supersub\cf10\f11\fs19 Sarabdeen Jawahitha, above n 6. \par\pard\ql \li2205\sb2 \sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 34\ul0\nos upersub\cf10\f11\fs19 [2000] 7 CLJ 157. \par\pard\ql \li10449\sb15\sl-251\slmul t0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 226 {\shp {\*\shpinst\shpleft2205\shptop13256\shpright5006\shpbottom13276\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz254\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g236}{\bkmkend Pg236}\par\pard\qj \li2205\sb0\sl-405\slmult0 \par\pard\qj\li2205 \sb0\sl-405\slmult0 \par\pard\qj\li2205\sb0\sl-405\slmult0 \par\pard\qj\li2205\r i915\sb230\sl-405\slmult0\fi0 \up0 \expndtw0\charscalex105 \ul0\nosupersub\cf1\f 2\fs23 contravene section 43 of the Securities Industry (Central Depositories) A ct 1991\ul0\super\cf8\f9\fs23 35\ul0\nosupersub\cf1\f2\fs23 and \up0 \expndtw0\ charscalex106 would expose the proposed intervener, its director and its officer to criminal liability. \up0 \expndtw0\charscalex100 However, the court rejected the application and held that it was in the interest of the public \up0 \expndt w0\charscalex105 that the disclosure be made. As such, the proposed intervener m ust obey and fulfill its \up0 \expndtw-3\charscalex100 obligations under the ord er. According to Abdul Malik J:\ul0\super\cf8\f9\fs23 36 \par\pard\qj \li2731\ri 931\sb4\sl-370\slmult0 \up0 \expndtw0\charscalex102 \ul0\nosupersub\cf13\f14\fs2 1 That the court has the absolute power to order disclosure can never be doubted . There is no \line \up0 \expndtw0\charscalex100 statutory provision which prohi bits this court from ordering disclosure. Nowhere in the Act \line \up0 \expndtw 0\charscalex100 nor in s.43 of the Act is there a provision that prohibits this court from ordering disclosure. \par\pard\qj \li2205\ri913\sb382\sl-404\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf1\f2\fs23 It should be noted tha t when it is unclear whether it is permissible to disclose under BAFIA \line \up 0 \expndtw0\charscalex107 or common law, a bank could either seek guidance or pe rmission from Bank Negara \line \up0 \expndtw0\charscalex104 Malaysia by virtue of section 99(1)(h) or apply to the Court for a declaration.\ul0\super\cf8\f9\fs 23 37\ul0\nosupersub\cf1\f2\fs23 By and \line \up0 \expndtw0\charscalex102 larg e, the provisions on banking secrecy under BAFIA are comprehensive and serve as a \line \up0 \expndtw0\charscalex109 better guide than common law as to the scop e of the duty and the exceptions where \line \up0 \expndtw-3\charscalex100 discl osure is permitted.\ul0\super\cf8\f9\fs23 38 \par\pard\qj \li2205\ri916\sb400\sl -400\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs23 Apart from the common law and BAFIA, the Code of Good Banking Practice\ul0\super\cf8\f9\fs 23 39\ul0\nosupersub\cf1\f2\fs23 also deals \up0 \expndtw0\charscalex100 with b anking secrecy. Paragraph 6 of the Code states that:\ul0\super\cf8\f9\fs23 40 \p ar\pard\qj \li2731\ri1498\sb3\sl-373\slmult0 \up0 \expndtw-1\charscalex100 \ul0\ nosupersub\cf13\f14\fs21 Banks will observe a strict duty of confidentiality abo ut their customers\u8217? (and former \line \up0 \expndtw0\charscalex106 custome rs\u8217?) personal financial affairs and will not disclose details of customers \u8217? \line \up0 \expndtw-2\charscalex100 accounts or their names and addresse s to any third party, including other companies in \line \up0 \expndtw-3\charsca lex100 the same group, other than in the four exceptional cases permitted by the law, namely: \par\pard\li2731\sb111\sl-241\slmult0\fi0\tx3255 \up0 \expndtw-2\c harscalex100 (i)\tab \up0 \expndtw-2\charscalex100 where a bank is legally compe lled to do so;\par\pard\li2731\sb5\sl-241\slmult0\fi0\tx3255 \up0 \expndtw-2\cha rscalex100 (ii)\tab \up0 \expndtw-2\charscalex100 where there is duty to the pub

lic to disclose;\par\pard\ql \li2731\sb1\sl-239\slmult0 \up0 \expndtw-3\charscal ex100 (iii)\ul0\nosupersub\cf15\f16\fs21 \ul0\nosupersub\cf13\f14\fs21 where the interest of a bank is require disclosure; \par\pard\ql \li2731\sb1\sl-239\sl mult0 \up0 \expndtw-3\charscalex100 (iv)\ul0\nosupersub\cf15\f16\fs21 \ul0\nosu persub\cf13\f14\fs21 where disclosure is made at the request, or with the cons ent, of the customer. \par\pard\qj \li2205\sb0\sl-220\slmult0 \par\pard\qj\li220 5\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\ sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb 0\sl-220\slmult0 \par\pard\qj\li2205\ri937\sb97\sl-220\slmult0 \up0 \expndtw0\ch arscalex107 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 35\ul0\nosupersub\cf1 0\f11\fs19 The section deals with the duty to maintain secrecy imposed on the d irector or officer of a central \up0 \expndtw-2\charscalex100 depository for not to divulge, reveal or disclose information or document to any person.\par\pard\ sect\sectd\sbknone\cols2\colno1\colw2390\colsr40\colno2\colw9330\colsr160\ql \li 2205\sb79\sl-149\slmult0 \up0 \expndtw-1\charscalex100 \ul0\super\cf9\f10\fs18 3 6\par\pard\column \ql \li20\sb22\sl-218\slmult0 \up0 \expndtw-3\charscalex100 \u l0\nosupersub\cf10\f11\fs19 [2000] 7 CLJ 206. \par\pard\sect\sectd\sbknone \qj \ li2205\ri946\sb1\sl-220\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9 \f10\fs18 37\ul0\nosupersub\cf10\f11\fs19 Syed Ahmad Aidid and Wong Kuo Shing (eds), Judicial Decisions Affecting Bankers and Financiers (2\ul0\super\cf9\f10\ fs18 nd \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf10\f11\fs19 ed, 2003) 75 3. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\su per\cf9\f10\fs18 38\ul0\nosupersub\cf10\f11\fs19 Ibid. \par\pard\ql \li2205\sb2 \sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 39\ul0\nos upersub\cf10\f11\fs19 The Code of Good Banking Practice was issued in 1996 by t he Association of Banks in Malaysia. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up 0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 40\ul0\nosupersub\cf10\f11\fs 19 \ul0\nosupersub\cf11\f12\fs19 The Code of Good Banking Practice\ul0\nosupers ub\cf10\f11\fs19 , para 6.1. \par\pard\ql \li10449\sb15\sl-251\slmult0 \up0 \exp ndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 227 {\shp {\*\shpinst\shpleft2205\shptop12585\shpright5006\shpbottom12605\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz208\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g237}{\bkmkend Pg237}\par\pard\qj \li2205\sb0\sl-405\slmult0 \par\pard\qj\li2205 \sb0\sl-405\slmult0 \par\pard\qj\li2205\sb0\sl-405\slmult0 \par\pard\qj\li2205\r i913\sb230\sl-405\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf1\ f2\fs23 It is submitted that paragraph 6 of the Code merely restates the common law principles. The \up0 \expndtw-1\charscalex100 Code also states that the duty of protecting the confidentiality of customer and counterparty \up0 \expndtw0\c harscalex100 information continues even after the member of staff ceases to be e mployed by the bank.\ul0\super\cf8\f9\fs23 41 \up0 \expndtw-2\charscalex100 \ul0 \nosupersub\cf1\f2\fs23 It should be noted that the Code is a voluntary guidelin e but it is expected to be followed by \up0 \expndtw-3\charscalex100 the members of the Association of Banks in Malaysia. \par\pard\qj \li2205\ri917\sb400\sl-40 0\slmult0 \up0 \expndtw0\charscalex100 It is important to note that apart from B AFIA, there are a number of laws which require \line \up0 \expndtw0\charscalex10 4 disclosure of a customer\u8217?s information. These include the Anti-Corruptio n Act 1997; \line \up0 \expndtw0\charscalex105 Kidnapping Act 1961; Dangerous Dr ugs (Forfeiture of Property) Act \up0 \expndtw0\charscalex101 1988; Internal \pa r\pard\qj \li2205\ri914\sb0\sl-402\slmult0 \up0 \expndtw-3\charscalex100 Securit y Act 1960; Bankruptcy Act 1967; Companies Act 1965 and Income Tax Act 1967. \li

ne \up0 \expndtw0\charscalex100 Generally, under these statutes, banks are under a legal obligation to give information or \line \up0 \expndtw0\charscalex103 do cuments relating to their customers\u8217? affairs or accounts to the enforcemen t agencies \line \up0 \expndtw-1\charscalex100 without the consent of the custom ers. It can be said that the government has enacted such \line \up0 \expndtw0\ch arscalex102 exceptions as and when necessary and where the benefits out weigh any possible \line \up0 \expndtw0\charscalex102 disadvantages. Indeed, t he exceptions to the secrecy rule allow some information to be \line \up0 \expnd tw0\charscalex105 disclosed in order to facilitate police investigation and it w as found that this rule is a \line \up0 \expndtw-4\charscalex100 powerful tool i n investigations involving malpractices in the banking sector.\ul0\super\cf8\f9\ fs23 42 \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb247\sl-264 \slmult0 \up0 \expndtw-4\charscalex100 \ul0\nosupersub\cf4\f5\fs23 6.2.5 Impac t of AMLATFA on Banking Secrecy \par\pard\qj \li2205\sb0\sl-402\slmult0 \par\par d\qj\li2205\ri913\sb40\sl-402\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupers ub\cf1\f2\fs23 The enactment of AMLATFA has increased the lists of exceptions to the secrecy rule in \line \up0 \expndtw0\charscalex105 Malaysia. As a result, i t now appears that the duty of the bank to keep its customer\u8217?s \line \up0 \expndtw0\charscalex104 information secret has to some extent been replaced with the duty to disclose. In fact, \line \up0 \expndtw0\charscalex106 AMLATFA stipu lates a wider set of circumstances under which banks can disclose \line \up0 \ex pndtw0\charscalex110 customer information than BAFIA or the common law. Under Pa rts III and IV of \line \up0 \expndtw0\charscalex105 AMLATFA, disclosure is requ ired to enable information sharing between competent \line \up0 \expndtw0\charsc alex102 authorities and the regulated institutions. Disclosure is also critical to enable banks and \line \up0 \expndtw0\charscalex102 other regulated instituti ons to comply with the reporting requirements under the Act. \par\pard\ql \li220 5\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\ sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb 0\sl-218\slmult0 \par\pard\ql\li2205\sb100\sl-218\slmult0 \up0 \expndtw-2\charsc alex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 41\ul0\nosupersub\cf10\f1 1\fs19 \ul0\nosupersub\cf11\f12\fs19 The Code of Good Banking Practice\ul0\nosu persub\cf10\f11\fs19 , para 6.2. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \ expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 42\ul0\nosupersub\cf10\f11\fs19 Mohd Eusoff Chin, above n13. \par\pard\ql \li10449\sb15\sl-251\slmult0 \up0 \exp ndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 228 {\shp {\*\shpinst\shpleft2205\shptop13928\shpright5006\shpbottom13948\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz181\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g238}{\bkmkend Pg238}\par\pard\qj \li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205 \sb0\sl-402\slmult0 \par\pard\qj\li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205\r i915\sb241\sl-402\slmult0 \up0 \expndtw0\charscalex105 \ul0\nosupersub\cf1\f2\fs 23 As already mentioned, banking secrecy is considered one of the biggest hurdle to the \line \up0 \expndtw0\charscalex100 sharing of information between compet ent authorities. Therefore, this problem has been \line \up0 \expndtw-1\charscal ex100 addressed with the introduction of AMLATFA. By virtue of section 9 of AMLA TFA, the \line \up0 \expndtw0\charscalex104 Malaysian competent authority, the F inancial Intelligence Unit (FIU) in Bank Negara \line \up0 \expndtw-4\charscalex 100 Malaysia may authorize the release of information to the enforcement agency or its officers, \line \up0 \expndtw0\charscalex100 the Labuan Offshore Financia l Services Authority and the Attorney General to deal with \line \up0 \expndtw0\

charscalex107 any foreign state\u8217?s request for information sharing and mutu al assistance in money \line \up0 \expndtw-5\charscalex100 laundering investigat ion. \par\pard\qj \li2205\ri913\sb398\sl-402\slmult0\fi0 \up0 \expndtw0\charscal ex100 Under section 10(1) of AMLATFA, FIU is permitted to share information rela ting to the \line \up0 \expndtw-3\charscalex100 reporting of suspicious transact ions and cash transactions with a foreign authority provided \line \up0 \expndtw -3\charscalex100 that there is an arrangement between Malaysia and that foreign state. However, in doing so, \line \up0 \expndtw0\charscalex107 FIU must be sati sfied that the corresponding authority will undertake to protect the \line \up0 \expndtw-1\charscalex100 confidentiality of any information communicated to it a nd to not use it as evidence in any \line \up0 \expndtw0\charscalex100 proceedin gs.\ul0\super\cf8\f9\fs23 43\ul0\nosupersub\cf1\f2\fs23 In this respect, it app ears that information sharing has been placed under \line \up0 \expndtw0\charsca lex107 rigid constraints to prevent abuses. At the time of writing, FIU has alre ady signed a \line \up0 \expndtw-3\charscalex100 Memorandum of Understanding for the exchange of financial intelligence with the relevant \line \up0 \expndtw0\c harscalex100 agencies in Australia, Indonesia, the Philippines, Thailand and the People\u8217?s Republic of \line \up0 \expndtw0\charscalex100 China. \par\pard\ qj \li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205\ri914\sb16\sl-402\slmult0 \up0 \expndtw0\charscalex102 Furthermore, the officers who have access to the inform ation from FIU cannot disclose \line \up0 \expndtw0\charscalex103 such informati on except to the authorized person.\ul0\super\cf8\f9\fs23 44\ul0\nosupersub\cf1\ f2\fs23 Section 12 of AMLATFA permits \line \up0 \expndtw-2\charscalex100 discl osure of information where there are proceedings for a charge of money launderin g or \line \up0 \expndtw0\charscalex106 terrorism financing offence and/or the o ffences listed in the Second Schedule or the \line \up0 \expndtw0\charscalex100 equivalent crimes in a foreign jurisdiction. Further, section 29(3) empowers FIU and the \line \up0 \expndtw0\charscalex103 relevant enforcement agency to coord inate and cooperate with any other domestic and \line \up0 \expndtw0\charscalex1 02 foreign enforcement agency in any investigations into money laundering and te rrorism \line \up0 \expndtw-5\charscalex100 financing offences. \par\pard\li2205 \sb0\sl-218\slmult0\par\pard\li2205\sb0\sl-218\slmult0\par\pard\li2205\sb0\sl-21 8\slmult0\par\pard\li2205\sb0\sl-218\slmult0\par\pard\li2205\sb0\sl-218\slmult0\ par\pard\li2205\sb115\sl-218\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\supe r\cf9\f10\fs19\ul0\super\cf9\f10\fs18 43\ul0\nosupersub\cf10\f11\fs19 \ul0\nosu persub\cf11\f12\fs19 Anti-Money Laundering and Anti-Terrorism Financing Act 2001 \ul0\nosupersub\cf10\f11\fs19 , s 10(1) (b).\par\pard\li2205\sb5\sl-218\slmult0\ fi0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 44\ul0\nosupersub\cf10 \f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Anti-Money Laundering and Anti-Terroris m Financing Act 2001\ul0\nosupersub\cf10\f11\fs19 , s 11.\par\pard\li2205\sb3\sl -264\slmult0\fi8243 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 22 9 {\shp {\*\shpinst\shpleft2205\shptop13928\shpright5006\shpbottom13948\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz181\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g239}{\bkmkend Pg239}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i915\sb249\sl-400\slmult0 \up0 \expndtw0\charscalex105 \ul0\nosupersub\cf1\f2\fs 23 In short, it can be said that the provisions relating to disclosure of inform ation under \up0 \expndtw0\charscalex107 AMLATFA aims to strike a right ba lance between preserving the customer\u8217?s \up0 \expndtw-1\charscalex100

confidentiality and the need for information sharing in the fight against money laundering \up0 \expndtw-2\charscalex100 and terrorist financing activities. \pa r\pard\qj \li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205\ri915\sb17\sl-402\slmul t0\fi0 \up0 \expndtw0\charscalex102 It should be noted that the provisions relating to international cooperation under \up0 \expndtw0\charscalex108 A MLATFA should be read together with the relevant provisions under the Mutual \up 0 \expndtw-2\charscalex100 Assistance in Criminal Matters Act 2002 (MACMA). MACM A has extra-territorial effect \up0 \expndtw-2\charscalex100 and it enables Mala ysia to seek and provide assistance in the investigation and prosecution \up0 \e xpndtw0\charscalex107 of criminal offences as well in the forfeiture and confisc ation of criminal proceeds. \up0 \expndtw0\charscalex104 Assistance is provided on the basis of bilateral and multilateral arrangement between \up0 \expndtw0\ch arscalex104 Malaysia and the foreign states.\ul0\super\cf8\f9\fs23 45\ul0\nosupe rsub\cf1\f2\fs23 Where a request for mutual assistance in a criminal \up0 \expn dtw0\charscalex100 matter is made by a foreign state that does not have a mutual legal assistance treaty with \up0 \expndtw-3\charscalex100 Malaysia, the releva nt Minister may, where the requirements of the Act have been fulfilled \up0 \exp ndtw-2\charscalex100 and on the recommendation of the Attorney General, issue a special direction to enable the \up0 \expndtw-3\charscalex100 request to be exec uted in accordance with the law.\ul0\super\cf8\f9\fs23 46 \par\pard\qj \li2205\r i914\sb398\sl-402\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs 23 Under section 23(3) of MACMA, after a request has been made by the foreign st ate, the \line \up0 \expndtw0\charscalex103 Attorney General may apply to the co urt for an order to produce the material evidence \line \up0 \expndtw0\charscale x105 within seven days of the date of the order or such other period as the cour t considers \line \up0 \expndtw-4\charscalex100 appropriate. More importantly, s ection 24(4)(b) provides that such an order for assistance in \line \up0 \expndt w-2\charscalex100 criminal investigation from foreign state shall have effect no twithstanding any obligations \line \up0 \expndtw-1\charscalex100 as to secrecy or other restrictions upon the disclosure of information. In addition to this, a \line \up0 \expndtw0\charscalex103 person who complies with such an order shall not be treated as being in breach of any \line \up0 \expndtw0\charscalex108 res triction upon the disclosure of information imposed by law, contract or rules of \line \up0 \expndtw0\charscalex100 professional conduct.\ul0\super\cf8\f9\fs23 47\ul0\nosupersub\cf1\f2\fs23 Clearly, this provision has overridden the secrec y rule to enable \line \up0 \expndtw-4\charscalex100 international cooperation a nd assistance in criminal investigation process. \par\pard\ql \li2205\sb0\sl-218 \slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\s lmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slm ult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb82\sl-218\slmu lt0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 45\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Mutual Assistanc e in Criminal Matters Act 2002\ul0\nosupersub\cf10\f11\fs19 , s 17(1). \par\pard \li2205\sb17\sl-218\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10 \fs18 46\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Mutual Assi stance in Criminal Matters Act 2002\ul0\nosupersub\cf10\f11\fs19 , s 18.\par\par d\li2205\sb5\sl-218\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10 \fs18 47\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Mutual Assi stance in Criminal Matters Act 2002\ul0\nosupersub\cf10\f11\fs19 , s 15(2).\par\ pard\li2205\sb3\sl-264\slmult0\fi8243 \up0 \expndtw-3\charscalex100 \ul0\nosuper sub\cf1\f2\fs23 230 {\shp {\*\shpinst\shpleft2205\shptop13704\shpright5006\shpbottom13724\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz177\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s

p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g240}{\bkmkend Pg240}\par\pard\qj \li2205\sb0\sl-403\slmult0 \par\pard\qj\li2205 \sb0\sl-403\slmult0 \par\pard\qj\li2205\sb0\sl-403\slmult0 \par\pard\qj\li2205\r i914\sb238\sl-403\slmult0\fi0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\ f2\fs23 AMLATFA also overrides the banking secrecy rule by requiring banks and o ther regulated \line \up0 \expndtw0\charscalex100 institutions to comply with th e reporting obligations under Part IV of the Act. As already \line \up0 \expndtw -2\charscalex100 discussed, AMLATFA requires banks to obtain extensive informati on of a customer\u8217?s true \line \up0 \expndtw0\charscalex105 identity before establishing any banking relationship.\ul0\super\cf8\f9\fs23 48\ul0\nosupersub\ cf1\f2\fs23 This information needs to be \line \up0 \expndtw-1\charscalex100 ve rified and stored securely.\ul0\super\cf8\f9\fs23 49\ul0\nosupersub\cf1\f2\fs23 Furthermore, AMLATFA imposes statutory obligations on \line \up0 \expndtw-1\cha rscalex100 banks and other regulated institutions to disclose customer confident ial information to the \line \up0 \expndtw0\charscalex103 relevant authorities w hen there is suspicion of money laundering or terrorist financing \line \up0 \ex pndtw0\charscalex100 activities.\ul0\super\cf8\f9\fs23 50\ul0\nosupersub\cf1\f2\ fs23 Information to be included in the report would comprise information on the \line \up0 \expndtw-2\charscalex100 person conducting the transaction, informat ion on the account holder or beneficiary of the \line \up0 \expndtw-3\charscalex 100 transaction, details of the transaction and description of the suspicious tr ansaction.\ul0\super\cf8\f9\fs23 51\ul0\nosupersub\cf1\f2\fs23 Failure \line \u p0 \expndtw-3\charscalex100 to report is an offence and upon conviction, the per son can be liable to a fine not exceeding \line \up0 \expndtw-3\charscalex100 RM 100,000 or to imprisonment for a term not exceeding 6 months or both.\ul0\super\ cf8\f9\fs23 52 \par\pard\qj \li2205\ri909\sb398\sl-402\slmult0 \up0 \expndtw-2\c harscalex100 \ul0\nosupersub\cf1\f2\fs23 Reporting obligation under AMLATFA mean s that banks have to strike a balance between \line \up0 \expndtw0\charscalex104 compliance with the laws, on one hand, and reasonable protection of customer \line \up0 \expndtw0\charscalex100 confidentiality, on the other hand. However, it appears that the reporting obligations take \line \up0 \expndtw0\cha rscalex104 precedence over customer confidentiality. Section 20 of AMLATFA state s that \u8216?[t]he \line \up0 \expndtw-3\charscalex100 provision of this Part s hall have effect notwithstanding any obligation as to secrecy or other \line \up 0 \expndtw-2\charscalex100 restriction on the disclosure of information imposed by any written law or otherwise.\u8217? This \line \up0 \expndtw-3\charscalex100 section clearly indicates that banking secrecy cannot be invoked as a ground no t to comply \line \up0 \expndtw0\charscalex107 with the reporting obligations, o r to a request for information. More importantly, in \line \up0 \expndtw0\charsc alex100 complying with the reporting obligations under AMLATFA, the bank and its employees \line \up0 \expndtw0\charscalex100 will not be subject to the banking secrecy rules under BAFIA or common law. \par\pard\qj \li2205\ri915\sb395\sl-40 6\slmult0 \up0 \expndtw0\charscalex107 In addition to this, by virtue of section 24(1) of AMLATFA, a person who lodges a \line \up0 \expndtw0\charscalex100 susp icious report is protected from any civil, criminal or disciplinary pr oceeding. \line \up0 \expndtw0\charscalex102 Furthermore, subsection (bb) of the section states that the person is protected from any \line \up0 \expndtw-4\char scalex100 consequences that follows from the reporting. Section 77(c) of AMLATFA provides that no \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb 0\sl-218\slmult0 \par\pard\ql\li2205\sb94\sl-218\slmult0 \up0 \expndtw-2\charsca lex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 48\ul0\nosupersub\cf11\f12 \fs19 Anti-Money Laundering and Anti-Terrorism Financing Act 2001\ul0\nosupersub \cf10\f11\fs19 , s 16. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\c harscalex100 \ul0\super\cf9\f10\fs18 49\ul0\nosupersub\cf10\f11\fs19 \ul0\nosup ersub\cf11\f12\fs19 Anti-Money Laundering and Anti-Terrorism Financing Act 2001\ ul0\nosupersub\cf10\f11\fs19 , s 13. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up 0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 50\ul0\nosupersub\cf10\f11\fs 19 \ul0\nosupersub\cf11\f12\fs19 Anti-Money Laundering and Anti-Terrorism Finan

cing Act 2001\ul0\nosupersub\cf10\f11\fs19 , s 14. \par\pard\ql \li2205\sb2\sl-2 18\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 51\ul0\nosupers ub\cf10\f11\fs19 Bank Negara Malaysia, \ul0\nosupersub\cf11\f12\fs19 Anti-Money Laundering Measures in Malaysia\ul0\nosupersub\cf10\f11\fs19 (2004) 49. \par\p ard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f 10\fs18 52\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Anti-Mone y Laundering and Anti-Terrorism Financing Act 2001,\ul0\nosupersub\cf10\f11\fs19 s 22 (4). \par\pard\ql \li10449\sb15\sl-251\slmult0 \up0 \expndtw-3\charscalex 100 \ul0\nosupersub\cf1\f2\fs23 231 {\shp {\*\shpinst\shpleft2205\shptop13256\shpright5006\shpbottom13276\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz190\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g241}{\bkmkend Pg241}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i914\sb249\sl-400\slmult0 \up0 \expndtw0\charscalex103 \ul0\nosupersub\cf1\f2\fs 23 proceedings shall be brought against any person lawfully acting in compliance with any \up0 \expndtw0\charscalex105 direction, instruction or order of a dire ctor or officer of the competent authority or the \up0 \expndtw-3\charscalex100 relevant enforcement agency. \par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\q j\li2205\ri914\sb20\sl-400\slmult0 \up0 \expndtw-4\charscalex100 Section 79 of A MLATFA requires that customer\u8217?s confidentiality be maintained at all other \up0 \expndtw-5\charscalex100 times, except when required by law: \par\pard\ql \li2553\sb0\sl-245\slmult0 \par\pard\ql\li2553\sb0\sl-245\slmult0 \par\pard\ql\l i2553\ri1307\sb19\sl-245\slmult0\tx2944\tx2944\tx2944\tx2944 \up0 \expndtw-1\cha rscalex100 \ul0\nosupersub\cf13\f14\fs21 (1)\ul0\nosupersub\cf15\f16\fs21 \ul0\ nosupersub\cf13\f14\fs21 Except for the purpose of performance of his duties or exercise of his functions under \line\tab \up0 \expndtw-3\charscalex100 this Ac t or when lawfully required to do so by any court or under the provisions of any \line\tab \up0 \expndtw0\charscalex107 written law, no person shall disclose an y information or matter which has been \line\tab \up0 \expndtw-2\charscalex100 o btained by him in the performance of his duties or the exercise of his functions under \line\tab \up0 \expndtw-3\charscalex100 this Act. \par\pard\ql \li2553\ri 1307\sb40\sl-240\slmult0\tx2944\tx2944 \up0 \expndtw0\charscalex107 \ul0\nosuper sub\cf1\f2\fs23 (2)\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf13\f14\fs21 No person who has any information or matter which to his knowledge has been \line\ tab \up0 \expndtw-3\charscalex100 disclosed in contravention of subsection (1) s hall disclose that information or matter to \line\tab \up0 \expndtw-4\charscalex 100 any other person. \par\pard\ql \li2553\ri1308\sb12\sl-250\slmult0\tx2944\tx2 944 \up0 \expndtw0\charscalex102 \ul0\nosupersub\cf1\f2\fs23 (3)\ul0\nosupersub\ cf6\f7\fs23 \ul0\nosupersub\cf13\f14\fs21 Any person who contravenes subsection (1) or (2) commits an offence and shall be \line\tab \up0 \expndtw-2\charscalex 100 liable on conviction to a fine not exceeding one million ringgit or to impri sonment for \line\tab \up0 \expndtw-4\charscalex100 a term not exceeding one yea r or to both. \par\pard\qj \li2205\ri915\sb282\sl-406\slmult0\fi0 \up0 \expndtw3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 This section clearly indicates that banking secrecy is still preserved except where detecting \up0 \expndtw0\charsca lex104 and deterring money laundering outweighs the overall need to protect the customer\u8217?s \up0 \expndtw-3\charscalex100 information. Any person who is fo und to have contravened this requirement could be liable \up0 \expndtw-4\charsca lex100 to criminal liability under AMLATFA. \par\pard\qj \li2205\ri915\sb399\sl400\slmult0 \up0 \expndtw-3\charscalex100 At first glance, it appears that AMLAT

FA makes greater inroads into the secrecy rule when \up0 \expndtw0\charscalex100 compared to the common law or BAFIA. Banks can disclose customer\u8217?s inform ation on \up0 \expndtw-3\charscalex100 even grounds of suspicion of money launde ring or terrorism financing activities. However, \up0 \expndtw-3\charscalex100 o n closer inspection this is not really true as there are limits to disclosure. \ par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri912\sb20\sl-400\slm ult0 \up0 \expndtw0\charscalex105 But despite the limits imposed on disclosure, there are some aspects of the reporting \up0 \expndtw0\charscalex100 obligations which would make customers wonder whether they can rely on the banks to \up0 \e xpndtw0\charscalex104 keep their affairs secret. Traditionally the banker-custom er relationship was one built \up0 \expndtw0\charscalex103 around mutual trust, but with the introduction of AML/CTF laws it appears that it will \up0 \expndtw0 \charscalex103 eventually be replaced with one built around mutual suspicion. \p ar\pard\ql \li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \ par\pard\ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb121\sl-264\slmult0 \up0 \expndtw-3\charscalex100 232 \par\pard\sect\sectd\fs24\paperw11900\paperh1 6840\pard\sb0\sl-240{\bkmkstart Pg242}{\bkmkend Pg242}\par\pard\li2205\sb0\sl-26 4\slmult0\par\pard\li2205\sb0\sl-264\slmult0\par\pard\li2205\sb0\sl-264\slmult0\ par\pard\li2205\sb0\sl-264\slmult0\par\pard\li2205\sb0\sl-264\slmult0\par\pard\l i2205\sb254\sl-264\slmult0\fi0\tx2905 \up0 \expndtw-3\charscalex100 \ul0\nosuper sub\cf4\f5\fs23 6.3\tab \up0 \expndtw-3\charscalex100 Correspondent Banking Rela tionship\par\pard\qj \li2205\ri914\sb291\sl-400\slmult0 \up0 \expndtw0\charscale x110 \ul0\nosupersub\cf1\f2\fs23 Correspondent banking is an essential service t hat financial institutions provide to \line \up0 \expndtw0\charscalex106 legitim ate customers around the globe. Unfortunately, permitting legitimate account-\li ne \up0 \expndtw0\charscalex102 holders to have access to this service also expo ses the same financial system to abuse by \line \up0 \expndtw0\charscalex100 mon ey launderers and other criminals. In response to this problem, the AML laws req uire \line \up0 \expndtw0\charscalex100 banks to conduct enhanced due diligence on correspondent banking relationships. \par\pard\qj \li2205\ri916\sb277\sl-404\ slmult0 \up0 \expndtw0\charscalex100 This section aims to examine how the Malays ian AML laws affect correspondent banking \line \up0 \expndtw0\charscalex100 rel ationships. It will also highlight the correspondent banking provisions under th e United \line \up0 \expndtw-3\charscalex100 States \up0 \expndtw0\charscalex110 (US) AML laws since they affect the Malaysian banks when they maintain \line \u p0 \expndtw-1\charscalex100 correspondent banking relationship with US banks. Be fore examining the laws, it would be \line \up0 \expndtw0\charscalex109 worthwhi le to briefly mention the vulnerability of correspondent banking to money \line \up0 \expndtw-3\charscalex100 laundering. \par\pard\ql \li2205\sb0\sl-264\slmult 0 \par\pard\ql\li2205\sb128\sl-264\slmult0 \up0 \expndtw-2\charscalex100 \ul0\no supersub\cf4\f5\fs23 6.3.1 Correspondent Banking and Money Laundering \par\par d\qj \li2205\ri916\sb282\sl-402\slmult0\fi0 \up0 \expndtw0\charscalex103 \ul0\no supersub\cf1\f2\fs23 It is generally accepted that at the heart of the international payment system is \line \up0 \expndtw0\charscalex100 correspon dent banking, whereby banks throughout the world can make payments to and \line \up0 \expndtw-1\charscalex100 through each other.\ul0\super\cf8\f9\fs23 53\ul0\n osupersub\cf1\f2\fs23 According to the Basle Committee, correspondent banking r efers to \line \up0 \expndtw-4\charscalex100 the provision of banking services b y the correspondent bank to the respondent bank through \line \up0 \expndtw-1\ch arscalex100 correspondent accounts which enable banks to conduct business and pr ovide services that \line \up0 \expndtw0\charscalex103 the respondent bank do es not offer directly.\ul0\super\cf8\f9\fs23 54\ul0\nosupersub\cf1\f2\fs23 Reciprocal correspondent banking \line \up0 \expndtw-1\charscalex100 relations hips may involve the use of so called nostro and vostro accounts to settle forei gn \line \up0 \expndtw-2\charscalex100 exchange transactions.\u8217?\ul0\super\c f8\f9\fs23 55 \par\pard\qj \li2205\ri914\sb384\sl-420\slmult0 \up0 \expndtw0\cha rscalex100 \ul0\nosupersub\cf1\f2\fs23 There are three activities in corresponde nt accounts that warrant heightened anti-money \line \up0 \expndtw0\charscalex10 0 laundering measures, namely wire transfers, correspondent accounts used as \u8 216?payable \par\pard\qj \li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-2

20\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220 \slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\ri940\sb166\ sl-220\slmult0 \up0 \expndtw0\charscalex103 \ul0\super\cf9\f10\fs19\ul0\super\cf 9\f10\fs18 53\ul0\nosupersub\cf10\f11\fs19 The New York Clearing House Associat ion, \ul0\nosupersub\cf11\f12\fs19 Guidelines for Counter Money Laundering Polic ies and \up0 \expndtw-2\charscalex100 Procedures in Correspondent Banking \ul0\n osupersub\cf10\f11\fs19 (2002) 1. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \ expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 54\ul0\nosupersub\cf10\f11\fs19 Basel Committee on Banking Supervision, \ul0\nosupersub\cf11\f12\fs19 Customer Due Diligence for Banks\ul0\nosupersub\cf10\f11\fs19 ( 2001) 12. \par\pard\ql \ li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 55\ul0\nosupersub\cf10\f11\fs19 Butterworths Encyclopaedic Australian Legal Di ctionary (Online edition) LexisNexis Australia. \par\pard\ql \li10449\sb15\sl-25 1\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 233 {\shp {\*\shpinst\shpleft2205\shptop13480\shpright5006\shpbottom13500\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz180\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g243}{\bkmkend Pg243}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i916\sb249\sl-400\slmult0\fi0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf1\ f2\fs23 through accounts\u8217? and \u8216?cash letter activity.\u8217?\ul0\sup er\cf8\f9\fs23 56\ul0\nosupersub\cf1\f2\fs23 \u8216?Payable through accounts\u8 217? may be defined \up0 \expndtw-4\charscalex100 as correspondent accounts that are used directly by third parties to transact business on their \up0 \expndtw5\charscalex100 own behalf.\ul0\super\cf8\f9\fs23 57 \par\pard\qj \li2205\sb0\sl -400\slmult0 \par\pard\qj\li2205\ri915\sb20\sl-400\slmult0 \up0 \expndtw0\charsc alex100 \ul0\nosupersub\cf1\f2\fs23 The speediness, accuracy and borderless natu re of correspondent banking allow banks to \up0 \expndtw0\charscalex102 conduct cross-jurisdictional transactions. However, these elements also cr eate \up0 \expndtw0\charscalex104 vulnerabilities and are open abuse by money la underers. The common weaknesses in \up0 \expndtw-3\charscalex100 correspondent banking relationship can be summarized as follows:\ul0\super\cf8\f9\fs23 58 \par \pard\ql \li2555\sb113\sl-264\slmult0\tx3255 \up0 \expndtw-5\charscalex100 \ul0\ nosupersub\cf1\f2\fs23 (i) \tab \up0 \expndtw0\charscalex102 no procedures in pl ace to identify the beneficial ownership of correspondent \par\pard\qj \li3255\r i916\sb24\sl-400\slmult0 \up0 \expndtw0\charscalex104 banks, particularly thos e domiciled in Non-Cooperative Countries and \up0 \expndtw-5\charscalex100 Territories or jurisdictions with weak regulatory requirement; \par\pard\ql \li2 555\sb133\sl-264\slmult0\tx3255 \up0 \expndtw-3\charscalex100 (ii) \tab \up0 \ex pndtw0\charscalex100 international remittances made from the bank\u8217?s parent to beneficiaries around \par\pard\ql \li3255\sb136\sl-264\slmult0 \up0 \expndtw -5\charscalex100 the world are executed without identifying the underlying clien ts; \par\pard\ql \li2555\sb136\sl-264\slmult0\tx3255 \up0 \expndtw-5\charscalex1 00 (iii) \tab \up0 \expndtw-1\charscalex100 while some banks investigate the mon ey laundering regulatory environment of \par\pard\qj \li3255\ri916\sb24\sl-400\s lmult0 \up0 \expndtw0\charscalex100 their correspondent bank\u8217?s country of domicile, others only confirm that there \up0 \expndtw-1\charscalex100 are contr ols and legislation in place without obtaining any assurances as to the \up0 \ex pndtw-2\charscalex100 substance of the controls. \par\pard\qj \li2205\ri915\sb39 7\sl-404\slmult0 \up0 \expndtw-2\charscalex100 In 2001, a US Senate Report ident ified that correspondent banking relationships with high \line \up0 \expndtw-1\c

harscalex100 risk foreign banks have been and continue to be exploited by money launderers and other \line \up0 \expndtw0\charscalex100 financial criminals worl dwide. High risk banks include shell banks,\ul0\super\cf8\f9\fs23 59\ul0\nosuper sub\cf1\f2\fs23 offshore banks and \line \up0 \expndtw-2\charscalex100 banks li censed in jurisdictions with weak anti-money laundering controls. The Report als o \line \up0 \expndtw0\charscalex102 stated that US banks typically failed to co nduct appropriate customer identification and \line \up0 \expndtw-5\charscalex10 0 verification.\ul0\super\cf8\f9\fs23 60 \par\pard\qj \li2205\ri916\sb400\sl-400 \slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf1\f2\fs23 Since the cor respondent bank provides services for individuals or entities for which it has \ line \up0 \expndtw-1\charscalex100 neither verified the identities nor obtained first hand knowledge of, it must rely on the \par\pard\qj \li2205\sb0\sl-240\slm ult0 \par\pard\qj\li2205\ri934\sb233\sl-240\slmult0 \up0 \expndtw0\charscalex105 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 56\ul0\nosupersub\cf10\f11\fs19 US Senate Committee on Governmental Affairs, \ul0\nosupersub\cf11\f12\fs19 Mino rity Staff of the Permanent Subcommittee on \up0 \expndtw-2\charscalex100 Invest igations Report on Correspondent banking: A Getaway for Money Laundering\ul0\nos upersub\cf10\f11\fs19 ( 2001) 10. \par\pard\ql \li2205\sb1\sl-215\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 57\ul0\nosupersub\cf10\f11\fs19 See FATF Standards, Glossary: FATF Methodology. \par\pard\qj \li2205\ri4101\sb 1\sl-220\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 58\ul0\no supersub\cf10\f11\fs19 \u8216?Money Laundering Theme- International Banking Clu ster\u8217? (2001). \line \up0 \expndtw-2\charscalex100 < {\field{\*\fldinst {HY PERLINK "http://www.fsa.gov.uk/pubs/other/ml_ibc.pdf/" }}{\fldrslt {\ul0\nosuper sub\cf29\f30\fs19\ul http://www.fsa.gov.uk/pubs/other/ml_ibc.pdf}}}\ul0\nosupers ub\cf10\f11\fs19 > at 18 May 2007. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 59\ul0\nosupersub\cf10\f11\fs1 9 This refers to banks with no physical presence in any country for conducting banking business. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charsc alex100 \ul0\super\cf9\f10\fs18 60\ul0\nosupersub\cf10\f11\fs19 US Senate, abov e n 57, 1. \par\pard\ql \li10449\sb15\sl-251\slmult0 \up0 \expndtw-3\charscalex1 00 \ul0\nosupersub\cf1\f2\fs23 234 {\shp {\*\shpinst\shpleft2205\shptop12810\shpright5006\shpbottom12830\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz206\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g244}{\bkmkend Pg244}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i916\sb249\sl-400\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf1\f2\f s23 respondent bank to perform all the necessary due diligence and continuous mo nitoring of \up0 \expndtw0\charscalex100 its own customer\u8217?s account activi ty.\ul0\super\cf8\f9\fs23 61\ul0\nosupersub\cf1\f2\fs23 To make matters worse, the respondent bank may \up0 \expndtw0\charscalex100 itself be offering correspo ndent banking facilities to other institutions and this creates an \up0 \expndtw -1\charscalex100 additional risk for the correspondent bank.\ul0\super\cf8\f9\fs 23 62 \par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri916\sb20\sl400\slmult0 \up0 \expndtw0\charscalex108 \ul0\nosupersub\cf1\f2\fs23 According t o the US Senate Report correspondent banking is vulnerable to money \up0 \expndt w-5\charscalex100 laundering due to the following reasons:\ul0\super\cf8\f9\fs23 63 \par\pard\ql \li2555\sb113\sl-264\slmult0\tx3255 \up0 \expndtw-5\charscalex1 00 \ul0\nosupersub\cf1\f2\fs23 (i) \tab \up0 \expndtw0\charscalex105 a culture o f lack due diligence, weak controls and inadequate responses to \par\pard\ql \li

3255\sb136\sl-264\slmult0 \up0 \expndtw-5\charscalex100 troubling information wi th regards to correspondent accounts; \par\pard\li2555\sb151\sl-264\slmult0\fi0\ tx3255 \up0 \expndtw-1\charscalex100 (ii)\tab \up0 \expndtw0\charscalex100 corre spondent bankers are insufficiently sensitive to the risk of money\par\ pard\li2555\sb138\sl-264\slmult0\fi699 \up0 \expndtw-1\charscalex100 laundering in correspondent banking;\par\pard\li2555\sb139\sl-264\slmult0\fi0\tx3255 \up0 \ expndtw-1\charscalex100 (iii)\tab \up0 \expndtw0\charscalex100 the practice of f oreign banks operating through the US correspondent accounts\par\pard\li2555\sb1 38\sl-264\slmult0\fi699 \up0 \expndtw0\charscalex100 of other foreign banks, (th is is also known as \u8216?nested correspondents\u8217?);\par\pard\li2555\sb140\ sl-264\slmult0\fi0\tx3255 \up0 \expndtw-1\charscalex100 (iv)\tab \up0 \expndtw-1 \charscalex100 weak foreign bank licensing, supervision and accounting practices ;\par\pard\li2555\sb138\sl-264\slmult0\fi0\tx3255 \up0 \expndtw-1\charscalex100 (v)\tab \up0 \expndtw0\charscalex100 strict bank secrecy laws that prohibit the free flow of important information\par\pard\li2555\sb139\sl-264\slmult0\fi699 \u p0 \expndtw-1\charscalex100 required to detect money laundering activities; and\ par\pard\li2555\sb138\sl-264\slmult0\fi0\tx3255 \up0 \expndtw-1\charscalex100 (v i)\tab \up0 \expndtw0\charscalex100 difficulties in obtaining detailed informati on needed to perform due diligence on\par\pard\li2555\sb139\sl-264\slmult0\fi699 \up0 \expndtw-1\charscalex100 foreign banks.\par\pard\qj \li2205\ri914\sb284\sl -405\slmult0 \up0 \expndtw0\charscalex103 Obviously, criminals can manipulate th ese shortcomings to gain access to the banking \up0 \expndtw0\charscalex104 syst em through out the world. Usually when criminal proceeds are laundered through \ up0 \expndtw-1\charscalex100 correspondent accounts, it can be a great challenge for the enforcement agencies to trace, \up0 \expndtw0\charscalex102 seize or fo rfeit the assets. For this reason, it is vitally important to establish anti-mon ey \up0 \expndtw-5\charscalex100 laundering systems and controls for corresponde nt banking activities. \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li22 05\sb108\sl-264\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf4\f5\fs2 3 6.3.3 Anti-Money Laundering Measures on Correspondent Banking in Malaysia \p ar\pard\qj \li2205\ri914\sb304\sl-400\slmult0\tx3038 \up0 \expndtw-5\charscalex1 00 \ul0\nosupersub\cf1\f2\fs23 Section \tab \up0 \expndtw0\charscalex107 31 of B AFIA allows Malaysian banks to establish a correspondent banking \line \up0 \exp ndtw-3\charscalex100 relationship with any bank in a foreign country. However, B NM is empowered to require a \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\q l\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\ li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb99\sl-218\slmult0 \up0 \expndtw2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 61\ul0\nosupersub \cf10\f11\fs19 FATF, \ul0\nosupersub\cf11\f12\fs19 Report on Money Laundering T ypologies 2001-2002\ul0\nosupersub\cf10\f11\fs19 (2002) 8. \par\pard\ql \li2205 \sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 62\ul0 \nosupersub\cf10\f11\fs19 Ibid. \par\pard\li2205\sb20\sl-218\slmult0\fi0 \up0 \ expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 63\ul0\nosupersub\cf10\f11\fs19 US Senate, above n 57, 26.\par\pard\li2205\sb3\sl-264\slmult0\fi8243 \up0 \expn dtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 235 {\shp {\*\shpinst\shpleft2205\shptop13704\shpright5006\shpbottom13724\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz227\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g245}{\bkmkend Pg245}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i915\sb249\sl-400\slmult0 \up0 \expndtw0\charscalex102 \ul0\nosupersub\cf1\f2\fs

23 bank to seek its approval before it establishes a correspondent relationship with a foreign \up0 \expndtw0\charscalex102 bank. Section 31 (2) states: \par\pa rd\qj \li2730\ri931\sb4\sl-372\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosuper sub\cf13\f14\fs21 The Bank may prescribe by order that such licensed bank or lic ensed merchant bank as may \up0 \expndtw0\charscalex100 be set out in the order shall not, except with the prior written approval of the Minister given \up0 \ex pndtw0\charscalex100 on the recommendation of the Bank, establish a corresponden t banking relationship with any \up0 \expndtw0\charscalex100 bank established in any country, territory or place outside Malaysia, which may be set out in \up0 \expndtw0\charscalex100 the order, or with any bank owned or controlled, directl y or indirectly, by the government, or \up0 \expndtw-1\charscalex100 an agency o f the government, of such country, territory or place. \par\pard\qj \li2205\ri91 2\sb382\sl-404\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs23 With the implementation of AMLATFA, banks are required to conduct AML measures i n \up0 \expndtw0\charscalex100 relation to the correspondent banking relationshi ps. Notably, the AML measures focus on \up0 \expndtw0\charscalex100 customer ide ntification and due diligence procedures. It is widely accepted that banks are \ up0 \expndtw0\charscalex109 required to establish clear customer identification policies and procedures to obtain \up0 \expndtw0\charscalex106 sufficient reliab le information to determine the true identity of their customers before \up0 \ex pndtw-3\charscalex100 establishing a banking relationship and providing any serv ices. \par\pard\qj \li2205\ri915\sb396\sl-405\slmult0\tx3055 \up0 \expndtw-3\cha rscalex100 Section \tab \up0 \expndtw0\charscalex112 16 of AMLATFA deals with th e obligation of banks and other regulated \line \up0 \expndtw0\charscalex100 ins titutions with regards to the identification and verification of their customers . Banks are \line \up0 \expndtw0\charscalex105 required to maintain accounts in the name of accounts holders and are prohibited from \line \up0 \expndtw0\charsc alex108 opening anonymous accounts or accounts which are in a fictitious, false or incorrect \line \up0 \expndtw-2\charscalex100 name.\ul0\super\cf8\f9\fs23 64\ ul0\nosupersub\cf1\f2\fs23 Sub section (2) sets out clearly the customer verifi cation procedures for banks: \par\pard\qj \li2731\ri1307\sb366\sl-368\slmult0 \u p0 \expndtw0\charscalex107 \ul0\nosupersub\cf13\f14\fs21 (a) verify, by reliable means, the identity, representative capacity, domicile, legal \line \up0 \expnd tw0\charscalex103 capacity, occupation or business purpose of any person, as well as identifying \line \up0 \expndtw-1\charscalex100 information on t hat person, whether he be an occasional or usual client, through the use \line \ up0 \expndtw0\charscalex106 of documents such as identity card, passport, birth certificate, driver\u8217?s licence and \line \up0 \expndtw0\charscalex102 const ituent document, or any other official or private document, when establishing or \line \up0 \expndtw0\charscalex102 conducting business relations, particularly when opening new accounts or passbooks, \line \up0 \expndtw-1\charscalex100 ente ring into any fiduciary transaction, renting of a safe deposit box, or performin g any \line \up0 \expndtw-3\charscalex100 cash transaction exceeding such amount as the competent authority may specify; \par\pard\ql \li2731\sb117\sl-241\slmul t0 \up0 \expndtw-4\charscalex100 (b) include such details in record. \par\pard\l i2205\sb0\sl-218\slmult0\par\pard\li2205\sb0\sl-218\slmult0\par\pard\li2205\sb0\ sl-218\slmult0\par\pard\li2205\sb122\sl-218\slmult0\fi0 \up0 \expndtw-2\charscal ex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 64\ul0\nosupersub\cf10\f11\ fs19 \ul0\nosupersub\cf11\f12\fs19 Anti-Money Laundering and Anti-Terrorism Fin ancing Act 2001\ul0\nosupersub\cf10\f11\fs19 , s 16(1).\par\pard\li2205\sb3\sl-2 64\slmult0\fi8243 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 236 {\shp {\*\shpinst\shpleft2205\shptop14151\shpright5006\shpbottom14171\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz154\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s

p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g246}{\bkmkend Pg246}\par\pard\qj \li2205\sb0\sl-404\slmult0 \par\pard\qj\li2205 \sb0\sl-404\slmult0 \par\pard\qj\li2205\sb0\sl-404\slmult0 \par\pard\qj\li2205\r i915\sb234\sl-404\slmult0 \up0 \expndtw0\charscalex103 \ul0\nosupersub\cf1\f2\fs 23 Furthermore, section 5(1) of the Anti-Money Laundering and Anti-Terrorism Fin ancing \up0 \expndtw-1\charscalex100 (Reporting Obligations) Regulations 2007 (A MLATF Regulations) specifies that customer \up0 \expndtw0\charscalex100 due dili gence measures must be conducted when there is a suspicion of money laundering \ up0 \expndtw-2\charscalex100 or when there is a doubt about the veracity or adeq uacy of information on the identity of the \up0 \expndtw0\charscalex106 account holder which it has obtained previously. Subsection (2)(b) requires a bank to \u p0 \expndtw-2\charscalex100 identify and verify the identity of the beneficial o wner of its customer. \par\pard\qj \li2205\ri916\sb400\sl-400\slmult0 \up0 \expn dtw-1\charscalex100 The requirement to conduct customer due diligence are reiter ated in AML/CFT Guidelines. \up0 \expndtw0\charscalex109 According to the Guidel ines, the customer due diligence procedures should at least \up0 \expndtw-3\char scalex100 comprise the following: \par\pard\ql \li2205\sb133\sl-264\slmult0 \up0 \expndtw-3\charscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\c f1\f2\fs23 identify and verify the customer; \par\pard\ql \li2205\sb156\sl-264 \slmult0 \up0 \expndtw-2\charscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0 \nosupersub\cf1\f2\fs23 identify and verify beneficial ownership and control o f the transaction; \par\pard\ql \li2205\ri906\sb36\sl-410\slmult0\tx2556 \up0 \e xpndtw-2\charscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\ f2\fs23 obtain information on the purpose and intended nature of the banking r elationship; and \up0 \expndtw0\charscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs2 3 \ul0\nosupersub\cf1\f2\fs23 conduct on-going due diligence and scrutiny in ensuring the information provided is \line\tab \up0 \expndtw0\charscalex100 upda ted and relevant.\ul0\super\cf8\f9\fs23 65 \par\pard\qj \li2205\sb0\sl-400\slmul t0 \par\pard\qj\li2205\ri916\sb19\sl-400\slmult0\fi0 \up0 \expndtw-4\charscalex1 00 \ul0\nosupersub\cf1\f2\fs23 It must be noted that if a customer fails to comp ly with the due diligence procedures, a bank \up0 \expndtw0\charscalex106 should not commence business relation or perform any transaction, or in the case of \u p0 \expndtw-4\charscalex100 existing customer, a bank should terminate such busi ness relation. In fact, the unwillingness \up0 \expndtw-2\charscalex100 of the c ustomer to provide the information requested and to cooperate in the due diligen ce \up0 \expndtw-1\charscalex100 process may itself be a factor of suspicion.\ul 0\super\cf8\f9\fs23 66\ul0\nosupersub\cf1\f2\fs23 Therefore, a bank should cons ider lodging a \up0 \expndtw-1\charscalex100 suspicious transactions report to F IU. \par\pard\qj \li2205\ri914\sb384\sl-420\slmult0 \up0 \expndtw0\charscalex105 It is submitted that the Anti-Money Laundering and Counter Financing of Terrori sm \line \up0 \expndtw-2\charscalex100 Sectoral Guidelines \up0 \expndtw0\chars calex101 1 for Banking and Financial Institutions \up0 \expndtw-3\charscale x100 (Sectoral Guidelines) \par\pard\qj \li2205\ri914\sb0\sl-400\slmult0 \up0 \ expndtw0\charscalex103 specifically provide procedures for sound business conduc t in correspondent banking. \line \up0 \expndtw0\charscalex103 Therefore, when a bank has a correspondent relationship with another respondent \par\pa rd\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\par d\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb2\sl-218\slmult0 \up0 \expndtw2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 65\ul0\nosupersub \cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Standard Guidelines on Anti-Money Laundering and Counter Financing of Terrorism\ul0\nosupersub\cf10\f11\fs19 , par a 5.1.3. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ ul0\super\cf9\f10\fs18 66\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12 \fs19 Standard Guidelines on Anti-Money Laundering and Counter Financing of Terr orism,\ul0\nosupersub\cf10\f11\fs19 para 5.1.4. \par\pard\ql \li10449\sb15\sl-2 51\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 237

{\shp {\*\shpinst\shpleft2205\shptop13928\shpright5006\shpbottom13948\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz188\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g247}{\bkmkend Pg247}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i915\sb249\sl-400\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs 23 institution, the bank is required to take appropriate measures to ensure that the relationship \up0 \expndtw0\charscalex100 is not exposed to money launderin g or terrorism financing activities.\ul0\super\cf8\f9\fs23 67 \par\pard\qj \li22 05\ri913\sb398\sl-403\slmult0 \up0 \expndtw0\charscalex111 \ul0\nosupersub\cf1\f 2\fs23 Additionally, the bank must assess, as a minimum, the relevant informatio n of the \line \up0 \expndtw0\charscalex107 respondent bank to determine its rep utation and quality of supervision. This includes \line \up0 \expndtw-2\charscal ex100 information on the board of directors and the management, business activit ies and products, \line \up0 \expndtw0\charscalex100 applicable legislation, reg ulations and supervision and AML/CTF measures and control of \line \up0 \expndtw 0\charscalex107 the respondent bank.\ul0\super\cf8\f9\fs23 68\ul0\nosupersub\cf1 \f2\fs23 The bank must establish or continue a correspondent banking \line \up0 \expndtw0\charscalex100 relationship with the respondent institution only if it is satisfied with the assessment of the \line \up0 \expndtw-1\charscalex100 inf ormation gathered. \par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i910\sb20\sl-400\slmult0 \up0 \expndtw0\charscalex102 Part 4.14.4 of the Sectora l Guidelines requires a bank to document the responsibilities of \line \up0 \exp ndtw0\charscalex100 the respective parties in relation to the correspondent bank ing relationship, particularly in \line \up0 \expndtw0\charscalex102 relation to customer due diligence for all products and services. It must be noted that the \line \up0 \expndtw0\charscalex100 decision and approval to establish or contin ue a correspondent banking relationship should \line \up0 \expndtw-1\charscalex1 00 be made at the senior management level. Most importantly, the bank must be aw are that the \line \up0 \expndtw-1\charscalex100 correspondent banking relations hip with shell banks is absolutely prohibited.\ul0\super\cf8\f9\fs23 69 \par\par d\qj \li2205\ri914\sb277\sl-404\slmult0\fi0 \up0 \expndtw0\charscalex103 \ul0\no supersub\cf1\f2\fs23 Furthermore, where a correspondent banking relationship inv olves the maintenance of \line \up0 \expndtw0\charscalex107 \u8216?payable-throu gh-account\u8217?, the bank must be satisfied that the respondent bank has \line \up0 \expndtw0\charscalex104 performed all the normal obligations on its custom ers that have direct access to such \line \up0 \expndtw0\charscalex100 accounts and the respondent bank is able to provide relevant customer identification dat a \line \up0 \expndtw0\charscalex105 upon request by the bank.\ul0\super\cf8\f9\ fs23 70\ul0\nosupersub\cf1\f2\fs23 This measure enables the bank to identify ad equately the \line \up0 \expndtw-4\charscalex100 ultimate user of such accounts and to understand the nature of their transactions. \par\pard\qj \li2205\ri914\s b252\sl-410\slmult0 \up0 \expndtw-1\charscalex100 Additionally, Part 4.14.8 of t he Sectoral Guidelines specifies that a bank must pay special \line \up0 \expndt w-3\charscalex100 attention to correspondent banking relationship with responden t institutions from countries \line \up0 \expndtw-3\charscalex100 which have ins ufficient AML/CTF measures. Specifically, a bank must conduct enhance \par\pard\ ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\q l\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\ li2205\sb137\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs1 9\ul0\super\cf9\f10\fs18 67\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f

12\fs19 Sectoral Guidelines 1 for Banking and Financial Institutions,\ul0\nosupe rsub\cf10\f11\fs19 para 4.14.1. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \e xpndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 68\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Sectoral Guidelines 1 for Banking and Financial In stitutions,\ul0\nosupersub\cf10\f11\fs19 para 4.14.2. \par\pard\ql \li2205\sb2\ sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 69\ul0\nosu persub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Sectoral Guidelines 1 for Ba nking and Financial Institutions\ul0\nosupersub\cf10\f11\fs19 , para 4.14.6. \pa r\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf 9\f10\fs18 70\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Sector al Guidelines 1 for Banking and Financial Institutions,\ul0\nosupersub\cf10\f11\ fs19 para 4.14.7. \par\pard\ql \li10449\sb15\sl-251\slmult0 \up0 \expndtw-3\cha rscalex100 \ul0\nosupersub\cf1\f2\fs23 238 {\shp {\*\shpinst\shpleft2205\shptop13480\shpright5006\shpbottom13500\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz167\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g248}{\bkmkend Pg248}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i914\sb249\sl-400\slmult0 \up0 \expndtw0\charscalex102 \ul0\nosupersub\cf1\f2\fs 23 due diligence when the respondent bank comes from the Non-Cooperative Countri es and \up0 \expndtw0\charscalex102 Territories (NCCTs). \par\pard\qj \li2205\ri 914\sb278\sl-403\slmult0 \up0 \expndtw-3\charscalex100 Clearly, under the Malays ian anti-money laundering laws, in addition to performing normal \line \up0 \exp ndtw0\charscalex107 due diligence measures, banks are required to gather suffici ent information about a \line \up0 \expndtw0\charscalex100 respondent institutio n to understand fully the nature of the respondent\u8217?s business and to \line \up0 \expndtw-2\charscalex100 determine the respondent\u8217?s reputation as w ell as the quality of supervision by the relevant \line \up0 \expndtw0\charscale x102 home authority. More importantly, the laws also place significant accountab ility on the \line \up0 \expndtw0\charscalex105 senior management of banks in de ciding whether to establish correspondent banking \line \up0 \expndtw-5\charscal ex100 relationship or not. \par\pard\qj \li2205\ri916\sb252\sl-410\slmult0 \up0 \expndtw-2\charscalex100 It appears that the laws apply a risk-based approach to correspondent banking procedures. \line \up0 \expndtw0\charscalex102 As such, t his is a positive development as it could reduce compliance cost faced by the \l ine \up0 \expndtw-5\charscalex100 banks. \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb127\sl-264\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nos upersub\cf4\f5\fs23 6.3.2 The USA PATRIOT Act \par\pard\qj \li2205\ri915\sb281 \sl-404\slmult0\fi0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 In response to the tragic event of September 11, 2001, the US government enacted t he USA \line \up0 \expndtw0\charscalex100 PATRIOT Act.\ul0\super\cf8\f9\fs23 71\ ul0\nosupersub\cf1\f2\fs23 One of the main aims of the Act is to hinder terrori st access to the US \line \up0 \expndtw-2\charscalex100 financial systems. Gener ally, the Act imposes a new duty of customer due diligence which \line \up0 \exp ndtw-4\charscalex100 was not previously found in the Bank Secrecy Act.\ul0\super \cf8\f9\fs23 72\ul0\nosupersub\cf1\f2\fs23 The PATRIOT Act, inter alia, require s \line \up0 \expndtw0\charscalex104 US financial institutions that establish, m aintain or manage correspondent account to \line \up0 \expndtw-2\charscalex100 e stablish appropriate enhanced due diligence policies that are reasonably designe d to deter \line \up0 \expndtw-2\charscalex100 and detect money laundering and t errorism financing activities. It would be worthwhile to \line \up0 \expndtw0\ch

arscalex100 examine the provisions relating to correspondent banking under the A ct since they both \line \up0 \expndtw-3\charscalex100 directly and indirectly a ffect almost all the financial institutions and their customers outside \line \u p0 \expndtw-4\charscalex100 the United States.\ul0\super\cf8\f9\fs23 73\ul0\nosu persub\cf1\f2\fs23 Due to the extensiveness of the US financial institutions\u8 217? operation, it is \line \up0 \expndtw-4\charscalex100 unavoidable for Malays ian banks to do business with the US banks. Therefore, Malaysian \par\pard\qj \l i2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2 205\sb0\sl-220\slmult0 \par\pard\qj\li2205\ri935\sb168\sl-220\slmult0 \up0 \expn dtw-1\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 71\ul0\nosupe rsub\cf10\f11\fs19 This is an abbreviation of the words- Uniting and Strengthen ing America by Providing Appropriate Tools \up0 \expndtw-1\charscalex100 Require d to Intercept and Obstruct Terrorism Act. This Act was signed into law on Octob er 26, 2001. \par\pard\qj \li2205\ri940\sb0\sl-220\slmult0 \up0 \expndtw-1\chars calex100 \ul0\super\cf9\f10\fs18 72\ul0\nosupersub\cf10\f11\fs19 Timothy D Scra ntom, \u8216?USA Patriot Act: Implications for Foreign Financial Institutions an d International \up0 \expndtw-2\charscalex100 Finance Centres\u8217? (2001) 8(1) \ul0\nosupersub\cf11\f12\fs19 Trusts & Trustees\ul0\nosupersub\cf10\f11\fs19 2 5. \par\pard\qj \li2205\ri936\sb0\sl-220\slmult0 \up0 \expndtw0\charscalex102 \u l0\super\cf9\f10\fs18 73\ul0\nosupersub\cf10\f11\fs19 Barry Mertzger and Armand o Ramirez, \u8216?The Anti-Money Laundering Provisions of the United States \up0 \expndtw0\charscalex102 PATRIOT Act\u8217? (2002) 13(1) \ul0\nosupersub\cf11\f1 2\fs19 Journal of Banking and Finance Law and Practice\ul0\nosupersub\cf10\f11\f s19 221. \par\pard\ql \li10449\sb14\sl-252\slmult0 \up0 \expndtw-3\charscalex10 0 \ul0\nosupersub\cf1\f2\fs23 239 {\shp {\*\shpinst\shpleft2205\shptop13033\shpright5006\shpbottom13053\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz184\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g249}{\bkmkend Pg249}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i916\sb249\sl-400\slmult0 \up0 \expndtw0\charscalex110 \ul0\nosupersub\cf1\f2\fs 23 banks may also face the risk of non-compliance with the laws when they mainta in \up0 \expndtw-3\charscalex100 correspondent banking relationships with the US banks. \par\pard\qj \li2205\ri913\sb280\sl-400\slmult0 \up0 \expndtw0\charscale x105 Generally, the PATRIOT Act imposes stringent standards on correspondent ban king \up0 \expndtw0\charscalex102 arrangements due to their vulnerability to mon ey laundering and in particular terrorism \up0 \expndtw0\charscalex100 financing . Based on section 311 of the Act, correspondent account means \u8216?\u8230?an account \up0 \expndtw0\charscalex105 established to receive deposits from, make payments on behalf of a foreign financial \up0 \expndtw-4\charscalex100 institut ion, or handle other financial transactions related to such institution.\u8217? \par\pard\qj \li2205\sb0\sl-403\slmult0 \par\pard\qj\li2205\ri914\sb15\sl-403\sl mult0 \up0 \expndtw0\charscalex100 In addition to the general due diligence requ irements, section 312 of the Act requires US \line \up0 \expndtw0\charscalex106 financial institutions to perform enhanced due diligence for correspondent accou nts \line \up0 \expndtw-2\charscalex100 maintained for certain foreign banks. Th ese requirements apply to correspondent accounts \line \up0 \expndtw-2\charscale x100 maintained for a foreign bank operating under an offshore banking licence, under a licence \line \up0 \expndtw0\charscalex102 issued by a country designate d as being non-cooperative with international anti-money \line \up0 \expndtw-1\c harscalex100 laundering standards or under a licence issued by a country designa

ted by the Security of \line \up0 \expndtw-1\charscalex100 the Treasury as warra nting special measures due to money laundering concerns. \par\pard\ql \li2205\sb 0\sl-264\slmult0 \par\pard\ql\li2205\sb248\sl-264\slmult0 \up0 \expndtw-4\charsc alex100 Therefore, in those circumstances, banks are required to take reasonable steps to:\ul0\super\cf8\f9\fs23 74 \par\pard\ql \li2205\sb136\sl-264\slmult0\tx 2906 \up0 \expndtw-5\charscalex100 \ul0\nosupersub\cf1\f2\fs23 (i) \tab \up0 \ex pndtw-3\charscalex100 conduct appropriate enhanced scrutiny of a correspondent a ccount maintained for or \par\pard\qj \li2906\ri916\sb24\sl-400\slmult0 \up0 \ex pndtw0\charscalex100 on behalf of such a foreign bank to guard against money lau ndering and to report \up0 \expndtw-1\charscalex100 suspicious activity; \par\pa rd\ql \li2205\sb113\sl-264\slmult0\tx2906 \up0 \expndtw-3\charscalex100 (ii) \ta b \up0 \expndtw0\charscalex100 determine whether the foreign bank itself offers correspondent accounts to other \par\pard\qj \li2205\ri939\sb8\sl-420\slmult0\fi 700 \up0 \expndtw-4\charscalex100 foreign banks (nested accounts) and, if so, to conduct appropriate due diligence; and \up0 \expndtw-5\charscalex100 (iii) \up0 \expndtw-4\charscalex100 identify the owners of such foreign bank if its shares are not publicly traded. \par\pard\qj \li2205\ri914\sb252\sl-406\slmult0 \up0 \ expndtw0\charscalex103 Section 313 of the PATRIOT Act prohibits US banks from ma intaining correspondent \line \up0 \expndtw-1\charscalex100 accounts for foreign shell banks and requires banks to take reasonable measures to ensure \line \up0 \expndtw-2\charscalex100 that correspondent accounts for other foreign banks ar e not being used indirectly by a shell \line \up0 \expndtw-2\charscalex100 bank, a bank which does not have a physical presence in any country. \ul0\super\cf8\f 9\fs23 75\ul0\nosupersub\cf1\f2\fs23 It appears that the \par\pard\qj \li2205\s b0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\ri1 058\sb168\sl-220\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\u l0\super\cf9\f10\fs18 74\ul0\nosupersub\cf10\f11\fs19 Department of the Treasur y, \u8216?Financial Crimes Enforcement Network: Anti-Money Laundering Programs: \line \up0 \expndtw-2\charscalex100 Special Due Diligence Programs for Certain F oreign Accounts; Final Rule and Proposed Rule (2006), 496. \line \up0 \expndtw-2 \charscalex100 <{\field{\*\fldinst {HYPERLINK "http://www.fincen.gov/finalrule01 042006.pdf/" }}{\fldrslt {\ul0\nosupersub\cf29\f30\fs19\ul www.fincen.gov/finalr ule01042006.pdf}}}\ul0\nosupersub\cf10\f11\fs19 > at 10 April 2007. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs1 8 75\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 The USA PATRIOT Act\ul0\nosupersub\cf10\f11\fs19 , s 313. \par\pard\ql \li10449\sb15\sl-251\slm ult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 240 {\shp {\*\shpinst\shpleft2205\shptop13480\shpright5006\shpbottom13500\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz179\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g250}{\bkmkend Pg250}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i917\sb249\sl-400\slmult0 \up0 \expndtw0\charscalex105 \ul0\nosupersub\cf1\f2\fs 23 first line of enforcement of the Act was the direction to the US financial in stitutions to \up0 \expndtw0\charscalex102 terminate any correspondent banking r elationship with foreign banks that fails to comply \up0 \expndtw0\charscalex102 with the US laws.\ul0\super\cf8\f9\fs23 76 \par\pard\qj \li2205\ri913\sb278\sl403\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 Furthermor e, section 319 of the PATRIOT Act permits the US authorities to seize a foreign \line \up0 \expndtw-3\charscalex100 bank\u8217?s inter-bank account to reach tai nted money on deposit in the foreign bank outside the \line \up0 \expndtw-3\char

scalex100 US.\ul0\super\cf8\f9\fs23 77\ul0\nosupersub\cf1\f2\fs23 This means th at a Malaysian bank maintaining a correspondent account at a US bank \line \up0 \expndtw-4\charscalex100 may be at risk of having funds seized from that account if a person deposits funds subject to \line \up0 \expndtw-3\charscalex100 a sei zure order under the US legislation. This can be regarded as a powerful tool for the US \line \up0 \expndtw0\charscalex100 law enforcement to combat money laund ering and terrorist financing at the international \line \up0 \expndtw-1\charsca lex100 level. \par\pard\qj \li2205\ri914\sb280\sl-400\slmult0 \up0 \expndtw-1\ch arscalex100 It appears that the anti-money laundering measures under the PATRIOT Act pose serious \up0 \expndtw-4\charscalex100 challenges for correspondent ban king arrangements. It will affect not only the US banks but \up0 \expndtw0\chars calex103 also any foreign bank that establishes correspondent banking relationsh ip with the US \up0 \expndtw-3\charscalex100 banks. Therefore, Malaysian banks n eed to be aware of the provisions of the PATRIOT Act \up0 \expndtw-4\charscalex1 00 especially when they are doing business with the US banks. \par\pard\qj \li22 05\ri916\sb277\sl-404\slmult0 \up0 \expndtw-3\charscalex100 It has been argued t hat the AML/CTF laws have placed a serious obstacle to correspondent \up0 \expnd tw0\charscalex109 banking relationships. The laws have made it more difficult fo r banks to maintain \up0 \expndtw-2\charscalex100 correspondent banking relation ship with foreign banks. Banks are now under greater legal \up0 \expndtw0\charsc alex100 requirements to conduct enhance due diligence reviews of their foreign b ank customers, \up0 \expndtw0\charscalex100 including obtaining information on t he foreign bank\u8217?s management, finances, reputation, \up0 \expndtw-1\charsc alex100 regulatory environment and AML/CTF measures. \par\pard\qj \li2205\ri915\ sb255\sl-406\slmult0\fi0 \up0 \expndtw-3\charscalex100 As the result of the stri ngent rules, there is evidence that some major banks elsewhere have \line \up0 \ expndtw0\charscalex102 reduced their overseas customers and correspondent bankin g relationships.\ul0\super\cf8\f9\fs23 78\ul0\nosupersub\cf1\f2\fs23 However, \ line \up0 \expndtw-2\charscalex100 since the AML/CTF laws have only been recentl y implemented, it remains to be seen how \line \up0 \expndtw-2\charscalex100 Mal aysian banks will cope with this changing compliance environment. At this stage, it is \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\sl mult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb216\sl-218\sl mult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs 18 76\ul0\nosupersub\cf10\f11\fs19 B Metzger, above n 74, 226. \par\pard\ql \li2 205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 77\ ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 The USA PATRIOT Act\ ul0\nosupersub\cf10\f11\fs19 , s319. \par\pard\qj \li2205\ri944\sb1\sl-220\slmul t0 \up0 \expndtw0\charscalex100 \ul0\super\cf9\f10\fs18 78\ul0\nosupersub\cf10\f 11\fs19 R Barry Johnston and Oana M Nedelescu, \u8216?The Impact of Terrorism o n Financial Markets\u8217? (2006) 13(1) \up0 \expndtw-1\charscalex100 \ul0\nosup ersub\cf11\f12\fs19 Journal of Financial Crime\ul0\nosupersub\cf10\f11\fs19 7, 22. \par\pard\ql \li10449\sb14\sl-252\slmult0 \up0 \expndtw-3\charscalex100 \ul0 \nosupersub\cf1\f2\fs23 241 {\shp {\*\shpinst\shpleft2205\shptop13480\shpright5006\shpbottom13500\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz164\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g251}{\bkmkend Pg251}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i918\sb249\sl-400\slmult0 \up0 \expndtw0\charscalex105 \ul0\nosupersub\cf1\f2\fs 23 vital for FIU to work with banks to address and tackle any problems faced by

banks in \up0 \expndtw-3\charscalex100 complying with the correspondent banking provisions. \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb129\sl -264\slmult0\tx2906 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf4\f5\fs23 6. 4 \tab \up0 \expndtw-3\charscalex100 Liability of Bank as Constructive Trustee \ par\pard\qj \li2205\sb0\sl-405\slmult0 \par\pard\qj\li2205\ri914\sb75\sl-405\slm ult0 \up0 \expndtw0\charscalex109 \ul0\nosupersub\cf1\f2\fs23 The principal focu s of anti-money laundering legislation is to ensure that regulated \up0 \expndtw -1\charscalex100 institutions, including banks have put in place effective antimoney laundering systems and \up0 \expndtw0\charscalex107 controls in order to r educe opportunities for money laundering and to provide for the \up0 \expndtw0\c harscalex100 forfeiture of the profits of crime. The legislation does not seek t o compensate the victim of \up0 \expndtw0\charscalex100 criminal activity but to take away the proceeds of the criminal activity. \par\pard\qj \li2205\ri913\sb2 55\sl-405\slmult0 \up0 \expndtw0\charscalex102 By contrast, under civil law, a v ictim of crime may have a claim against those who have \up0 \expndtw0\charscalex 104 become involved in or provided assistance for money laundering. Such a claim may be \up0 \expndtw0\charscalex102 attractive particularly in situations where the wrongdoer cannot be found, or is unable to \up0 \expndtw0\charscalex100 com pensate the victim. Bankers should therefore be prepared for the possibility of a civil \up0 \expndtw0\charscalex100 claim, if they engage in money laundering. \par\pard\qj \li2205\ri914\sb280\sl-400\slmult0 \up0 \expndtw0\charscalex104 The re are established legal principles that can be used to recover money or propert y. In \up0 \expndtw-1\charscalex100 particular, a victim may have claims against third parties involved in money laundering for \up0 \expndtw0\charscalex105 con structive trusteeship; money had and received; and tracing in equity or conspira cy. \up0 \expndtw0\charscalex102 However, the liability as constructive trustee is much more directly relevant for banks in \up0 \expndtw0\charscalex102 the mon ey laundering context.\ul0\super\cf8\f9\fs23 79 \par\pard\qj \li2205\ri914\sb279 \sl-402\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf1\f2\fs23 This s ection aims to examine a bank\u8217?s liability to a victim of crime as construc tive trustee \line \up0 \expndtw0\charscalex100 for the money they hold followin g a suspicious transactions report made to the relevant \line \up0 \expndtw0\cha rscalex102 authorities under the anti-money laundering legislation. Before exami ning this issue, it \line \up0 \expndtw-4\charscalex100 would be worthwhile to e xamine the nature of a constructive trust and when a person would \line \up0 \ex pndtw0\charscalex100 be regarded as a constructive trustee. In examining the lia bility of a bank as constructive \line \up0 \expndtw-1\charscalex100 trustee in the context of money laundering, the main issue is whether suspicion of money \l ine \up0 \expndtw-2\charscalex100 laundering activities suffices to make the ban k liable as a constructive trustee to the victim \line \up0 \expndtw-2\charscale x100 of fraud. This section will look into this issue and will analyse it based on the Malaysian \par\pard\qj \li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0 \sl-220\slmult0 \par\pard\qj\li2205\ri939\sb9\sl-220\slmult0 \up0 \expndtw0\char scalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 79\ul0\nosupersub\cf10\ f11\fs19 M Brindle, \u8216?The Liabilities of Financial Intermediaries and Thei r Advisers for Handling the Proceeds of \up0 \expndtw-1\charscalex100 Crime\u821 7? (2002) 9(3) \ul0\nosupersub\cf11\f12\fs19 Journal of Financial Crime\ul0\nosu persub\cf10\f11\fs19 227. \par\pard\ql \li10449\sb14\sl-252\slmult0 \up0 \expnd tw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 242 {\shp {\*\shpinst\shpleft2205\shptop13928\shpright5006\shpbottom13948\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz175\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}}

}}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g252}{\bkmkend Pg252}\par\pard\qj \li2205\sb0\sl-404\slmult0 \par\pard\qj\li2205 \sb0\sl-404\slmult0 \par\pard\qj\li2205\sb0\sl-404\slmult0 \par\pard\qj\li2205\r i915\sb234\sl-404\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs 23 AML laws. Since the laws have only been recently introduced, there is no Mala ysian case \line \up0 \expndtw0\charscalex102 law that has dealt with this issue . As such, we will have to resort to English decisions for \line \up0 \expndtw0\ charscalex102 guidance. By virtue of section 3 of the Malaysian Civil Law Act 19 56, where there is no \line \up0 \expndtw0\charscalex114 written law in force, t he court will apply the common law and rules of equity as \line \up0 \expndtw-1\ charscalex100 administered in England. In the event of a conflict between common law and equity, equity \line \up0 \expndtw-2\charscalex100 will prevail.\ul0\su per\cf8\f9\fs23 80 \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\s b248\sl-264\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf4\f5\fs23 6. 4.1 Constructive Trusts and Constructive Trustee \par\pard\qj \li2205\sb0\sl-4 10\slmult0 \par\pard\qj\li2205\ri915\sb6\sl-410\slmult0 \up0 \expndtw-2\charscal ex100 \ul0\nosupersub\cf1\f2\fs23 Constructive trust arises by operation of equi table principles of law rather than as a result of \up0 \expndtw0\charscalex102 the express intention of the parties. According to Low Hop Bing J in the Malaysi an case, \up0 \expndtw0\charscalex102 \ul0\nosupersub\cf7\f8\fs23 Vohrah-Merican Sdn Bhd v Gombak Land Sdn Bhd\ul0\nosupersub\cf1\f2\fs23 [2006] 1 LNS 193, \pa r\pard\qj \li2731\ri1457\sb4\sl-370\slmult0 \up0 \expndtw0\charscalex100 \ul0\no supersub\cf25\f26\fs21 \u8230? [a] constructive trust is a trust not created by a settler but artificially imposed by \up0 \expndtw-2\charscalex100 equity on a person who has control of property where it would be contrary to equitable \up0 \expndtw-3\charscalex100 principles for such a person to assert beneficial owner ship. \par\pard\qj \li2205\ri765\sb266\sl-400\slmult0 \up0 \expndtw-2\charscalex 100 \ul0\nosupersub\cf1\f2\fs23 A constructive trust is a trust which is imposed by operation of law rather than by voluntary \up0 \expndtw-2\charscalex100 sett lement by the settler. It describes a situation where the defendant has not been expressly \up0 \expndtw-2\charscalex100 appointed as a trustee but has assumed the role of a trustee. This term also encompasses one \up0 \expndtw-1\charscalex 100 who has acquired property by a lawful transaction in circumstances where he or she knows \up0 \expndtw-2\charscalex100 another is entitled beneficially.\ul0 \super\cf8\f9\fs23 81 \par\pard\qj \li2205\ri914\sb280\sl-400\slmult0 \up0 \expn dtw-1\charscalex100 \ul0\nosupersub\cf1\f2\fs23 According to Ungoed-Thomas J in \ul0\nosupersub\cf7\f8\fs23 Selangor United Rubber Estates Ltd v Cradock\ul0\nos upersub\cf1\f2\fs23 (No 3) \line \up0 \expndtw0\charscalex100 [1968] 1 WLR 1555 , a constructive trustee is nothing more than a formula for equitable \line \up0 \expndtw0\charscalex102 relief. The court of equity says that the defendant sha ll be liable in equity, as though he \line \up0 \expndtw0\charscalex104 were a t rustee. He is made liable in equity as trustee by the imposition of the court of \line \up0 \expndtw-5\charscalex100 equity. \par\pard\ql \li2205\sb0\sl-218\slm ult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmul t0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb1\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super \cf9\f10\fs19\ul0\super\cf9\f10\fs18 80\ul0\nosupersub\cf10\f11\fs19 Section 3( 2) of the Civil Law Act 1956 provides: \par\pard\qj \li2205\ri1314\sb1\sl-220\sl mult0 \up0 \expndtw0\charscalex100 \u8216?Subject to the express provisions of t his Act or any other written law in force in Malaysia or any part \up0 \expndtw0 \charscalex105 thereof, in the event of conflict or variance between the common law and the rules of equity with \up0 \expndtw-2\charscalex100 reference to the same matter, the rules of equity shall prevail.\u8217? \par\pard\qj \li2205\ri94 6\sb0\sl-220\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 81\ul 0\nosupersub\cf10\f11\fs19 Margaret C Hemsworth, \u8216?Constructive Trust and Constructive Trustee-What\u8217?s in a Name\u8217? (2000) 19 \ul0\nosupersub\cf1 1\f12\fs19 Civil \up0 \expndtw-2\charscalex100 Justice Quarterly\ul0\nosupersub\ cf10\f11\fs19 156. \par\pard\ql \li10449\sb14\sl-252\slmult0 \up0 \expndtw-3\ch arscalex100 \ul0\nosupersub\cf1\f2\fs23 243

{\shp {\*\shpinst\shpleft2205\shptop13033\shpright5006\shpbottom13053\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz168\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g253}{\bkmkend Pg253}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i766\sb249\sl-400\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf1\f2\f s23 In \ul0\nosupersub\cf7\f8\fs23 Paragon Finance plc v D. B. Thakerar & Co \ul 0\nosupersub\cf1\f2\fs23 [1999] 1 All E.R. 400, Millet LJ said at page \line \up 0 \expndtw-2\charscalex100 409: \par\pard\qj \li2731\ri780\sb285\sl-370\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf13\f14\fs21 Regrettably, however , the expressions \u8220?constructive trust\u8221? and \u8220?constructive trust ee\u8221? have been \line \up0 \expndtw-3\charscalex100 used by equity lawyers t o describe two entirely different situations. The first covers those cases \line \up0 \expndtw0\charscalex106 already mentioned, where the defendant, though not expressly appointed as trustee, has \line \up0 \expndtw-2\charscalex100 assumed the duties of a trustee by a lawful transaction which was independent of and pr eceded \line \up0 \expndtw-1\charscalex100 the breach of trust and is not impeac hed by the plaintiff. The second covers those cases where \line \up0 \expndtw0\c harscalex108 the trust obligation arises as a direct consequence of the unlawful transaction which is \line \up0 \expndtw-4\charscalex100 impeached by the plain tiff. \par\pard\qj \li2205\ri911\sb265\sl-401\slmult0\fi0 \up0 \expndtw0\charsca lex104 \ul0\nosupersub\cf1\f2\fs23 Therefore, the expression \u8216?constructive trustee\u8217? is used in two different senses. In one \line \up0 \expndtw-3\ch arscalex100 sense, it is referring to the trustee of a constructive trust where there is a trust and its trustee \line \up0 \expndtw-2\charscalex100 is a genuin e trustee.\ul0\super\cf8\f9\fs23 82\ul0\nosupersub\cf1\f2\fs23 In the other sen se, it is referring to the circumstances when a person \line \up0 \expndtw-2\cha rscalex100 is accountable in equity as he or she was a trustee. It arises when a defendant is implicated \line \up0 \expndtw0\charscalex109 in fraud. For the pu rpose of this discussion, when we say that a bank is liable as a \line \up0 \exp ndtw-2\charscalex100 constructive trustee in the money laundering context, it me ans that the bank is accountable \line \up0 \expndtw-2\charscalex100 in equity a s though it were a trustee although there is no real trust.\ul0\super\cf8\f9\fs2 3 83\ul0\nosupersub\cf1\f2\fs23 Therefore, it does not \line \up0 \expndtw0\cha rscalex102 refer to the liability of a bank as a trustee of a constructive trust . At this point, the main \line \up0 \expndtw0\charscalex104 issue to be examine d is whether a bank could be liable as a constructive trustee to the \line \up0 \expndtw0\charscalex100 victim of fraud when a bank discloses its suspicion of m oney laundering to the relevant \line \up0 \expndtw0\charscalex103 authorities. However, before examining this issue in details, it would be worthwhile to \line \up0 \expndtw-4\charscalex100 mention circumstances where a stranger could be h eld liable as a constructive trustee. \par\pard\qj \li2205\ri915\sb396\sl-405\sl mult0 \up0 \expndtw-2\charscalex100 In the Malaysian case of \ul0\nosupersub\cf7 \f8\fs23 Lian Keow Sdn Bhd v Chelliah Paramjothy & Anor\ul0\nosupersub\cf1\f2\fs 23 [1988] 1 CLJ \line \up0 \expndtw-2\charscalex100 (Rep) 729, the court held t hat a stranger may be liable as a constructive trustee if he or she \line \up0 \ expndtw0\charscalex105 dishonestly allows himself or herself to be used as an in strument of a breach of trust. \line \up0 \expndtw-3\charscalex100 Furthermore, in \ul0\nosupersub\cf7\f8\fs23 Pharmmalaysia Bhd v Dinesh Kumar Jashbai Nagjibha Patel & Ors,\ul0\super\cf8\f9\fs23 84\ul0\nosupersub\cf7\f8\fs23 \ul0\nosupers ub\cf1\f2\fs23 the \line \up0 \expndtw-3\charscalex100 court held that the defen dants became, in law, constructive trustees for the plaintiff in \par\pard\ql \l

i2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2 205\sb194\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\u l0\super\cf9\f10\fs18 82\ul0\nosupersub\cf10\f11\fs19 Lionel Smith, \u8216?Cons tructive Trusts and Constructive Trustees\u8217? (1999) 58(2) \ul0\nosupersub\cf 11\f12\fs19 Cambridge Law Journal\ul0\nosupersub\cf10\f11\fs19 301. \par\pard\q j \li2205\ri946\sb1\sl-220\slmult0 \up0 \expndtw0\charscalex100 \ul0\super\cf9\f 10\fs18 83\ul0\nosupersub\cf10\f11\fs19 In \ul0\nosupersub\cf11\f12\fs19 Selang or United Rubber Estates Ltd v Cradock\ul0\nosupersub\cf10\f11\fs19 (No 3) [196 8] 1 WLR 1555, Ungoed-Thomas J also \line \up0 \expndtw-2\charscalex100 noted th at the words \u8216?accountable as constructive trustee\u8217? should be substit ute with the words \u8216?accountable in \line \up0 \expndtw-3\charscalex100 equ ity.\u8217? \par\pard\li2205\sb20\sl-218\slmult0\fi0 \up0 \expndtw-2\charscalex1 00 \ul0\super\cf9\f10\fs18 84\ul0\nosupersub\cf10\f11\fs19 [2004] 7 CLJ 465 at p502.\par\pard\li2205\sb3\sl-264\slmult0\fi8243 \up0 \expndtw-3\charscalex100 \u l0\nosupersub\cf1\f2\fs23 244 {\shp {\*\shpinst\shpleft2205\shptop13256\shpright5006\shpbottom13276\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz199\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g254}{\bkmkend Pg254}\par\pard\qj \li2205\sb0\sl-403\slmult0 \par\pard\qj\li2205 \sb0\sl-403\slmult0 \par\pard\qj\li2205\sb0\sl-403\slmult0 \par\pard\qj\li2205\r i912\sb238\sl-403\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf1\ f2\fs23 relation to the misapplied funds. The plaintiff applied an order for inj unction to restraint the \line \up0 \expndtw0\charscalex105 defendants from di ssipating their assets. The plaintiff carried on the business of \line \up0 \expndtw0\charscalex104 manufacturing and distributing pharmaceutical produ cts and was under receivership. It \line \up0 \expndtw0\charscalex100 alleged th at the first defendant was in breach of various fiduciary duties and that the 2\ ul0\super\cf8\f9\fs23 nd\ul0\nosupersub\cf1\f2\fs23 to \line \up0 \expndtw0\cha rscalex104 the 14\ul0\super\cf8\f9\fs23 th\ul0\nosupersub\cf1\f2\fs23 defendant s dishonestly assisted the 1\ul0\super\cf8\f9\fs23 st\ul0\nosupersub\cf1\f2\fs23 defendant to breach his fiduciary duties. \line \up0 \expndtw-2\charscalex100 Abdul Malik Ishak J stated at page 499 the circumstances where a person may be l iable as a \line \up0 \expndtw-3\charscalex100 constructive trustee: \par\pard\q j \li2731\ri1456\sb5\sl-370\slmult0\fi0 \up0 \expndtw-3\charscalex100 \ul0\nosup ersub\cf13\f14\fs21 That the 1\ul0\super\cf14\f15\fs20 st\ul0\nosupersub\cf13\f1 4\fs21 defendant as the managing director of the plaintiff in breach of his fid uciary \up0 \expndtw0\charscalex103 duties misapplied the funds of the plaintiff so that those funds would come into the \up0 \expndtw0\charscalex103 hands of s ome strangers to the trust who received them with the knowledge\u8230?.The \up0 \expndtw0\charscalex109 strangers became, in law, constructive trustee for the p laintiff in relation to the \up0 \expndtw-1\charscalex100 misapplied funds. In t he context of the present case, the \u8220?strangers\u8221? would refer to the \ up0 \expndtw-2\charscalex100 2\ul0\super\cf14\f15\fs20 nd\ul0\nosupersub\cf13\f1 4\fs21 defendant right up to the 6\ul0\super\cf14\f15\fs20 th\ul0\nosupersub\cf 13\f14\fs21 defendant as well as the 9\ul0\super\cf14\f15\fs20 th\ul0\nosupersu b\cf13\f14\fs21 defendant together with the \up0 \expndtw-4\charscalex100 13\ul 0\super\cf14\f15\fs20 th\ul0\nosupersub\cf13\f14\fs21 and 14\ul0\super\cf14\f15 \fs20 th\ul0\nosupersub\cf13\f14\fs21 defendants and they must be held accounta ble. \par\pard\qj \li2205\ri915\sb383\sl-403\slmult0 \up0 \expndtw0\charscalex10 0 \ul0\nosupersub\cf1\f2\fs23 The circumstances in which a stranger to a trust m ay become accountable for a breach of \line \up0 \expndtw-2\charscalex100 trust

may be traced back to the speech of Lord Selborne in\ul0\nosupersub\cf7\f8\fs23 Barnes v. Addy \ul0\nosupersub\cf1\f2\fs23 (1874) LR 9 Ch \line \up0 \expndtw0\ charscalex100 App 244 where, his Lordship identified two classes of persons who are liable: those who \line \up0 \expndtw-1\charscalex100 'receive and become ch argeable with some part of the trust property' and those who 'assist \line \up0 \expndtw-2\charscalex100 with knowledge in a dishonest and fraudulent design on the part of the trustees'. These two \line \up0 \expndtw0\charscalex100 categori es of liability subsequently became identified as 'knowing receipt' and 'knowing \line \up0 \expndtw0\charscalex100 assistance' respectively. \par\pard\ql \li22 64\sb0\sl-264\slmult0 \par\pard\ql\li2264\sb248\sl-264\slmult0 \up0 \expndtw-3\c harscalex100 In \ul0\nosupersub\cf7\f8\fs23 Majlis Agama Islam Negeri Johor v Un ited Merchant Finance Berhad and Anor\ul0\nosupersub\cf1\f2\fs23 [1995] \par\pa rd\qj \li2205\ri915\sb8\sl-420\slmult0 \up0 \expndtw-1\charscalex100 1 LNS 127, Abdul Malik Ishak J elaborated on the differences between \u8216?knowing receipt \u8217? \up0 \expndtw-2\charscalex100 and \u8216?knowing assistance\u8217? as fo llows: \par\pard\qj \li2731\ri1456\sb2\sl-370\slmult0 \up0 \expndtw0\charscalex1 05 \ul0\nosupersub\cf13\f14\fs21 The acts involved in knowing assistance may be any act which assists the trustee, \line \up0 \expndtw-2\charscalex100 except th e act of receiving the funds. The mental state required for knowing assistance \ line \up0 \expndtw-3\charscalex100 is something like dishonesty, morally reprehe nsible behaviour, lack of probity to such a \line \up0 \expndtw-1\charscalex100 degree that the bank might be said to have been a party to the dishonesty. On th e other \line \up0 \expndtw-3\charscalex100 hand, knowing receipt does not requi re this degree of fault, but requires lack of probity. \line \up0 \expndtw0\char scalex106 In knowing receipt cases the bank is liable to account only for the fu nds which it \line \up0 \expndtw0\charscalex106 receives or deals with in breach of the trust, whilst in the more serious knowing \par\pard\ql \li10449\sb78\sl264\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 245 \par\p ard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart Pg255}{\b kmkend Pg255}\par\pard\qj \li2731\sb0\sl-380\slmult0 \par\pard\qj\li2731\sb0\sl380\slmult0 \par\pard\qj\li2731\sb0\sl-380\slmult0 \par\pard\qj\li2731\ri1457\sb 306\sl-380\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf13\f14\fs21 a ssistance cases, the bank\u8217?s liability extends to all the losses to the tru st fund caused by \up0 \expndtw-3\charscalex100 the dishonest trustee, whether o r not the funds came into the hands of the bank. \par\pard\qj \li2205\ri1441\sb3 84\sl-400\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf1\f2\fs23 From this case, it is clear that one of the main difference between these two types of \up0 \expndtw-4\charscalex100 liability concerns whether or not an element of dishonesty is required. \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li 2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb5\sl-264\slmult0 \up0 \expndtw-5\c harscalex100 \ul0\nosupersub\cf4\f5\fs23 a) Knowing Receipt \par\pard\qj \li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\ri915\sb24\sl-400\slmult0 \up0 \expndtw4\charscalex100 \ul0\nosupersub\cf1\f2\fs23 For the bank to be liable, it must b e shown that the bank has \u8216?received\u8217? trust property, and it \line \u p0 \expndtw-1\charscalex100 must be shown that the bank knew that the trust prop erty it had received had come to it in \line \up0 \expndtw-3\charscalex100 breac h of trust. It has been established that for the \u8216?knowing receipt\u8217? l iability, knowledge is \line \up0 \expndtw-2\charscalex100 essential element. Ac cording to Peter Gibson J in \ul0\nosupersub\cf7\f8\fs23 Baden v Societe General e\ul0\nosupersub\cf1\f2\fs23 [1983] BCLC \line \up0 \expndtw-2\charscalex100 32 5, knowledge for the purpose of knowing receipt can be divided into five categor ies: \par\pard\ql \li2906\sb133\sl-264\slmult0 \up0 \expndtw-3\charscalex100 \u3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 actual knowledge ; \par\pard\ql \li2906\sb156\sl-264\slmult0 \up0 \expndtw-3\charscalex100 \u-391 3?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 wilfully shutting o nes eyes to the obvious; \par\pard\ql \li2906\ri917\sb44\sl-400\slmult0\tx3255 \ up0 \expndtw0\charscalex109 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub \cf1\f2\fs23 wilfully and recklessly failing to make such enquiries as an hone st and \line\tab \up0 \expndtw-5\charscalex100 reasonable man would make; \par\p ard\ql \li2906\ri916\sb20\sl-400\slmult0\tx3255 \up0 \expndtw0\charscalex100 \u-

3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 knowledge of cir cumstances which would indicate the facts to an honest and \line\tab \up0 \expnd tw-5\charscalex100 reasonable man; and \par\pard\ql \li2906\ri915\sb4\sl-420\slm ult0\tx3255 \up0 \expndtw0\charscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \u l0\nosupersub\cf1\f2\fs23 knowledge of circumstances which would give put an h onest and reasonable \line\tab \up0 \expndtw-5\charscalex100 man on enquiry. \pa r\pard\qj \li2205\ri913\sb397\sl-400\slmult0 \up0 \expndtw-2\charscalex100 Addit ionally, Scott LJ in \ul0\nosupersub\cf7\f8\fs23 Polly Peck International plc v Nadir\ul0\nosupersub\cf1\f2\fs23 (No 2) [1992] 4 All ER 769 \up0 \expndtw-2\cha rscalex100 stated that the Baden categories are not rigid categories with clear and precise boundaries. \up0 \expndtw0\charscalex100 One category may merge impe rceptibly with another. However, there has been sustained \up0 \expndtw-2\charsc alex100 debate as to the knowledge on the part of the recipient that ought to be required in order to \up0 \expndtw-3\charscalex100 be found guilty in knowing r eceipt. The question is whether it is constructive knowledge or \up0 \expndtw-4\ charscalex100 actual knowledge that is required. \par\pard\qj \li2205\sb0\sl-400 \slmult0 \par\pard\qj\li2205\ri915\sb20\sl-400\slmult0 \up0 \expndtw-1\charscale x100 In \ul0\nosupersub\cf7\f8\fs23 BCCI (Overseas) Ltd v Akindele\ul0\nosupersu b\cf1\f2\fs23 [2001] Ch 437, the Court of Appeal rejected previous \line \up0 \ expndtw-2\charscalex100 attempts to categorise the different degree of knowledge which a recipient might have and \line \up0 \expndtw-2\charscalex100 instead pr eferred a more fluid test based upon unconscionability. Nourse LJ noted that the \par\pard\ql \li10449\sb13\sl-264\slmult0 \up0 \expndtw-3\charscalex100 246 \pa r\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart Pg256} {\bkmkend Pg256}\par\pard\qj \li2205\sb0\sl-405\slmult0 \par\pard\qj\li2205\sb0\ sl-405\slmult0 \par\pard\qj\li2205\sb0\sl-405\slmult0 \par\pard\qj\li2205\ri915\ sb230\sl-405\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf1\f2\fs 23 relevant question was whether the recipient\u8217?s state of knowledge was su ch that it would in \up0 \expndtw-1\charscalex100 all circumstances be unconscio nable for him to retain the benefit of the property received. \up0 \expndtw0\cha rscalex100 The Court of Appeal also confirmed that it was not necessary to prove dishonesty on the \up0 \expndtw0\charscalex100 part of the recipient.\ul0\super \cf8\f9\fs23 85\ul0\nosupersub\cf1\f2\fs23 Indeed, this approach is sensible an d has been widely regarded as \up0 \expndtw0\charscalex100 clarifying this area of the law. \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb248\sl -264\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf4\f5\fs23 b) Knowin g / Dishonest Assistance \par\pard\qj \li2205\sb0\sl-402\slmult0 \par\pard\qj\li 2205\ri913\sb20\sl-402\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\ f2\fs23 Generally, this type of liability refers to the person who assisted in t he breach of trust in \line \up0 \expndtw0\charscalex105 such a way as to become liable to the claimant for the loss. The decision of the Privy \line \up0 \expn dtw-2\charscalex100 Council in \ul0\nosupersub\cf7\f8\fs23 Royal Brunei Airlines Sdn Bhd v Tan\ul0\nosupersub\cf1\f2\fs23 [1995] 2 AC 378\ul0\nosupersub\cf7\f8 \fs23 \ul0\nosupersub\cf1\f2\fs23 replaced the principle of \line \up0 \expndtw 0\charscalex102 \u8216?knowing assistance\u8217? with \u8216?dishonest assistanc e\u8217? reflecting the need in all cases for the \line \up0 \expndtw0\charscale x100 requirement of dishonesty to be satisfied.\ul0\super\cf8\f9\fs23 86\ul0\nos upersub\cf1\f2\fs23 In this case, the court made it clear that what \line \up0 \expndtw0\charscalex102 matters is the state of mind of the accessory and not th e person who has committed the \line \up0 \expndtw0\charscalex102 breach of fidu ciary duty. Therefore, to be liable as a constructive trustee, the accessory \li ne \up0 \expndtw-5\charscalex100 must be dishonest. \par\pard\qj \li2205\ri915\s b400\sl-400\slmult0 \up0 \expndtw0\charscalex103 Following the \ul0\nosupersub\c f7\f8\fs23 Royal Brunei \ul0\nosupersub\cf1\f2\fs23 case, the elements for disho nest assistant\u8217?s liability are as \line \up0 \expndtw-5\charscalex100 foll ows: \par\pard\ql \li2906\sb133\sl-264\slmult0 \up0 \expndtw-3\charscalex100 \u3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 the existence of a trust or other fiduciary relationship; \par\pard\ql \li2906\sb156\sl-264\slmu lt0 \up0 \expndtw-3\charscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosu persub\cf1\f2\fs23 a breach of trust or fiduciary duty, causing or resulting i

n loss; \par\pard\qj \li2906\ri1226\sb28\sl-420\slmult0 \up0 \expndtw-2\charscal ex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 assista nce in that breach of trust or fiduciary obligation by the defendant; and \up0 \ expndtw-3\charscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1 \f2\fs23 dishonesty on the part of the defendant. \par\pard\qj \li2205\sb0\sl400\slmult0 \par\pard\qj\li2205\ri912\sb17\sl-400\slmult0 \up0 \expndtw-3\charsc alex100 In the \ul0\nosupersub\cf7\f8\fs23 Royal Brunei\ul0\nosupersub\cf1\f2\fs 23 case, the plaintiff appointed a company of which the defendant was the \line \up0 \expndtw-2\charscalex100 managing director and principal shareholder, as i ts agent in a particular area for the sale of \line \up0 \expndtw-3\charscalex10 0 passenger and cargo transportation. Under the agreement, the company was to ho ld in trust \line \up0 \expndtw-3\charscalex100 for the plaintiff money received from such sale until it was accounted for by the company \par\pard\qj \li2205\s b0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0 \sl-220\slmult0 \par\pard\qj\li2205\ri940\sb29\sl-220\slmult0\fi0 \up0 \expndtw0 \charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 85\ul0\nosupersub\ cf10\f11\fs19 Nikunj Kiri, \u8216?Recipient and Accessory Liability-Where Do We Stand Now?\u8217? (2006) 21(11) \ul0\nosupersub\cf11\f12\fs19 Journal of \up0 \ expndtw0\charscalex100 International Banking Law and Regulation \ul0\nosupersub\ cf10\f11\fs19 611, 615. \par\pard\qj \li2205\ri935\sb0\sl-220\slmult0 \up0 \expn dtw-3\charscalex100 \ul0\super\cf9\f10\fs18 86\ul0\nosupersub\cf10\f11\fs19 Luc y Tagoe, \u8216?An Analysis of Bank\u8217?s Liability for the Deposit of Proceed s of Criminal Activities in the UK\u8217? \up0 \expndtw-4\charscalex100 (2003) 4 (4) \ul0\nosupersub\cf11\f12\fs19 Journal of International Banking Regulation\ul 0\nosupersub\cf10\f11\fs19 352, 360. \par\pard\ql \li10449\sb14\sl-252\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 247 {\shp {\*\shpinst\shpleft2205\shptop13480\shpright5006\shpbottom13500\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz230\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g257}{\bkmkend Pg257}\par\pard\qj \li2205\sb0\sl-403\slmult0 \par\pard\qj\li2205 \sb0\sl-403\slmult0 \par\pard\qj\li2205\sb0\sl-403\slmult0 \par\pard\qj\li2205\r i914\sb238\sl-403\slmult0 \up0 \expndtw0\charscalex103 \ul0\nosupersub\cf1\f2\fs 23 to the plaintiff. With the defendant\u8217?s knowledge and assistance, the co mpany paid the \line \up0 \expndtw0\charscalex102 money into its current bank ac count instead of into a separate account, and in breach of \line \up0 \expndtw-1 \charscalex100 trust the company used that money for its own business purposes. The judge held that the \line \up0 \expndtw-1\charscalex100 defendant was liable as constructive trustee to pay that amount to the plaintiff. On appeal, \line \ up0 \expndtw0\charscalex108 the Court of Appeal of Brunei Darussalam reversed th at decision, holding that the \line \up0 \expndtw-1\charscalex100 defendant coul d not be so liable because it had not been established that the company was \lin e \up0 \expndtw0\charscalex102 guilty of fraud or dishonesty in relation to the money held in trust for the plaintiff. The \line \up0 \expndtw-1\charscalex100 p laintiff appealed to the Privy Council and in allowing the appeal, the Privy Cou ncil held \line \up0 \expndtw0\charscalex107 that where a third party dishonestl y assisted a trustee to commit a breach of trust or \line \up0 \expndtw0\charsca lex107 procured him to do so, the third party would be liable to the beneficiary for the loss \line \up0 \expndtw-4\charscalex100 occasioned by the breach of tr ust, even though the third party had received no trust property \line \up0 \expn dtw-4\charscalex100 and irrespective of whether the trustee had been dishonest o r fraudulent. \par\pard\qj \li2205\ri914\sb260\sl-400\slmult0\fi0 \up0 \expndtw-

2\charscalex100 Lord Nicholls in the \ul0\nosupersub\cf7\f8\fs23 Royal Brunei\u8 217?s\ul0\nosupersub\cf1\f2\fs23 case also explained the meaning of dishonesty at page \up0 \expndtw-3\charscalex100 389 as follows: \par\pard\qj \li2731\ri145 5\sb286\sl-369\slmult0\fi57 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf13\f 14\fs21 ... in the context of the accessory liability principle acting dishonest ly, or with a lack \line \up0 \expndtw-1\charscalex100 of probity, which is syn onymous, means simply not acting as an honest person would \line \up0 \expndtw0\ charscalex103 act in the circumstances. This is an objective standard. At first sight this may seem \line \up0 \expndtw-2\charscalex100 surprising. Honesty has a connotation of subjectivity, as distinct from the objectivity of \line \up0 \e xpndtw0\charscalex108 negligence. Honesty does indeed have a strong subjective e lement in that it is a \line \up0 \expndtw-2\charscalex100 description of a type of conduct assessed in the light of what a person actually knew at \line \up0 \ expndtw0\charscalex100 the time as distinct from what a reasonable person would have known or appreciated. \line \up0 \expndtw0\charscalex100 Further, honesty a nd its counterpart dishonesty are mostly concerned with advertent \line \up0 \ex pndtw-1\charscalex100 conduct and not inadvertent conduct. Carelessness is not d ishonesty, thus for the most \line \up0 \expndtw-2\charscalex100 part dishonesty is to be equated with conscious impropriety. However, these subjective \line \u p0 \expndtw0\charscalex108 characteristics of honesty do not mean that individua ls are free to set their own \line \up0 \expndtw-4\charscalex100 standards of ho nest in particular circumstances. \par\pard\qj \li2205\ri765\sb266\sl-400\slmult 0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf1\f2\fs23 Therefore, dishonest y means not acting as an honest person would in the circumstances. In \line \up0 \expndtw-2\charscalex100 the opinion of the court, knowledge is better avoided as a defining ingredient of dishonesty. \line \up0 \expndtw-2\charscalex100 Ther efore, the \ul0\nosupersub\cf7\f8\fs23 Baden\ul0\nosupersub\cf1\f2\fs23 categor isation of degree of knowledge is irrelevant in the \u8216?dishonest \par\pard\q l \li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \par\pard\ ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb41\sl-264\slmult0 \up0 \exp ndtw-3\charscalex100 248 \par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\ sb0\sl-240{\bkmkstart Pg258}{\bkmkend Pg258}\par\pard\qj \li2205\sb0\sl-400\slmu lt0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult 0 \par\pard\qj\li2205\ri766\sb249\sl-400\slmult0\fi0 \up0 \expndtw0\charscalex10 0 \ul0\nosupersub\cf1\f2\fs23 assistance\u8217? cases.\ul0\super\cf8\f9\fs23 87\ ul0\nosupersub\cf1\f2\fs23 It appears that an assessment of whether an act is d ishonest requires a \up0 \expndtw0\charscalex103 look at all the circumstances k nown to the third party at the time.\ul0\super\cf8\f9\fs23 88\ul0\nosupersub\cf1 \f2\fs23 It is notable that the \up0 \expndtw0\charscalex100 judgement of Lor d Nicholls was widely received as a welcome rationalisation and \up0 \e xpndtw-5\charscalex100 clarification of the test for dishonest assistance.\ul0\s uper\cf8\f9\fs23 89 \par\pard\qj \li2205\ri915\sb278\sl-403\slmult0 \up0 \expndt w-1\charscalex100 \ul0\nosupersub\cf1\f2\fs23 In \ul0\nosupersub\cf7\f8\fs23 Twi nsectra Ltd v Yardley\ul0\nosupersub\cf1\f2\fs23 [2002] 2 Ac 164, the court hel d that a person who assists in a \line \up0 \expndtw-2\charscalex100 breach of t rust will not be liable to the beneficiaries unless he acted dishonestly. Howeve r, \line \up0 \expndtw-3\charscalex100 the majority of their Lordships considere d that dishonesty is a standard which combines an \line \up0 \expndtw-2\charscal ex100 objective and a subjective test. As such, before there can be a finding of dishonesty it must \line \up0 \expndtw0\charscalex103 be established that the d efendant\u8217?s conduct was dishonest by the ordinary standards of \line \up0 \ expndtw0\charscalex105 reasonable and honest people and that he himself realised that by those standards his \line \up0 \expndtw-5\charscalex100 conduct was dis honest.\ul0\super\cf8\f9\fs23 90 \par\pard\qj \li2205\ri916\sb400\sl-400\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf1\f2\fs23 Recently, the Privy C ouncil revisited this standard in \ul0\nosupersub\cf7\f8\fs23 Barlow Clowes Inte rnational Ltd. v \line \up0 \expndtw0\charscalex100 Eurotrust International Ltd \up0 \expndtw0\charscalex106 \ul0\nosupersub\cf1\f2\fs23 [2005] UKPC 37; [2006] 1 All ER 333 where, although \par\pard\qj \li2205\ri915\sb19\sl-402\slmult0 \up0 \expndtw0\charscalex103 claiming to be applying \ul0\nosupersub\cf7\f8\fs23 Twi

nsectra\ul0\nosupersub\cf1\f2\fs23 , it has effectively altered the test of dish onesty by \up0 \expndtw-1\charscalex100 removing the second limb.\ul0\super\cf8\ f9\fs23 91\ul0\nosupersub\cf1\f2\fs23 As such the \ul0\nosupersub\cf7\f8\fs23 B arlow Clowes \ul0\nosupersub\cf1\f2\fs23 case is a desirable move back to \up0 \ expndtw0\charscalex103 the concept of dishonesty elucidated in the \ul0\nosupers ub\cf7\f8\fs23 Royal Brunei\ul0\nosupersub\cf1\f2\fs23 case where consciousness of \up0 \expndtw-1\charscalex100 wrongdoing is not relevant in determining the \u8216?dishonest assistance\u8217? liability. In this case, \up0 \expndtw-4\char scalex100 the Privy Council was asked to decide whether it was necessary to show that the respondent \up0 \expndtw0\charscalex100 was aware that, by normally ac ceptable standard, his conduct was dishonest. The Court \up0 \expndtw0\charscale x100 concluded that the standard by which the law determines whether it is disho nest remain \up0 \expndtw0\charscalex100 objective. It was thus irrelevant that there were no findings on the respondent subjective \up0 \expndtw0\charscalex100 opinions about his normal standards of honesty. \par\pard\ql \li2205\sb0\sl-218 \slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\s lmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slm ult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmul t0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb88\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\supe r\cf9\f10\fs19\ul0\super\cf9\f10\fs18 87\ul0\nosupersub\cf10\f11\fs19 \ul0\nosu persub\cf11\f12\fs19 Baden v Societe Generale\ul0\nosupersub\cf10\f11\fs19 [199 3] 1 WLR 509. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex 100 \ul0\super\cf9\f10\fs18 88\ul0\nosupersub\cf10\f11\fs19 Lucy Tagoe, above n 88, 359. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 89\ul0\nosupersub\cf10\f11\fs19 Nikunj Kiri, above n 87 , 615. \par\pard\qj \li2205\ri946\sb1\sl-220\slmult0 \up0 \expndtw-1\charscalex1 00 \ul0\super\cf9\f10\fs18 90\ul0\nosupersub\cf10\f11\fs19 M Conaglen and A Goy mour, \u8216?Dishonesty in the Context of Assistance- Again\u8217? (2006) 65(1) \ul0\nosupersub\cf11\f12\fs19 Cambridge \up0 \expndtw-2\charscalex100 Law Journa l \ul0\nosupersub\cf10\f11\fs19 20. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 91\ul0\nosupersub\cf10\f11\fs1 9 Ibid. \par\pard\ql \li10449\sb15\sl-251\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 249 {\shp {\*\shpinst\shpleft2205\shptop13033\shpright5006\shpbottom13053\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz212\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g259}{\bkmkend Pg259}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i916\sb249\sl-400\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs 23 This approach is to be welcomed and the Privy Council appears to have settled the law at \up0 \expndtw0\charscalex103 last.\ul0\super\cf8\f9\fs23 92\ul0\nosu persub\cf1\f2\fs23 It is clear now that the liability for dishonest assistance is to be judged against an \up0 \expndtw-3\charscalex100 objective standard of h onesty. \par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri916\sb20\s l-400\slmult0\fi0 \up0 \expndtw0\charscalex102 Recently, in \ul0\nosupersub\cf7\ f8\fs23 Abou-Rahmah v Abatcha,\ul0\super\cf16\f17\fs23 93\ul0\nosupersub\cf1\f2\ fs23 the court held that an accessory does not breach \up0 \expndtw0\charscalex 113 the standards of objective dishonestly if he or she has only general suspici ons of \up0 \expndtw0\charscalex102 impropriety in rendering assistance to suspe cted fraudsters. The Court also noted that the \up0 \expndtw0\charscalex108 foll

owing principles were relevant to the state of mind of the person alleged to hav e \up0 \expndtw-3\charscalex100 assisted in the breach of trust: \par\pard\ql \l i2906\ri916\sb296\sl-406\slmult0\tx3255\tx3255 \up0 \expndtw0\charscalex100 \u-3 913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 the person\u8217? s knowledge of the relevant transaction had to be such as to render \line\tab \u p0 \expndtw-4\charscalex100 his participation contrary to normally acceptable st andards of honest conduct; \up0 \expndtw-1\charscalex100 \u-3913?\ul0\nosupersub \cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 such a state of mind may have involv ed suspicions combined with a conscious \line\tab \up0 \expndtw-2\charscalex100 decision not to make enquiries; \par\pard\ql \li2906\ri915\sb19\sl-400\slmult0\t x3255\tx3255 \up0 \expndtw-1\charscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 it was not necessary to show that the person assis ting knew of the existence of \line\tab \up0 \expndtw0\charscalex102 the trust o r fiduciary relationship and/or that the transfer of funds involved a \line\tab \up0 \expndtw0\charscalex102 breach of that trust; \par\pard\ql \li2906\ri917\sb 20\sl-400\slmult0\tx3255 \up0 \expndtw0\charscalex100 \u-3913?\ul0\nosupersub\cf 6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 it was sufficient that the person assis ting had a clear suspicion that the money \line\tab \up0 \expndtw-1\charscalex10 0 was held in trust. \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205 \sb129\sl-264\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf4\f5\fs23 6.4.2 Constructive Trustee in the Context of Banker-Customer Relationship \par \pard\qj \li2205\sb0\sl-403\slmult0 \par\pard\qj\li2205\ri915\sb19\sl-403\slmult 0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf1\f2\fs23 A banker could be li able as a constructive trustee if it knowingly assists in the disposition \line \up0 \expndtw0\charscalex100 of money in breach of trust or if it knowingly rece ives the trust money in breach of trust. \line \up0 \expndtw-3\charscalex100 Thi s has been highlighted in \ul0\nosupersub\cf7\f8\fs23 Majlis Agama Islam Negeri Johor v United Merchant Finance \line \up0 \expndtw0\charscalex100 Berhad and An or \ul0\nosupersub\cf1\f2\fs23 [1995] 1 LNS 127. There, the plaintiff applied fo r summary judgement \line \up0 \expndtw0\charscalex104 against the defendant. Th e plaintiff had deposited one million ringgit by way of fixed \line \up0 \expndt w0\charscalex105 deposit with the defendant and was issued with two fixed deposi t receipts. The fixed \line \up0 \expndtw0\charscalex105 deposit receipts were i n the name of \ul0\nosupersub\cf7\f8\fs23 Pengerusi Jawatankuasa Zakat dan Fitra h\ul0\nosupersub\cf1\f2\fs23 .\ul0\super\cf8\f9\fs23 94\ul0\nosupersub\cf1\f2\fs 23 The \par\pard\qj \li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\ri946\sb209\ sl-220\slmult0\fi0 \up0 \expndtw-1\charscalex100 \ul0\super\cf9\f10\fs19\ul0\sup er\cf9\f10\fs18 92\ul0\nosupersub\cf10\f11\fs19 Rebecca Lee, \u8216?Dishonesty and Bad Faith after Barlow Clowes: Abou-Rahmah v Abacha\u8217? (2007) \ul0\nosu persub\cf11\f12\fs19 Journal of \up0 \expndtw-2\charscalex100 Business Law\ul0\n osupersub\cf10\f11\fs19 209. \par\pard\li2205\sb24\sl-218\slmult0\fi0 \up0 \exp ndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 93\ul0\nosupersub\cf10\f11\fs19 [2 006] EWCA Civ 1492; [2007] 1 Lloyd\u8217?s Rep. 115 (CA (Civ Div).\par\pard\li22 05\sb7\sl-218\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 94\ul0\nosupersub\cf10\f11\fs19 Means Chairman of Islamic Taxation System Commi ttee.\par\pard\li2205\sb114\sl-264\slmult0\fi8243 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 250 {\shp {\*\shpinst\shpleft2205\shptop13369\shpright5006\shpbottom13389\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz224\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g260}{\bkmkend Pg260}\par\pard\qj \li2205\sb0\sl-403\slmult0 \par\pard\qj\li2205

\sb0\sl-403\slmult0 \par\pard\qj\li2205\sb0\sl-403\slmult0 \par\pard\qj\li2205\r i914\sb238\sl-403\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\f s23 plaintiff subsequently demanded the refund of the fixed deposit, but the def endant failed to \up0 \expndtw0\charscalex102 comply. The plaintiff thereupon su ed the defendants for the deposited sum and interest \up0 \expndtw0\charscalex10 4 thereon, pleading that the defendants were liable to refund the money under th e fixed \up0 \expndtw-2\charscalex100 deposit receipts and alternatively, that t hey were liable as constructive trustee thereof. The \up0 \expndtw0\charscalex10 2 defendants filed their defence wherein they alleged that the fixed deposit rec eipts were \up0 \expndtw-2\charscalex100 issued without due authority or issued by way of fraud. Abdul Malik Ishak J observed that \up0 \expndtw-1\charscalex100 the principles of \u8216?knowing receipt\u8217? and \u8216?knowing assistance\u 8217? would come into play in the \up0 \expndtw0\charscalex107 context of a rela tionship between a banker and a customer. However, the court also \up0 \expndtw4\charscalex100 believed that the issue of constructive trustee in the context o f banker-customer relationship \up0 \expndtw-2\charscalex100 is quite complicate d and technical in nature and a claim based on it could only be properly \up0 \e xpndtw-3\charscalex100 proved by oral evidence and the onus is on the plaintiff to prove that the defendants were in \up0 \expndtw-4\charscalex100 breach of the ir contractual duty of care to the plaintiff. \par\pard\qj \li2205\ri913\sb397\s l-403\slmult0 \up0 \expndtw0\charscalex105 The principle of bank\u8217?s liabili ty as a constructive trustee was established in \ul0\nosupersub\cf7\f8\fs23 Sela ngor \up0 \expndtw0\charscalex100 United Rubber Estates Ltd v Cradock\ul0\nosupe rsub\cf1\f2\fs23 (No 3) [1968] 1 WLR 1555 and\ul0\nosupersub\cf7\f8\fs23 Karak Rubber Co \up0 \expndtw-4\charscalex100 Ltd v Burden\ul0\nosupersub\cf1\f2\fs23 [1972] 1 WLR 602. Both cases upheld that a bank may have liability based on \u p0 \expndtw-4\charscalex100 mere constructive knowledge of a dishonest and fraud ulent design by the accessory. Alliot J \up0 \expndtw-2\charscalex100 in \ul0\no supersub\cf7\f8\fs23 Lipkin Gorman v Karpnale Ltd\ul0\nosupersub\cf1\f2\fs23 [1 987] 1 WLR 987 laid down a principle of law where a \up0 \expndtw-1\charscalex10 0 banker knowingly assists a customer in committing a breach of trust, the banke r becomes \up0 \expndtw-2\charscalex100 liable as a constructive trustee. \par\p ard\qj \li2205\ri914\sb398\sl-402\slmult0 \up0 \expndtw-2\charscalex100 Similarl y, in the Malaysian case of \ul0\nosupersub\cf7\f8\fs23 Sabah Bank Bhd v Borneo Housing Mortgage Finance \line \up0 \expndtw-2\charscalex100 Bhd\ul0\nosupersub\ cf1\f2\fs23 [1992] 3 CLJ 518, the court held that a banker may be a constructiv e trustee of money \line \up0 \expndtw-4\charscalex100 in his customer\u8217?s a ccount and in breach of trust if he pays the money away in circumstances \line \ up0 \expndtw-2\charscalex100 which put him upon inquiry even his action based on the customer\u8217?s mandate. Sabah Bank \line \up0 \expndtw0\charscalex100 Ber had applied to set aside the award made by the arbitrator in arbitration between them \line \up0 \expndtw0\charscalex100 and Borneo Housing Mortgage Finance Bhd (BHMF). The arbitrator found that the bank \line \up0 \expndtw0\charscalex100 w as negligent for allowing Emperor Properties (EP) to draw the proceeds of ten ch eques \line \up0 \expndtw-3\charscalex100 from their current account and utilise them for purposes other than discharging the bridging \line \up0 \expndtw0\char scalex103 loans. He also found that the bank had failed to satisfy him that the bank had not been \line \up0 \expndtw-2\charscalex100 negligent in the discharge of their duties to BHMF as bankers. The arbitrator then awarded \par\pard\ql \l i10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb168\sl-264\slmult0 \up0 \expndt w-3\charscalex100 251 \par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0 \sl-240{\bkmkstart Pg261}{\bkmkend Pg261}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \ par\pard\qj\li2205\ri916\sb249\sl-400\slmult0 \up0 \expndtw0\charscalex105 \ul0\ nosupersub\cf1\f2\fs23 damages to BHMF. The High court affirmed the decision mad e by the arbitrator and \up0 \expndtw-4\charscalex100 dismissed the bank\u8217?s application to set aside the award made by the arbitrator. \par\pard\qj \li2205 \ri915\sb277\sl-404\slmult0\fi0 \up0 \expndtw-2\charscalex100 In \ul0\nosupersub \cf7\f8\fs23 Governor and Company of the Bank of Scotland v A Ltd and Others\ul0 \nosupersub\cf1\f2\fs23 [2001] EWCA Civ \line \up0 \expndtw0\charscalex104 52,

Lord Woolf CJ observed that a bank may become subject in equity to knowing or \l ine \up0 \expndtw0\charscalex103 dishonest assistance if it dishonestly assists in a breach of trust committed either by its \line \up0 \expndtw0\charscalex107 customer or by others. As such, if the debt owed to the customer is affected by any \line \up0 \expndtw-2\charscalex100 equitable interest or claim of a third p arty the bank may become accountable in equity if it \line \up0 \expndtw-2\chars calex100 dishonestly assists in any course of action which jeopardise the third party\u8217?s interest. \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2 205\sb108\sl-264\slmult0 \up0 \expndtw-4\charscalex100 \ul0\nosupersub\cf4\f5\fs 23 6.4.3 Liability of Banks as Constructive Trustee in Money Laundering \par\p ard\qj \li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205\ri912\sb40\sl-402\slmult0 \up0 \expndtw0\charscalex105 \ul0\nosupersub\cf1\f2\fs23 Section 14(b) of AMLATF A sets out the statutory obligation for banks to report any \line \up0 \expndtw1\charscalex100 suspicious transactions. Should there be reason to suspect any t ransaction as being related \line \up0 \expndtw-3\charscalex100 directly or indi rectly to any of the serious offence, or foreign serious offence, a bank has to \line \up0 \expndtw-3\charscalex100 file a suspicious transaction report with th e Financial Intelligence Unit (FIU). The reporting \line \up0 \expndtw0\charscal ex104 should be conducted by the money laundering reporting officer (MLRO) of th e bank. \line \up0 \expndtw0\charscalex105 Section 19(4) of AMLATFA requires rep orting institutions to designate a MLRO, at \line \up0 \expndtw0\charscalex109 m anagement level in each branch and subsidiary. Failure to report any suspicious \line \up0 \expndtw0\charscalex104 transaction is an offence and upon conviction , the person could be liable to a fine not \line \up0 \expndtw-4\charscalex100 e xceeding RM100,000 or to imprisonment for a term not exceeding 6 months or both. \ul0\super\cf8\f9\fs23 95 \par\pard\qj \li2205\ri915\sb400\sl-400\slmult0 \up0 \ expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 AMLATFA also provides for th e tipping-off offence under section 35. Accordingly, where \line \up0 \expndtw-2 \charscalex100 a banker knows or suspects that a report has been made to the law enforcement authorities, \line \up0 \expndtw0\charscalex107 it is an offence fo r a banker to make any disclosure which is likely to prejudice any \line \up0 \e xpndtw0\charscalex109 investigation which might be conducted following the makin g of the report under \line \up0 \expndtw-5\charscalex100 AMLATFA.\ul0\super\cf8 \f9\fs23 96 \par\pard\qj \li2205\ri763\sb280\sl-400\slmult0 \up0 \expndtw0\chars calex100 \ul0\nosupersub\cf1\f2\fs23 There is a concern that the duty to report suspicious transactions and to avoid \u8216?tipping off\u8217? \line \up0 \expnd tw-4\charscalex100 can lead to a conflict between the bank\u8217?s responsibilit y under the anti-money laundering laws \line \up0 \expndtw-4\charscalex100 and i ts obligation, as a constructive trustee, to a victim of fraud and other crimes under the \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb173\sl-2 18\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f 10\fs18 95\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Anti-Mone y Laundering and Anti-Terrorism Financing Act 2001\ul0\nosupersub\cf10\f11\fs19 , s22 (4). \par\pard\li2205\sb20\sl-218\slmult0\fi0 \up0 \expndtw-2\charscalex10 0 \ul0\super\cf9\f10\fs18 96\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\ f12\fs19 Anti-Money Laundering and Anti-Terrorism Financing Act 2001\ul0\nosuper sub\cf10\f11\fs19 , s35 (1).\par\pard\li2205\sb3\sl-264\slmult0\fi8243 \up0 \exp ndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 252 {\shp {\*\shpinst\shpleft2205\shptop13928\shpright5006\shpbottom13948\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz186\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P

g262}{\bkmkend Pg262}\par\pard\qj \li2205\sb0\sl-405\slmult0 \par\pard\qj\li2205 \sb0\sl-405\slmult0 \par\pard\qj\li2205\sb0\sl-405\slmult0 \par\pard\qj\li2205\r i763\sb230\sl-405\slmult0 \up0 \expndtw0\charscalex104 \ul0\nosupersub\cf1\f2\fs 23 civil law. If a suspicious transaction report has been made, the bank would n ormally not \line \up0 \expndtw0\charscalex112 allow the customer to transact th e account. The danger is that if the bank suspends \line \up0 \expndtw0\charscal ex103 transaction, it may inadvertently tip off the customer. On the other hand, if it pays out the \line \up0 \expndtw-2\charscalex100 funds, it may be liable as a constructive trustee. In the \ul0\nosupersub\cf7\f8\fs23 Governor and Compa ny of the Bank of \line \up0 \expndtw-2\charscalex100 Scotland v A Ltd and Other s\ul0\nosupersub\cf1\f2\fs23 [2001] EWCA Civ 52, Lord Woolf CJ observed at page 764: \par\pard\qj \li2731\ri781\sb262\sl-373\slmult0 \up0 \expndtw-1\charscalex 100 \ul0\nosupersub\cf13\f14\fs21 \u8230?If A Ltd had been the recipient of fund s which were the proceeds of fraud\u8230?and if the bank \up0 \expndtw0\charscal ex103 had such strong grounds for doubting its customer\u8217?s honesty that it would itself have been \up0 \expndtw0\charscalex103 dishonest to turn a blind ey e to its doubts, then there was a clear risk of the bank incurring \up0 \expndtw -4\charscalex100 liability in equity as an accessory to breach of trust. \par\pa rd\qj \li2205\ri914\sb263\sl-403\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosu persub\cf1\f2\fs23 In this case, the bank suspected that the monies in A Ltd\u82 17?s account could be the proceeds of \line \up0 \expndtw-2\charscalex100 crime. The bank was informed by the police that A Ltd was under investigation in relat ion \line \up0 \expndtw-2\charscalex100 to suspected financial fraud. As a resul t, the bank feared that if it paid out money from the \line \up0 \expndtw-1\char scalex100 customer\u8217?s account, it could be liable to third parties as a con structive trustee and if it did \line \up0 \expndtw-3\charscalex100 not pay out, it could be criminally liable for the offence of tipping off under section 93D of \line \up0 \expndtw-1\charscalex100 the Criminal Justice Act 1988. The bank a pplied to the court for directions, in private and \line \up0 \expndtw0\charscal ex100 without notifying the customer. An injunction was initially ordered freezi ng the account. \line \up0 \expndtw-3\charscalex100 Being unaware of the injunct ion and anxious to have access to his funds, the customer then \line \up0 \expnd tw0\charscalex100 brought proceedings against the bank and eventually the injunc tion was discharged. The \line \up0 \expndtw0\charscalex100 court stressed the n eed for the authorities, the Serious Fraud Office (SFO), to cooperate \line \up0 \expndtw-3\charscalex100 with the banks to try and find a sensible solution as to what could revealed to the customer, \line \up0 \expndtw-3\charscalex100 but again if a bank was unsatisfied it should apply to the court for interim declara tory relief \line \up0 \expndtw-1\charscalex100 and the bank should make the SFO as defendant, and not the customer. Each party should \line \up0 \expndtw-2\cha rscalex100 bear its own costs unless acting unreasonably. \par\pard\qj \li2205\r i918\sb260\sl-400\slmult0 \up0 \expndtw0\charscalex102 From this case, the court established the following guidelines to be followed by a bank \up0 \expndtw-5\c harscalex100 which finds itself in the same position as the Bank of Scotland: \p ar\pard\ql \li2906\ri916\sb300\sl-400\slmult0\tx3255\tx3255 \up0 \expndtw0\chars calex111 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 It i s important to establish an open and constructive dialogue with the \line\tab \u p0 \expndtw0\charscalex106 investigating authority from the outset. The bank and the authority should \line\tab \up0 \expndtw-4\charscalex100 attempt to agree t he information that can properly be disclosed to the customer. \par\pard\ql \li1 0449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li1 0449\sb145\sl-264\slmult0 \up0 \expndtw-3\charscalex100 253 \par\pard\sect\sectd \fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart Pg263}{\bkmkend Pg263}\ par\pard\li2906\sb0\sl-264\slmult0\par\pard\li2906\sb0\sl-264\slmult0\par\pard\l i2906\sb0\sl-264\slmult0\par\pard\li2906\sb0\sl-264\slmult0\par\pard\li2906\sb0\ sl-264\slmult0\par\pard\li2906\sb0\sl-264\slmult0\par\pard\li2906\sb6\sl-264\slm ult0\fi0\tx3255 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf1\f2\fs23 \u-391 3?\tab \up0 \expndtw-2\charscalex100 In the absence of agreement, the bank may b ring a without notice application to\par\pard\qj \li3255\ri914\sb15\sl-400\slmul t0 \up0 \expndtw-1\charscalex100 the court for directions. The appropriate defen

dant to such an application is the \up0 \expndtw-2\charscalex100 investigating a uthority, not the customer. \par\pard\ql \li2906\sb133\sl-264\slmult0\tx3255 \up 0 \expndtw0\charscalex80 \u-3913? \tab \up0 \expndtw0\charscalex100 It is not ap propriate, in these circumstances, for a bank to request the court to \par\pard\ qj \li3255\ri916\sb20\sl-405\slmult0 \up0 \expndtw0\charscalex106 grant an injun ction against it, restraining it from making payments from a \up0 \expndtw0\char scalex100 customer\u8217?s account. Such an order would serve no useful purpose and would \up0 \expndtw0\charscalex100 make a bank\u8217?s problem more acute as it would prevent the bank from making \up0 \expndtw0\charscalex108 payments fro m a customer\u8217?s account and in addition, it could not tell its \up0 \expndt w-5\charscalex100 customer why this had happen. \par\pard\ql \li2906\sb132\sl-26 4\slmult0\tx3255 \up0 \expndtw0\charscalex80 \u-3913? \tab \up0 \expndtw-1\chars calex100 An interim declaration can be made, if necessary, by the court setting out what \par\pard\qj \li3255\ri915\sb24\sl-400\slmult0 \up0 \expndtw0\charscale x105 information would be proper for the bank to rely on when dealing with the \ up0 \expndtw-3\charscalex100 customer. In determining the terms of any declarati on, the court will pay careful \up0 \expndtw-1\charscalex100 attention to the vi ews of the investigating authority as to what would or would \up0 \expndtw-2\cha rscalex100 not prejudice its investigation. \par\pard\ql \li2906\sb133\sl-264\sl mult0\tx3255 \up0 \expndtw0\charscalex80 \u-3913? \tab \up0 \expndtw0\charscalex 100 The life of an interim declaration is likely to be short since, in the major ity of \par\pard\qj \li3255\ri916\sb8\sl-420\slmult0 \up0 \expndtw-2\charscalex1 00 cases, it will only be necessary to conceal the existence of the investigatio ns for \up0 \expndtw-3\charscalex100 a fairy limited period. \par\pard\li2906\sb 129\sl-264\slmult0\fi0\tx3255 \up0 \expndtw-2\charscalex100 \u-3913?\tab \up0 \e xpndtw-1\charscalex100 Unless the investigating authority acts unreasonably, it is likely that the parties\par\pard\li2906\sb137\sl-264\slmult0\fi349 \up0 \expn dtw-2\charscalex100 to the application will pay their own costs.\par\pard\ql \li 2906\sb155\sl-264\slmult0\tx3255 \up0 \expndtw0\charscalex80 \u-3913? \tab \up0 \expndtw-3\charscalex100 The power to grant an interim declaration should not be regarded as a substitute \par\pard\qj \li3255\ri915\sb24\sl-400\slmult0 \up0 \e xpndtw-3\charscalex100 for financial institutions taking their own commercial de cisions. In addition, the \up0 \expndtw0\charscalex104 court\u8217?s powers are discretionary and will only be used where there is a real \up0 \expndtw-5\charsc alex100 dilemma that requires their intervention.\ul0\super\cf8\f9\fs23 97 \par\ pard\qj \li2205\ri915\sb280\sl-400\slmult0 \up0 \expndtw0\charscalex103 \ul0\nos upersub\cf1\f2\fs23 Accordingly, having a suspicion which it considers necessary to report under the anti-\line \up0 \expndtw-3\charscalex100 money laundering l aws may, prima facie, indicate that bank knows or should know that the \line \up 0 \expndtw0\charscalex103 funds belong to a third party. The question to be pose d is whether suspicion of money \line \up0 \expndtw-3\charscalex100 laundering a ctivities suffices to make the bank liable to the victims of fraud for knowing o r \line \up0 \expndtw-4\charscalex100 dishonest assistance? \par\pard\qj \li2205 \sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\s b0\sl-220\slmult0 \par\pard\qj\li2205\ri944\sb169\sl-220\slmult0\fi0 \up0 \expnd tw-1\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 97\ul0\nosuper sub\cf10\f11\fs19 Michael Isaacs, \u8216?Money Laundering: Dilemma for Banks\u8 217? (2004) 19(8) \ul0\nosupersub\cf11\f12\fs19 Journal of International Banking \up0 \expndtw-2\charscalex100 Law and Regulation\ul0\nosupersub\cf10\f11\fs19 284, 285. \par\pard\ql \li10449\sb14\sl-252\slmult0 \up0 \expndtw-3\charscalex1 00 \ul0\nosupersub\cf1\f2\fs23 254 {\shp {\*\shpinst\shpleft2205\shptop13928\shpright5006\shpbottom13948\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz203\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s

p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g264}{\bkmkend Pg264}\par\pard\qj \li2205\sb0\sl-404\slmult0 \par\pard\qj\li2205 \sb0\sl-404\slmult0 \par\pard\qj\li2205\sb0\sl-404\slmult0 \par\pard\qj\li2205\r i916\sb234\sl-404\slmult0\fi0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f 2\fs23 This issue was discussed recently in \ul0\nosupersub\cf7\f8\fs23 Abou-Rah mah v Abatcha\ul0\nosupersub\cf1\f2\fs23 [2006] EWCA Civ 1492; \line \up0 \expn dtw-3\charscalex100 [2007] 1 Lloyd\u8217?s Rep.115. There, the victims of a frau d sued a Nigerian Bank for the return \line \up0 \expndtw0\charscalex100 of the money on the basis that the bank had requisite knowledge of the fraud. The bank\ u8217?s \line \up0 \expndtw-1\charscalex100 local manager had suspected that his clients might be involved in money laundering. The \line \up0 \expndtw-3\charsc alex100 judge at first instance found that a general suspicion of this nature wa s insufficient to make \line \up0 \expndtw-3\charscalex100 the bank liable to th e victims of the fraud. The victims appealed to the Court of Appeal. \par\pard\q j \li2205\ri914\sb256\sl-404\slmult0 \up0 \expndtw-1\charscalex100 The Court of Appeal upheld the judge\u8217?s decision at first instance. The Court held that the \line \up0 \expndtw0\charscalex103 victims needed to show that the bank had acted in a way that was contrary to normally \line \up0 \expndtw-2\charscalex100 acceptable standards of honest conduct. A general suspicion that customers migh t possibly \line \up0 \expndtw0\charscalex103 be involved in money laundering wa s not sufficient to make the bank liable. From the \line \up0 \expndtw0\charscal ex103 circumstances of this case, the court held that there was no evidence that the bank was \line \up0 \expndtw-3\charscalex100 aware of the existence of a si tuation giving rise to a fiduciary duty owed to the claimant, or \line \up0 \exp ndtw-2\charscalex100 that such duty had been breached, or that the funds were th e fruits of the breach of duty, or \line \up0 \expndtw0\charscalex102 had been o btained by fraud. As the bank did not have the dishonest knowledge that the \lin e \up0 \expndtw-1\charscalex100 funds were misappropriated, the claim for dishon est assistance therefore, failed. This case \line \up0 \expndtw-2\charscalex100 is likely to be of some comfort to banks faced with knowing or dishonest assista nce claims \line \up0 \expndtw-3\charscalex100 in the future.\ul0\super\cf8\f9\f s23 98 \par\pard\qj \li2205\ri914\sb280\sl-400\slmult0\fi0 \up0 \expndtw0\charsc alex102 \ul0\nosupersub\cf1\f2\fs23 From this case, it is also notable that the occurrence of the bank\u8217?s general suspicions of \line \up0 \expndtw0\charsc alex111 impropriety in a commercial setting would not negate its liberty to act on proper \line \up0 \expndtw0\charscalex107 instructions of their customers, pa rticularly when it had complied with the relevant \line \up0 \expndtw0\charscale x100 regulatory reporting requirements.\ul0\super\cf8\f9\fs23 99\ul0\nosupersub\ cf1\f2\fs23 However, there is no clear guidance given on what \line \up0 \expnd tw0\charscalex100 constitutes \u8216?normally acceptable standards of honest con duct\u8217?. It has been suggested that \line \up0 \expndtw-3\charscalex100 the nature of the suspicions, the context in which suspicions arose, the customs of the trade, \line \up0 \expndtw-2\charscalex100 as well as policy considerations are all relevant factors in benchmarking the commercially \line \up0 \expndtw-3\ charscalex100 acceptable conduct of a bank.\ul0\super\cf8\f9\fs23 100 \par\pard\ qj \li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\q j\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\ li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li 2205\ri945\sb109\sl-220\slmult0 \up0 \expndtw0\charscalex104 \ul0\super\cf9\f10\ fs18 98\ul0\nosupersub\cf10\f11\fs19 Ian Huskinson, \u8216?Money Laundering-Ban ks\u8217? (2007) 22(2) \ul0\nosupersub\cf11\f12\fs19 Journal of International Ba nking Law and \up0 \expndtw-3\charscalex100 Regulation\ul0\nosupersub\cf10\f11\f s19 29. \par\pard\qj \li2205\ri6977\sb0\sl-220\slmult0 \up0 \expndtw-2\charscal ex100 \ul0\super\cf9\f10\fs18 99\ul0\nosupersub\cf10\f11\fs19 Rebecca Lee, abov e n 94, 210. \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 100\ul0\nosup ersub\cf10\f11\fs19 Ibid 211. \par\pard\ql \li10449\sb14\sl-252\slmult0 \up0 \e xpndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 255

{\shp {\*\shpinst\shpleft2205\shptop13480\shpright5006\shpbottom13500\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz168\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g265}{\bkmkend Pg265}\par\pard\qj \li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205 \sb0\sl-402\slmult0 \par\pard\qj\li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205\r i911\sb241\sl-402\slmult0\fi0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f 2\fs23 It is also relevant to look into other English decisions which provide fu rther guidance for \line \up0 \expndtw0\charscalex100 banks in dealing with susp icious transactions reports. In \ul0\nosupersub\cf7\f8\fs23 Hosni Tayeb v HSBC B ank plc \line \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 [2004] E WCH 1529\ul0\nosupersub\cf7\f8\fs23 ,\ul0\nosupersub\cf1\f2\fs23 Tayeb opened a n account with HSBC to receive the proceeds of a sale \line \up0 \expndtw0\chars calex100 transaction. The HSBC received the monies by means of the Clearing Hous e Automated \line \up0 \expndtw0\charscalex100 Payments System (CHAPS) from Taye b\u8217?s client. A bank\u8217?s employee became suspicious \line \up0 \expndtw0 \charscalex102 about the transaction and froze the account. The funds were retur ned to the transferor\u8217?s \line \up0 \expndtw-2\charscalex100 account and Ta yeb\u8217?s account was closed. These actions were not prescribed by the money \ line \up0 \expndtw0\charscalex100 laundering legislation. When Tayeb had difficu lty recovering his funds, he sued HSBC. \line \up0 \expndtw-2\charscalex100 The court held in favour of the claimant. The CHAPS transfer to the bank, followed b y its \line \up0 \expndtw0\charscalex105 authentication, acknowledgement and cre diting the amount to the claimant\u8217?s account \line \up0 \expndtw-3\charscal ex100 created a debt due from the bank to the claimant. This is because the rela tionship between a \line \up0 \expndtw-1\charscalex100 bank and its customer is essentially that of a debtor and unsecured creditor governed by a \line \up0 \ex pndtw-1\charscalex100 banking contract. Colman J suggested that if there is any money laundering suspicion, the \line \up0 \expndtw0\charscalex102 bank could ob tain further reassurance by seeking the court\u8217?s guidance and it is \u8216? wholly \line \up0 \expndtw0\charscalex105 unrealistic\u8217? that the bank would be found guilty for dishonest assistance liability if it \line \up0 \expndtw-5\ charscalex100 followed the guidance. \par\pard\qj \li2261\ri859\sb397\sl-404\slm ult0\fi0 \up0 \expndtw-2\charscalex100 In\ul0\nosupersub\cf7\f8\fs23 Squirrell Ltd v National Westminister Bank plc (customs and excise intervening),\ul0\super \cf16\f17\fs23 101\ul0\nosupersub\cf1\f2\fs23 the \line \up0 \expndtw0\charscal ex100 bank discovered that some of the proceeds in a customer\u8217?s account co uld have been the \line \up0 \expndtw-2\charscalex100 result of criminal activit y and as a result was forced to block a customer\u8217?s account in order \line \up0 \expndtw0\charscalex103 to prevent itself becoming involved in making arran gements for dealing with criminal \line \up0 \expndtw-1\charscalex100 property. The customer, Squirrell, made an application to the High Court for an order that \line \up0 \expndtw0\charscalex100 its account be unfrozen and for disclosure o f the reasons behind the bank\u8217?s actions. The \line \up0 \expndtw-4\charsca lex100 court refused Squirrell\u8217?s application and held that the bank\u8217? s actions were \u8216?unimpeachable\u8217?. \line \up0 \expndtw0\charscalex100 A s such, Squirrell was not entitled to disclosure by the bank of why its account had been \line \up0 \expndtw-4\charscalex100 frozen, nor was it entitled to an o rder to unblock the account, as in doing so the court would \line \up0 \expndtw1\charscalex100 be requiring the bank to commit a criminal offence. The bank has done precisely what the \line \up0 \expndtw-2\charscalex100 legislation envisag ed. \par\pard\li2205\sb0\sl-218\slmult0\par\pard\li2205\sb0\sl-218\slmult0\par\p ard\li2205\sb0\sl-218\slmult0\par\pard\li2205\sb0\sl-218\slmult0\par\pard\li2205

\sb0\sl-218\slmult0\par\pard\li2205\sb0\sl-218\slmult0\par\pard\li2205\sb120\sl218\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\ cf9\f10\fs18 101\ul0\nosupersub\cf10\f11\fs19 [2005] EWHC 664.\par\pard\li2205\ sb3\sl-264\slmult0\fi8243 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\f s23 256 {\shp {\*\shpinst\shpleft2205\shptop14151\shpright5006\shpbottom14171\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz181\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g266}{\bkmkend Pg266}\par\pard\qj \li2261\sb0\sl-402\slmult0 \par\pard\qj\li2261 \sb0\sl-402\slmult0 \par\pard\qj\li2261\sb0\sl-402\slmult0 \par\pard\qj\li2261\r i859\sb241\sl-402\slmult0 \up0 \expndtw0\charscalex105 \ul0\nosupersub\cf1\f2\fs 23 Laddie J in his judgement made it clear that the issue is not whether there h as been a \up0 \expndtw0\charscalex100 criminal offence committed by the custome r but merely whether the bank has a relevant \up0 \expndtw-3\charscalex100 suspi cion. The bank can then comply with the provision of the Proceeds of Crime Act 2 002 \up0 \expndtw0\charscalex100 (POCA) by obtaining the \u8216?appropriate cons ent\u8217? and making an \u8216?authorised disclosure\u8217? as \up0 \expndtw-3\ charscalex100 required under the Act. Once a bank has performed those steps and complied with the anti\up0 \expndtw-2\charscalex100 tipping off provision, it is obliged to block the account of such customer until such time as \up0 \expndtw0 \charscalex100 the relevant authority has given its direction for complying with its obligations under the \up0 \expndtw-1\charscalex100 Act or in accordance wi th the relevant authority directions.\ul0\super\cf8\f9\fs23 102 \par\pard\qj \li 2205\ri912\sb398\sl-403\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1 \f2\fs23 In the \ul0\nosupersub\cf7\f8\fs23 N2J Ltd v Cater Allen Ltd\ul0\nosupe rsub\cf1\f2\fs23 (unreported, February 21, 2006) (HC), the bank made a \line \u p0 \expndtw0\charscalex100 report that it knew or suspected that funds that its customer had requested be transferred, \line \up0 \expndtw-2\charscalex100 were the proceeds of crime. The customer sought a mandatory injunction to force the b ank \line \up0 \expndtw-3\charscalex100 to make the requested transfers in accor dance with its mandate, and an order for the bank to \line \up0 \expndtw-3\chars calex100 disclose the reasons it had for refusing to make the payments. The ques tion in that case was \line \up0 \expndtw0\charscalex106 whether the bank subjec tively believed that it had reasonable grounds to suspect the \line \up0 \expndt w-2\charscalex100 transactions. The customer argued that the bank had misdirecte d itself and should not have \line \up0 \expndtw-3\charscalex100 developed the s uspicion in the circumstances of the case. The court held that suspicion may \li ne \up0 \expndtw0\charscalex100 arise in an otherwise seamless period of good co nduct from one important piece of new \line \up0 \expndtw0\charscalex100 informa tion. The refusal by the relevant authority to give consent to the transaction w as \line \up0 \expndtw0\charscalex106 found by the judge to support the Bank\u82 17?s claim that it had reasonably developed the \line \up0 \expndtw0\charscalex1 08 suspicion in the first place and therefore the banks\u8217? decision to repor t could not be \line \up0 \expndtw-5\charscalex100 challenged.\ul0\super\cf8\f9\ fs23 103 \par\pard\qj \li2205\ri914\sb396\sl-405\slmult0 \up0 \expndtw0\charscal ex100 \ul0\nosupersub\cf1\f2\fs23 Recently, in \ul0\nosupersub\cf7\f8\fs23 K Ltd v National Westminster Bank Plc\ul0\nosupersub\cf1\f2\fs23 [2006] EWCA Civ 103 9, Natwest\u8217?s \line \up0 \expndtw0\charscalex106 customer instructed it to make a payment but the bank, having made a disclosure to \line \up0 \expndtw-2\c harscalex100 Revenue and Customs that it suspected that the money was criminal p roperty, stated that it \line \up0 \expndtw-3\charscalex100 could not comply wit

h the customer\u8217?s request. The customer sought an injunction from the \line \up0 \expndtw-3\charscalex100 court ordering the bank to make the payment The j udge refused to grant the injunction and \par\pard\qj \li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\ri938\sb88\sl-220\sl mult0\fi0 \up0 \expndtw-1\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f1 0\fs18 102\ul0\nosupersub\cf10\f11\fs19 Edward Bridge, \u8216?The Risks faced b y Banks in Overstepping their Anti-Money Laundering Obligations.\u8217? \up0 \ex pndtw-1\charscalex100 (2005) 20(9) \ul0\nosupersub\cf11\f12\fs19 Journal of Inte rnational Banking Law and Regulation \ul0\nosupersub\cf10\f11\fs19 461, 462. \pa r\pard\li2205\sb13\sl-218\slmult0\fi0\tx3879 \up0 \expndtw0\charscalex105 \ul0\s uper\cf9\f10\fs18 103\ul0\nosupersub\cf10\f11\fs19 Michael Isaacs,\tab \up0 \ex pndtw0\charscalex106 \u8216?Money Laundering: Further guidance for banks on what to do when faced with\par\pard\li2205\sb6\sl-218\slmult0\fi0\tx8790 \up0 \expnd tw0\charscalex106 conflicting duties following a suspicious transactions reports : The N2J Case\u8217?\tab \up0 \expndtw0\charscalex105 (2006) 21(8) \ul0\nosuper sub\cf11\f12\fs19 Journal of\par\pard\li2205\sb5\sl-218\slmult0\fi0 \up0 \expndt w0\charscalex105 International Banking Law and Regulation\ul0\nosupersub\cf10\f1 1\fs19 431.\par\pard\ql \li10449\sb12\sl-233\slmult0 \up0 \expndtw-3\charscalex 100 \ul0\nosupersub\cf1\f2\fs23 257 {\shp {\*\shpinst\shpleft2205\shptop13256\shpright5006\shpbottom13276\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz189\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g267}{\bkmkend Pg267}\par\pard\qj \li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205 \sb0\sl-402\slmult0 \par\pard\qj\li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205\r i915\sb241\sl-402\slmult0 \up0 \expndtw0\charscalex106 \ul0\nosupersub\cf1\f2\fs 23 the customer appealed, arguing that the bank was acting in breach of the cont ract of \up0 \expndtw-1\charscalex100 mandate whereby the bank had agree to hono ur its customer\u8217?s instructions. The customer \up0 \expndtw0\charscalex102 further argued that the bank had not provided sufficient evidence of its suspici ons. The \up0 \expndtw0\charscalex102 Court of Appeal held that it would be enti rely inappropriate for the court to require the \up0 \expndtw0\charscalex100 per formance of an act which would render the performer of the act criminally liable and \up0 \expndtw-2\charscalex100 that, as a matter of discretion, any injuncti on should be refused.\ul0\super\cf8\f9\fs23 104\ul0\nosupersub\cf1\f2\fs23 This is a positive ruling \up0 \expndtw0\charscalex103 and certainly supports banks in their efforts to comply with the reporting requirements \up0 \expndtw-5\chars calex100 under the anti-money laundering laws. \par\pard\li2205\sb0\sl-264\slmul t0\par\pard\li2205\sb0\sl-264\slmult0\par\pard\li2205\sb234\sl-264\slmult0\fi0\t x2906 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf4\f5\fs23 6.5\tab \up0 \ex pndtw-3\charscalex100 Summary\par\pard\qj \li2205\sb0\sl-402\slmult0 \par\pard\q j\li2205\ri915\sb70\sl-402\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub \cf1\f2\fs23 It is clear that the implementation of the AML/CTF laws has signifi cantly affected a bank\u8217?s \line \up0 \expndtw0\charscalex105 relationship w ith outsiders, especially its customers. While it is clear that AML/CTF \line \u p0 \expndtw-3\charscalex100 obligations should take precedence over customer con fidentiality rules to improve the flow \line \up0 \expndtw0\charscalex102 of in formation to law enforcement authorities and to facilitate money launde ring \line \up0 \expndtw-1\charscalex100 investigation, there is the danger that customers may lose confidence that their secrets are \line \up0 \expndtw-2\char scalex100 safe with the banks. By requiring banks to disclose suspect transactio ns, the authorities are \line \up0 \expndtw0\charscalex102 asking banks to act a

s informers. This is a role that is in conflict with their commercial \line \up0 \expndtw-5\charscalex100 objectives. \par\pard\qj \li2205\ri915\sb398\sl-403\sl mult0 \up0 \expndtw0\charscalex104 However, it appears that AMLATFA provides suf ficient safeguards to ensure that the \line \up0 \expndtw-3\charscalex100 disclo sure of customer\u8217?s information is carried out in a manner that is not prej udicial to the \line \up0 \expndtw-2\charscalex100 interest of legitimate custom ers. This is a positive approach that could protect the innocent \line \up0 \exp ndtw0\charscalex102 customers from being mistreated by the law. Ultimately, it c an be said that the growing \line \up0 \expndtw-1\charscalex100 threat of global terrorism and money laundering makes the overriding of banking secrecy \line \u p0 \expndtw-2\charscalex100 justified because without a flow of information from the banks, the effective prevention of \line \up0 \expndtw-3\charscalex100 the menace is not possible. \par\pard\qj \li2205\sb0\sl-220\slmult0 \par\pard\qj\li2 205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li220 5\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\ ri939\sb209\sl-220\slmult0\fi0 \up0 \expndtw0\charscalex100 \ul0\super\cf9\f10\f s19\ul0\super\cf9\f10\fs18 104\ul0\nosupersub\cf10\f11\fs19 Elspeth White, \u82 16?Money Laundering: Banks-Court would not Order Bank to Commit Offence.\u8217? (2006) \up0 \expndtw0\charscalex100 21(11) \ul0\nosupersub\cf11\f12\fs19 Journal of International Banking Law and Regulation\ul0\nosupersub\cf10\f11\fs19 91. \ par\pard\ql \li10449\sb14\sl-252\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosu persub\cf1\f2\fs23 258 {\shp {\*\shpinst\shpleft2205\shptop13928\shpright5006\shpbottom13948\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz159\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g268}{\bkmkend Pg268}\par\pard\qj \li2205\sb0\sl-403\slmult0 \par\pard\qj\li2205 \sb0\sl-403\slmult0 \par\pard\qj\li2205\sb0\sl-403\slmult0 \par\pard\qj\li2205\r i914\sb238\sl-403\slmult0 \up0 \expndtw0\charscalex102 \ul0\nosupersub\cf1\f2\fs 23 AML/CTF laws also impose stringent standards on correspondent banking arrange ments \line \up0 \expndtw0\charscalex104 due to its vulnerability to money laundering. Banks are now under greater legal \line \up0 \expndtw0\charsc alex100 requirements to identify and verify other banks before establishing corr espondent banking \line \up0 \expndtw0\charscalex108 relationship. Banks are req uired to know the details of all parties in a correspondent \line \up0 \expndtw0 \charscalex107 banking transaction, even if the parties are not their direct cus tomers. Banks also are \line \up0 \expndtw0\charscalex110 required to understand and monitor the intended use of the funds, the nature of the \line \up0 \expndt w-2\charscalex100 transactions, the people to whom they deal with, their backgro und and countries involved. \par\pard\qj \li2205\ri915\sb278\sl-402\slmult0 \up0 \expndtw0\charscalex108 Although the obligations imposed on the correspondent b anking relationship can be \line \up0 \expndtw-1\charscalex100 regarded as a sig nificant step towards further protecting the international financial systems, \l ine \up0 \expndtw-2\charscalex100 if left unchecked, they may put unnecessary bu rden on banks. This is particularly true when \line \up0 \expndtw0\charscalex106 the laws prescribe to whom the bank could do business with. Therefore, effectiv e and \line \up0 \expndtw-2\charscalex100 workable anti-money laundering measure s must be implemented. More importantly, it must \line \up0 \expndtw-1\charscale x100 be ensured that the laws will not put unnecessary burdens on banks and will not jeopardize \line \up0 \expndtw0\charscalex102 the correspondent banking ope ration which is crucial for the effective functioning of the \line \up0 \expndtw 0\charscalex102 international payment systems. \par\pard\qj \li2205\ri913\sb398\

sl-402\slmult0 \up0 \expndtw0\charscalex102 Furthermore, in complying with their obligations under the anti-money laundering laws, \up0 \expndtw-1\charscalex100 banks may be placed in a difficult commercial position trying to find a balance between the \up0 \expndtw0\charscalex100 avoidance of criminal liability on the one hand and civil liability as a constructive trustee \up0 \expndtw0\charscale x102 on the other hand. However, in dealing with this problem, experience has sh own that the \up0 \expndtw0\charscalex110 court approaches the matter in a way w hich encourages banks to report suspicious \up0 \expndtw0\charscalex100 transact ions without fear of constructive trustee liability. Accordingly, a general susp icion \up0 \expndtw0\charscalex102 that customers might possibly be involved in money laundering is not sufficient to make \up0 \expndtw0\charscalex102 banks li able as constructive trustee. \par\pard\qj \li2205\ri914\sb397\sl-404\slmult0 \u p0 \expndtw0\charscalex104 Since the AML/CTF laws have only been recently introd uced in Malaysia, the issue of \line \up0 \expndtw-1\charscalex100 constructive trusteeship has yet to be tested in the court of law. However, it can be said th at \line \up0 \expndtw-1\charscalex100 when banks comply with the reporting requ irement and act in accordance with the relevant \line \up0 \expndtw0\charscalex1 02 authorities directions, the risk of being held liable as a constructive trust ee is very slight. \line \up0 \expndtw0\charscalex111 Furthermore, there is no s pecific provision in AMLATFA which requires bank to \line \up0 \expndtw0\charsca lex103 discontinue a transaction that is subject to the suspicious transaction r eporting. As such, \par\pard\ql \li10449\sb152\sl-264\slmult0 \up0 \expndtw-3\ch arscalex100 259 \par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-24 0{\bkmkstart Pg269}{\bkmkend Pg269}\par\pard\qj \li2205\sb0\sl-405\slmult0 \par\ pard\qj\li2205\sb0\sl-405\slmult0 \par\pard\qj\li2205\sb0\sl-405\slmult0 \par\pa rd\qj\li2205\ri913\sb230\sl-405\slmult0 \up0 \expndtw0\charscalex103 \ul0\nosupe rsub\cf1\f2\fs23 banks may proceed with the transaction in accordance to custome r\u8217?s instruction. More \up0 \expndtw-1\charscalex100 importantly, in comply ing with AML/CTF obligations, AMLATFA clearly protects bank \up0 \expndtw-2\char scalex100 and its employee from being exposed to civil, criminal or even discipl inary proceedings. It \up0 \expndtw-2\charscalex100 must be said that such prote ction will encourage bankers to play an active role in detecting \up0 \expndtw-3 \charscalex100 the flows of dirty money within the Malaysian banking systems. \p ar\pard\ql \li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \ par\pard\ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \ par\pard\ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \ par\pard\ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \ par\pard\ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \ par\pard\ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \ par\pard\ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \ par\pard\ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \ par\pard\ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \ par\pard\ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \ par\pard\ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \ par\pard\ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \ par\pard\ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \ par\pard\ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \ par\pard\ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \ par\pard\ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \ par\pard\ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \ par\pard\ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \ par\pard\ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \ par\pard\ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \ par\pard\ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb68\sl-264\slmult0 \up0 \expndtw-3\charscalex100 260 \par\pard\sect\sectd\fs24\paperw11900\paperh16 840\pard\sb0\sl-240{\bkmkstart Pg270}{\bkmkend Pg270}\par\pard\ql \li5512\sb0\sl -264\slmult0 \par\pard\ql\li5512\sb0\sl-264\slmult0 \par\pard\ql\li5512\sb0\sl-2 64\slmult0 \par\pard\ql\li5512\sb0\sl-264\slmult0 \par\pard\ql\li5512\sb0\sl-264 \slmult0 \par\pard\ql\li5512\sb0\sl-264\slmult0 \par\pard\ql\li5512\sb217\sl-264 \slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf4\f5\fs23 CHAPTER SEVEN

\par\pard\ql \li3650\sb0\sl-264\slmult0 \par\pard\ql\li3650\sb112\sl-264\slmult 0 \up0 \expndtw-3\charscalex100 ANTI-MONEY LAUNDERING LAWS IN AUSTRALIA \par\par d\li2205\sb0\sl-264\slmult0\par\pard\li2205\sb0\sl-264\slmult0\par\pard\li2205\s b0\sl-264\slmult0\par\pard\li2205\sb44\sl-264\slmult0\fi0\tx2905 \up0 \expndtw-3 \charscalex100 7.1\tab \up0 \expndtw-3\charscalex100 Introduction\par\pard\qj \l i2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri914\sb84\sl-400\slmult0\fi0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf1\f2\fs23 The regulation of money lau ndering is not new in Australia. For many years, Australia was \line \up0 \expnd tw0\charscalex108 at the forefront of international efforts to combat money laun dering. The Australian \line \up0 \expndtw0\charscalex104 Financial Transactions Act 1988 (Cth)\ul0\super\cf8\f9\fs23 1\ul0\nosupersub\cf1\f2\fs23 (FTRA) preda ted the original version of the 40 \line \up0 \expndtw0\charscalex109 Recommenda tions issued by the FATF.\ul0\super\cf8\f9\fs23 2\ul0\nosupersub\cf1\f2\fs23 It was considered the primary anti-money \line \up0 \expndtw0\charscalex105 launde ring regime applicable to Australian financial institutions. It requires banks a nd \line \up0 \expndtw0\charscalex100 financial institutions to properly identif y customers and report certain transactions such as \line \up0 \expndtw0\charsca lex100 cash transactions that exceed a certain threshold or suspicious transacti ons. \par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri914\sb20\sl-4 00\slmult0 \up0 \expndtw0\charscalex100 However, changes to money laundering tre nds and its association with terrorism financing \line \up0 \expndtw0\charscalex 104 have made the Australian regime outdated and in need of review.\ul0\nosupers ub\cf20\f21\fs23 \ul0\nosupersub\cf1\f2\fs23 As a result, the Anti-\line \up0 \ expndtw-2\charscalex100 Money Laundering Law and Counter-Terrorism Financing Act 2006 (Cth) (AML/CTF Act) \line \up0 \expndtw0\charscalex100 was enacted. The AM L/CTF Act is broader in coverage and will ensure a more consistent \line \up0 \e xpndtw0\charscalex102 and effective application of anti-money laundering measure s than that currently required \line \up0 \expndtw0\charscalex105 under the FTRA . More importantly, the AML/CTF Act will bring the Australian anti-\line \up0 \e xpndtw0\charscalex105 money laundering regime in line with the current internati onal standards issued by the \line \up0 \expndtw-3\charscalex100 FATF. \par\pard \qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri918\sb20\sl-400\slmult0 \up 0 \expndtw-1\charscalex100 The anti-money laundering package in Australia also i ncludes the Criminal Code Act 1995 \line \up0 \expndtw-3\charscalex100 (Cth) \up 0 \expndtw0\charscalex108 (Criminal Code); the Mutual Assistance in Criminal Mat ters Act \up0 \expndtw0\charscalex105 1987 (Cth) \par\pard\ql \li2205\sb113\sl-2 64\slmult0 \up0 \expndtw0\charscalex102 (MACMA) and the proceeds of crimes legis lation.\ul0\super\cf8\f9\fs23 3\ul0\nosupersub\cf1\f2\fs23 The Criminal Code co ntains a wide-\par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl -218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb80\sl218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\ f10\fs18 1\ul0\nosupersub\cf10\f11\fs19 Initially the Act was enacted as the Ca sh Transaction Reports Act 1988 (Cth). \par\pard\qj \li2205\ri941\sb1\sl-220\slm ult0 \up0 \expndtw0\charscalex102 \ul0\super\cf9\f10\fs18 2\ul0\nosupersub\cf10\ f11\fs19 The first version of FATF 40 Recommendations was formulated in 1990 to combat money laundering. It \up0 \expndtw0\charscalex102 was subsequently revis ed in 1996 and again in 2003. \par\pard\qj \li2205\ri946\sb0\sl-220\slmult0 \up0 \expndtw0\charscalex103 \ul0\super\cf9\f10\fs18 3\ul0\nosupersub\cf10\f11\fs19 The proceeds of crime legislation consists of the Proceeds of Crime Act 1987 (C th) and the Proceeds of \line \up0 \expndtw0\charscalex100 Crime Act 2002 (Cth). The 2002 Act extends the confiscation regime from conviction-based to civil-bas ed \line \up0 \expndtw0\charscalex100 forfeiture. \par\pard\ql \li10449\sb14\sl252\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 261 {\shp {\*\shpinst\shpleft2205\shptop13033\shpright5006\shpbottom13053\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz179\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276

8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g271}{\bkmkend Pg271}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i914\sb249\sl-400\slmult0 \up0 \expndtw0\charscalex102 \ul0\nosupersub\cf1\f2\fs 23 range of money laundering and terrorism financing offences, while MACMA provi des a \up0 \expndtw0\charscalex104 legislative basis for international cooperati on and arrangement in criminal matters. The \up0 \expndtw0\charscalex100 proceed s of crime legislation contain comprehensive measures for forfeiture, freezing a nd \up0 \expndtw-1\charscalex100 seizure of criminal proceeds. \par\pard\qj \li2 205\sb0\sl-403\slmult0 \par\pard\qj\li2205\ri913\sb15\sl-403\slmult0 \up0 \expnd tw0\charscalex100 This chapter will briefly examine the anti-money laundering la ws in Australia since it was \line \up0 \expndtw0\charscalex108 one of the first countries in the world to develop and enact laws to deal with money \line \up0 \expndtw0\charscalex109 laundering. It will also include a short comparison of t he Australian and Malaysian \line \up0 \expndtw0\charscalex103 regulatory regime s. While relevant provisions under the Criminal Code, the proceeds of \line \up0 \expndtw0\charscalex102 crime legislation and MACMA will be examined, the focus of this chapter will be on the \line \up0 \expndtw0\charscalex105 key provision s of the AML/CTF Act that directly impact on banks and other financial \line \up 0 \expndtw-3\charscalex100 institutions. \par\pard\li2205\sb0\sl-264\slmult0\par \pard\li2205\sb0\sl-264\slmult0\par\pard\li2205\sb0\sl-264\slmult0\par\pard\li22 05\sb195\sl-264\slmult0\fi0\tx2906 \up0 \expndtw-3\charscalex100 \ul0\nosupersub \cf4\f5\fs23 7.2\tab \up0 \expndtw-3\charscalex100 Money Laundering Offences\par \pard\qj \li2205\sb0\sl-404\slmult0 \par\pard\qj\li2205\ri915\sb62\sl-404\slmult 0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf1\f2\fs23 Originally, money la undering was criminalised under sections 81 and 83 of the Proceeds of \line \up0 \expndtw0\charscalex103 Crime Act 1987 (POCA). Since January 2003, the revised Division 400 of the Criminal \line \up0 \expndtw0\charscalex107 Code has replace d the money laundering offences under POCA 1987. Generally, the \line \up0 \expn dtw0\charscalex108 Criminal Code prohibits receiving, possessing, concealing or disposing of property, \line \up0 \expndtw-1\charscalex100 importing or engaging in banking transactions involving the proceeds of Commonwealth or \line \up0 \e xpndtw-1\charscalex100 foreign offences or property intended to be used as an in strumentality of such an offence.\ul0\super\cf8\f9\fs23 4 \par\pard\qj \li2205\r i915\sb397\sl-403\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf1\f2\f s23 The Criminal Code establishes the offence of laundering proceeds of crime as well as the \line \up0 \expndtw0\charscalex104 offence of possession of crimina l property that constitutes the proceeds of crime. The \line \up0 \expndtw-1\cha rscalex100 definitions of \u8216?proceeds of crime\u8217? and \u8216?property\u8 217? under section 400.1 are expansive. They \line \up0 \expndtw0\charscalex100 extend to any money or other property, whether located in Australia or overseas, that has \line \up0 \expndtw0\charscalex100 been derived or realised directly o r indirectly, by any person from the commission of an \line \up0 \expndtw0\chars calex102 indictable offence. An indictable offence means an offence agai nst a law of the \line \up0 \expndtw-4\charscalex100 Commonwealth, or a law of Territory with a minimum penalty of 12 months imprisonment. \par\pard\ql \li2 205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb172\sl-218\slmult0 \up0 \expndtw-2\ charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 4\ul0\nosupersub\cf 10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Criminal Code Act 1995\ul0\nosupersub \cf10\f11\fs19 (Cth), s 400.2. \par\pard\ql \li10449\sb104\sl-264\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 262 {\shp {\*\shpinst\shpleft2205\shptop14040\shpright5006\shpbottom14060\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz153\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}}

{\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g272}{\bkmkend Pg272}\par\pard\qj \li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205 \sb0\sl-402\slmult0 \par\pard\qj\li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205\s b0\sl-402\slmult0 \par\pard\qj\li2205\ri914\sb239\sl-402\slmult0\fi0 \up0 \expnd tw0\charscalex107 \ul0\nosupersub\cf1\f2\fs23 Sections 400.3 to 400.8 provide th e primary offences of dealing with money or other \line \up0 \expndtw0\charscale x105 property. These offences are graded depending on the value of the money or property; \line \up0 \expndtw0\charscalex104 whether the money or property is th e proceeds of crime; whether there is a risk that the \line \up0 \expndtw-1\char scalex100 money or property will become an instrument of crime; and the state of mind of the person \line \up0 \expndtw0\charscalex104 dealing with it (i.e. whe ther it was intentional, recklessness or negligent). For example, \line \up0 \ex pndtw-1\charscalex100 under section 400.3, where the dealing involves money or p roperty worth AUD1000,000 or \line \up0 \expndtw0\charscalex107 more and the per son believes the money or other property to be proceeds of crime or \line \up0 \ expndtw0\charscalex102 intends that it will become an instrument of crime,\ul0\s uper\cf8\f9\fs23 5\ul0\nosupersub\cf1\f2\fs23 upon conviction, the person could be \line \up0 \expndtw0\charscalex100 liable to a maximum penalty of 25 years i mprisonment or 1500 penalty units or both (one \line \up0 \expndtw0\charscalex10 0 penalty unit is equal to a fine of AUD110).\ul0\super\cf8\f9\fs23 6\ul0\nosupe rsub\cf1\f2\fs23 However, if the person was reckless about the \line \up0 \expn dtw0\charscalex100 money or other property being proceeds or about the risk that it is an instrument of crime, \line \up0 \expndtw0\charscalex100 the person cou ld be liable to a maximum penalty of 12 years imprisonment or 720 penalty \line \up0 \expndtw-1\charscalex100 units or both.\ul0\super\cf8\f9\fs23 7\ul0\nosuper sub\cf1\f2\fs23 Where the person was negligent about the money or other propert y being the \line \up0 \expndtw0\charscalex100 proceeds or instrument of crime, the person could be liable to a maximum penalty of five \line \up0 \expndtw0\cha rscalex100 years imprisonment or 300 penalty units or both.\ul0\super\cf8\f9\fs2 3 8 \par\pard\qj \li2205\ri915\sb400\sl-400\slmult0 \up0 \expndtw-2\charscalex10 0 \ul0\nosupersub\cf1\f2\fs23 Sections 400.4 to 400.8 provide for lesser dealing s with proceeds of crimes. Where dealings \line \up0 \expndtw-2\charscalex100 in volve money or property with a value of AUD100,000 or more the maximum penalty i s \par\pard\qj \li2205\ri915\sb20\sl-400\slmult0 \up0 \expndtw0\charscalex104 20 years imprisonment or 1200 penalty units or both, if the dealing was intentiona l; 10 \up0 \expndtw0\charscalex100 years imprisonment or 600 penalty units or bo th if there was recklessness; and four years \up0 \expndtw0\charscalex100 impris onment or 240 penalty units or both if it was negligent.\ul0\super\cf8\f9\fs23 9 \par\pard\qj \li2205\ri913\sb400\sl-400\slmult0 \up0 \expndtw0\charscalex103 \u l0\nosupersub\cf1\f2\fs23 Where the dealings involve property or money with a va lue of AUD50,000 or more, the \line \up0 \expndtw0\charscalex111 maximum penalty is 15 years imprisonment or 900 penalty units or both, if it was \line \up0 \ex pndtw-1\charscalex100 intentional; 7 years imprisonment or 420 penalty units or both if there was recklessness and \par\pard\ql \li2205\sb113\sl-264\slmult0 \up 0 \expndtw-1\charscalex100 3 years imprisonment or 180 penalty units or both if it was negligent.\ul0\super\cf8\f9\fs23 10\ul0\nosupersub\cf1\f2\fs23 Furthermo re, where \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218 \slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb100\sl-218 \slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10 \fs18 5\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Criminal Cod e Act 1995\ul0\nosupersub\cf10\f11\fs19 (Cth), s 400.3(1). \par\pard\ql \li2205 \sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 6\ul0\ nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Crimes Act 1914\ul0\nosu persub\cf10\f11\fs19 (Cth), s 4AA. \par\pard\li2205\sb9\sl-218\slmult0\fi0 \up0

\expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 7\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Criminal Code Act 1995\ul0\nosupersub\cf10\f11\f s19 (Cth), s 400.3(2).\par\pard\li2205\sb6\sl-218\slmult0\fi0 \up0 \expndtw-2\c harscalex100 \ul0\super\cf26\f27\fs18 8\ul0\nosupersub\cf11\f12\fs19 Criminal C ode Act 1995\ul0\nosupersub\cf10\f11\fs19 (Cth), s 400.3(3).\par\pard\li2205\sb 6\sl-218\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 9\ul0 \nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Criminal Code Act 1995\ ul0\nosupersub\cf10\f11\fs19 (Cth), s 400.4.\par\pard\li2205\sb5\sl-218\slmult0 \fi0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 10\ul0\nosupersub\cf1 0\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Criminal Code Act 1995\ul0\nosupersub\ cf10\f11\fs19 (Cth), s 400.5.\par\pard\li2205\sb3\sl-264\slmult0\fi8243 \up0 \e xpndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 263 {\shp {\*\shpinst\shpleft2205\shptop13033\shpright5006\shpbottom13053\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz178\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g273}{\bkmkend Pg273}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i914\sb249\sl-400\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf1\f2\f s23 the dealings involve property or money with a value of AUD10,000 or more, th e maximum \up0 \expndtw0\charscalex100 penalty is 10 years imprisonment or 600 p enalty units or both if it was intentional; 5 years \up0 \expndtw-1\charscalex10 0 imprisonment or 300 penalty units or both, if it was recklessness and 2 years imprisonment \up0 \expndtw-2\charscalex100 or 120 penalty units or both if it wa s negligent.\ul0\super\cf8\f9\fs23 11 \par\pard\ql \li2205\sb0\sl-264\slmult0 \p ar\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb5\sl-264\slmult0\tx10 044 \up0 \expndtw0\charscalex110 \ul0\nosupersub\cf1\f2\fs23 Where the dealings involve AUD1,000 or more, the maximum penalty is \tab \up0 \expndtw0\charscalex1 10 5 years \par\pard\qj \li2205\ri913\sb21\sl-404\slmult0\fi0 \up0 \expndtw-1\ch arscalex100 imprisonment or 300 penalty units or both if there was intentional; 2 years imprisonment or \up0 \expndtw0\charscalex105 120 penalty units or both i f there was recklessness and 12 months imprisonment or 60 \up0 \expndtw0\charsca lex100 penalty units or both if there was negligent.\ul0\super\cf8\f9\fs23 12\ul 0\nosupersub\cf1\f2\fs23 Finally, section 400.8 provides dealing with \up0 \exp ndtw0\charscalex102 proceeds of crime of any value, with a maximum penalty 12 mo nths imprisonment or 60 \up0 \expndtw-1\charscalex100 penalty units or both if t here was intentional; 6 months imprisonment or 30 penalty units or \up0 \expndtw -1\charscalex100 both if there was recklessness and 10 penalty units if there wa s negligent. \par\pard\qj \li2205\ri913\sb399\sl-401\slmult0\fi0 \up0 \expndtw0\ charscalex102 Furthermore, under section 400.9,\ul0\super\cf8\f9\fs23 13\ul0\nos upersub\cf1\f2\fs23 a person is guilty of an offence if he or she receives, \li ne \up0 \expndtw0\charscalex100 possesses, conceals, disposes of or brings into Australia any money or other property that \line \up0 \expndtw0\charscalex100 ma y reasonably be suspected of being proceeds of Commonwealth or foreign crimes. T he \line \up0 \expndtw0\charscalex100 maximum penalty is two years imprisonment or 50 penalty units or both. The offence also \line \up0 \expndtw-1\charscalex10 0 covers the taking money outside Australia and the proceeds of State and Territ ory offences \line \up0 \expndtw0\charscalex106 where the possession, concealing , receiving or disposing of the proceeds occur in the \line \up0 \expndtw0\chars calex110 course of importing or exporting goods, postal or telegraphic communica tions or a \line \up0 \expndtw0\charscalex102 transaction in the course of banki ng.\ul0\super\cf8\f9\fs23 14\ul0\nosupersub\cf1\f2\fs23 Subsection (5) provides

that this offence does not \line \up0 \expndtw0\charscalex102 apply if the pers on can show that he or she had no reasonable grounds to suspect that the \line \ up0 \expndtw0\charscalex105 property was derived from some form of unlawful acti vity.\ul0\super\cf8\f9\fs23 15\ul0\nosupersub\cf1\f2\fs23 Clearly, this provide s an \line \up0 \expndtw0\charscalex100 appropriate safeguard against prosecutio n. However, the defendant bears a legal burden in \line \up0 \expndtw0\charscale x106 relation to the defence. Given the knowledge and information the defendant will have \line \up0 \expndtw-3\charscalex100 concerning the transaction, this i s considered a reasonable approach. \par\pard\ql \li2205\sb0\sl-218\slmult0 \par \pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\p ard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\par d\ql\li2205\sb41\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10 \fs19\ul0\super\cf9\f10\fs18 11\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf 11\f12\fs19 Criminal Code Act 1995\ul0\nosupersub\cf10\f11\fs19 (Cth), s 400.6. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\supe r\cf9\f10\fs18 12\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Cr iminal Code Act 1995\ul0\nosupersub\cf10\f11\fs19 (Cth), s 400.7. \par\pard\qj \li2205\ri947\sb1\sl-220\slmult0\fi0 \up0 \expndtw0\charscalex100 \ul0\super\cf9 \f10\fs18 13\ul0\nosupersub\cf10\f11\fs19 This section replaces the money laund ering offence provision under section 82 of the \ul0\nosupersub\cf11\f12\fs19 Pr oceeds of Crime \up0 \expndtw0\charscalex100 Act 1987 \ul0\nosupersub\cf10\f11\f s19 (Cth). \par\pard\li2205\sb17\sl-218\slmult0\fi0 \up0 \expndtw-2\charscalex10 0 \ul0\super\cf9\f10\fs18 14\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\ f12\fs19 Criminal Code Act 1995\ul0\nosupersub\cf10\f11\fs19 (Cth), s 400.9(3). \par\pard\li2205\sb5\sl-218\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\super \cf26\f27\fs18 15\ul0\nosupersub\cf11\f12\fs19 Criminal Code Act 1995\ul0\nosup ersub\cf10\f11\fs19 (Cth), s 400.9(5).\par\pard\li2205\sb3\sl-264\slmult0\fi824 3 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 264 {\shp {\*\shpinst\shpleft2205\shptop13033\shpright5006\shpbottom13053\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz177\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g274}{\bkmkend Pg274}\par\pard\qj \li2205\sb0\sl-404\slmult0 \par\pard\qj\li2205 \sb0\sl-404\slmult0 \par\pard\qj\li2205\sb0\sl-404\slmult0 \par\pard\qj\li2205\r i913\sb234\sl-404\slmult0 \up0 \expndtw0\charscalex104 \ul0\nosupersub\cf1\f2\fs 23 Section 400.9 (2) provides a wide range of activities which can be taken to s atisfy the \line \up0 \expndtw-4\charscalex100 reasonable suspicion element of t he offence. This includes structuring transactions to avoid \line \up0 \expndtw -2\charscalex100 reporting requirements; the use of false name for accounts; usi ng grossly out of proportion \line \up0 \expndtw0\charscalex102 valuations to th e defendant\u8217?s income and expenditure; contraventions of the FTRA and \line \up0 \expndtw-3\charscalex100 engaging in transactions on behalf of others but not being prepared to identify such persons \line \up0 \expndtw-4\charscalex100 or their location.\ul0\super\cf8\f9\fs23 16 \par\pard\qj \li2205\ri915\sb397\sl403\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf1\f2\fs23 In a prose cution of a money laundering offence under the Criminal Code, sections 400.11 \l ine \up0 \expndtw0\charscalex104 and 400.13 indicate that the prosecution does n ot need to prove the predicate offence. \line \up0 \expndtw0\charscalex100 Howev er, the prosecution must still prove beyond a reasonable doubt that the money or \line \up0 \expndtw0\charscalex102 property is the proceeds of crime. This appr oach is welcome because it will remove the \line \up0 \expndtw0\charscalex100 bi ggest barrier to successful prosecution of money laundering, that is the require

ment to \line \up0 \expndtw-1\charscalex100 prove the link between money launder ing offence and the specific predicate offence from \line \up0 \expndtw-2\charsc alex100 which the fund is generated. \par\pard\qj \li2205\ri910\sb397\sl-404\slm ult0 \up0 \expndtw0\charscalex105 It is generally accepted that money launder ing prosecutions are typically complex \up0 \expndtw0\charscalex102 prosecution s. As the offences in Division 400 of the Criminal Code are relatively new, \up0 \expndtw-4\charscalex100 there is limited judicial consideration of the issues that can arise in money laundering cases. \up0 \expndtw0\charscalex103 The factu al circumstances of these cases are usually complex and are often conducted \up0 \expndtw0\charscalex107 outside the country, which requires overseas cooperatio n and evidence to assist the \up0 \expndtw-5\charscalex100 investigation and pro secution. \par\pard\qj \li2205\ri913\sb398\sl-402\slmult0\fi0 \up0 \expndtw-2\ch arscalex100 The New South Wales Court of Criminal Appeal in \ul0\nosupersub\cf7\ f8\fs23 Ansari v The Queen\ul0\nosupersub\cf1\f2\fs23 [2007] NSWCCA \line \up0 \expndtw0\charscalex100 204 and \ul0\nosupersub\cf7\f8\fs23 R v Huang\ul0\nosupe rsub\cf1\f2\fs23 [2007] NSWCCA 259 provide guidance on the sentencing principle s \line \up0 \expndtw0\charscalex106 that should be adopted in money laundering prosecutions under Division 400 of the \line \up0 \expndtw0\charscalex102 Crimin al Code. In \ul0\nosupersub\cf7\f8\fs23 Ansari v The Queen\ul0\nosupersub\cf1\f2 \fs23 , two brothers were charged with the offences of \line \up0 \expndtw0\char scalex100 conspiring to launder money.\ul0\nosupersub\cf7\f8\fs23 \ul0\nosupers ub\cf1\f2\fs23 The brothers who owned and operated a money exchange \line \up0 \ expndtw0\charscalex105 business took delivery of over AUD2 million in cash in Oc tober 2003. The cash was \line \up0 \expndtw0\charscalex100 delivered by Z, an I sraeli national. Z later testified that he was recruited in Romania and \line \u p0 \expndtw0\charscalex100 travelled to Australia to deliver the cash to the def endants for their money exchange \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pa rd\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb174\sl-218\slmult0 \up0 \e xpndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 16\ul0\nos upersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Criminal Code Act 1995 \ul0 \nosupersub\cf10\f11\fs19 (Cth), s 400.9(2) (a)-(e). \par\pard\ql \li10449\sb15\ sl-251\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 265 {\shp {\*\shpinst\shpleft2205\shptop14151\shpright5006\shpbottom14171\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz196\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g275}{\bkmkend Pg275}\par\pard\qj \li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205 \sb0\sl-402\slmult0 \par\pard\qj\li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205\r i913\sb241\sl-402\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf1\f2\f s23 business in Sydney. Z left Sydney on October 13, 2003 and within two days th e defendants \line \up0 \expndtw0\charscalex104 had arranged for an associate to deposit the cash into various bank accounts. A total of \line \up0 \expndtw-2\c harscalex100 AUD1,952,107.00 in bank deposits were made by the associate on beha lf of the defendants. \line \up0 \expndtw-1\charscalex100 The bank deposits whic h were for sums below $10,000, were structured in such a way as to \line \up0 \e xpndtw-1\charscalex100 avoid the attention of law enforcement authorities. The f ollowing year, the defendants tried \line \up0 \expndtw0\charscalex106 to arrang e a similar operation. Z was again contacted by his Romanian associates and \lin e \up0 \expndtw0\charscalex102 agreed to return to Australia to repeat what he h ad done in October 2003. He managed to \line \up0 \expndtw0\charscalex102 return to Australia, but was arrested before any money was delivered to the defendants . \par\pard\qj \li2205\ri914\sb398\sl-402\slmult0 \up0 \expndtw0\charscalex100 T

he defendants were found guilty of the offences and were sentenced on November 1 0, \up0 \expndtw-2\charscalex100 2006 in the District Court of New South Wales. On each conspiracy charge the defendants \up0 \expndtw-2\charscalex100 were sent enced to four years of imprisonment. The DPP appealed against the sentences on \ up0 \expndtw0\charscalex103 the grounds that they were manifestly inadequate, wh ilst the defendants also appealed \up0 \expndtw0\charscalex102 against their con victions. On August 14, 2007 the New South Wales Court of Criminal \up0 \expndtw 0\charscalex100 Appeal dismissed the defendants\u8217? appeal against the convic tions and allowed the DPP\u8217?s \up0 \expndtw-1\charscalex100 appeal on the se ntences. The Court quashed the sentences ruling by the District Court and \up0 \ expndtw0\charscalex106 instead imposed sentences of seven years imprisonment for each conspiracy - partly \up0 \expndtw-2\charscalex100 accumulated, so as to re sult in an effective total head sentence of nine years imprisonment \up0 \expndt w-3\charscalex100 and a single non-parole period of five years and five months. \par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri914\sb20\sl-400\sl mult0 \up0 \expndtw-4\charscalex100 In this case the Court held that the sentenc es failed to a very significant degree to reflect the \up0 \expndtw-5\charscalex 100 objective seriousness of the offences. The Court noted at p 145: \par\pard\q j \li2906\ri931\sb5\sl-370\slmult0 \up0 \expndtw0\charscalex102 \ul0\nosupersub\ cf13\f14\fs21 The Judge with respect correctly identified the appellants as prin cipals in the scheme to \line \up0 \expndtw-3\charscalex100 launder the money th ey received, or were to receive, from Z. They were at the very heart of \line \u p0 \expndtw0\charscalex100 the conspiracies alleged. But more than that they wer e intelligent professionals who were \line \up0 \expndtw0\charscalex104 engaged in an apparently legitimate finance business used as a cover for dealing with \l ine \up0 \expndtw-3\charscalex100 money reckless as to unlawful use to which it might be put, and no doubt relying upon their \line \up0 \expndtw-2\charscalex10 0 expertise and business connection to commit their offences. Regardless of what they knew \line \up0 \expndtw0\charscalex109 about the source of the money or i ts ultimate destination, their conduct involved a \line \up0 \expndtw0\charscale x102 substantial degree of criminality within the scope of the section. It was o bvious that the \line \up0 \expndtw-3\charscalex100 offences were committed by t he appellants for profit and apparently motivated by greed. \par\pard\ql \li1044 9\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li1044 9\sb190\sl-264\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 266 \par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstar t Pg276}{\bkmkend Pg276}\par\pard\qj \li2205\sb0\sl-402\slmult0 \par\pard\qj\li2 205\sb0\sl-402\slmult0 \par\pard\qj\li2205\sb0\sl-402\slmult0 \par\pard\qj\li220 5\ri911\sb241\sl-402\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf1\f 2\fs23 From this case, it appears that when persons are convicted of laundering money that is to be \line \up0 \expndtw0\charscalex105 used as an instrument of crime, knowledge that money is proceeds or an instrument of \line \up0 \expndtw0 \charscalex100 crime is a relevant consideration to convict the offender but is of limited significance as an \line \up0 \expndtw0\charscalex100 aggravating or mitigating factor. More importantly, in determining the relative seriousness \li ne \up0 \expndtw0\charscalex100 of money laundering offences, it appears that it is important for the court to consider what \line \up0 \expndtw0\charscalex108 the offender did because there may be little or no evidence before the court as to the \line \up0 \expndtw0\charscalex100 organisation behind the offence, the s ource of the funds or the ultimate use to be made of \line \up0 \expndtw0\charsc alex100 them. \par\pard\qj \li2205\ri912\sb398\sl-402\slmult0 \up0 \expndtw0\cha rscalex103 In \ul0\nosupersub\cf7\f8\fs23 R v Huang\ul0\nosupersub\cf1\f2\fs23 , the defendants, Huang and Siu, were each recruited and directed by Zhen \line \ up0 \expndtw0\charscalex111 Chi Chen to conduct cash transactions at various bra nches of banks in the Sydney \line \up0 \expndtw0\charscalex100 metropolitan dis trict, involving numerous cash deposits - each less than AUD10, 000.00 -\line \u p0 \expndtw0\charscalex103 with the intention of circumventing the reporti ng requirement under the Financial \line \up0 \expndtw-1\charscalex100 Trans action Reports Act 1988, thereby avoiding the attention of law enforcement agenc ies. \line \up0 \expndtw0\charscalex106 Huang made structured deposits of cash t

otalling AUD3,088,311.00 often using false \line \up0 \expndtw0\charscalex100 na mes and addresses at over 60 bank branches during an 11 month period. Siu, also using \line \up0 \expndtw0\charscalex102 false names and addresses, structured c ash deposits totalling AUD556,400.00 at over 40 \line \up0 \expndtw0\charscalex1 00 bank branches during a three month period. Huang pleaded guilty to the offenc e of dealing \line \up0 \expndtw0\charscalex105 in proceeds of crime worth AUD1 million or more, pursuant to section 400.3(1) of the \line \up0 \expndtw0\charsc alex104 Criminal Code, while Siu pleaded guilty to the offence of dealing in pro ceeds of crime \line \up0 \expndtw0\charscalex104 worth AUD100,000.00 or more, p ursuant to section 400.4(1) of the Criminal Code. On \line \up0 \expndtw-1\chars calex100 March 9, 2007, Huang was sentenced to imprisonment for three years with an order that he \line \up0 \expndtw-1\charscalex100 be released after serving one year and nine months. Siu was sentenced to imprisonment for \line \up0 \expn dtw0\charscalex103 two years and 11 months with an order that he be released aft er serving 12 months. The \line \up0 \expndtw0\charscalex105 Crown viewed the se ntences imposed by the District Court of New South Wales to be \line \up0 \expnd tw-1\charscalex100 manifestly inadequate and lodged separate appeals to the Cour t of Criminal Appeal against \line \up0 \expndtw0\charscalex105 the sentences. T he appeals were jointly heard by the Court of Appeal, where the Court \line \up0 \expndtw0\charscalex100 allowed the Crown appeals and quashed the sentences imp osed by the court below. Huang \line \up0 \expndtw0\charscalex102 was resentence d to five and half years of imprisonment with a non-parole period of three \line \up0 \expndtw0\charscalex105 years and four months. Siu was resentenced to impr isonment of five years with a non-\line \up0 \expndtw-3\charscalex100 parole per iod of two and half years. \par\pard\ql \li10449\sb0\sl-264\slmult0 \par\pard\ql \li10449\sb168\sl-264\slmult0 \up0 \expndtw-3\charscalex100 267 \par\pard\sect\s ectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart Pg277}{\bkmkend Pg2 77}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult 0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri916\sb249\sl-400\ slmult0 \up0 \expndtw0\charscalex104 \ul0\nosupersub\cf1\f2\fs23 In this case, i t appears that in determining the relative seriousness of money laundering \up0 \expndtw0\charscalex100 offences, the Court considered the amount of money invol ved, the number of transactions \up0 \expndtw0\charscalex108 carried out by the offender in committing the offence and the period over which the \up0 \expndtw-3 \charscalex100 transactions occurred. The Court noted at p381: \par\pard\qj \li2 906\ri930\sb24\sl-371\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf13 \f14\fs21 The amount of money involved is clearly a highly significant matter be cause the legislation \up0 \expndtw-1\charscalex100 uses it as the principal mea ns of dividing the offences into categories and it is the primary \up0 \expndtw0 \charscalex107 identifier of what is the maximum penalty for an offence...Of cou rse the number of \up0 \expndtw0\charscalex104 transactions carried out by the o ffender in committing the offence and the period over \up0 \expndtw0\charscalex1 04 which the transactions occurred are significant because they indicate the ext ent of the \up0 \expndtw0\charscalex106 offender\u8217?s criminality. Generally speaking a number of transactions involving small \up0 \expndtw0\charscalex100 a mounts of money will be more serious than a single transaction of a larger amoun t. The \up0 \expndtw-1\charscalex100 latter may be seen as an isolated offenc\ul 0\nosupersub\cf1\f2\fs23 e. \par\pard\qj \li2205\ri916\sb6\sl-400\slmult0 \up0 \ expndtw0\charscalex105 In this case the Court also ruled that when the activity is engaged in for profit, over a \up0 \expndtw-2\charscalex100 significant perio d of time and with a large number of transactions, the prior good character \up0 \expndtw-2\charscalex100 of the offender is of less significance than might oth erwise be the case. \par\pard\qj \li2205\ri913\sb399\sl-402\slmult0 \up0 \expndt w0\charscalex107 The decision in \ul0\nosupersub\cf7\f8\fs23 R v Huang\ul0\nosup ersub\cf1\f2\fs23 was considered in \ul0\nosupersub\cf7\f8\fs23 R v Foster\ul0\ nosupersub\cf1\f2\fs23 [2008] QCA 90. Here, the \line \up0 \expndtw0\charscalex 100 defendant was acting on behalf of a company called Kai Viti Liku Beach Ltd ( KVLBL), \line \up0 \expndtw0\charscalex110 which obtained a loan of USD$580,000 from the Bank of the Federated States of \line \up0 \expndtw-3\charscalex100 Mic ronesia in 2006. The loan was secured by a mortgage over a leasehold property o

wned \line \up0 \expndtw0\charscalex102 by KVLBL in Fiji. The purpose of the lo an was to develop the leasehold property as a \line \up0 \expndtw0\charscalex105 resort. It was agreed between the parties that before the funds could be drawn down, \line \up0 \expndtw0\charscalex102 KVLBL would be required to supply the b ank written instructions with documentation \line \up0 \expndtw0\charscalex100 f rom the third party payees. On nine occasions between August 4, 2006 and Octobe r 13, \line \up0 \expndtw0\charscalex107 2006, the defendant sent email requests to the bank to pay three third party entities, \line \up0 \expndtw0\charscalex1 02 reportedly doing work on behalf of KVLBL in development of the resort. Howeve r, no \line \up0 \expndtw-3\charscalex100 work had been performed by these entit ies for the resort. The bank acted on the defendant\u8217?s \line \up0 \expndtw0 \charscalex107 misrepresentations and forwarded funds at the defendant\u8217?s d irection, to accounts in \line \up0 \expndtw0\charscalex104 Australia. Eight of the nine payments forwarded to Australian accounts were used for \line \up0 \exp ndtw-1\charscalex100 expenses that were not associated with the resort\u8217?s d evelopment, while the ninth payment \line \up0 \expndtw-2\charscalex100 was retu rned to the bank after steps to recover the money were taken. \par\pard\ql \li10 449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li10 449\sb144\sl-264\slmult0 \up0 \expndtw-3\charscalex100 268 \par\pard\sect\sectd\ fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart Pg278}{\bkmkend Pg278}\p ar\pard\qj \li2205\sb0\sl-403\slmult0 \par\pard\qj\li2205\sb0\sl-403\slmult0 \pa r\pard\qj\li2205\sb0\sl-403\slmult0 \par\pard\qj\li2205\ri912\sb238\sl-403\slmul t0 \up0 \expndtw0\charscalex104 \ul0\nosupersub\cf1\f2\fs23 The defendant pleade d guilty to the offence of money laundering to a total amount of \line \up0 \exp ndtw-1\charscalex100 $306,772.58 which related to the transfer of the proceeds o f foreign indictable offences to \line \up0 \expndtw0\charscalex103 Australia. On December 7, 2007 the defendant was sentenced to four and a half years \line \ up0 \expndtw-3\charscalex100 imprisonment with a non-parole period of 2 years an d 3 months. The defendant\u8217?s appeal to \line \up0 \expndtw0\charscalex100 the Queensland Court of Appeal against the severity of the sentence was dismisse d. The \line \up0 \expndtw-2\charscalex100 Court held that the sentencing judge did not err in taking into account the circumstances of \line \up0 \expndtw0\cha rscalex106 the fraud. The acts of obtaining the money by fraud were closely inte rwoven and an \line \up0 \expndtw0\charscalex102 essential element in the offenc e of money laundering. The sentence was not manifestly \line \up0 \expndtw-3\cha rscalex100 excessive by comparison to similar criminal offences. In this case, the Court also ruled that \line \up0 \expndtw0\charscalex102 general and individ ual deterrence were important considerations when determining the \line \up0 \ex pndtw-2\charscalex100 appropriate sentence for money laundering offence. Finally , the court should also consider \line \up0 \expndtw-2\charscalex100 the circums tances of the offence from which the money was directly or indirectly realised, \line \up0 \expndtw-3\charscalex100 the amount of money involved, the offender\u 8217?s state of belief or knowledge and the relevant \line \up0 \expndtw-4\chars calex100 maximum penalty. \par\pard\qj \li2205\ri914\sb397\sl-403\slmult0 \up0 \ expndtw0\charscalex100 From these cases, it appears that Division 400 of the Cri minal Code contains a range of \line \up0 \expndtw0\charscalex103 money launderi ng offences, which are broad in their application. The offences are not \line \u p0 \expndtw0\charscalex104 concerned only with the source of the money or proper ty that is dealt with but also its \line \up0 \expndtw-3\charscalex100 ultimate use. The offences cover money obtained illegally or to be used for illegal purpo ses \line \up0 \expndtw0\charscalex108 or dealt with in a manner that is illegal . More importantly, the legislation itself has \line \up0 \expndtw-1\charscalex1 00 attempted to structure offences to give some guidance as to the seriousness o f the conduct \line \up0 \expndtw-1\charscalex100 by reference to the applicable maximum penalty for each offences. Generally, the greater \line \up0 \expndtw0\ charscalex100 the sum of money involved, the more serious the offence. The legis lation also takes into \line \up0 \expndtw-3\charscalex100 account the mental st ate of the offender, so that an offence involving the intentional dealing \line \up0 \expndtw-4\charscalex100 with proceeds of crime or instruments of crime is more serious than that one where the state \line \up0 \expndtw0\charscalex100 of

mind is recklessness as to the criminal nature of the property. As such, it pro vides law \line \up0 \expndtw0\charscalex105 enforcement authorities with an app ealing set of options in ensuring that charges are \line \up0 \expndtw0\charscal ex103 initiated. Also, it provides the courts with very specific guidance in sen tencing money \line \up0 \expndtw-3\charscalex100 launderers.\ul0\super\cf8\f9\f s23 17\ul0\nosupersub\cf1\f2\fs23 Therefore, if it is effectively implemented, it would become an effective legal \par\pard\qj \li2205\sb0\sl-220\slmult0 \par\ pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pa rd\qj\li2205\ri946\sb129\sl-220\slmult0 \up0 \expndtw0\charscalex105 \ul0\super\ cf9\f10\fs19\ul0\super\cf9\f10\fs18 17\ul0\nosupersub\cf10\f11\fs19 APG Third Mu tual Evaluation Report on Anti-Money Laundering and Combating the Financing of \ up0 \expndtw-2\charscalex100 Terrorism (2006) 28. \par\pard\ql \li10449\sb14\sl252\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 269 {\shp {\*\shpinst\shpleft2205\shptop13928\shpright5006\shpbottom13948\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz174\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g279}{\bkmkend Pg279}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i914\sb249\sl-400\slmult0 \up0 \expndtw0\charscalex104 \ul0\nosupersub\cf1\f2\fs 23 tool in preventing the movement of illegally obtained money and pro perty, both \up0 \expndtw-3\charscalex100 domestically and internationally. \pa r\pard\qj \li2205\ri917\sb392\sl-410\slmult0 \up0 \expndtw0\charscalex104 With t he enactment of the AML/CTF Act, the scope of money laundering offences has \up0 \expndtw0\charscalex100 widened to include offences committed overseas. The AML /CTF Act provides that money \up0 \expndtw-1\charscalex100 laundering offences m eans conduct that amounts to \par\pard\li2555\sb119\sl-241\slmult0\fi0\tx3255 \u p0 \expndtw-1\charscalex100 \ul0\nosupersub\cf13\f14\fs21 (a)\tab \up0 \expndtw1\charscalex100 an offence against Division 400 of the Criminal Code; or\par\par d\li2555\sb128\sl-241\slmult0\fi0\tx3255 \up0 \expndtw-1\charscalex100 (b)\tab \ up0 \expndtw0\charscalex100 an offence against a law of a State or Territory tha t corresponds to an offence referred\par\pard\ql \li3255\sb121\sl-241\slmult0 \u p0 \expndtw-2\charscalex100 to in paragraph (a); or \par\pard\ql \li2556\sb119\s l-241\slmult0\tx3255 \up0 \expndtw-3\charscalex100 (c) \tab \up0 \expndtw0\chars calex107 an offence against a law of a foreign country or of a part of a foreign country that \par\pard\ql \li3255\sb139\sl-241\slmult0 \up0 \expndtw-2\charscal ex100 corresponds to an offence referred to in paragraph (a).\ul0\super\cf14\f15 \fs20 18 \par\pard\li2205\sb0\sl-264\slmult0\par\pard\li2205\sb0\sl-264\slmult0\ par\pard\li2205\sb243\sl-264\slmult0\fi0\tx2906 \up0 \expndtw-3\charscalex100 \u l0\nosupersub\cf4\f5\fs23 7.3\tab \up0 \expndtw-3\charscalex100 Terrorism Financ ing Offences\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri915\sb 73\sl-400\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf1\f2\fs23 The terrorism financing offences are found in Division 100 of the Criminal Code and Part 4 \up0 \expndtw-2\charscalex100 of the Charter of the United Nations Act 19 45 (CoTUNA). Generally, sections 102.6(1) and \up0 \expndtw-2\charscalex100 102. 6(2) of the Criminal Code prohibit the collection of funds for, or on behalf of a terrorist \up0 \expndtw-2\charscalex100 organisation, whether directly or indi rectly. A terrorist organisation is defined as \par\pard\qj \li2731\ri931\sb34\s l-360\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf13\f14\fs21 (a) an organisation that is directly or indirectly engaged in, preparing, planning, as sisting in or \up0 \expndtw-1\charscalex100 fostering the doing of a terrorist a ct (whether or not the terrorist act occurs); or \par\pard\ql \li2731\sb119\sl-2

41\slmult0 \up0 \expndtw-2\charscalex100 (b) an organisation that is specified b y the regulations for the purpose of this paragraph; \par\pard\ql \li2731\sb119\ sl-241\slmult0 \up0 \expndtw-2\charscalex100 (c) a Hizballah organisation, if th at organisation is specified by the regulations; or \par\pard\ql \li2731\sb139\s l-241\slmult0 \up0 \expndtw-2\charscalex100 (d) a Hamas organisation, if that or ganisation is specified by the regulations; or \par\pard\ql \li2731\sb119\sl-241 \slmult0 \up0 \expndtw-2\charscalex100 (e) a Lashkar-e-Tayyiba organisation, if that organisation is specified by the regulations.\ul0\super\cf14\f15\fs20 19 \p ar\pard\qj \li2205\ri915\sb392\sl-420\slmult0 \up0 \expndtw-1\charscalex100 \ul0 \nosupersub\cf1\f2\fs23 It is to be noted that the list of terrorist organisatio ns for the purposes of the Criminal Code \up0 \expndtw-2\charscalex100 is availa ble on the National Security Australia website.\ul0\super\cf8\f9\fs23 20 \par\pa rd\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\par d\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb137\sl-218\slmult0 \up0 \expn dtw-2\charscalex100 \ul0\super\cf9\f10\fs18 18\ul0\nosupersub\cf10\f11\fs19 \ul 0\nosupersub\cf11\f12\fs19 Anti-Money Laundering and Counter-Terrorism Financing Act 2006\ul0\nosupersub\cf10\f11\fs19 (Cth), s 5. \par\pard\ql \li2205\sb2\sl218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 19\ul0\nosuper sub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Criminal Code Act 1995 \ul0\nos upersub\cf10\f11\fs19 (Cth), s 102.1. \par\pard\qj \li2205\ri943\sb1\sl-220\slmu lt0\fi0 \up0 \expndtw-1\charscalex100 \ul0\super\cf9\f10\fs18 20\ul0\nosupersub\ cf10\f11\fs19 See {\field{\*\fldinst {HYPERLINK "http://www.nationalsecurity.go v.au./" }}{\fldrslt {\ul0\nosupersub\cf29\f30\fs19\ul www.nationalsecurity.gov.a u\ul0\nosupersub\cf10\f11\fs19 .}}}\ul0\nosupersub\cf10\f11\fs19 As of 30 Septe mber 2007, there were 19 organizations officially listed as \line \up0 \expndtw2\charscalex100 terrorist organizations. \par\pard\ql \li10449\sb14\sl-252\slmul t0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 270 {\shp {\*\shpinst\shpleft2205\shptop13480\shpright5006\shpbottom13500\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz197\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g280}{\bkmkend Pg280}\par\pard\qj \li2205\sb0\sl-404\slmult0 \par\pard\qj\li2205 \sb0\sl-404\slmult0 \par\pard\qj\li2205\sb0\sl-404\slmult0 \par\pard\qj\li2205\r i915\sb234\sl-404\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs 23 Under section 102.6(1), if the offender knows the organisation is a terrorist organisation, \up0 \expndtw-1\charscalex100 the person could be liable for up t o 25 years imprisonment upon conviction. Additionally, \up0 \expndtw0\charscalex 100 section 102.6(2) deals with the situation where the offender is reckless as to whether the \up0 \expndtw-2\charscalex100 organisation is a terrorist organis ation. The offence carries a maximum penalty of 15 years \up0 \expndtw0\charscal ex100 imprisonment. \u8216?Knowledge\u8217? and \u8216?recklessness\u8217? are d efined in sections 5.3 and 5.4 of the \up0 \expndtw-1\charscalex100 Criminal Cod e respectively.\ul0\super\cf8\f9\fs23 21 \par\pard\qj \li2205\ri915\sb398\sl-402 \slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf1\f2\fs23 Section 1 03.1 makes it an offence for a person to provide or collect funds, and be reckle ss \line \up0 \expndtw0\charscalex106 as to whether those funds will be used to facilitate or engage in a terrorist act. Upon \line \up0 \expndtw-1\charscalex10 0 conviction, the person could be liable for a life imprisonment. Interestingly, the offence is \line \up0 \expndtw-1\charscalex100 committed even if the terror ist act does not occur.\ul0\super\cf8\f9\fs23 22\ul0\nosupersub\cf1\f2\fs23 Fur ther, section 103.2(1) criminalises \line \up0 \expndtw-2\charscalex100 the coll

ection of funds where the funds are made available to, or collected for, or on b ehalf \line \up0 \expndtw-1\charscalex100 of another person. The offence will oc cur if the person is reckless as to whether that other \line \up0 \expndtw0\char scalex105 person will use the funds to facilitate or engage in a terrorist act. As recklessness is a \line \up0 \expndtw0\charscalex103 relatively high standard fault element, it is believed that the offence will not apply to a \line \up0 \ expndtw0\charscalex100 person who provides or collects funds believing those fun ds will be used for an innocent \line \up0 \expndtw-1\charscalex100 purpose.\ul0 \super\cf8\f9\fs23 23 \par\pard\qj \li2205\ri914\sb397\sl-404\slmult0\fi0 \up0 \ expndtw0\charscalex103 \ul0\nosupersub\cf1\f2\fs23 It has been argued that the o ffences under section 102.6 of the Criminal Code are very \line \up0 \expndtw0\c harscalex106 broad and captures conduct that go far beyond intentional funding o f politically and \line \up0 \expndtw0\charscalex102 religiously motivated viole nce.\ul0\super\cf8\f9\fs23 24\ul0\nosupersub\cf1\f2\fs23 Under these provisions , it is illegal to fund a \u8216?terrorist \line \up0 \expndtw-3\charscalex100 o rganisation\u8217? as prescribed under section 102.1, regardless of the use to w hich the funds are \line \up0 \expndtw0\charscalex113 put. For instance, giving money to a Hamas for the sole purpose of assisting its \line \up0 \expndtw0\char scalex107 humanitarian activities is an offence if the donor knows that recipien t of the fund is \par\pard\qj \li2205\sb0\sl-226\slmult0 \par\pard\qj\li2205\sb0 \sl-226\slmult0 \par\pard\qj\li2205\sb0\sl-226\slmult0 \par\pard\qj\li2205\sb0\s l-226\slmult0 \par\pard\qj\li2205\sb0\sl-226\slmult0 \par\pard\qj\li2205\ri944\s b114\sl-226\slmult0 \up0 \expndtw-1\charscalex100 \ul0\super\cf9\f10\fs19\ul0\su per\cf9\f10\fs18 21\ul0\nosupersub\cf10\f11\fs19 A person has knowledge of a ci rcumstance or a result if he or she is aware that it exists or will exist in the \up0 \expndtw0\charscalex107 ordinary course of events. A person is reckless wi th respect to a circumstance if they are aware of a \up0 \expndtw0\charscalex100 substantial risk that the circumstance exists or will exist, and having regard to the circumstances known to \up0 \expndtw-1\charscalex100 them, it is unjustif iable to take the risk. \par\pard\ql \li2205\sb1\sl-218\slmult0 \up0 \expndtw-2\ charscalex100 \ul0\super\cf9\f10\fs18 22\ul0\nosupersub\cf10\f11\fs19 \ul0\nosu persub\cf11\f12\fs19 Criminal Code Act 1995\ul0\nosupersub\cf10\f11\fs19 (Cth), s 103.1(2). \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex1 00 \ul0\super\cf9\f10\fs18 23\ul0\nosupersub\cf10\f11\fs19 Explanatory Memorand um, \ul0\nosupersub\cf11\f12\fs19 Anti-Terrorism Act (No.2) Bill 2005\ul0\nosupe rsub\cf10\f11\fs19 (Cth)\ul0\nosupersub\cf11\f12\fs19 , \ul0\nosupersub\cf10\f1 1\fs19 12. \par\pard\qj \li2205\ri941\sb1\sl-220\slmult0 \up0 \expndtw-3\charsca lex100 \ul0\super\cf9\f10\fs18 24\ul0\nosupersub\cf10\f11\fs19 See Senate Legal and Constitutional Affairs Committee, Submission in relation to Anti_Money Laun dering \up0 \expndtw-4\charscalex100 and Counter-Terrorism Financing Bill 2006(C th), 2. \par\pard\ql \li2205\sb0\sl-220\slmult0 \up0 \expndtw-2\charscalex100 < {\field{\*\fldinst {HYPERLINK "http://www.apg.gov.au/senate/committee/legcon_ctt c/aml_ctf06/submissions/sub01.pdf/" }}{\fldrslt {\ul0\nosupersub\cf29\f30\fs19\u l www.apg.gov.au/Senate/Committee/legcon_Cttc/aml_ctf06/submissions/sub01.pdf}}} \ul0\nosupersub\cf10\f11\fs19 > at 10 February 2008 \par\pard\ql \li10449\sb14\s l-252\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 271 {\shp {\*\shpinst\shpleft2205\shptop12362\shpright5006\shpbottom12382\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz172\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g281}{\bkmkend Pg281}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r

i915\sb249\sl-400\slmult0\fi0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f 2\fs23 Hamas.\ul0\super\cf8\f9\fs23 25\ul0\nosupersub\cf1\f2\fs23 Even internat ional humanitarian aid organisations like Red Cross can be caught \up0 \expndtw0 \charscalex100 by the provision. \par\pard\qj \li2205\ri912\sb396\sl-405\slmult0 \up0 \expndtw-3\charscalex100 There is also a concern that these provisions wou ld pose the risk of discrimination based on \up0 \expndtw0\charscalex107 race, r eligion and nationality. Given the difficulties faced by banks in identifying a \up0 \expndtw-3\charscalex100 particular customer who poses a terrorism financin g risk, it would be possible for a bank to \up0 \expndtw0\charscalex106 construc t a customer profile based on race, religion and nationality.\ul0\super\cf8\f9\f s23 26\ul0\nosupersub\cf1\f2\fs23 There are also \up0 \expndtw0\charscalex100 p erceptions among Muslim Australians that anti-terrorism financing laws have targ eted \up0 \expndtw-2\charscalex100 their communities, particularly when 18 of th e 19 groups listed as \u8216?terrorist organisations\u8217? \up0 \expndtw-4\char scalex100 under the Criminal Code are self-identified Muslim groups.\ul0\super\c f8\f9\fs23 27\ul0\nosupersub\cf1\f2\fs23 For this reason, it is critical to \up 0 \expndtw-1\charscalex100 ensure that certain group of people are not mistreate d by the laws even though combating \up0 \expndtw-2\charscalex100 terrorism is a n important priority across the globe. \par\pard\qj \li2205\ri916\sb400\sl-400\s lmult0 \up0 \expndtw0\charscalex100 As already mentioned, terrorism financing ac tivities are also criminalised under Part 4 of \up0 \expndtw0\charscalex105 the Charter of the United Nations Act 1945 (CoTUNA). Under sections 20 and 21 of \up 0 \expndtw-1\charscalex100 CoTUNA, it is illegal to use or deal with the assets of a proscribed person or entity and to \up0 \expndtw0\charscalex100 directly or indirectly provide assets to such an entity. Both offences are punishable by a \up0 \expndtw0\charscalex100 maximum of five years imprisonment. A proscribed p erson or entity refers to a person or \up0 \expndtw-1\charscalex100 entity liste d by the Foreign Minister under CoTUNA.\ul0\super\cf8\f9\fs23 28 \par\pard\qj \l i2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri916\sb20\sl-400\slmult0 \up0 \exp ndtw0\charscalex104 \ul0\nosupersub\cf1\f2\fs23 It must be borne in mind that wh ile CoTUNA applies less stringent penalties than the \up0 \expndtw-1\charscalex1 00 Criminal Code, it has a much broader application due to its very wide definit ion of \u8216?asset\u8217? \up0 \expndtw0\charscalex100 which includes asset of any kind, or property of any kind, whether tangible or intangible, \up0 \expndtw -2\charscalex100 movable or immovable however acquired. It also covers a legal d ocument or instrument in \up0 \expndtw-3\charscalex100 any form, including elect ronic or digital.\ul0\super\cf8\f9\fs23 29 \par\pard\ql \li2205\sb0\sl-218\slmul t0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb199\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 25\ul0\nosupersub\cf10\f1 1\fs19 Ibid. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex 100 \ul0\super\cf9\f10\fs18 26\ul0\nosupersub\cf10\f11\fs19 Ibid. \par\pard\ql \li2205\sb22\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs1 8 27\ul0\nosupersub\cf10\f11\fs19 Ibid 6. \par\pard\qj \li2205\ri944\sb1\sl-220 \slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 28\ul0\nosupersub \cf10\f11\fs19 The Minister for Foreign Affairs may list a person or entity on a case-by-case basis if he or she is satisfied \line \up0 \expndtw-3\charscalex1 00 that they are associated with terrorism. The list is maintained by the Depart ment of Foreign Affairs and Trade \line \up0 \expndtw0\charscalex105 (DFAT). As of 30 January 2008, there were 2167 proscribed persons or entities included on D FAT\u8217?s \line \up0 \expndtw-2\charscalex100 Consolidated List. \par\pard\li2 205\sb20\sl-218\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\super\cf26\f27\fs 18 29\ul0\nosupersub\cf11\f12\fs19 Charter of the United Nations Act 1945\ul0\n osupersub\cf10\f11\fs19 (Cth), s 14.\par\pard\li2205\sb3\sl-264\slmult0\fi8243 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 272 {\shp {\*\shpinst\shpleft2205\shptop12585\shpright5006\shpbottom12605\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz167\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}}

{\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g282}{\bkmkend Pg282}\par\pard\qj \li2205\sb0\sl-405\slmult0 \par\pard\qj\li2205 \sb0\sl-405\slmult0 \par\pard\qj\li2205\sb0\sl-405\slmult0 \par\pard\qj\li2205\r i915\sb230\sl-405\slmult0 \up0 \expndtw0\charscalex110 \ul0\nosupersub\cf1\f2\fs 23 It is clear that the Australian government has introduced a wide range of ter rorism \up0 \expndtw0\charscalex106 financing offences. The Criminal Code applie s strict penalties for terrorism financing \up0 \expndtw0\charscalex110 offences . They do not require that the funds are actually used to carry out terrorist \u p0 \expndtw-1\charscalex100 activities. All terrorism financing offences apply w hether or not the conduct or the result of \up0 \expndtw-2\charscalex100 the con duct occurs in Australia.\ul0\super\cf8\f9\fs23 30 \par\pard\qj \li2205\ri916\sb 400\sl-400\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf1\f2\fs23 The enactment of the AML/CTF Act also extends the scope of terrorism financing offe nces \line \up0 \expndtw-1\charscalex100 to offences committed overseas. It defi nes terrorism financing as conduct that amounts to; \par\pard\ql \li2731\sb112\s l-241\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf13\f14\fs21 (a)\ul 0\nosupersub\cf15\f16\fs21 \ul0\nosupersub\cf13\f14\fs21 an offence against sec tion 102.6 or Division 103 of the Criminal Code; or \par\pard\ql \li2731\sb139\s l-241\slmult0 \up0 \expndtw-2\charscalex100 (b)\ul0\nosupersub\cf15\f16\fs21 \u l0\nosupersub\cf13\f14\fs21 an offence against section 20 or 21 of the CoTUNA; o r \par\pard\ql \li2731\ri932\sb5\sl-380\slmult0\tx3080 \up0 \expndtw0\charscalex 100 (c)\ul0\nosupersub\cf15\f16\fs21 \ul0\nosupersub\cf13\f14\fs21 an offence a gainst a law of a State or Territory that corresponds to an offence referred to \line\tab \up0 \expndtw0\charscalex100 in paragraph (a) or (b); or \par\pard\ql \li2731\ri932\sb0\sl-380\slmult0\tx3080 \up0 \expndtw0\charscalex113 (d)\ul0\nos upersub\cf15\f16\fs21 \ul0\nosupersub\cf13\f14\fs21 an offence against a law of a foreign country or a part of a foreign country that \line\tab \up0 \expndtw-2 \charscalex100 corresponds to an offence referred to in paragraph (a) or (b).\ul 0\super\cf14\f15\fs20 31 \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li 2205\sb52\sl-264\slmult0\tx2906 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf 4\f5\fs23 7.4 \tab \up0 \expndtw-3\charscalex100 The Anti-Money Laundering and C ounter-Terrorism Financing Act 2006 \par\pard\qj \li2205\sb0\sl-400\slmult0 \par \pard\qj\li2205\ri914\sb84\sl-400\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nos upersub\cf1\f2\fs23 The Anti-Money Laundering and Counter-Terrorism Financing Ac t (AML/CTF Act) came \up0 \expndtw-1\charscalex100 into force on 13 December 200 6. Apart from bringing Australia into line with international \up0 \expndtw-1\ch arscalex100 AML/CTF standards set by the FATF, the Act aims to ensure that Austr alia implements the \up0 \expndtw0\charscalex102 most effective and proportionat e measures to deter, detect and disrupt money laundering \up0 \expndtw0\charscal ex102 and terrorism financing.\ul0\super\cf8\f9\fs23 32 \par\pard\qj \li2205\ri9 14\sb397\sl-404\slmult0\fi0 \up0 \expndtw0\charscalex103 \ul0\nosupersub\cf1\f2\ fs23 The AML/CTF Act has extra-territorial effect\ul0\super\cf8\f9\fs23 33\ul0\n osupersub\cf1\f2\fs23 and it applies to providers of designated \line \up0 \exp ndtw0\charscalex106 services at or through a permanent establishment in Australi a as well as to Australian \line \up0 \expndtw0\charscalex103 residents who prov ide designated services at, or through a permanent establishment in a \line \up0 \expndtw0\charscalex100 foreign country. The concept of a permanent establishme nt is very broad. It extends to any \line \up0 \expndtw0\charscalex100 place at or through which the entities carries on any activities or business. It also inc ludes \line \up0 \expndtw0\charscalex100 any place where the entity is carrying on activities or business through an agent. Besides, it \par\pard\ql \li2205\sb0 \sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\s l-218\slmult0 \par\pard\ql\li2205\sb16\sl-218\slmult0 \up0 \expndtw-2\charscalex 100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 30\ul0\nosupersub\cf10\f11\fs

19 \ul0\nosupersub\cf11\f12\fs19 Criminal Code Act 1995\ul0\nosupersub\cf10\f11 \fs19 (Cth), s 15.4 \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\cha rscalex100 \ul0\super\cf9\f10\fs18 31\ul0\nosupersub\cf10\f11\fs19 \ul0\nosuper sub\cf11\f12\fs19 Anti-Money Laundering and Counter-Terrorism Financing Act 2006 \ul0\nosupersub\cf10\f11\fs19 (Cth) s 5. \par\pard\ql \li2205\sb2\sl-218\slmult 0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 32\ul0\nosupersub\cf10\f 11\fs19 Explanatory Memorandum, \ul0\nosupersub\cf11\f12\fs19 Anti-Money Launde ring and Counter Terrorism Financing Bill 2006 \ul0\nosupersub\cf10\f11\fs19 (Ct h), 7. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul 0\super\cf9\f10\fs18 33\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\f s19 Anti-Money Laundering and Counter-Terrorism Financing Act 2006\ul0\nosupersu b\cf10\f11\fs19 (Cth), s 26. \par\pard\ql \li10449\sb15\sl-251\slmult0 \up0 \ex pndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 273 {\shp {\*\shpinst\shpleft2205\shptop13480\shpright5006\shpbottom13500\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz233\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g283}{\bkmkend Pg283}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i916\sb249\sl-400\slmult0\fi0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f 2\fs23 covers activities undertaken on a mobile basis.\ul0\super\cf8\f9\fs23 34\ ul0\nosupersub\cf1\f2\fs23 As such, the legislation has an extensive \up0 \expn dtw-2\charscalex100 and expansive reach and it is possible that it would also ap ply to overseas entities with even \up0 \expndtw-3\charscalex100 minimal connect ion with Australia.\ul0\super\cf8\f9\fs23 35 \par\pard\qj \li2205\sb0\sl-401\slm ult0 \par\pard\qj\li2205\ri913\sb19\sl-401\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf1\f2\fs23 Furthermore, the AML/CTF Act has a wider applicatio n than the FTRA, as it applies to an \line \up0 \expndtw0\charscalex100 organiza tion that provides a \u8216?designated service\u8217?. The term \u8216?designate d service\u8217? covers a \line \up0 \expndtw0\charscalex106 wide range of servi ces. Section 6 of the AML/CTF Act 2006 provides four tables of \line \up0 \expnd tw-3\charscalex100 \u8216?designated services\u8217?. Table 1 covers financial s ervices,\ul0\super\cf8\f9\fs23 36\ul0\nosupersub\cf1\f2\fs23 Table 2 covers buy ing and selling \line \up0 \expndtw-2\charscalex100 bullion, Table 3 covers gamb ling services and Table 4 covers prescribed services provided \line \up0 \expndt w0\charscalex103 in the regulations. Financial services include opening an accou nt, accepting money on \line \up0 \expndtw0\charscalex102 deposit, making loan, issuing a bill of exchange, a promissory note or a letter of credit, \line \up0 \expndtw0\charscalex103 issuing a debit or stored value card, issuing traveller\ u8217?s cheques, sending and receiving \line \up0 \expndtw-3\charscalex100 inter national funds transfer instructions (IFTIs), making money or property available under \line \up0 \expndtw-3\charscalex100 a designated remittance arrangement, issuing or selling a security or derivative, accepting a \line \up0 \expndtw0\ch arscalex103 contribution, rollover or transfer in respect of a member of a super annuation fund and \line \up0 \expndtw-5\charscalex100 exchanging currency. \par \pard\qj \li2205\ri915\sb396\sl-405\slmult0 \up0 \expndtw0\charscalex103 Unlike FTRA which is prescriptive, the AML/CTF Act sets out broad obligations and \up0 \expndtw0\charscalex100 requires the regulated institutions to develop risk-base d anti-money laundering programs \up0 \expndtw0\charscalex104 tailored to their businesses. The AML/CTF Act provides the general principles, while \up0 \expndtw -4\charscalex100 detailed operating rules will be covered in the AML/CTF Rules w hich have been developed \up0 \expndtw-5\charscalex100 by the AUSTRAC in consult

ation with the regulated institutions. \par\pard\qj \li2205\ri915\sb400\sl-400\s lmult0\fi0 \up0 \expndtw0\charscalex100 The AML/CTF Act also imposes a wider ran ge of obligations than FTRA. It will replace \line \up0 \expndtw-3\charscalex100 the existing obligations under FTRA when it is fully enforced in December 2008. \ul0\super\cf8\f9\fs23 37\ul0\nosupersub\cf1\f2\fs23 Briefly, \line \up0 \expnd tw-3\charscalex100 the key obligations imposed by the AML/CTF Act 2006 include t he requirement to identify \line \up0 \expndtw-3\charscalex100 and verify custom ers, to carry out ongoing due diligence on customers, to report suspicious \par\ pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\p ard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\par d\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb81\sl-218\slmult0 \up0 \exp ndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 34\ul0\nosup ersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Anti-Money Laundering and Cou nter-Terrorism Financing Act 2006\ul0\nosupersub\cf10\f11\fs19 (Cth), s 21. \pa r\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf 9\f10\fs18 35\ul0\nosupersub\cf10\f11\fs19 Ross Grady and Gian Boeddu, \u8216?O z\u8217?s Long Arm\u8217? (2007) \ul0\nosupersub\cf11\f12\fs19 International Fin ancial Law Review\ul0\nosupersub\cf10\f11\fs19 1, 2. \par\pard\ql \li2205\sb2\s l-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 36\ul0\nosup ersub\cf10\f11\fs19 Financial services cover authorised deposit taking institut ions, banks, building societies and credit unions. \par\pard\ql \li2205\sb2\sl-2 18\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 37\ul0\nosupers ub\cf10\f11\fs19 At the time of writing, the existing obligations under the FTR A remain to apply. \par\pard\ql \li10449\sb15\sl-251\slmult0 \up0 \expndtw-3\cha rscalex100 \ul0\nosupersub\cf1\f2\fs23 274 {\shp {\*\shpinst\shpleft2205\shptop13480\shpright5006\shpbottom13500\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz179\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g284}{\bkmkend Pg284}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i917\sb249\sl-400\slmult0 \up0 \expndtw0\charscalex102 \ul0\nosupersub\cf1\f2\fs 23 and prescribed transactions, to keep records for seven years and to develop a nd maintain \up0 \expndtw0\charscalex102 AML/CTF programs. \par\pard\qj \li2205\ ri915\sb396\sl-405\slmult0\fi0 \up0 \expndtw0\charscalex109 The Act also require s providers of designated services to report about cross-border \up0 \expndtw0\c harscalex107 movements of physical currency and bearer negotiable instruments,\u l0\super\cf8\f9\fs23 38\ul0\nosupersub\cf1\f2\fs23 to include new \up0 \expndtw 0\charscalex104 information in electronic funds transfer instructions\ul0\s uper\cf8\f9\fs23 39\ul0\nosupersub\cf1\f2\fs23 and to register providers o f \up0 \expndtw0\charscalex104 designated remittance.\ul0\super\cf8\f9\fs23 40\ ul0\nosupersub\cf1\f2\fs23 Additionally, the Act imposes restrictions as to entry of \up0 \expndtw-3\charscalex100 correspondent banking relationship. \ul0\super\cf8\f9\fs23 41 \par\pard\qj \li2205\ri914\sb398\sl-402\slmult0 \up0 \ expndtw-1\charscalex100 \ul0\nosupersub\cf1\f2\fs23 The AML/CTF Act provides a c ivil penalty framework for non-compliance with regulatory \line \up0 \expndtw0\c harscalex100 obligations with maximum fine of AUD11million in the case of corpor ations and AUD2.2 \line \up0 \expndtw0\charscalex110 million for all other perso ns. As such, a lower standard of proof, that is balance of \line \up0 \expndtw0\ charscalex100 probabilities, will apply to these penalties. This is a positive a pproach because it becomes \line \up0 \expndtw0\charscalex104 easier for the law enforcement authority to punish the offender. Section 236 provides a \line \up0

\expndtw0\charscalex100 general protection for reporting entities from civil or criminal liability. This applies if they \line \up0 \expndtw0\charscalex102 can prove that they took reasonable precautions and exercised due diligence to avoi d the \line \up0 \expndtw0\charscalex102 contravention of the legislation. \par\ pard\qj \li2205\ri915\sb397\sl-404\slmult0 \up0 \expndtw0\charscalex100 It is be yond the scope of this study to examine the Act in its entirety. As such, this s ection \line \up0 \expndtw-1\charscalex100 examines only the core requirements t hat directly affect banks. These include customer due \line \up0 \expndtw0\chars calex105 diligence, suspicious matter and threshold transaction reporting, AML/C TF programs, \line \up0 \expndtw0\charscalex100 correspondent banking obliga tions and record keeping. Before examining these \line \up0 \expndtw 0\charscalex103 requirements, it would be worthwhile to look into the background of the AML/CTF Act \line \up0 \expndtw0\charscalex103 2006. \par\pard\ql \li220 5\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\ sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb 0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\ sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl -218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb190\sl -218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9 \f10\fs18 38\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Anti-Mo ney Laundering and Counter-Terrorism Financing Act 2006\ul0\nosupersub\cf10\f11\ fs19 (Cth), Part 4. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\cha rscalex100 \ul0\super\cf9\f10\fs18 39\ul0\nosupersub\cf10\f11\fs19 \ul0\nosuper sub\cf11\f12\fs19 Anti-Money Laundering and Counter-Terrorism Financing Act 2006 \ul0\nosupersub\cf10\f11\fs19 (Cth), Part 5. \par\pard\ql \li2205\sb2\sl-218\sl mult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 40\ul0\nosupersub\cf 10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Anti-Money Laundering and Counter-Ter rorism Financing Act 2006\ul0\nosupersub\cf10\f11\fs19 (Cth), Part 6. \par\pard \ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\ fs18 41\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Anti-Money L aundering and Counter-Terrorism Financing Act 2006\ul0\nosupersub\cf10\f11\fs19 (Cth), Part 8. \par\pard\ql \li10449\sb15\sl-251\slmult0 \up0 \expndtw-3\charsc alex100 \ul0\nosupersub\cf1\f2\fs23 275 {\shp {\*\shpinst\shpleft2176\shptop9062\shpright10830\shpbottom9466\shpfhdr0\sh pbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz126\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 8654}}{\sp{\sn geoBottom}{\sv 404}} {\sp{\sn pVerticies}{\sv 8;5;(1,404);(8654,404);(8654,0);(1,0);(1,404)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 167772 15}}{\sp{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\sp{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }} {\shp {\*\shpinst\shpleft2176\shptop9465\shpright10830\shpbottom9868\shpfhdr0\sh pbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz140\shplid1 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 8654}}{\sp{\sn geoBottom}{\sv 403}} {\sp{\sn pVerticies}{\sv 8;5;(1,403);(8654,403);(8654,1);(1,1);(1,403)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 167772 15}}{\sp{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\sp{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }} {\shp {\*\shpinst\shpleft2176\shptop9867\shpright10830\shpbottom10271\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz150\shplid2

{\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 8654}}{\sp{\sn geoBottom}{\sv 404}} {\sp{\sn pVerticies}{\sv 8;5;(1,404);(8654,404);(8654,1);(1,1);(1,404)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 167772 15}}{\sp{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\sp{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }} {\shp {\*\shpinst\shpleft2176\shptop10270\shpright10830\shpbottom10673\shpfhdr0\ shpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz164\shplid3 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 8654}}{\sp{\sn geoBottom}{\sv 403}} {\sp{\sn pVerticies}{\sv 8;5;(1,403);(8654,403);(8654,1);(1,1);(1,403)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 167772 15}}{\sp{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\sp{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }} {\shp {\*\shpinst\shpleft2176\shptop10672\shpright10830\shpbottom11076\shpfhdr0\ shpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz174\shplid4 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 8654}}{\sp{\sn geoBottom}{\sv 404}} {\sp{\sn pVerticies}{\sv 8;5;(1,404);(8654,404);(8654,1);(1,1);(1,404)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 167772 15}}{\sp{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\sp{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }} {\shp {\*\shpinst\shpleft2176\shptop11076\shpright10830\shpbottom11478\shpfhdr0\ shpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz183\shplid5 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 8654}}{\sp{\sn geoBottom}{\sv 402}} {\sp{\sn pVerticies}{\sv 8;5;(1,402);(8654,402);(8654,0);(1,0);(1,402)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 167772 15}}{\sp{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\sp{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }} {\shp {\*\shpinst\shpleft2176\shptop11478\shpright10830\shpbottom11881\shpfhdr0\ shpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz193\shplid6 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 8654}}{\sp{\sn geoBottom}{\sv 403}} {\sp{\sn pVerticies}{\sv 8;5;(1,403);(8654,403);(8654,0);(1,0);(1,403)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 167772 15}}{\sp{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\sp{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }} {\shp {\*\shpinst\shpleft2176\shptop11881\shpright10830\shpbottom12283\shpfhdr0\ shpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz202\shplid7

{\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 8654}}{\sp{\sn geoBottom}{\sv 402}} {\sp{\sn pVerticies}{\sv 8;5;(1,402);(8654,402);(8654,0);(1,0);(1,402)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 167772 15}}{\sp{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\sp{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }} {\shp {\*\shpinst\shpleft2176\shptop12283\shpright10830\shpbottom12686\shpfhdr0\ shpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz210\shplid8 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 8654}}{\sp{\sn geoBottom}{\sv 403}} {\sp{\sn pVerticies}{\sv 8;5;(1,403);(8654,403);(8654,0);(1,0);(1,403)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 167772 15}}{\sp{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\sp{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }} {\shp {\*\shpinst\shpleft2176\shptop12686\shpright10830\shpbottom13088\shpfhdr0\ shpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz219\shplid9 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 8654}}{\sp{\sn geoBottom}{\sv 402}} {\sp{\sn pVerticies}{\sv 8;5;(1,402);(8654,402);(8654,0);(1,0);(1,402)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 167772 15}}{\sp{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\sp{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }} {\shp {\*\shpinst\shpleft2205\shptop13480\shpright5006\shpbottom13500\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz229\shplid10 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g285}{\bkmkend Pg285}\par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205 \sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\s b0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb2 41\sl-264\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf4\f5\fs23 7.4. 1 Background to the AML/CTF Act 2006 \par\pard\qj \li2205\sb0\sl-404\slmult0 \pa r\pard\qj\li2205\ri915\sb17\sl-404\slmult0\fi0 \up0 \expndtw-3\charscalex100 \ul 0\nosupersub\cf1\f2\fs23 Before the enactment of the AML/CTF Act, FTRA was consi dered the primary anti-money \line \up0 \expndtw0\charscalex100 laundering legis lation applicable to the financial institutions in Australia. FTRA requires \lin e \up0 \expndtw-2\charscalex100 cash dealers to report to AUSTRAC any significan t cash transactions, suspect transactions \line \up0 \expndtw-2\charscalex100 an d international funds transfer instructions (IFTIs). It also makes it an offence to open an \line \up0 \expndtw0\charscalex105 account in a false name and requi res the verification of the customer\u8217?s identity when \line \up0 \expndtw-5 \charscalex100 accounts are opened.\ul0\super\cf8\f9\fs23 42 \par\pard\qj \li220

5\ri915\sb396\sl-404\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2 \fs23 Apart from the imposition of reporting obligations on cash dealers, sectio n 15 of FTRA \line \up0 \expndtw0\charscalex102 requires members of the publ ic to report to the Australian Customs Service any \line \up0 \expndtw-3 \charscalex100 international currency transfers which include the shipping, mail ing or carrying of AUD10, \line \up0 \expndtw-2\charscalex100 000 cash or its eq uivalent in foreign currency. Furthermore, section 31 makes it an offence \line \up0 \expndtw0\charscalex108 for a person to conduct transactions with a cash de aler so as to avoid the reporting \line \up0 \expndtw-3\charscalex100 requiremen ts. \par\pard\qj \li2205\ri916\sb396\sl-405\slmult0 \up0 \expndtw0\charscalex108 Despite being at the forefront in international efforts to combat money launder ing, \up0 \expndtw0\charscalex100 Australian anti-money laundering law did not k eep abreast of the latest developments in \up0 \expndtw0\charscalex105 money lau ndering and terrorism financing. FTRA soon became outdated and for this \up0 \ex pndtw0\charscalex105 reason, in late \up0 \expndtw0\charscalex104 2003, a review of Australia's AML/CTF regime was announced. The \up0 \expndtw-3\charscalex100 Minister for Justice and Customs, Senator Chris Ellison said:\ul0\super\cf8\f9\f s23 43 \par\pard\qj \li2731\ri931\sb4\sl-370\slmult0 \up0 \expndtw-3\charscalex1 00 \ul0\nosupersub\cf13\f14\fs21 Australia will now commit to implementing FATF\ u8217?s revised 40 Recommendations which will \up0 \expndtw-3\charscalex100 requ ire a significant review of Australia\u8217?s anti-money laundering regime, incl uding some new \up0 \expndtw0\charscalex103 measures intended to counter terrorist financing\u8230?The adoption of the FATF \up0 \expndtw-1\ch arscalex100 recommendations is essential if Australia is to maintain its positio n as a key financial sector \up0 \expndtw-2\charscalex100 player both in the reg ion and globally. \par\pard\qj \li2205\ri916\sb386\sl-400\slmult0 \up0 \expndtw0 \charscalex104 \ul0\nosupersub\cf1\f2\fs23 The move to reform Australian anti-mo ney laundering (AML) legislation was further \line \up0 \expndtw-2\charscalex100 strengthened when Australia received the mutual evaluation report from FATF in October \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\s lmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb97\sl-218\sl mult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs 18 42\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Financial Tran sactions Report Act 1988\ul0\nosupersub\cf10\f11\fs19 (Cth), s 24.\par\pard\sec t\sectd\sbknone\cols2\colno1\colw2381\colsr40\colno2\colw9339\colsr160\ql \li220 5\sb74\sl-149\slmult0 \up0 \expndtw-1\charscalex100 \ul0\super\cf9\f10\fs18 43\p ar\pard\column \ql \li20\sb17\sl-218\slmult0 \up0 \expndtw0\charscalex103 \ul0\n osupersub\cf10\f11\fs19 \u8216?Australia endorses global anti-money laundering s tandards\u8217? (AUSTRAC Media Release, 8 December \par\pard\sect\sectd\sbknone \li2205\sb5\sl-218\slmult0\fi0 \up0 \expndtw-3\charscalex100 2003).\par\pard\ql \li10449\sb12\sl-233\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f 2\fs23 276 {\shp {\*\shpinst\shpleft2176\shptop1816\shpright10830\shpbottom2220\shpfhdr0\sh pbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz15\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 8654}}{\sp{\sn geoBottom}{\sv 404}} {\sp{\sn pVerticies}{\sv 8;5;(1,404);(8654,404);(8654,1);(1,1);(1,404)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 167772 15}}{\sp{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\sp{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }} {\shp {\*\shpinst\shpleft2176\shptop2220\shpright10830\shpbottom2622\shpfhdr0\sh pbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz26\shplid1 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 8654}}{\sp{\sn geoBottom}{\sv 402}} {\sp{\sn pVerticies}{\sv 8;5;(1,402);(8654,402);(8654,0);(1,0);(1,402)}}

{\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 167772 15}}{\sp{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\sp{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }} {\shp {\*\shpinst\shpleft2176\shptop7856\shpright10830\shpbottom8258\shpfhdr0\sh pbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz111\shplid2 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 8654}}{\sp{\sn geoBottom}{\sv 402}} {\sp{\sn pVerticies}{\sv 8;5;(1,402);(8654,402);(8654,0);(1,0);(1,402)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 167772 15}}{\sp{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\sp{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }} {\shp {\*\shpinst\shpleft2176\shptop8258\shpright10830\shpbottom8662\shpfhdr0\sh pbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz120\shplid3 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 8654}}{\sp{\sn geoBottom}{\sv 404}} {\sp{\sn pVerticies}{\sv 8;5;(1,403);(8654,403);(8654,0);(1,0);(1,403)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 167772 15}}{\sp{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\sp{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }} {\shp {\*\shpinst\shpleft2176\shptop8661\shpright10830\shpbottom9062\shpfhdr0\sh pbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz130\shplid4 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 8654}}{\sp{\sn geoBottom}{\sv 401}} {\sp{\sn pVerticies}{\sv 8;5;(1,401);(8654,401);(8654,0);(1,0);(1,401)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 167772 15}}{\sp{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\sp{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }} {\shp {\*\shpinst\shpleft2176\shptop9062\shpright10830\shpbottom9466\shpfhdr0\sh pbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz140\shplid5 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 8654}}{\sp{\sn geoBottom}{\sv 404}} {\sp{\sn pVerticies}{\sv 8;5;(1,404);(8654,404);(8654,0);(1,0);(1,404)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 167772 15}}{\sp{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\sp{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }} {\shp {\*\shpinst\shpleft2176\shptop9465\shpright10830\shpbottom9868\shpfhdr0\sh pbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz150\shplid6 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 8654}}{\sp{\sn geoBottom}{\sv 403}} {\sp{\sn pVerticies}{\sv 8;5;(1,403);(8654,403);(8654,1);(1,1);(1,403)}}

{\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 167772 15}}{\sp{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\sp{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }} {\shp {\*\shpinst\shpleft2176\shptop9867\shpright10830\shpbottom10271\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz160\shplid7 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 8654}}{\sp{\sn geoBottom}{\sv 404}} {\sp{\sn pVerticies}{\sv 8;5;(1,404);(8654,404);(8654,1);(1,1);(1,404)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 167772 15}}{\sp{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\sp{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }} {\shp {\*\shpinst\shpleft2701\shptop10270\shpright10830\shpbottom10640\shpfhdr0\ shpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz177\shplid8 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 8129}}{\sp{\sn geoBottom}{\sv 370}} {\sp{\sn pVerticies}{\sv 8;5;(0,370);(8129,370);(8129,1);(0,1);(0,370)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 167772 15}}{\sp{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\sp{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }} {\shp {\*\shpinst\shpleft2701\shptop10640\shpright10830\shpbottom11009\shpfhdr0\ shpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz187\shplid9 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 8129}}{\sp{\sn geoBottom}{\sv 369}} {\sp{\sn pVerticies}{\sv 8;5;(0,369);(8129,369);(8129,0);(0,0);(0,369)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 167772 15}}{\sp{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\sp{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }} {\shp {\*\shpinst\shpleft2701\shptop11008\shpright10830\shpbottom11378\shpfhdr0\ shpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz197\shplid10 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 8129}}{\sp{\sn geoBottom}{\sv 370}} {\sp{\sn pVerticies}{\sv 8;5;(0,370);(8129,370);(8129,1);(0,1);(0,370)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 167772 15}}{\sp{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\sp{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }} {\shp {\*\shpinst\shpleft2701\shptop11378\shpright10830\shpbottom11747\shpfhdr0\ shpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz207\shplid11 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 8129}}{\sp{\sn geoBottom}{\sv 369}} {\sp{\sn pVerticies}{\sv 8;5;(0,369);(8129,369);(8129,0);(0,0);(0,369)}}

{\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 167772 15}}{\sp{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\sp{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }} {\shp {\*\shpinst\shpleft2701\shptop11746\shpright10830\shpbottom12115\shpfhdr0\ shpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz217\shplid12 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 8129}}{\sp{\sn geoBottom}{\sv 369}} {\sp{\sn pVerticies}{\sv 8;5;(0,369);(8129,369);(8129,1);(0,1);(0,369)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 167772 15}}{\sp{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\sp{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }} {\shp {\*\shpinst\shpleft2176\shptop12115\shpright10830\shpbottom12518\shpfhdr0\ shpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz227\shplid13 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 8654}}{\sp{\sn geoBottom}{\sv 403}} {\sp{\sn pVerticies}{\sv 8;5;(1,403);(8654,403);(8654,0);(1,0);(1,403)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 167772 15}}{\sp{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\sp{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }} {\shp {\*\shpinst\shpleft2176\shptop12518\shpright10830\shpbottom12920\shpfhdr0\ shpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz237\shplid14 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 8654}}{\sp{\sn geoBottom}{\sv 402}} {\sp{\sn pVerticies}{\sv 8;5;(1,402);(8654,402);(8654,0);(1,0);(1,402)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 167772 15}}{\sp{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\sp{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }} {\shp {\*\shpinst\shpleft2176\shptop12920\shpright10830\shpbottom13324\shpfhdr0\ shpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz251\shplid15 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 8654}}{\sp{\sn geoBottom}{\sv 404}} {\sp{\sn pVerticies}{\sv 8;5;(1,403);(8654,403);(8654,0);(1,0);(1,403)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 167772 15}}{\sp{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\sp{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }} {\shp {\*\shpinst\shpleft2205\shptop13704\shpright5006\shpbottom13724\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz264\shplid16 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}}

{\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g286}{\bkmkend Pg286}\par\pard\qj \li2205\sb0\sl-403\slmult0 \par\pard\qj\li2205 \sb0\sl-403\slmult0 \par\pard\qj\li2205\sb0\sl-403\slmult0 \par\pard\qj\li2205\r i911\sb238\sl-403\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs 23 2005. The report said that Australia\u8217?s AML measures were significantly non-compliant \line \up0 \expndtw-1\charscalex100 with approximately half of the FATF\u8217?s Recommendations.\ul0\super\cf8\f9\fs23 44\ul0\nosupersub\cf1\f2\fs 23 In fact, Australia was one of \line \up0 \expndtw-2\charscalex100 the least compliant countries assessed at that time. This meant that Australia was almost at \line \up0 \expndtw-1\charscalex100 risk of being placed on the list of non-c ooperative countries and territories (NCCTs). The \line \up0 \expndtw0\charscale x100 report also noted that the legislative framework for customer due diligence requirements \line \up0 \expndtw-1\charscalex100 under FTRA was inadequate and required substantial amendments in accordance with the \line \up0 \expndtw-2\cha rscalex100 revised FATF requirements. To make matters worse, the report stated t hat the low number \line \up0 \expndtw-3\charscalex100 of prosecutions at a Comm onwealth level (i.e. ten summarily and three on indictment since \line \up0 \exp ndtw-3\charscalex100 2003, with five convictions) is an indication that the AML regime in Australia has not been \line \up0 \expndtw-2\charscalex100 effectively implemented.\ul0\super\cf8\f9\fs23 45\ul0\nosupersub\cf1\f2\fs23 Clearly, refo rms to the existing regime were critical to bringing \line \up0 \expndtw0\charsc alex103 the Australian AML/CTF regime in line with international best practice f or combating \line \up0 \expndtw0\charscalex104 money laundering and terrorism f inancing. After extensive consultation with relevant \line \up0 \expndtw0\charsc alex104 stakeholders, the Anti-Money Laundering and Counter-Terrorism Financing Bill was \line \up0 \expndtw-2\charscalex100 passed on 7 December 2006 and recei ved Royal Assent on 12 December 2006. \par\pard\qj \li2205\ri914\sb397\sl-403\sl mult0 \up0 \expndtw0\charscalex100 The AML/CTF Act forms part of a legislative p ackage of AML/CTF reform in Australia \line \up0 \expndtw-4\charscalex100 which is introduced in two stages. The first stage is set out in the AML/CTF Act and c overs \line \up0 \expndtw0\charscalex100 a range of services provided by the fin ancial services sector, gambling service providers \line \up0 \expndtw0\charscal ex100 and bullion dealers. It has been implemented since 12 December 2007. The s econd stage \line \up0 \expndtw0\charscalex100 will impose obligations on re al estate agents, jewellers and professionals such as \line \up0 \expndtw -2\charscalex100 accountants and lawyers. At the time of writing, the second sta ge of legislation has not yet \line \up0 \expndtw-3\charscalex100 been implement ed. \par\pard\qj \li2205\ri915\sb397\sl-404\slmult0 \up0 \expndtw0\charscalex104 The AML/CTF Act aims to create a financial system hostile to money laundering a nd \line \up0 \expndtw0\charscalex109 terrorism financing while minimising the i mpact on business. For this reason, the \line \up0 \expndtw0\charscalex103 AML/C TF Act adopts a risk based approach where the regulated institutions will have \ line \up0 \expndtw-3\charscalex100 flexibility to develop AML/CTF procedures acc ording to different risks which they identify \line \up0 \expndtw-1\charscalex10 0 using their own AML/CTF programs. This is a good approach because in complying with \line \up0 \expndtw-1\charscalex100 the legislation, the regulated institu tions could avoid unnecessary compliance burden by \par\pard\ql \li2205\sb0\sl-2 18\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb134\sl-2 18\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f 10\fs18 44\ul0\nosupersub\cf10\f11\fs19 Explanatory Memorandum, Anti-Money Laun dering and Counter-Terrorism Financing Bill 2006, 14. \par\pard\qj \li2205\ri163 9\sb1\sl-220\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 45\ul 0\nosupersub\cf10\f11\fs19 APG Third Mutual Evaluation Report on Anti-Money Lau ndering and Combating the Financing of \up0 \expndtw-2\charscalex100 Terrorism ( 2006) 6. \par\pard\ql \li10449\sb14\sl-252\slmult0 \up0 \expndtw-3\charscalex100

\ul0\nosupersub\cf1\f2\fs23 277 {\shp {\*\shpinst\shpleft2176\shptop1816\shpright10830\shpbottom2220\shpfhdr0\sh pbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz15\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 8654}}{\sp{\sn geoBottom}{\sv 404}} {\sp{\sn pVerticies}{\sv 8;5;(1,404);(8654,404);(8654,1);(1,1);(1,404)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 167772 15}}{\sp{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\sp{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }} {\shp {\*\shpinst\shpleft2176\shptop2220\shpright10830\shpbottom2622\shpfhdr0\sh pbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz25\shplid1 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 8654}}{\sp{\sn geoBottom}{\sv 402}} {\sp{\sn pVerticies}{\sv 8;5;(1,402);(8654,402);(8654,0);(1,0);(1,402)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 167772 15}}{\sp{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\sp{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }} {\shp {\*\shpinst\shpleft2176\shptop2622\shpright10830\shpbottom3025\shpfhdr0\sh pbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz43\shplid2 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 8654}}{\sp{\sn geoBottom}{\sv 403}} {\sp{\sn pVerticies}{\sv 8;5;(1,403);(8654,403);(8654,0);(1,0);(1,403)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 167772 15}}{\sp{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\sp{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }} {\shp {\*\shpinst\shpleft2176\shptop3025\shpright10830\shpbottom3427\shpfhdr0\sh pbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz53\shplid3 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 8654}}{\sp{\sn geoBottom}{\sv 402}} {\sp{\sn pVerticies}{\sv 8;5;(1,402);(8654,402);(8654,0);(1,0);(1,402)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 167772 15}}{\sp{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\sp{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }} {\shp {\*\shpinst\shpleft2176\shptop3427\shpright10830\shpbottom3830\shpfhdr0\sh pbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz63\shplid4 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 8654}}{\sp{\sn geoBottom}{\sv 403}} {\sp{\sn pVerticies}{\sv 8;5;(1,403);(8654,403);(8654,0);(1,0);(1,403)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 167772 15}}{\sp{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\sp{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}}

}} {\shp {\*\shpinst\shpleft2176\shptop3830\shpright10830\shpbottom4232\shpfhdr0\sh pbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz73\shplid5 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 8654}}{\sp{\sn geoBottom}{\sv 402}} {\sp{\sn pVerticies}{\sv 8;5;(1,402);(8654,402);(8654,0);(1,0);(1,402)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 167772 15}}{\sp{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\sp{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }} {\shp {\*\shpinst\shpleft2176\shptop4232\shpright10830\shpbottom4636\shpfhdr0\sh pbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz91\shplid6 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 8654}}{\sp{\sn geoBottom}{\sv 404}} {\sp{\sn pVerticies}{\sv 8;5;(1,404);(8654,404);(8654,0);(1,0);(1,404)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 167772 15}}{\sp{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\sp{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }} {\shp {\*\shpinst\shpleft2176\shptop4635\shpright10830\shpbottom5038\shpfhdr0\sh pbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz101\shplid7 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 8654}}{\sp{\sn geoBottom}{\sv 403}} {\sp{\sn pVerticies}{\sv 8;5;(1,403);(8654,403);(8654,1);(1,1);(1,403)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 167772 15}}{\sp{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\sp{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }} {\shp {\*\shpinst\shpleft2176\shptop5037\shpright10830\shpbottom5441\shpfhdr0\sh pbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz111\shplid8 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 8654}}{\sp{\sn geoBottom}{\sv 404}} {\sp{\sn pVerticies}{\sv 8;5;(1,404);(8654,404);(8654,1);(1,1);(1,404)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 167772 15}}{\sp{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\sp{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }} {\shp {\*\shpinst\shpleft2176\shptop5440\shpright10830\shpbottom5843\shpfhdr0\sh pbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz121\shplid9 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 8654}}{\sp{\sn geoBottom}{\sv 403}} {\sp{\sn pVerticies}{\sv 8;5;(1,403);(8654,403);(8654,1);(1,1);(1,403)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 167772 15}}{\sp{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\sp{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}}

}} {\shp {\*\shpinst\shpleft2176\shptop5842\shpright10830\shpbottom6246\shpfhdr0\sh pbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz139\shplid10 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 8654}}{\sp{\sn geoBottom}{\sv 404}} {\sp{\sn pVerticies}{\sv 8;5;(1,404);(8654,404);(8654,1);(1,1);(1,404)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 167772 15}}{\sp{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\sp{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }} {\shp {\*\shpinst\shpleft2176\shptop6246\shpright10830\shpbottom6648\shpfhdr0\sh pbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz153\shplid11 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 8654}}{\sp{\sn geoBottom}{\sv 402}} {\sp{\sn pVerticies}{\sv 8;5;(1,402);(8654,402);(8654,0);(1,0);(1,402)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 167772 15}}{\sp{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\sp{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }} {\shp {\*\shpinst\shpleft2176\shptop6648\shpright10830\shpbottom7051\shpfhdr0\sh pbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz163\shplid12 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 8654}}{\sp{\sn geoBottom}{\sv 403}} {\sp{\sn pVerticies}{\sv 8;5;(1,403);(8654,403);(8654,0);(1,0);(1,403)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 167772 15}}{\sp{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\sp{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }} {\shp {\*\shpinst\shpleft2176\shptop7051\shpright10830\shpbottom7453\shpfhdr0\sh pbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz173\shplid13 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 8654}}{\sp{\sn geoBottom}{\sv 402}} {\sp{\sn pVerticies}{\sv 8;5;(1,402);(8654,402);(8654,0);(1,0);(1,402)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 167772 15}}{\sp{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\sp{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }} {\shp {\*\shpinst\shpleft2205\shptop13704\shpright5006\shpbottom13724\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz269\shplid14 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}}

}}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g287}{\bkmkend Pg287}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i913\sb249\sl-400\slmult0 \up0 \expndtw0\charscalex104 \ul0\nosupersub\cf1\f2\fs 23 concentrating their resources on areas where the risk of money laundering or terrorism \line \up0 \expndtw0\charscalex100 financing is greatest. Before exami ning key obligations imposed by the AML/CTF Act, it \line \up0 \expndtw0\charsca lex100 would be worthwhile to make a brief mention of the role and function of A USTRAC. \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\s lmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb141\sl-264\s lmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf4\f5\fs23 7.4.2 The Rol e and Function of AUSTRAC \par\pard\qj \li2205\sb0\sl-402\slmult0 \par\pard\qj\l i2205\ri914\sb20\sl-402\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\nosupersu b\cf1\f2\fs23 AUSTRAC was established in 1989 under section 35 of the FTRA as a statutory authority \line \up0 \expndtw-4\charscalex100 within the Attorney-Gene ral\u8217?s portfolio and it acts as the Intelligence Unit.\ul0\super\cf8\f9\fs2 3 46\ul0\nosupersub\cf1\f2\fs23 The enactment \line \up0 \expndtw-3\charscalex1 00 of the AML/CTF Act has expanded AUSTRAC\u8217?s role as the national AML/CTF regulator. \line \up0 \expndtw0\charscalex100 Part 16 of the AML/CTF Act covers administrative aspects of AUSTRAC\u8217?s functions. It \line \up0 \expndtw-4\ch arscalex100 replaces the role of Director of AUSTRAC with that of Chief Executiv e Officer (CEO), and \line \up0 \expndtw-3\charscalex100 outlines the role and f unctions of the AUSTRAC CEO and AUSTRAC staff. Under section \line \up0 \expndtw -4\charscalex100 229(3) of the AML/CTF Act, the Minister of Justice and Customs may direct AUSTRAC to \line \up0 \expndtw-5\charscalex100 make the AML/CTF Rules . \par\pard\qj \li2205\ri915\sb398\sl-402\slmult0 \up0 \expndtw0\charscalex102 I t is important to note that the AML/CTF Act also enhances AUSTRAC\u8217?s superv isory, \line \up0 \expndtw-2\charscalex100 monitoring and enforcement powers. D ivision 3 of Part 13 provides strong access powers \line \up0 \expndtw0\charscal ex108 for AUSTRAC to require the production of documents and supply of informati on, \line \up0 \expndtw-2\charscalex100 including the ability to apply for warra nts to enter a reporting entity\u8217?s business premises to \line \up0 \expndtw 0\charscalex107 exercise monitoring powers under the Act. Division 7 of Part 13 of the Act enables \line \up0 \expndtw-4\charscalex100 AUSTRAC to require a repo rting entity to carry out external audit on their compliance with \line \up0 \ex pndtw0\charscalex100 the AML/CTF Act or their risk management relating to money laundering and terrorism \line \up0 \expndtw0\charscalex100 financing. \par\pard \qj \li2205\ri914\sb396\sl-405\slmult0 \up0 \expndtw0\charscalex104 Part 15 of t he AML/CTF Act provides AUSTRAC with a wide range of enforcement \line \up0 \exp ndtw0\charscalex103 powers such as civil penalty orders, enforceable undertaking s, remedial directions and \line \up0 \expndtw-4\charscalex100 infringement noti ces. Division 2 of Part 15 provides AUSTRAC with a civil penalty regime \line \u p0 \expndtw-1\charscalex100 for enforcing non-compliance with regulatory obligat ions under the Act. AUSTRAC can \line \up0 \expndtw-1\charscalex100 apply to th e Federal Court for a \u8216?civil penalty order\u8217? and if the Court is sati sfied that a \par\pard\qj \li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\ri946\s b168\sl-220\slmult0 \up0 \expndtw-3\charscalex100 \ul0\super\cf9\f10\fs19\ul0\su per\cf9\f10\fs18 46\ul0\nosupersub\cf10\f11\fs19 The AUSTRAC Chief Executive Of ficer reports to the Minister for Justice and Customs on the operation of \up0 \ expndtw-4\charscalex100 the agency. \par\pard\ql \li10449\sb14\sl-252\slmult0 \u p0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 278 {\shp {\*\shpinst\shpleft2205\shptop13928\shpright5006\shpbottom13948\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz168\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s

p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g288}{\bkmkend Pg288}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i913\sb249\sl-400\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf1\f2\f s23 person has contravened a civil penalty provision, it may order the person to pay a pecuniary \line \up0 \expndtw-1\charscalex100 penalty to the Federal Gove rnment. Where the person is a body corporate, the penalty must \line \up0 \expnd tw-1\charscalex100 not exceed AUD 11 million and in all other cases, it must not exceed AUD2.2 million. \par\pard\qj \li2205\sb0\sl-402\slmult0 \par\pard\qj\li2 205\ri913\sb17\sl-402\slmult0\fi0 \up0 \expndtw0\charscalex102 Under Division 5 of Part 15, AUSTRAC may direct a reporting entity to take specified \line \up0 \ expndtw0\charscalex100 action, aimed at preventing the contravention of a civil penalty clause, or minimising the \line \up0 \expndtw-4\charscalex100 likelihood that such a contravention will occur.\ul0\super\cf8\f9\fs23 47\ul0\nosupersub\c f1\f2\fs23 This includes a direction that the reporting \line \up0 \expndtw-2\c harscalex100 entity implements effective administrative systems for monitoring c ompliance with a civil \line \up0 \expndtw0\charscalex102 penalty provision. Bes ides, AUSTRAC may seek an injunction from the Federal Court \line \up0 \expndtw0 \charscalex108 restraining a person from engaging in conduct which contravenes t he civil penalty \line \up0 \expndtw-2\charscalex100 provisions within the Act a nd requiring the person to take action, if in the Court\u8217?s opinion, \line \ up0 \expndtw0\charscalex100 it is desirable to do so. It appears that AUSTRAC\u8 217?s approach in enforcing a civil penalty \line \up0 \expndtw-1\charscalex100 regime is in line with the view that a civil penalty regime would be more approp riate than \line \up0 \expndtw0\charscalex100 criminal penalty and workable in e nsuring the reporting entities comply with obligations \line \up0 \expndtw-1\cha rscalex100 under the AML/CTF Act. \par\pard\qj \li2205\ri914\sb396\sl-405\slmult 0 \up0 \expndtw0\charscalex100 Division 7 of Part 15 enables AUSTRAC to accept w ritten undertakings from reporting \line \up0 \expndtw0\charscalex102 entities a nd to seek an order from the Federal Court in the event that the undertaking is \line \up0 \expndtw-4\charscalex100 breached. The Court may order the person to comply with the undertakings, pay the Federal \line \up0 \expndtw-1\charscalex10 0 Government any financial benefit obtained as a result of the breach, pay compe nsation to \line \up0 \expndtw-1\charscalex100 another person who has suffered l oss as a result of the breach, or any other order. \par\pard\qj \li2205\ri916\sb 396\sl-404\slmult0 \up0 \expndtw0\charscalex111 The AML/CTF Act also allows a br oader range of designated agencies to access \line \up0 \expndtw-2\charscalex100 information held by AUSTRAC. However, such information is securely protected an d can \line \up0 \expndtw0\charscalex103 only be disseminated in accordance with Part 11 of the AML/CTF Act.\ul0\super\cf8\f9\fs23 48\ul0\nosupersub\cf1\f2\fs23 In particular, \line \up0 \expndtw-1\charscalex100 under sections 121 and 122, it is an offence for the AUSTRAC CEO, AUSTRAC staff or \line \up0 \expndtw0\cha rscalex104 designated agencies to disclose AUSTRAC information obtained under se ction 49 or \line \up0 \expndtw-4\charscalex100 Division 4\ul0\super\cf8\f9\fs23 49\ul0\nosupersub\cf1\f2\fs23 of the Act, to another person.\ul0\super\cf8\f9\ fs23 50\ul0\nosupersub\cf1\f2\fs23 Notably, information obtained under section 49 \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult 0 \par\pard\ql\li2205\sb94\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\sup er\cf9\f10\fs19\ul0\super\cf9\f10\fs18 47\ul0\nosupersub\cf10\f11\fs19 \ul0\nos upersub\cf11\f12\fs19 Anti-Money Laundering and Counter-Terrorism Financing Act 2006\ul0\nosupersub\cf10\f11\fs19 (Cth), s 191. \par\pard\ql \li2205\sb2\sl-218 \slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 48\ul0\nosupersub \cf10\f11\fs19 Part 11 of the AML/CTF Act 2006 also applies to the FTRA and thu s repealed Part IV of the FTRA. \par\pard\qj \li2205\ri1596\sb1\sl-220\slmult0 \ up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 49\ul0\nosupersub\cf10\f11\ fs19 Division 4 of the AML/CTF Act 2006 deals with reports about cross-border m ovements of physical \up0 \expndtw-2\charscalex100 currency and bearer negotiabl e instruments. \par\pard\li2205\sb20\sl-218\slmult0\fi0 \up0 \expndtw-2\charscal

ex100 \ul0\super\cf9\f10\fs18 50\ul0\nosupersub\cf10\f11\fs19 The penalty is im prisonment for 2 years or 120 penalty units, or both.\par\pard\li2205\sb3\sl-264 \slmult0\fi8243 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 279 {\shp {\*\shpinst\shpleft2205\shptop13256\shpright5006\shpbottom13276\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz174\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g289}{\bkmkend Pg289}\par\pard\qj \li2205\sb0\sl-405\slmult0 \par\pard\qj\li2205 \sb0\sl-405\slmult0 \par\pard\qj\li2205\sb0\sl-405\slmult0 \par\pard\qj\li2205\r i915\sb230\sl-405\slmult0 \up0 \expndtw0\charscalex112 \ul0\nosupersub\cf1\f2\fs 23 refers to information that is obtained when following up on information given to \line \up0 \expndtw0\charscalex100 AUSTRAC or related agencies under section 41 (reports of suspicious matters); section 43 \line \up0 \expndtw0\charscalex1 05 (reports of threshold transactions) or section 45 (reports of international f unds transfer \line \up0 \expndtw0\charscalex100 instructions). However there a re a number of exemptions for disclosure, for instance, the \line \up0 \expndtw0 \charscalex100 disclosure for the performance of the AML/CTF Act or other releva nt legislations.\ul0\super\cf8\f9\fs23 51 \par\pard\qj \li2205\ri913\sb398\sl-40 2\slmult0 \up0 \expndtw0\charscalex102 \ul0\nosupersub\cf1\f2\fs23 As already me ntioned, AUSTRAC will adopt a risk-based approach in implementing the \line \up0 \expndtw0\charscalex103 AML/CTF Act. As such, it places a significant burden on AUSTRAC to ensure that this \line \up0 \expndtw-1\charscalex100 approach can be achieved in practical manner.\ul0\super\cf8\f9\fs23 52\ul0\nosupersub\cf1\f2\fs 23 Obviously, the key challenge is to provide \line \up0 \expndtw0\charscalex10 7 the regulated institutions with workable guidance while, at the same time give s them \line \up0 \expndtw-1\charscalex100 freedom to manage money laundering an d terrorism financing risk faced by the institutions. \line \up0 \expndtw0\chars calex105 It appears that AUSTRAC has provided extensive guidance to the reportin g entities in \line \up0 \expndtw0\charscalex107 complying with the AML/CTF obli gations. The guidance is contained in the form of \line \up0 \expndtw0\charscale x102 Guidance Notes, Guidelines, Information Circulars, AUSTRAC Online, A USTRAC \line \up0 \expndtw0\charscalex100 Regulatory Guide, AUSTRAC Typologies a nd Case Studies Report 2007 and Introduction \line \up0 \expndtw-1\charscalex100 to AML/CTF e-learning course. \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard \ql\li2205\sb248\sl-264\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf 4\f5\fs23 7.4.3 AML/CTF Program \par\pard\qj \li2205\sb0\sl-400\slmult0 \par\p ard\qj\li2205\ri914\sb44\sl-400\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosup ersub\cf1\f2\fs23 Part 7 of the AML/CTF Act requires a reporting entity to adopt and maintain an AML/CTF \up0 \expndtw0\charscalex108 Program (the Program). Thi s is considered a key obligation of a reporting entity in \up0 \expndtw0\charsca lex107 compliance with the AML/CTF Act. Failure to do so is an offence and would incur \up0 \expndtw0\charscalex102 significant civil penalty. The AML/CTF Rules set out the requirements with which the \up0 \expndtw0\charscalex100 Program mu st comply. The Program aims to assist a reporting entity to identify, mitigate \ up0 \expndtw0\charscalex100 and manage money laundering and terrorism financing risk (ML/TF risk) that affect the \up0 \expndtw0\charscalex100 entity\u8217?s bu siness. Therefore, a reporting entity could undertake appropriate and effective \up0 \expndtw-1\charscalex100 measures in complying with their obligations under the Act. \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218 \slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\s lmult0 \par\pard\ql\li2205\sb179\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \u l0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 51\ul0\nosupersub\cf10\f11\fs19 \u

l0\nosupersub\cf11\f12\fs19 Anti-Money Laundering and Counter-Terrorism Financin g Act 2006\ul0\nosupersub\cf10\f11\fs19 (Cth), s 121(3). \par\pard\qj \li2205\r i941\sb0\sl-240\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 52 \ul0\nosupersub\cf10\f11\fs19 Chris McNeil, \u8216?The Australian Anti-Money La undering Reform in the International Context\u8217? (2007) 22(6) \up0 \expndtw-3 \charscalex100 \ul0\nosupersub\cf11\f12\fs19 Journal of International Banking La w and Regulation\ul0\nosupersub\cf10\f11\fs19 340, 344. \par\pard\ql \li10449\s b0\sl-264\slmult0 \par\pard\ql\li10449\sb41\sl-264\slmult0 \up0 \expndtw-3\chars calex100 \ul0\nosupersub\cf1\f2\fs23 280 {\shp {\*\shpinst\shpleft2205\shptop13369\shpright5006\shpbottom13389\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz163\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g290}{\bkmkend Pg290}\par\pard\qj \li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205 \sb0\sl-402\slmult0 \par\pard\qj\li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205\r i913\sb241\sl-402\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf1\ f2\fs23 According to section 83 of the AML/CTF Act, there are three types of Pro grams. The first \up0 \expndtw-1\charscalex100 type of Program is a Standard Pro gram and it applies to individual reporting entity.\ul0\super\cf8\f9\fs23 53\ul0 \nosupersub\cf1\f2\fs23 The \up0 \expndtw0\charscalex104 second type of Program is a Joint Program and it applies to reporting entities who are \up0 \expndtw-1 \charscalex100 members of a designated business group (DBG).\ul0\super\cf8\f9\fs 23 54\ul0\nosupersub\cf1\f2\fs23 The third type of Program is a Special \up0 \e xpndtw0\charscalex103 Program and it applies to item 54 designated services.\ul0 \super\cf8\f9\fs23 55\ul0\nosupersub\cf1\f2\fs23 Item 54 is described as \u8216 ?in the \up0 \expndtw-2\charscalex100 capacity of a holder of an Australian fina ncial services licence, making arrangements for a \up0 \expndtw-1\charscalex100 person to receive a designated service (other than a service covered by this ite m).\u8217?\ul0\super\cf8\f9\fs23 56\ul0\nosupersub\cf1\f2\fs23 Such \up0 \expnd tw0\charscalex100 services are not subject to the suspicious and significant tra nsactions reporting as well as \up0 \expndtw-1\charscalex100 ongoing customer due diligence requirements. However, customer identification, \up0 \ expndtw-2\charscalex100 verification and record keeping requirements will still apply. \par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri916\sb20\sl -400\slmult0 \up0 \expndtw-2\charscalex100 Every Standard or Joint AML/CTF progr am comprises two different parts, namely, Part A \up0 \expndtw-3\charscalex100 a nd Part B. The purpose of Part A of a Standard AML/CTF program is to identify, m itigate \up0 \expndtw0\charscalex104 and manage the ML/TF risks that a reporting entity may reasonably face in providing \up0 \expndtw0\charscalex100 designated services.\ul0\super\cf8\f9\fs23 57\ul0\nosupersub\cf1\f2\fs23 Part B of a Stan dard Program sets out the customer identification \up0 \expndtw-4\charscalex100 procedures, including the collection and verification of customer information. \ par\pard\qj \li2205\ri914\sb399\sl-402\slmult0 \up0 \expndtw-3\charscalex100 In a Joint AML/CTF program, the purpose of Part A is to identify, mitigate and mana ge the \up0 \expndtw0\charscalex100 ML/TF risk each of the reporting entities in a designated business group may reasonably \up0 \expndtw-1\charscalex100 face i n providing designated services.\ul0\super\cf8\f9\fs23 58\ul0\nosupersub\cf1\f2\ fs23 Part B of the Joint program must set out customer \up0 \expndtw0\charscale x102 identification procedures in relation to each of the reporting entities in the group which \up0 \expndtw0\charscalex100 have been chosen to adopt the Joint AML/CTF program. In these circumstances, each of \up0 \expndtw-1\charscalex100 the reporting entities may have different ML/TF risks. As such, Parts A and B of

the Joint \up0 \expndtw0\charscalex100 Program need to be capable of identifyin g, mitigating and managing ML/TF risks which \up0 \expndtw-3\charscalex100 may b e faced by different reporting entities in the group. Notably, this section will focus on \up0 \expndtw-3\charscalex100 the requirements relating to Part A of t he AML/CTF Program as the requirements of Part B \up0 \expndtw-4\charscalex100 w ill be discussed in greater detail in the next section. \par\pard\ql \li2205\sb0 \sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\s l-218\slmult0 \par\pard\ql\li2205\sb76\sl-218\slmult0 \up0 \expndtw-2\charscalex 100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 53\ul0\nosupersub\cf10\f11\fs 19 \ul0\nosupersub\cf11\f12\fs19 Anti Money Laundering and Counter-Terrorism Fi nancing Act 2006 \ul0\nosupersub\cf10\f11\fs19 (Cth),\ul0\nosupersub\cf11\f12\fs 19 \ul0\nosupersub\cf10\f11\fs19 s 84. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 54\ul0\nosupersub\cf10\f11 \fs19 \ul0\nosupersub\cf11\f12\fs19 Anti Money Laundering and Counter-Terrorism Financing Act 2006 \ul0\nosupersub\cf10\f11\fs19 (Cth),\ul0\nosupersub\cf11\f12 \fs19 \ul0\nosupersub\cf10\f11\fs19 s 85. \par\pard\qj \li2205\ri3100\sb1\sl-22 0\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 55\ul0\nosupersu b\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Anti Money Laundering and Counter -Terrorism Financing Act 2006 \ul0\nosupersub\cf10\f11\fs19 (Cth),\ul0\nosupersu b\cf11\f12\fs19 \ul0\nosupersub\cf10\f11\fs19 s 86. \line \up0 \expndtw-2\chars calex100 \ul0\super\cf9\f10\fs18 56\ul0\nosupersub\cf11\f12\fs19 Anti Money Laun dering and Counter-Terrorism Financing Act 2006 \ul0\nosupersub\cf10\f11\fs19 (C th),\ul0\nosupersub\cf11\f12\fs19 \ul0\nosupersub\cf10\f11\fs19 s 6. \par\pard\ ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\f s18 57\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Anti Money La undering and Counter-Terrorism Financing Rules Instrument 2007 (No.1\ul0\nosuper sub\cf10\f11\fs19 ), pt 8.1.2. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \exp ndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 58\ul0\nosupersub\cf10\f11\fs19 \u l0\nosupersub\cf11\f12\fs19 Anti Money Laundering and Counter-Terrorism Financin g Rules Instrument 2007 (No.1\ul0\nosupersub\cf10\f11\fs19 ), pt 9.1.2. \par\par d\ql \li10449\sb15\sl-251\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\ cf1\f2\fs23 281 {\shp {\*\shpinst\shpleft2205\shptop13033\shpright5006\shpbottom13053\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz191\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g291}{\bkmkend Pg291}\par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205 \sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\s b0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0 \sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb113 \sl-264\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf4\f5\fs23 Requir ements for Part A of an AML/CTF Program \par\pard\qj \li2205\sb0\sl-403\slmult0 \par\pard\qj\li2205\ri915\sb19\sl-403\slmult0 \up0 \expndtw0\charscalex100 \ul0\ nosupersub\cf1\f2\fs23 Chapter 8 and 9 of the AML/CTF Rules require a reporting entity to implement risk-based \line \up0 \expndtw-1\charscalex100 systems and c ontrols in Part A of the Program. For this reason, a reporting entity must take \line \up0 \expndtw0\charscalex100 into account the nature and complexity of its business and the type of ML/TF risk it might \line \up0 \expndtw0\charscalex100 face. Furthermore, in assessing such risk, a reporting entity must specifically consider the \line \up0 \expndtw0\charscalex103 types of customer and designate d services provided, methods by which it delivers those \line \up0 \expndtw0\cha rscalex102 services, foreign jurisdictions with which it deals and designated se

rvices provided by its \line \up0 \expndtw0\charscalex102 overseas offices.\ul0\ super\cf8\f9\fs23 59 \par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \ri916\sb20\sl-400\slmult0 \up0 \expndtw0\charscalex106 \ul0\nosupersub\cf1\f2\f s23 Besides, a reporting entity is required to include in Part A of the Program appropriate \up0 \expndtw0\charscalex104 procedures relating to oversight by boards and senior management; a designated \up0 \expndtw0\charscalex105 A ML/CTF Compliance Officer; regular independent review; dealing with AUSTRAC \up0 \expndtw-3\charscalex100 feedback and permanent establishments in a foreign cou ntry. \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb249\sl-264\s lmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf4\f5\fs23 a) Oversight by boards and senior management \par\pard\qj \li2205\ri914\sb22\sl-403\slmult0 \up 0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs23 The Program must be approv ed and subject to ongoing oversight by its board of directors. \line \up0 \expnd tw0\charscalex103 Where an entity does not have a board it will be the responsib ility of its chief executive \line \up0 \expndtw0\charscalex100 officer to overs ee the program. Oversight may include regular reports that are dealt as part \li ne \up0 \expndtw0\charscalex100 of operational risk reporting processes.\ul0\sup er\cf8\f9\fs23 60\ul0\nosupersub\cf1\f2\fs23 Additionally, where a reporting en tity is part of a \line \up0 \expndtw0\charscalex100 designated business group ( DBG), and has a joint AML/CTF program, ongoing oversight \line \up0 \expndtw0\ch arscalex104 can be discharged by the governing board and senior management of th e main holding \line \up0 \expndtw-3\charscalex100 company of the group.\ul0\sup er\cf8\f9\fs23 61 \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb 248\sl-264\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf4\f5\fs23 b) Designated of AML/CTF Compliance Officer \par\pard\qj \li2205\ri917\sb8\sl-420\s lmult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs23 A reporting enti ty or a designated business group must appoint an AML/CTF Compliance \line \up0 \expndtw0\charscalex100 Officer at the management level. Factors that may be rel evant when considering the \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\ li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li 2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb95\sl-218\slmult0 \up0 \expndtw-2\ charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 59\ul0\nosupersub\c f10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Anti Money Laundering and Counter-Te rrorism Financing Rules Instrument 2007 (No.1\ul0\nosupersub\cf10\f11\fs19 ), pt 8.1, 9.1 \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 60\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f1 2\fs19 Anti Money Laundering and Counter-Terrorism Financing Rules Instrument 20 07 (No.1), \ul0\nosupersub\cf10\f11\fs19 pt 8.4, 9.4. \par\pard\ql \li2205\sb2\s l-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 61\ul0\nosup ersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Anti Money Laundering and Cou nter-Terrorism Financing Rules Instrument 2007 (No.1), \ul0\nosupersub\cf10\f11\ fs19 pt 9.4.2. \par\pard\ql \li10449\sb15\sl-251\slmult0 \up0 \expndtw-3\charsca lex100 \ul0\nosupersub\cf1\f2\fs23 282 {\shp {\*\shpinst\shpleft2205\shptop13704\shpright5006\shpbottom13724\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz183\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g292}{\bkmkend Pg292}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i915\sb249\sl-400\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs 23 designation of the officer include independence, seniority, accountability, r eporting lines, \up0 \expndtw0\charscalex100 access to executive or board and re

levant skills and experience.\ul0\super\cf8\f9\fs23 62 \par\pard\ql \li2205\sb0\ sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb5\sl -264\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf4\f5\fs23 c) Regula r independent reviews \par\pard\qj \li2205\ri914\sb24\sl-400\slmult0 \up0 \expnd tw0\charscalex100 \ul0\nosupersub\cf1\f2\fs23 The Program must be subject to reg ular independent review, which may be carried out by \up0 \expndtw0\charscalex10 6 either an internal or external party. The review aims to assess the effective ness of the \up0 \expndtw0\charscalex107 AML/CTF program and whether the program has been effectively implemented and \up0 \expndtw-3\charscalex100 complied by the reporting entities.\ul0\super\cf8\f9\fs23 63 \par\pard\ql \li2205\sb0\sl-264 \slmult0 \par\pard\ql\li2205\sb249\sl-264\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf4\f5\fs23 d) AUSTRAC feedback \par\pard\qj \li2205\ri914\sb19\ sl-406\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs23 The Prog ram must include appropriate procedures for the reporting entity to consider any \up0 \expndtw0\charscalex105 feedback provided by AUSTRAC in respect of its per formance on the management of \up0 \expndtw0\charscalex104 ML/TF risk.\ul0\supe r\cf8\f9\fs23 64\ul0\nosupersub\cf1\f2\fs23 This may include requirements and recommendations contained in \up0 \expndtw-3\charscalex100 AUSTRAC audit reports. \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb248\sl-26 4\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf4\f5\fs23 e) Permanent establishments in a foreign country \par\pard\qj \li2205\ri914\sb21\sl-404\slmu lt0 \up0 \expndtw0\charscalex108 \ul0\nosupersub\cf1\f2\fs23 The Program must in clude systems and controls that meet the obligations under the \line \up0 \expnd tw0\charscalex100 AML/CTF Act that apply at a permanent establishment of the rep orting entity in a foreign \line \up0 \expndtw0\charscalex107 country. If it is regulated by the laws that are comparable to Australia, only minimal \line \up0 \expndtw-1\charscalex100 additional systems and controls need to be considered. Besides, the requirements relating to \line \up0 \expndtw0\charscalex100 an over sight by BOD or CEO, designation of AML/CTF compliance officer, independent \lin e \up0 \expndtw0\charscalex100 reviews and consideration of AUSTRAC feedback als o apply to such entities.\ul0\super\cf8\f9\fs23 65 \par\pard\ql \li2205\sb0\sl-2 64\slmult0 \par\pard\ql\li2205\sb248\sl-264\slmult0 \up0 \expndtw-3\charscalex10 0 \ul0\nosupersub\cf1\f2\fs23 Ultimately, Part A of the Program must be able to: \par\pard\ql \li2205\sb156\sl-264\slmult0 \up0 \expndtw-3\charscalex100 \u-3913 ?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 identify, mitigate a nd manage ML/TF risk; \par\pard\ql \li2205\sb156\sl-264\slmult0 \up0 \expndtw-3\ charscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 enable the identification of significant changes in ML/TF risk; \par\pard\qj \l i2205\ri915\sb44\sl-400\slmult0\tx2556 \up0 \expndtw0\charscalex107 \u-3913?\ul0 \nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 recognise such ML/TF risk changes for the requirement of Parts A and B of the \line\tab \up0 \expndtw-3\c harscalex100 AML/CTF program; \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql \li2205\sb57\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs1 9\ul0\super\cf9\f10\fs18 62\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f 12\fs19 Anti Money Laundering and Counter-Terrorism Financing Rules Instrument 2 007 (No.1)\ul0\nosupersub\cf10\f11\fs19 , pt 8.5, 9.5. \par\pard\ql \li2205\sb2\ sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 63\ul0\nosu persub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Anti Money Laundering and Co unter-Terrorism Financing Rules Instrument 2007 (No.1)\ul0\nosupersub\cf10\f11\f s19 , pt 8.6, 9.6. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\chars calex100 \ul0\super\cf9\f10\fs18 64\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersu b\cf11\f12\fs19 Anti Money Laundering and Counter-Terrorism Financing Rules Inst rument 2007 (No.1),\ul0\nosupersub\cf10\f11\fs19 pt 8.7, 9.7. \par\pard\ql \li2 205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 65\ ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Anti Money Launderin g and Counter-Terrorism Financing Rules Instrument 2007 (No.1),\ul0\nosupersub\c f10\f11\fs19 pt 8.8, 9.8. \par\pard\ql \li10449\sb15\sl-251\slmult0 \up0 \expnd tw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 283

{\shp {\*\shpinst\shpleft2205\shptop13480\shpright5006\shpbottom13500\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz206\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g293}{\bkmkend Pg293}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i916\sb269\sl-400\slmult0\tx2556 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\c f1\f2\fs23 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 as sess the ML/TF risk posed by all new designated services and their methods befor e \line\tab \up0 \expndtw-2\charscalex100 introducing them to the market; \par\p ard\qj \li2205\ri2829\sb4\sl-420\slmult0 \up0 \expndtw-2\charscalex100 \u-3913?\ ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 determine the appropri ate level of employee due diligence to apply; \line \up0 \expndtw-3\charscalex10 0 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 design appr opriate ML/TF risk awareness training programs.\ul0\super\cf8\f9\fs23 66 \par\pa rd\qj \li2205\ri913\sb395\sl-402\slmult0\fi0 \up0 \expndtw-3\charscalex100 \ul0\ nosupersub\cf1\f2\fs23 The obligation to establish and maintain AML/CTF program places reporting entities in the \line \up0 \expndtw0\charscalex100 position of needing to gather more information about their customers. It appears that an \li ne \up0 \expndtw-1\charscalex100 effective AML/CTF program will be the key to a reporting entity\u8217?s strategy to adequately \line \up0 \expndtw-2\charscalex 100 manage money laundering and terrorism financing risks and to ensure complian ce with the \line \up0 \expndtw0\charscalex106 AML/CTF legislation. On the other hand, an ineffective program will lead to undue \line \up0 \expndtw-2\charscale x100 compliance costs and possibly result in significant civil penalties and per sonal liability for \line \up0 \expndtw-3\charscalex100 the Board of Directors.\ ul0\super\cf8\f9\fs23 67\ul0\nosupersub\cf1\f2\fs23 As such, a reporting entity must put considerable effort to develop \line \up0 \expndtw-1\charscalex100 and maintain an effective and workable AML/CTF program. Given the complex nature of \line \up0 \expndtw-3\charscalex100 money laundering and terrorism financing ac tivities, this is a very challenging and onerous \line \up0 \expndtw-3\charscale x100 task. \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-26 4\slmult0 \par\pard\ql\li2205\sb4\sl-264\slmult0 \up0 \expndtw-4\charscalex100 \ ul0\nosupersub\cf4\f5\fs23 7.4.4 Customer Identification and Due Diligence \pa r\pard\qj \li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205\ri914\sb20\sl-402\slmul t0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf1\f2\fs23 Part 2 of the AML/C TF Act deals with obligations to identify and verify customers as well \line \up 0 \expndtw-2\charscalex100 as to establish ongoing customer due diligence. The A nti Money Laundering and Counter-\line \up0 \expndtw0\charscalex104 Terrorism Fi nancing Rules Instrument 2007 (No.1)\ul0\super\cf8\f9\fs23 68\ul0\nosupersub\cf1 \f2\fs23 describes the implementation of \line \up0 \expndtw0\charscalex102 cus tomer identification and verification procedures. Generally, when implementing t he \line \up0 \expndtw-4\charscalex100 customer due diligence requirements, a re porting entity must adopt an approach appropriate \line \up0 \expndtw0\charscale x105 to the ML/TF risk which has been identified by Part A of its AML/CTF progra m. As \line \up0 \expndtw-2\charscalex100 already mentioned, customer identifica tion and verification procedures must be outlined in \line \up0 \expndtw0\charsc alex100 Part B of the AML/CTF Program. The AML/CTF Rules specify different ident ification \line \up0 \expndtw0\charscalex100 procedures for different type of cu stomers. They also provide a safe harbour procedure for \par\pard\ql \li2205\sb0 \sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\s l-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl218\slmult0 \par\pard\ql\li2205\sb20\sl-218\slmult0 \up0 \expndtw-2\charscalex10

0 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 66\ul0\nosupersub\cf10\f11\fs19 Ibid. \par\pard\qj \li2205\ri941\sb1\sl-220\slmult0 \up0 \expndtw0\charscalex1 00 \ul0\super\cf9\f10\fs18 67\ul0\nosupersub\cf10\f11\fs19 Andrea Beatty and Ja mes Moore, \u8216?Anti-Money Laundering Reform: A Review\u8217? (2006) 21(8) \ul 0\nosupersub\cf11\f12\fs19 Australian \up0 \expndtw-1\charscalex100 Banking and Finance Law Bulletin\ul0\nosupersub\cf10\f11\fs19 103, 105. \par\pard\li2205\sb 20\sl-218\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 68\u l0\nosupersub\cf10\f11\fs19 Hereafter referred as the AML/CTF Rules.\par\pard\l i2205\sb3\sl-264\slmult0\fi8243 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf 1\f2\fs23 284 {\shp {\*\shpinst\shpleft2205\shptop13480\shpright5006\shpbottom13500\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz204\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g294}{\bkmkend Pg294}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i916\sb249\sl-400\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs 23 individuals which are identified as a lower ML/TF risk. A safe harbour proced ure involves \up0 \expndtw-1\charscalex100 minimum customer identification and v erification. \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl264\slmult0 \par\pard\ql\li2205\sb5\sl-264\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf4\f5\fs23 a) Customer Identification and Verification Procedu res \par\pard\qj \li2205\ri914\sb24\sl-400\slmult0\fi0 \up0 \expndtw0\charscalex 103 \ul0\nosupersub\cf1\f2\fs23 The identification procedures can be divided int o three categories, namely identification \line \up0 \expndtw0\charscalex102 and verification of existing customers; identification and verification of low risk services \line \up0 \expndtw0\charscalex104 and identification and verification of new customers. Generally, existing customers are \line \up0 \expndtw0\charsc alex102 exempted from customer identification procedures\ul0\super\cf8\f9\fs23 6 9\ul0\nosupersub\cf1\f2\fs23 except in the event that a suspicious \line \up0 \ expndtw0\charscalex101 matter obligation arises.\ul0\super\cf8\f9\fs23 70\ul0\ nosupersub\cf1\f2\fs23 Section \up0 \expndtw0\charscalex103 41 describes the various circumstances when a \par\pard\qj \li2205\ri916\sb0\sl-410\slmult0\ fi0 \up0 \expndtw0\charscalex100 suspicious obligation would arise. An example i s when a reporting entity suspects that the \up0 \expndtw0\charscalex102 custome r is not who it claims to be.\ul0\super\cf8\f9\fs23 71\ul0\nosupersub\cf1\f2\fs2 3 Within 14 days of the suspicious matter obligation \up0 \expndtw0\charscalex1 02 arising, the new customer must be identified and verified.\ul0\super\cf8\f9\f s23 72 \par\pard\qj \li2205\ri915\sb391\sl-400\slmult0 \up0 \expndtw-4\charscale x100 \ul0\nosupersub\cf1\f2\fs23 Similarly, section 30 provides that certain \u8 216?low-risk designated services\u8217?\ul0\super\cf8\f9\fs23 73\ul0\nosupersub\ cf1\f2\fs23 will be exempted \line \up0 \expndtw0\charscalex100 from customer i dentification procedures. However, when a suspicious matter obligation \line \up 0 \expndtw0\charscalex108 arises, the customers need to be identified and verifi ed.\ul0\super\cf8\f9\fs23 74\ul0\nosupersub\cf1\f2\fs23 Under section \up0 \exp ndtw0\charscalex114 32 of the \par\pard\qj \li2205\ri915\sb0\sl-406\slmult0\fi0 \up0 \expndtw-3\charscalex100 AML/CTF Act, a reporting entity must identify and verify the identity of all new customers \up0 \expndtw-3\charscalex100 before it can provide them with a designated service. However, if \u8216?special circumst ances\u8217?\ul0\super\cf8\f9\fs23 75 \up0 \expndtw-2\charscalex100 \ul0\nosuper sub\cf1\f2\fs23 arise, the identification procedure can be carried out, no later than five business days, after \up0 \expndtw-3\charscalex100 providing a design

ated service.\ul0\super\cf8\f9\fs23 76 \par\pard\qj \li2205\ri916\sb395\sl-400\ slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf1\f2\fs23 Under section 35, a reporting entity must re-verify a new customer where it has reasonable \li ne \up0 \expndtw-1\charscalex100 grounds to doubt that the customer is who it cl aims to be. Under these circumstances, the \line \up0 \expndtw-1\charscalex100 r eporting entity must, within 14 days, collect know your customer (KYC) informati on in \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slm ult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmul t0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb163\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\sup er\cf9\f10\fs19\ul0\super\cf9\f10\fs18 69\ul0\nosupersub\cf10\f11\fs19 \ul0\nos upersub\cf11\f12\fs19 Anti-Money Laundering and Counter-Terrorism Financing Act 2006\ul0\nosupersub\cf10\f11\fs19 (Cth), s 28. \par\pard\ql \li2205\sb2\sl-218\ slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 70\ul0\nosupersub\ cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Anti-Money Laundering and Counter-T errorism Financing Act 2006\ul0\nosupersub\cf10\f11\fs19 (Cth), s 29. \par\pard \ql \li2205\sb22\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10 \fs18 71\ul0\nosupersub\cf10\f11\fs19 Details of suspicious matter obligations can be found in s 41(1) of the AML/CTF Act 2006. \par\pard\ql \li2205\sb2\sl-218 \slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 72\ul0\nosupersub \cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Anti Money Laundering and CounterTerrorism Financing Rules Instrument 2007 (No.1)\ul0\nosupersub\cf10\f11\fs19 , pt 6.3.2. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 73\ul0\nosupersub\cf10\f11\fs19 At the time of writing , the AML/CTF Rules have not yet identified which are low-risk designated servic es. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\s uper\cf9\f10\fs18 74\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Anti Money Laundering and Counter-Terrorism Financing Rules Instrument 2007 (No .1),\ul0\nosupersub\cf10\f11\fs19 pt 6.4.2. \par\pard\ql \li2205\sb2\sl-218\slm ult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 75\ul0\nosupersub\cf1 0\f11\fs19 At the time of writing, the AML/CTF Rules have not yet specified the \u8216?special circumstances\u8217?. \par\pard\ql \li2205\sb2\sl-218\slmult0 \u p0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 76\ul0\nosupersub\cf10\f11\f s19 \ul0\nosupersub\cf11\f12\fs19 Anti-Money Laundering and Counter-Terrorism F inancing Act 2006\ul0\nosupersub\cf10\f11\fs19 (Cth) ss 33 and 34. \par\pard\ql \li10449\sb15\sl-251\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\ f2\fs23 285 {\shp {\*\shpinst\shpleft2205\shptop12585\shpright5006\shpbottom12605\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz197\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g295}{\bkmkend Pg295}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i917\sb249\sl-400\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf1\f2\f s23 respect of the customer or verify certain KYC information that has been obta ined to satisfy \up0 \expndtw-2\charscalex100 itself that the customer is the pe rson claimed.\ul0\super\cf8\f9\fs23 77 \par\pard\qj \li2205\ri915\sb396\sl-405\s lmult0 \up0 \expndtw0\charscalex103 \ul0\nosupersub\cf1\f2\fs23 As regards to th e verification of customers, the AML/CTF Rules provide two important \up0 \expnd tw0\charscalex106 methods: electronic verification and reliance on documentation . For verification from \up0 \expndtw0\charscalex103 documentation, a reporting entity must use reliable and independent documentation and \up0 \expndtw0\charsc

alex104 must apply appropriate risk based systems and controls to determine the reliability and \up0 \expndtw-3\charscalex100 validity of the documents.\ul0\sup er\cf8\f9\fs23 78 \par\pard\qj \li2205\ri913\sb396\sl-404\slmult0\fi0 \up0 \expn dtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 The AML/CTF Rules impose specifi c safeguards where electronic verification is used. This \up0 \expndtw-1\charsca lex100 includes the obligation to establish systems and controls to ensure that the data is reliable, \up0 \expndtw0\charscalex102 independent, accurate, secure , up to date and comprehensive.\ul0\super\cf8\f9\fs23 79\ul0\nosupersub\cf1\f2\f s23 It appears that the \u8216?100 \up0 \expndtw0\charscalex100 point check\u82 17? systems under FTRA is no longer applicable. Instead, the reporting entities \up0 \expndtw0\charscalex100 may use \u8216?reliable and independent\u8217? docu mentation, such as valid passports or photo card \up0 \expndtw-1\charscalex100 d riving licences, to verify customer\u8217?s information. \par\pard\qj \li2205\ri 915\sb396\sl-405\slmult0 \up0 \expndtw-3\charscalex100 It is interesting to note that the AML/CTF Act allows reporting entities to appoint agents to \up0 \expnd tw-3\charscalex100 carry out their customer identification procedures.\ul0\super \cf8\f9\fs23 80\ul0\nosupersub\cf1\f2\fs23 In this respect, agency principles a pply \up0 \expndtw0\charscalex103 and the reporting entities will remain respons ible for the acts of their agents. Also, the \up0 \expndtw0\charscalex100 report ing entities are still required to identify, manage and mitigate any risk posed by the \up0 \expndtw0\charscalex100 use of third parties in order to comply with the obligations under the Act. \par\pard\qj \li2205\ri915\sb400\sl-400\slmult0\ fi0 \up0 \expndtw-3\charscalex100 The AML/CTF Act introduces the concept of desi gnated business group (DBG), which will \line \up0 \expndtw0\charscalex106 facil itate sharing of customer identification information and allow for a group-wide \line \up0 \expndtw-2\charscalex100 compliance program. A DBG is defined as a gr oup of two or more persons, each of whom \line \up0 \expndtw-2\charscalex100 has elected in writing to be a member of a DBG.\ul0\super\cf8\f9\fs23 81\ul0\nosupe rsub\cf1\f2\fs23 A DBG must meet the requirements set \line \up0 \expndtw-2\cha rscalex100 out in Chapter 2 of the AML/CTF Rules. The Rules restrict membership of a DBG to:\ul0\super\cf8\f9\fs23 82 \par\pard\ql \li2205\sb0\sl-218\slmult0 \p ar\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par \pard\ql\li2205\sb77\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9 \f10\fs18 77\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Anti Mo ney Laundering and Counter-Terrorism Financing Rules Instrument 2007 (No.1)\ul0\ nosupersub\cf10\f11\fs19 , pt 6.2.3. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up 0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 78\ul0\nosupersub\cf10\f11\fs 19 \ul0\nosupersub\cf11\f12\fs19 Anti Money Laundering and Counter-Terrorism Fi nancing Rules Instrument 2007 (No.1),\ul0\nosupersub\cf10\f11\fs19 pt 4.9. \par \pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9 \f10\fs18 79\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Anti Mo ney Laundering and Counter-Terrorism Financing Rules Instrument 2007 (No.1), \ul 0\nosupersub\cf10\f11\fs19 pt 4.10. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 80\ul0\nosupersub\cf10\f11\fs1 9 \ul0\nosupersub\cf11\f12\fs19 Anti-Money Laundering and Counter-Terrorism Fin ancing Act 2006\ul0\nosupersub\cf10\f11\fs19 (Cth), s 37. \par\pard\ql \li2205\ sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 81\ul0\ nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Anti-Money Laundering an d Counter-Terrorism Financing Act 2006\ul0\nosupersub\cf10\f11\fs19 (Cth), s 5. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\supe r\cf9\f10\fs18 82\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 An ti Money Laundering and Counter-Terrorism Financing Rules Instrument 2007 (No.1) \ul0\nosupersub\cf10\f11\fs19 , pt 2.1.2 (4). \par\pard\ql \li10449\sb15\sl-251\ slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 286 {\shp {\*\shpinst\shpleft2205\shptop13033\shpright5006\shpbottom13053\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz190\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}}

{\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g296}{\bkmkend Pg296}\par\pard\li2205\sb0\sl-264\slmult0\par\pard\li2205\sb0\sl264\slmult0\par\pard\li2205\sb0\sl-264\slmult0\par\pard\li2205\sb0\sl-264\slmult 0\par\pard\li2205\sb0\sl-264\slmult0\par\pard\li2205\sb252\sl-264\slmult0\fi0\tx 2731 \up0 \expndtw0\charscalex101 \ul0\nosupersub\cf1\f2\fs23 a)\tab \up0 \expnd tw0\charscalex102 related bodies corporate (within the meaning of section 50 of the Corporations Act\par\pard\li2205\sb138\sl-264\slmult0\fi525 \up0 \expndtw0\c harscalex101 2001 (Cth)) that are reporting entities; or\par\pard\li2205\sb139\s l-264\slmult0\fi0 \up0 \expndtw0\charscalex102 b)\ul0\nosupersub\cf6\f7\fs23 \u l0\nosupersub\cf1\f2\fs23 a company in a foreign country, which if it were re sident in Australia would be a\par\pard\li2205\sb139\sl-264\slmult0\fi525 \up0 \ expndtw0\charscalex101 reporting entity; or\par\pard\li2205\sb139\sl-264\slmult0 \fi0\tx2731 \up0 \expndtw0\charscalex101 c)\tab \up0 \expndtw0\charscalex102 per sons who provide designated services pursuant to a joint venture agreement to\pa r\pard\li2205\sb139\sl-264\slmult0\fi525 \up0 \expndtw0\charscalex101 which each member of the group is a party.\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\par d\qj\li2205\ri916\sb19\sl-400\slmult0 \up0 \expndtw0\charscalex104 Members of a DBG can discharge ongoing customer due diligence, record keeping and \up0 \expnd tw0\charscalex100 compliance reporting requirements for other members and, in ce rtain circumstances, they \up0 \expndtw0\charscalex100 can share suspicious matt er information.\ul0\super\cf8\f9\fs23 83 \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb5\sl-264\slmult0 \ up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf4\f5\fs23 b) Ongoing Due Diligenc e \par\pard\qj \li2205\ri914\sb24\sl-400\slmult0\tx3039 \up0 \expndtw-3\charscal ex100 \ul0\nosupersub\cf1\f2\fs23 Section \tab \up0 \expndtw0\charscalex109 36 s pecifically requires a reporting entity to conduct ongoing customer due \line \u p0 \expndtw0\charscalex106 diligence, with a view to identifying, mitigating and managing money laundering and \line \up0 \expndtw0\charscalex100 terrorism fina ncing risks that it might reasonably face. Ongoing due diligence requirement \li ne \up0 \expndtw0\charscalex100 relates to KYC information, transaction monitori ng and enhanced customer due diligence \line \up0 \expndtw0\charscalex100 progra ms. \par\pard\qj \li2205\ri916\sb392\sl-410\slmult0 \up0 \expndtw0\charscalex100 Based on Part A of its AML/CTF program, a reporting entity must determine wheth er any \up0 \expndtw0\charscalex100 further KYC information should be collected and in what circumstances KYC information \up0 \expndtw0\charscalex100 should be updated and verified in respect of its customer due diligence purposes.\ul0\sup er\cf8\f9\fs23 84 \par\pard\qj \li2205\ri915\sb395\sl-404\slmult0\fi0 \up0 \expn dtw0\charscalex107 \ul0\nosupersub\cf1\f2\fs23 A reporting entity must include t ransaction monitoring and enhanced customer due \line \up0 \expndtw0\charscalex1 07 diligence programs in its AML/CTF program. A transaction monitoring program i s \line \up0 \expndtw-3\charscalex100 designed to monitor all transactions in or der to identify any suspicious transactions and any \line \up0 \expndtw-3\charsc alex100 complex, unusual large and patterns of transactions.\ul0\super\cf8\f9\fs 23 85\ul0\nosupersub\cf1\f2\fs23 An enhanced customer due diligence \line \up0 \expndtw-1\charscalex100 refers to further consideration of customer\u8217?s inf ormation. This is critical when a reporting \line \up0 \expndtw-1\charscalex100 entity determines, based on Part A of its AML/CTF program, that the money launde ring or \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\s lmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slm ult0 \par\pard\ql\li2205\sb98\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\ super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 83\ul0\nosupersub\cf10\f11\fs19 AUSTR AC Guidance Note-Designated Business Groups, s 5. \par\pard\ql \li2205\sb2\sl-21 8\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 84\ul0\nosupersu b\cf10\f11\fs19 AUSTRAC Draft AML/CTF Rules in respect of ongoing customer due diligence, paras 2, 3. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\c

harscalex100 \ul0\super\cf9\f10\fs18 85\ul0\nosupersub\cf10\f11\fs19 Ibid, para 6. \par\pard\ql \li10449\sb15\sl-251\slmult0 \up0 \expndtw-3\charscalex100 \ul0 \nosupersub\cf1\f2\fs23 287 {\shp {\*\shpinst\shpleft2205\shptop13704\shpright5006\shpbottom13724\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz196\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g297}{\bkmkend Pg297}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i916\sb249\sl-400\slmult0\fi0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f 2\fs23 terrorism financing risk is high or a suspicious obligation has arisen.\u l0\super\cf8\f9\fs23 86\ul0\nosupersub\cf1\f2\fs23 Undoubtedly, given \up0 \exp ndtw-1\charscalex100 the complexity of the industry, the nature of their custome rs and the volume and frequency \up0 \expndtw0\charscalex100 of customer transac tions, ongoing due diligence requirements will put a significant burden \up0 \ex pndtw-1\charscalex100 on the reporting entities. \par\pard\ql \li2205\sb0\sl-264 \slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb5\sl-264\s lmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf4\f5\fs23 7.4.5 Reporti ng Obligations \par\pard\qj \li2205\sb0\sl-405\slmult0 \par\pard\qj\li2205\ri916 \sb15\sl-405\slmult0 \up0 \expndtw0\charscalex104 \ul0\nosupersub\cf1\f2\fs23 Pa rt 3 of the AML/CTF Act requires a reporting entity to lodge four types of repor ts to \line \up0 \expndtw0\charscalex100 AUSTRAC. These include reports of suspi cious matters, reports of threshold transactions, \line \up0 \expndtw0\charscale x105 reports of international funds transfer instructions and AML/CTF compliance reports. \line \up0 \expndtw-1\charscalex100 Failure to comply with the reporti ng obligations is an offence and can incur a civil penalty. \line \up0 \expndtw1\charscalex100 Clearly, the AML/CTF Act provides a wider range of reporting obl igations than the FTRA. \par\pard\qj \li2205\ri914\sb398\sl-402\slmult0 \up0 \ex pndtw0\charscalex100 Division 6 of Part 3 of the AML/CTF Act sets out general pr ovisions relating to reporting \up0 \expndtw0\charscalex102 obligations. The Act may exclude certain kinds of designated services from the reporting \up0 \expnd tw-2\charscalex100 obligations.\ul0\super\cf8\f9\fs23 87\ul0\nosupersub\cf1\f2\f s23 Section 68 provides protection from civil liability for persons complying w ith \up0 \expndtw0\charscalex100 reporting obligations under the Act. Essentiall y, a reporting entity, its officers, employees \up0 \expndtw0\charscalex100 and agents who act in good faith and without negligence in making a report under the Act, \up0 \expndtw0\charscalex100 are protected from actions, suits or proceedi ngs against them. Besides, complying with the \up0 \expndtw0\charscalex100 repor ting obligations provides some protection from prosecution of money laundering a nd \up0 \expndtw-1\charscalex100 terrorism financing offences under the Criminal Code.\ul0\super\cf8\f9\fs23 88 \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\par d\ql\li2205\sb248\sl-264\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\c f4\f5\fs23 a) Reports of Suspicious Matters \par\pard\qj \li2205\ri916\sb24\sl-4 00\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs23 Section 41(1 ) of the AML/CTF Act requires a reporting entity to report suspicious matters \u p0 \expndtw-1\charscalex100 to AUSTRAC. The reporting obligation is triggered: \ par\pard\qj \li2205\ri918\sb0\sl-400\slmult0 \up0 \expndtw0\charscalex102 (i) wh en the reporting entity commences to provide, or proposes to provide, a designat ed \up0 \expndtw0\charscalex102 service to a person; or \par\pard\qj \li2205\ri9 14\sb20\sl-400\slmult0 \up0 \expndtw-1\charscalex100 (ii) when a person requests the reporting entity to provide a designated service and it is of a \up0 \expnd tw-2\charscalex100 kind ordinarily provided by the reporting entity; or \par\par

d\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard \ql\li2205\sb135\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10 \fs19\ul0\super\cf9\f10\fs18 86\ul0\nosupersub\cf10\f11\fs19 Ibid, para 9. \par \pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9 \f10\fs18 87\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Anti-Mo ney Laundering and Counter-Terrorism Financing Act 2006\ul0\nosupersub\cf10\f11\ fs19 (Cth), s 67. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\chars calex100 \ul0\super\cf9\f10\fs18 88\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersu b\cf11\f12\fs19 Anti-Money Laundering and Counter-Terrorism Financing Act 2006\u l0\nosupersub\cf10\f11\fs19 (Cth), s 68. \par\pard\ql \li10449\sb15\sl-251\slmu lt0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 288 {\shp {\*\shpinst\shpleft2205\shptop13704\shpright5006\shpbottom13724\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz182\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g298}{\bkmkend Pg298}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i915\sb249\sl-400\slmult0 \up0 \expndtw0\charscalex102 \ul0\nosupersub\cf1\f2\fs 23 (iii) when a person merely inquires of the reporting entity whether it would be willing or \up0 \expndtw0\charscalex106 prepared to provide a designated serv ice and it is of a kind ordinarily provided by the \up0 \expndtw-3\charscalex100 reporting entity.\ul0\super\cf8\f9\fs23 89 \par\pard\ql \li2205\sb0\sl-264\slmu lt0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb5\sl-264\slmult 0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 Furthermore, any of the following conditions must be satisfied: \par\pard\qj \li2205\ri918\sb24\sl-4 00\slmult0 \up0 \expndtw0\charscalex102 (a) the person who receives, or will rec eive the designated serve is not who they claim to \line \up0 \expndtw0\charscal ex102 be; \par\pard\qj \li2205\ri917\sb0\sl-400\slmult0 \up0 \expndtw0\charscale x100 (b) the agent of the person who deals with the reporting entity in relation to the designated \up0 \expndtw-1\charscalex100 service is not the person the a gent claims to be; \par\pard\qj \li2205\ri916\sb0\sl-400\slmult0\tx2555 \up0 \ex pndtw0\charscalex102 (c) information concerning the provision, or the prospectiv e provision, of the designated \line\tab \up0 \expndtw0\charscalex102 service ma y be; \par\pard\ql \li2906\sb133\sl-264\slmult0 \up0 \expndtw-3\charscalex100 (i ) connected to a breach of a tax law; or \par\pard\qj \li2906\ri3755\sb24\sl-400 \slmult0 \up0 \expndtw-3\charscalex100 (ii) connected to a Commonwealth or state offence; or \line \up0 \expndtw-3\charscalex100 (iii) of assistance to a POCA 2 002 investigation; or \par\pard\ql \li2205\sb113\sl-264\slmult0 \up0 \expndtw-2\ charscalex100 (d) the provision or the prospective provision of the designated s ervice may be: \par\pard\ql \li2906\sb136\sl-264\slmult0 \up0 \expndtw-2\charsca lex100 (i) preparatory to a money laundering or terrorism financing offence; or \par\pard\qj \li2906\ri1490\sb24\sl-400\slmult0 \up0 \expndtw-2\charscalex100 (i i) relevant to an investigation into a money laundering or terrorism financing \ up0 \expndtw-3\charscalex100 offence.\ul0\super\cf8\f9\fs23 90 \par\pard\qj \li2 205\sb0\sl-402\slmult0 \par\pard\qj\li2205\ri912\sb17\sl-402\slmult0\fi0 \up0 \e xpndtw0\charscalex104 \ul0\nosupersub\cf1\f2\fs23 It is clear that obligations t o report suspicious matters have been significantly extended \line \up0 \expndtw 0\charscalex100 under the AML/CTF Act as they may arise even before there is any business relationship \line \up0 \expndtw0\charscalex107 between the reporting entity and a potential customer. Additionally, the scope of the \line \up0 \expn dtw0\charscalex100 grounds which trigger suspicion has been greatly expanded. A reporting entity is required \line \up0 \expndtw0\charscalex107 to make a suspic

ious matter report in circumstances where a reporting entity actually \line \up0 \expndtw-1\charscalex100 suspects on reasonable grounds that any one of those c ircumstances specified in section 41 \line \up0 \expndtw0\charscalex100 has aris en, for instance, when a bank suspect that the customer is not who he or she cla ims \line \up0 \expndtw0\charscalex103 to be. The AML/CTF Rules may specify matt ers to be taken into account by a reporting \line \up0 \expndtw0\charscalex102 e ntity when determining whether there are reasonable grounds for forming a suspic ion.\ul0\super\cf8\f9\fs23 91 \line \up0 \expndtw0\charscalex102 \ul0\nosupersub \cf1\f2\fs23 This includes details of the following: \par\pard\ql \li2205\sb0\sl -218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb134\sl -218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9 \f10\fs18 89\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Anti-Mo ney Laundering and Counter-Terrorism Financing Act 2006\ul0\nosupersub\cf10\f11\ fs19 (Cth), s 41(1) (a)-(c). \par\pard\qj \li2205\ri2283\sb1\sl-220\slmult0 \up 0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 90\ul0\nosupersub\cf10\f11\fs 19 \ul0\nosupersub\cf11\f12\fs19 Anti-Money Laundering and Counter-Terrorism Fi nancing Act 2006\ul0\nosupersub\cf10\f11\fs19 (Cth), s 41 (1) (d)-(j). \up0 \ex pndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 91\ul0\nosupersub\cf11\f12\fs19 An ti-Money Laundering and Counter-Terrorism Financing Act 2006\ul0\nosupersub\cf10 \f11\fs19 (Cth), s 41(5). \par\pard\ql \li10449\sb14\sl-252\slmult0 \up0 \expnd tw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 289 {\shp {\*\shpinst\shpleft2205\shptop13704\shpright5006\shpbottom13724\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz173\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g299}{\bkmkend Pg299}\par\pard\ql \li2613\sb0\sl-264\slmult0 \par\pard\ql\li2613 \sb0\sl-264\slmult0 \par\pard\ql\li2613\sb0\sl-264\slmult0 \par\pard\ql\li2613\s b0\sl-264\slmult0 \par\pard\ql\li2613\sb0\sl-264\slmult0 \par\pard\ql\li2613\sb2 61\sl-264\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 \u-3 913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 the person who ha s requested the designated service \par\pard\ql \li2613\sb156\sl-264\slmult0 \up 0 \expndtw-2\charscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\ cf1\f2\fs23 the reasonable grounds for suspicion relating to the suspicious ma tter \par\pard\qj \li2613\ri1831\sb28\sl-420\slmult0 \up0 \expndtw-2\charscalex1 00 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 the payee for a transfer of money or property under the designated service \up0 \expndtw-2 \charscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 the agent, if any, requesting the designated service on behalf of a person \up 0 \expndtw-3\charscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\ cf1\f2\fs23 money or property to be transferred\ul0\super\cf8\f9\fs23 92 \par\ pard\qj \li2205\ri915\sb394\sl-404\slmult0 \up0 \expndtw0\charscalex100 \ul0\nos upersub\cf1\f2\fs23 This requirement is different from that in FTRA which requir es a cash dealer to report a \line \up0 \expndtw-1\charscalex100 suspicious tran saction when there are reasonable grounds to suspect that such transaction \line \up0 \expndtw0\charscalex100 may be relevant to money laundering offence. As su ch, it can be said that the AML/CTF \line \up0 \expndtw0\charscalex100 Act provi des clearer guidance to the reporting entities for submitting suspicious matters \line \up0 \expndtw0\charscalex108 reports. This approach is welcome and potent ially would prevent unnecessary and \line \up0 \expndtw-5\charscalex100 defensiv e reporting. \par\pard\qj \li2261\ri915\sb397\sl-403\slmult0 \up0 \expndtw-2\cha rscalex100 Section 41(2) provides that suspicious matters reports must be made w ithin three days for \line \up0 \expndtw0\charscalex104 money laundering offence

s, and 24 hours for terrorism financing offences. Given the \line \up0 \expndtw1\charscalex100 complexity of the matters involved, there are concerns that this timing requirement is too \line \up0 \expndtw0\charscalex107 stringent. The US legislation allows a period of 30 days and the UK adopts a more \line \up0 \expn dtw0\charscalex100 pragmatic approach by requiring reports to be made \u8216?as soon as is practicable\u8217?. As such, \line \up0 \expndtw0\charscalex104 the t iming requirement must be reviewed if the suspicious reporting measure is to be \line \up0 \expndtw-5\charscalex100 effectively implemented. \par\pard\qj \li220 5\ri914\sb397\sl-403\slmult0 \up0 \expndtw0\charscalex102 There is no specific p rovision in the AML/CTF Act which requires reporting entities to \up0 \expndtw-3 \charscalex100 discontinue a transaction that is the subject of a suspicious mat ter reporting obligation. The \up0 \expndtw0\charscalex102 fact that making a su spicious matter report provides a defence to the money laundering \up0 \expndtw1\charscalex100 offences in the Criminal Code suggests that the transaction can proceed. This is a positive \up0 \expndtw0\charscalex104 approach because it wou ld prevent any serious practical implications to the reporting \up0 \expndtw0\ch arscalex100 entities, for instance a claim for breach of contract, if they disco ntinue such transactions \up0 \expndtw0\charscalex100 when suspicious matter obl igations arise. \par\pard\qj \li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\ sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl -220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\ri944\sb 9\sl-220\slmult0 \up0 \expndtw0\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\ cf9\f10\fs18 92\ul0\nosupersub\cf10\f11\fs19 Explanatory Statement Anti-Money L aundering and Counter-Terrorism Financing Rules for reportable \up0 \expndtw0\ch arscalex100 details of suspicious matters, para 1. \par\pard\ql \li10449\sb14\sl -252\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 290 {\shp {\*\shpinst\shpleft2205\shptop13928\shpright5006\shpbottom13948\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz215\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g300}{\bkmkend Pg300}\par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205 \sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\s b0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb2 41\sl-264\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf4\f5\fs23 b) R eports of Threshold Transactions \par\pard\qj \li2205\ri914\sb22\sl-402\slmult0\ fi0 \up0 \expndtw0\charscalex103 \ul0\nosupersub\cf1\f2\fs23 Section 43(1) provi des that when a reporting entity commences to provide or provides a \line \up0 \ expndtw0\charscalex105 designated service to a customer, and the provision of th e service involves a threshold \line \up0 \expndtw0\charscalex100 transaction, t he reporting entity must, within 10 days after the transaction has taken place, \line \up0 \expndtw0\charscalex100 report the transaction to the AUSTRAC. The re port must contain certain details about the \line \up0 \expndtw0\charscalex100 c ustomer and the nature of a designated service provided or commenced to be provi ded by \line \up0 \expndtw0\charscalex104 a reporting entity which involves the threshold transaction.\ul0\super\cf8\f9\fs23 93\ul0\nosupersub\cf1\f2\fs23 A th reshold transaction is \line \up0 \expndtw0\charscalex106 defined under section 5 of the AML/CTF Act as including a transaction involving the \line \up0 \expndt w0\charscalex102 transfer of physical currency or e-currency, where the total am ount transferred is not less \line \up0 \expndtw0\charscalex102 than AUD10,000.\ ul0\super\cf8\f9\fs23 94 \par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li 2205\ri911\sb20\sl-400\slmult0 \up0 \expndtw0\charscalex109 \ul0\nosupersub\cf1\ f2\fs23 It can be said that the obligation to report threshold transactions has

much the same \line \up0 \expndtw0\charscalex108 application as the requirement to report cash transaction under FTRA. However, the \line \up0 \expndtw0\charsca lex105 AML/CTF Act extends such obligation to the transfers of e-currency. This measure is \line \up0 \expndtw0\charscalex100 welcome because it could prevent t he potential abuse of e-currency channels by criminals \line \up0 \expndtw0\char scalex104 and terrorists. Section \up0 \expndtw0\charscalex106 5 defines e-curre ncy as an internet-based, electronic means of \par\pard\qj \li2205\ri915\sb0\sl400\slmult0 \up0 \expndtw0\charscalex110 exchange that is backed either directly or indirectly by precious metal, bullion or a \up0 \expndtw-2\charscalex100 pre scribed thing and is not issued by or under the authority of the government body . \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb5\sl-264\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosup ersub\cf4\f5\fs23 c) Reports of International Funds Transfer Instructions (IFTIs ) \par\pard\qj \li2205\ri913\sb24\sl-400\slmult0 \up0 \expndtw-1\charscalex100 \ ul0\nosupersub\cf1\f2\fs23 According to section 45, if a person is the sender of an IFTI transmitted out of Australia, or \line \up0 \expndtw0\charscalex100 the recipient of an IFTI transmitted into Australia, the person must give the AUSTR AC a \line \up0 \expndtw-1\charscalex100 report about the instruction, in the ap proved form, within 10 business days after the day the \line \up0 \expndtw0\char scalex100 instruction was sent or received. The report must contain such inform ation as specified in \line \up0 \expndtw0\charscalex108 the AML/CTF Rules. This includes certain details of the payer, ordering institution, \line \up0 \expndt w0\charscalex108 beneficiary institution and payee, relating to instructions tra nsmitted into and out of \par\pard\qj \li2205\sb0\sl-220\slmult0 \par\pard\qj\li 2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li22 05\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205 \sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\r i944\sb29\sl-220\slmult0 \up0 \expndtw0\charscalex102 \ul0\super\cf9\f10\fs19\ul 0\super\cf9\f10\fs18 93\ul0\nosupersub\cf10\f11\fs19 Explanatory Statement- Ant i-Money Laundering and Counter-Terrorism Financing Rules for reportable \up0 \ex pndtw0\charscalex102 details of threshold transactions, para 1. \par\pard\qj \li 2205\ri937\sb0\sl-220\slmult0 \up0 \expndtw0\charscalex103 \ul0\super\cf9\f10\fs 18 94\ul0\nosupersub\cf10\f11\fs19 The AML/CTF Regulations may provide that a sp ecified transaction involving money or the transfer of \up0 \expndtw-2\charscale x100 property is also a threshold transaction and specify the threshold amount. \par\pard\ql \li10449\sb14\sl-252\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nos upersub\cf1\f2\fs23 291 {\shp {\*\shpinst\shpleft2205\shptop13480\shpright5006\shpbottom13500\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz154\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g301}{\bkmkend Pg301}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i917\sb249\sl-400\slmult0\fi0 \up0 \expndtw0\charscalex102 \ul0\nosupersub\cf1\f 2\fs23 Australia.\ul0\super\cf8\f9\fs23 95\ul0\nosupersub\cf1\f2\fs23 Under sec tion 45(6), the AML/CTF Rules may exclude certain kinds of IFTI \up0 \expndtw0\c harscalex102 from the reporting obligation.\ul0\super\cf8\f9\fs23 96 \par\pard\q j \li2205\ri913\sb397\sl-404\slmult0 \up0 \expndtw0\charscalex102 \ul0\nosupersu b\cf1\f2\fs23 Section 46 provides a detailed definition of an IFTI. In brief, it refers to any instruction \up0 \expndtw-3\charscalex100 transmitted electronica lly into, or out of Australia, for the transfer of funds. IFTIs reporting \up0 \ expndtw-3\charscalex100 provisions implement the requirements of the FATF\u8217?

s Special Recommendation VII which \up0 \expndtw-2\charscalex100 requires financ ial institutions to include accurate originator information on funds transfers \ up0 \expndtw0\charscalex105 and the information should remain with the transfer through the payment chain. This \up0 \expndtw0\charscalex103 measure aims to pre vent terrorists and criminals from having unfettered access to wire \up0 \expndt w-1\charscalex100 transfers for moving their funds and for detecting such misuse when it occurs. Obviously, \up0 \expndtw-2\charscalex100 this measure is critic al in ensuring that Australian financial institutions are not barred from \up0 \ expndtw0\charscalex102 sending funds transfers internationally, especially in th e US and the Europe. Given the \up0 \expndtw-2\charscalex100 large number of IFT Is sent into and out of Australia, it is important to ensure that the laws \up0 \expndtw-3\charscalex100 are workable and provide practical options for the bank s. \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb248\sl-264\slmu lt0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf4\f5\fs23 d) AML/CTF Complia nce Reports \par\pard\qj \li2205\ri914\sb20\sl-405\slmult0 \up0 \expndtw0\charsc alex103 \ul0\nosupersub\cf1\f2\fs23 Section 47(2) of the AML/CTF Act requires a reporting entity to submit a compliance \up0 \expndtw-2\charscalex100 report to the AUSTRAC within a prescribed time. The report covers obligations under the \ up0 \expndtw-3\charscalex100 AML/CTF Act, regulations and the AML/CTF Rules. Thi s includes customer identification \up0 \expndtw-4\charscalex100 procedures, rep orting obligations, correspondent banking due diligence and record-keeping. \up0 \expndtw-5\charscalex100 A civil penalty may apply for failure to provide the r eport.\ul0\super\cf8\f9\fs23 97 \par\pard\qj \li2205\ri916\sb400\sl-400\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf1\f2\fs23 It can be said that th is kind of report provides an effective tool that would force reporting \up0 \ex pndtw0\charscalex100 entities to review the quality and scope of their complianc e against the obligations under \up0 \expndtw0\charscalex107 the Act. This speci fic mechanism will drive regular self-assessment of whether the \up0 \expndtw0\c harscalex109 AML/CTF program that has been adopted is workable and effective. As such, the \up0 \expndtw-4\charscalex100 transparency that has been delivered by section 47(2) is indeed clever.\ul0\super\cf8\f9\fs23 98 \par\pard\ql \li2205\s b0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0 \sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb79\ sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 95\ul0\nosu persub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Anti Money Laundering and Co unter-Terrorism Financing Rules Instrument 2007 (No.1)\ul0\nosupersub\cf10\f11\f s19 , Chapters 16 and \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-3\ch arscalex100 17. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscal ex100 \ul0\super\cf9\f10\fs18 96\ul0\nosupersub\cf10\f11\fs19 At the time of wr iting, this kind of IFTIs are not yet been formulated by the AML/CTF Rules. \par \pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9 \f10\fs18 97\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Anti-Mo ney Laundering and Counter-Terrorism Financing Act 2006\ul0\nosupersub\cf10\f11\ fs19 (Cth), s 45(3). \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\ch arscalex100 \ul0\super\cf9\f10\fs18 98\ul0\nosupersub\cf10\f11\fs19 Joy M Geary , \u8216?The cleverest section in the Act\u8217? (2007) \ul0\nosupersub\cf11\f12 \fs19 Anti-Money Laundering Magazine\ul0\nosupersub\cf10\f11\fs19 13. \par\pard \ql \li10449\sb15\sl-251\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\c f1\f2\fs23 292 {\shp {\*\shpinst\shpleft2205\shptop13256\shpright5006\shpbottom13276\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz194\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}}

}}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g302}{\bkmkend Pg302}\par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205 \sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\s b0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0 \sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb113 \sl-264\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf4\f5\fs23 7.4.6 Record-Keeping Requirements \par\pard\qj \li2205\sb0\sl-404\slmult0 \par\pard\ qj\li2205\ri915\sb17\sl-404\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub \cf1\f2\fs23 Part 10 of the AML/CTF Act imposes record keeping obligations on th e reporting entities. \up0 \expndtw0\charscalex105 This includes records of desi gnated service (s106); records relating to transferred ADI \up0 \expndtw0\charsc alex102 accounts (s109); records of identification procedures (s112); records of IFTIs (s115) and \up0 \expndtw-2\charscalex100 records about due diligence asse ssments of correspondent banking relationships (s117). It is \up0 \expndtw0\char scalex103 clear that the AML/CTF Act continues the document retention obligation s in the FTRA \up0 \expndtw-3\charscalex100 where the records must be kept for s even years. \par\pard\qj \li2205\ri915\sb392\sl-410\slmult0 \up0 \expndtw0\chars calex103 The AML/CTF Act also allows a reporting entity within a designated busi ness group to \up0 \expndtw0\charscalex104 provide and keep records for a number of entities within the business group. However, \up0 \expndtw-2\charscalex100 l iability remains with the reporting entity with which obligation arose.\ul0\supe r\cf8\f9\fs23 99 \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb2 47\sl-264\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf4\f5\fs23 7.4. 7 Correspondent Banking Due Diligence \par\pard\qj \li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205\ri915\sb20\sl-402\slmult0 \up0 \expndtw0\charscalex100 \ul0\ nosupersub\cf1\f2\fs23 Part 8 of the AML/CTF Act sets out the requirements impos ed on correspondent banking \line \up0 \expndtw0\charscalex105 relationships. It is important to note that the Act has narrowed the application of these \line \ up0 \expndtw0\charscalex100 requirements to financial institutions, that is, aut horised deposit taking institutions, banks, \line \up0 \expndtw0\charscalex105 b uilding societies and credit unions.\ul0\super\cf8\f9\fs23 100\ul0\nosupersub\cf 1\f2\fs23 Additionally, these requirements only apply to \line \up0 \expndtw0\c harscalex102 financial institutions with the requisite geographical link to Aust ralia.\ul0\super\cf8\f9\fs23 101\ul0\nosupersub\cf1\f2\fs23 This means that \li ne \up0 \expndtw-2\charscalex100 the correspondent banking provisions apply to f inancial institutions that carry on an activity \line \up0 \expndtw0\charscalex1 00 or business at or through a permanent establishment in Australia, and those c arrying on an \line \up0 \expndtw-1\charscalex100 activity or business at or thr ough a permanent establishment in a foreign country where the \line \up0 \expndt w-1\charscalex100 financial institutions, or its parent company, is a resident o f Australia. \par\pard\qj \li2205\ri915\sb392\sl-410\slmult0 \up0 \expndtw0\char scalex100 Under section 5, \u8216?correspondent banking relationship\u8217? incl udes the provision of banking \line \up0 \expndtw-2\charscalex100 services by on e financial institution (first institution) to another (second institution), whe re \line \up0 \expndtw-2\charscalex100 the financial institutions carry on activities or business at or through permanent \par\pard\ql \li2205\sb0\sl -218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb133\sl -218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9 \f10\fs18 99\ul0\nosupersub\cf10\f11\fs19 See sections 106(6), 107(4), 108(4) a nd 112(5) of the AML/CTF Act. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expn dtw-2\charscalex100 \ul0\super\cf9\f10\fs18 100\ul0\nosupersub\cf10\f11\fs19 Se e s 5 of the AML/CTF Act in relation to definition of financial institutions. \p ar\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\c f9\f10\fs18 101\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Anti -Money Laundering and Counter-Terrorism Financing Act 2006\ul0\nosupersub\cf10\f 11\fs19 (Cth), s 100. \par\pard\ql \li10449\sb15\sl-251\slmult0 \up0 \expndtw-3 \charscalex100 \ul0\nosupersub\cf1\f2\fs23 293 {\shp {\*\shpinst\shpleft2205\shptop13704\shpright5006\shpbottom13724\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz181\shplid0

{\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g303}{\bkmkend Pg303}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i915\sb249\sl-400\slmult0\fi0 \up0 \expndtw0\charscalex102 \ul0\nosupersub\cf1\f 2\fs23 establishments in different countries and the banking services involves a nostro or vostro \up0 \expndtw0\charscalex109 account.\ul0\super\cf8\f9\fs23 10 2\ul0\nosupersub\cf1\f2\fs23 Nostro account is an account a financial instituti on holds with a foreign \up0 \expndtw0\charscalex100 financial institution, usua lly in the currency of the foreign country. A vostro account is the \up0 \expndt w0\charscalex100 account a financial institution holds on behalf of a foreign fi nancial institution.\ul0\super\cf8\f9\fs23 103 \par\pard\qj \li2205\sb0\sl-402\s lmult0 \par\pard\qj\li2205\ri914\sb17\sl-402\slmult0\tx3073 \up0 \expndtw-3\char scalex100 \ul0\nosupersub\cf1\f2\fs23 Section \tab \up0 \expndtw0\charscalex104 95 prohibits a reporting entity from entering into correspondent bankin g \line \up0 \expndtw0\charscalex107 relationship with shell banks or another fi nancial institution that has a correspondent \line \up0 \expndtw-1\charscalex100 banking relationship with a shell bank. Section 15 defines a shell bank as a co rporation that \line \up0 \expndtw0\charscalex107 is incorporated and authorised to carry on banking business in a foreign country, but \line \up0 \expndtw0\cha rscalex104 without having a physical presence in that country. Physical presence means the \line \up0 \expndtw0\charscalex100 corporation carries on banking business at a physical place in that country and has at least \line \up0 \expndtw0\charscalex105 one full-time employee performing banking related dutie s at that place. An affiliate of \line \up0 \expndtw-2\charscalex100 another cor poration that does have a physical presence in a country and that is authorised to \line \up0 \expndtw-2\charscalex100 carry on banking business in that country is excluded from the definition of shell banks.\ul0\super\cf8\f9\fs23 104 \par\ pard\qj \li2205\ri915\sb398\sl-402\slmult0 \up0 \expndtw0\charscalex110 \ul0\nos upersub\cf1\f2\fs23 Where a first institution is in such relationship and become s aware that the second \line \up0 \expndtw-2\charscalex100 institution is a she ll bank, or the second institution has a correspondent banking relationship \lin e \up0 \expndtw0\charscalex103 with a shell bank, the first institution must ter minate the relationship within 20 business \line \up0 \expndtw0\charscalex105 da ys after becoming aware, or such longer period as allowed by the AUSTRAC CEO. \l ine \up0 \expndtw0\charscalex109 Alternatively, if applicable, the first institu tion can request the second institution to \line \up0 \expndtw0\charscalex100 te rminate its correspondent banking relationship with the shell bank. However, if after 20 \line \up0 \expndtw0\charscalex100 business days, the second institutio n has not complied with the request, the first institution \line \up0 \expndtw-1 \charscalex100 must terminate its correspondent banking relationship with the se cond institution within the \line \up0 \expndtw-2\charscalex100 prescribed perio d of time.\ul0\super\cf8\f9\fs23 105 \par\pard\qj \li2205\ri916\sb392\sl-410\slm ult0\fi0 \up0 \expndtw0\charscalex107 \ul0\nosupersub\cf1\f2\fs23 Before forming a correspondent banking relationship, the first financial institution is \up0 \ expndtw0\charscalex100 required to conduct a preliminary risk and due diligence assessment.\ul0\super\cf8\f9\fs23 106\ul0\nosupersub\cf1\f2\fs23 The due dilige nce \up0 \expndtw0\charscalex100 matters to be assessed are as follows:\ul0\supe r\cf8\f9\fs23 107 \par\pard\qj \li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb 0\sl-220\slmult0 \par\pard\qj\li2205\ri1760\sb87\sl-220\slmult0 \up0 \expndtw-2\ charscalex100 \ul0\super\cf9\f10\fs18 102\ul0\nosupersub\cf10\f11\fs19 \ul0\nos upersub\cf11\f12\fs19 Anti Money Laundering and Counter-Terrorism Financing Rule s Instrument 2007 (No.2)\ul0\nosupersub\cf10\f11\fs19 , Sch 1. \up0 \expndtw-2\c

harscalex100 \ul0\super\cf9\f10\fs18 103\ul0\nosupersub\cf10\f11\fs19 AUSTRAC G uidance Notes-Correspondent Banking, para 2.3. \par\pard\ql \li2205\ri2518\sb0\s l-220\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 104\ul0\nosu persub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Anti-Money Laundering and Co unter-Terrorism Financing Act 2006\ul0\nosupersub\cf10\f11\fs19 (Cth), s 15(1) (d). \line \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 105\ul0\nosuper sub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Anti-Money Laundering and Count er-Terrorism Financing Act 2006\ul0\nosupersub\cf10\f11\fs19 (Cth), s 96. \line \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 106\ul0\nosupersub\cf10\f 11\fs19 \ul0\nosupersub\cf11\f12\fs19 Anti-Money Laundering and Counter-Terrori sm Financing Act 2006\ul0\nosupersub\cf10\f11\fs19 (Cth), s 97. \par\pard\ql \l i10449\sb14\sl-252\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\ fs23 294 {\shp {\*\shpinst\shpleft2205\shptop13256\shpright5006\shpbottom13276\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz217\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g304}{\bkmkend Pg304}\par\pard\li2205\sb0\sl-264\slmult0\par\pard\li2205\sb0\sl264\slmult0\par\pard\li2205\sb0\sl-264\slmult0\par\pard\li2205\sb0\sl-264\slmult 0\par\pard\li2205\sb0\sl-264\slmult0\par\pard\li2205\sb0\sl-264\slmult0\par\pard \li2205\sb6\sl-264\slmult0\fi0\tx2731 \up0 \expndtw-1\charscalex100 \ul0\nosuper sub\cf1\f2\fs23 \u-3913?\tab \up0 \expndtw0\charscalex100 the nature of the seco nd institution\u8217?s business, including its product and customer\par\pard\li2 205\sb137\sl-264\slmult0\fi525 \up0 \expndtw-1\charscalex100 base;\par\pard\li22 05\sb156\sl-264\slmult0\fi0\tx2731 \up0 \expndtw-1\charscalex100 \u-3913?\tab \u p0 \expndtw-1\charscalex100 the country of residence of the second institution;\ par\pard\li2205\sb156\sl-264\slmult0\fi0\tx2731 \up0 \expndtw-1\charscalex100 \u -3913?\tab \up0 \expndtw0\charscalex100 the country of residence of any parent c ompany of the second institution;\par\pard\li2205\sb155\sl-264\slmult0\fi0\tx273 1 \up0 \expndtw-1\charscalex100 \u-3913?\tab \up0 \expndtw0\charscalex100 the ex istence and quality of any AML/CTF regulation in the country of residence of\par \pard\li2205\sb138\sl-264\slmult0\fi525 \up0 \expndtw0\charscalex100 any parent company of the second institution, where the parent company has group-\par\pard\ li2205\sb138\sl-264\slmult0\fi525 \up0 \expndtw-1\charscalex100 wide controls wi thin which the second institution operates;\par\pard\li2205\sb157\sl-264\slmult0 \fi0\tx2731 \up0 \expndtw-1\charscalex100 \u-3913?\tab \up0 \expndtw0\charscalex 100 the adequacy of the second institution\u8217?s AML/CTF controls and internal compliance\par\pard\li2205\sb138\sl-264\slmult0\fi525 \up0 \expndtw-1\charscale x100 practices;\par\pard\li2205\sb156\sl-264\slmult0\fi0\tx2731 \up0 \expndtw-1\ charscalex100 \u-3913?\tab \up0 \expndtw0\charscalex100 the ownership, control a nd management structures of the second institution and any\par\pard\li2205\sb138 \sl-264\slmult0\fi525 \up0 \expndtw0\charscalex100 parent company, including whe ther a PEP has ownership or control of the second\par\pard\li2205\sb138\sl-264\s lmult0\fi525 \up0 \expndtw-1\charscalex100 institution or parent company;\par\pa rd\li2205\sb156\sl-264\slmult0\fi0\tx2731 \up0 \expndtw-1\charscalex100 \u-3913? \tab \up0 \expndtw-1\charscalex100 the second institution\u8217?s financial posi tion;\par\pard\li2205\sb155\sl-264\slmult0\fi0\tx2731 \up0 \expndtw-1\charscalex 100 \u-3913?\tab \up0 \expndtw0\charscalex100 the reputation and history of the second institution, including its business history and\par\pard\li2205\sb138\sl264\slmult0\fi525 \up0 \expndtw-1\charscalex100 compliance history;\par\pard\li2 205\sb156\sl-264\slmult0\fi0\tx2731 \up0 \expndtw-1\charscalex100 \u-3913?\tab \ up0 \expndtw0\charscalex100 the reputation and history of any parent company of

the second institution; and\par\pard\li2205\sb156\sl-264\slmult0\fi0\tx2731 \up0 \expndtw-1\charscalex100 \u-3913?\tab \up0 \expndtw0\charscalex100 whether the second institution has been the subject of an investigation, or any\par\pard\ql \li2731\sb135\sl-264\slmult0 \up0 \expndtw-4\charscalex100 criminal or civil pro ceedings relating to money laundering or terrorism financing. \par\pard\qj \li22 05\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri913\sb24\sl-400\slmult0\fi0 \up0 \ex pndtw-2\charscalex100 Following the due diligence assessment, the correspondent banking relationship can only be \up0 \expndtw0\charscalex111 entered into if it is approved and documented by a senior officer of the financial \up0 \expndtw-2 \charscalex100 institution.\ul0\super\cf8\f9\fs23 108\ul0\nosupersub\cf1\f2\fs23 After entering into a correspondent banking relationship, if warranted by the \up0 \expndtw-2\charscalex100 result of a risk assessment, regular assessment mu st be conducted.\ul0\super\cf8\f9\fs23 109\ul0\nosupersub\cf1\f2\fs23 Apart fro m the above \up0 \expndtw-3\charscalex100 mentioned matters, the institution mus t also assess:\ul0\super\cf8\f9\fs23 110 \par\pard\li2205\sb151\sl-264\slmult0\f i0\tx2731 \up0 \expndtw0\charscalex101 \ul0\nosupersub\cf1\f2\fs23 \u-3913?\tab \up0 \expndtw0\charscalex101 any material changes in respect of the matters;\par \pard\li2205\sb155\sl-264\slmult0\fi0\tx2731 \up0 \expndtw0\charscalex101 \u-391 3?\tab \up0 \expndtw0\charscalex102 the nature of the second institution\u8217?s ongoing business relationship with the first\par\pard\qj \li2731\ri916\sb27\sl400\slmult0 \up0 \expndtw-1\charscalex100 institution, including the types of tr ansactions carried out as part of the relationship; \line \up0 \expndtw-2\charsc alex100 and \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb213\sl -218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9 \f10\fs18 107\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Anti M oney Laundering and Counter-Terrorism Financing Rules Instrument 2007 (No.1)\ul0 \nosupersub\cf10\f11\fs19 , pt 3.1.2. \par\pard\ql \li2205\sb122\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 108\ul0\nosupersub\cf10\f1 1\fs19 \ul0\nosupersub\cf11\f12\fs19 Anti-Money Laundering and Counter-Terroris m Financing Act 2006\ul0\nosupersub\cf10\f11\fs19 (Cth), s 99. \par\pard\ql \li 2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 10 9\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Anti-Money Launder ing and Counter-Terrorism Financing Act 2006\ul0\nosupersub\cf10\f11\fs19 (Cth) , s 98. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \u l0\super\cf9\f10\fs18 110\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12 \fs19 Anti Money Laundering and Counter-Terrorism Financing Rules Instrument 200 7 (No.1)\ul0\nosupersub\cf10\f11\fs19 , pt 3.1.4. \par\pard\ql \li10449\sb15\sl251\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 295 {\shp {\*\shpinst\shpleft2205\shptop13369\shpright10800\shpbottom13389\shpfhdr0\ shpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz286\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 8595}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(8595,20);(8595,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g305}{\bkmkend Pg305}\par\pard\li2205\sb0\sl-264\slmult0\par\pard\li2205\sb0\sl264\slmult0\par\pard\li2205\sb0\sl-264\slmult0\par\pard\li2205\sb0\sl-264\slmult 0\par\pard\li2205\sb0\sl-264\slmult0\par\pard\li2205\sb0\sl-264\slmult0\par\pard \li2205\sb6\sl-264\slmult0\fi0\tx2731 \up0 \expndtw0\charscalex107 \ul0\nosupers ub\cf1\f2\fs23 \u-3913?\tab \up0 \expndtw0\charscalex108 any material change in the nature of the second institution\u8217?s ongoing business\par\pard\qj \li273 1\ri914\sb15\sl-400\slmult0 \up0 \expndtw-3\charscalex100 relationship with the first institution, including the types of transactions carried out as \up0 \expn dtw-4\charscalex100 part of that relationship. The first institution must have i n place appropriate risk-based \up0 \expndtw-4\charscalex100 systems and control

s to identify such changes. \par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj \li2205\ri915\sb20\sl-400\slmult0 \up0 \expndtw0\charscalex100 It is clear that the aim of the provisions is to protect correspondent banking relationships \up0 \expndtw0\charscalex104 from being manipulated by criminals and terrorists. As such, it becomes the financial \up0 \expndtw0\charscalex102 institution\u8217?s responsibility to determine those correspondents that need to be monitored \up0 \expndtw-4\charscalex100 closely and most importantly, not to form any relations hip with rogue banks. \par\pard\qj \li2205\ri913\sb397\sl-404\slmult0\fi0 \up0 \ expndtw0\charscalex110 However, it has been argued that the correspondent bankin g provisions under the \up0 \expndtw0\charscalex102 AML/CTF Act do not apply the risk-based approach adopted in other areas of the Act. \up0 \expndtw0\charscale x105 There is no distinction between correspondents from different locations, wh ich have \up0 \expndtw-1\charscalex100 inherently different risks of being used for money laundering or terrorism financing.\ul0\super\cf8\f9\fs23 111\ul0\nosup ersub\cf1\f2\fs23 In \up0 \expndtw-3\charscalex100 the US, for instance, sectio n 312 of the USA PATRIOT Act imposes general due diligence \up0 \expndtw-3\chars calex100 for all correspondent banking relationships. An enhanced due diligence measures, however, \up0 \expndtw0\charscalex107 would only apply to corresponden t banking accounts maintained for a foreign bank \up0 \expndtw-2\charscalex100 o perating under an offshore banking license or under a license issued by a countr y that has \up0 \expndtw0\charscalex100 been designated as being non-coopera tive with international anti-money laundering \up0 \expndtw0\charscalex100 s tandards.\ul0\super\cf8\f9\fs23 112\ul0\nosupersub\cf1\f2\fs23 In relation to c orrespondent banking provisions, the risk-based approach is \up0 \expndtw0\chars calex100 critical as this would reduce the costs of compliance. \par\pard\li2205 \sb0\sl-264\slmult0\par\pard\li2205\sb0\sl-264\slmult0\par\pard\li2205\sb224\sl264\slmult0\fi0\tx2906 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf4\f5\fs23 7.5\tab \up0 \expndtw-3\charscalex100 The Proceeds of Crime Legislation\par\par d\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri913\sb84\sl-400\slmult0 \u p0 \expndtw-4\charscalex100 \ul0\nosupersub\cf1\f2\fs23 The freezing, seizure an d confiscation of criminal proceeds in Australia are governed by the \line \up0 \expndtw-3\charscalex100 proceeds of crime legislation which consists of two imp ortant statutes namely the Proceeds \line \up0 \expndtw0\charscalex103 of Crime Act 1987(Cth) (POCA 1987) and Proceeds of Crime Act 2002 (Cth) (POCA \line \up0 \expndtw0\charscalex103 2002). POCA 1987 provides for the freezing and confiscat ion of property used in or \par\pard\ql \li2205\sb0\sl-220\slmult0 \par\pard\ql\ li2205\sb0\sl-220\slmult0 \par\pard\ql\li2205\ri931\sb9\sl-220\slmult0\fi0 \up0 \expndtw0\charscalex105 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 111\ul0\n osupersub\cf10\f11\fs19 Chris Cass, Alexandra Kirk and Tom O\u8217?Callaghan, \ u8216?The Anti-Money Laundering Draft Bill 2005: \line \up0 \expndtw-2\charscale x100 Correspondent Banking\u8217? (2006) 21(7) \ul0\nosupersub\cf11\f12\fs19 Aus tralian Banking and Finance Law Bulletin\ul0\nosupersub\cf10\f11\fs19 101,105. \line \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 112\ul0\nosupersub\c f10\f11\fs19 Department of the Treasury, \u8216?Financial Crimes Enforcement Ne twork: Anti-Money Laundering Program; \line \up0 \expndtw-2\charscalex100 Specia l Due Diligence Programs for Certain Foreign Accounts\u8217? (2007) 72(15) \ul0\ nosupersub\cf11\f12\fs19 Federal Register\ul0\nosupersub\cf10\f11\fs19 , 447. \p ar\pard\ql \li10449\sb14\sl-252\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosup ersub\cf1\f2\fs23 296 {\shp {\*\shpinst\shpleft2205\shptop13480\shpright5006\shpbottom13500\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz171\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}}

}}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g306}{\bkmkend Pg306}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i916\sb249\sl-400\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs 23 derived from the commission of serious crimes and applies to proceedings begu n before 1 \up0 \expndtw0\charscalex100 January 2003. It will be repealed once a ll cases under the Act are completed. \par\pard\qj \li2205\ri915\sb399\sl-402\sl mult0 \up0 \expndtw0\charscalex100 The confiscation law regime has been enhanced with the enactment of POCA 2002 which \line \up0 \expndtw0\charscalex105 introd uced a civil forfeiture regime that is directed at confiscating unlawfully acqui red \line \up0 \expndtw0\charscalex100 property, without first requiring a convi ction. It must be noted that the legislation operates \line \up0 \expndtw0\chars calex103 in addition to the conviction based scheme under POCA 1987. As such, th ere are seven \line \up0 \expndtw-1\charscalex100 types of confiscation actions available under POCA 2002. This includes a conviction based \line \up0 \expndtw1\charscalex100 forfeiture order; a conviction based pecuniary penalty order; au tomatic forfeiture following \line \up0 \expndtw0\charscalex106 conviction; a pe rson directed civil based forfeiture order; an asset directed civil based \line \up0 \expndtw-2\charscalex100 forfeiture order; a civil based pecuniary penalty order and a literary proceeds order. \par\pard\qj \li2205\sb0\sl-400\slmult0 \p ar\pard\qj\li2205\ri914\sb20\sl-400\slmult0 \up0 \expndtw0\charscalex105 Section 329 of POCA 2002 indicates that property is the proceeds of an offence if it is \line \up0 \expndtw-1\charscalex100 wholly or partly derived or realised, wheth er directly or indirectly, from the commission of \line \up0 \expndtw0\charscale x111 the offence. It appears that such a definition allows a wide range of prope rty to be \line \up0 \expndtw0\charscalex103 forfeitable under the Act and this is considered vital for the effective application of civil \line \up0 \expndtw0\ charscalex103 forfeiture regime. \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pa rd\ql\li2205\sb249\sl-264\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\ cf4\f5\fs23 7.5.1 Confiscation Scheme \par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri913\sb44\sl-400\slmult0 \up0 \expndtw0\charscalex100 \ul0\ nosupersub\cf1\f2\fs23 POCA 2002 provides extensive confiscation measures which include restraining orders to \up0 \expndtw0\charscalex104 prevent disposal of a n asset before determination by a court; forfeiture orders to forfeit \up0 \expn dtw-2\charscalex100 proceeds of crime and pecuniary penalty orders which require a person to pay an equivalent \up0 \expndtw-3\charscalex100 of any benefit rece ived from the commission of an offence. \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb249\sl-264\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosu persub\cf4\f5\fs23 a) Restraining Orders \par\pard\qj \li2205\ri914\sb16\sl-410\ slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf1\f2\fs23 Sections 16 to 45 of POCA 2002 deal with restraining order. The order can be made against \lin e \up0 \expndtw0\charscalex104 the property of the suspect or specified property of another person that is subject to the \line \up0 \expndtw0\charscalex104 eff ective control of the suspect. Section 17 deals with the order against a person convicted \par\pard\ql \li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-2 64\slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-2 64\slmult0 \par\pard\ql\li10449\sb175\sl-264\slmult0 \up0 \expndtw-3\charscalex1 00 297 \par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkst art Pg307}{\bkmkend Pg307}\par\pard\li2205\sb0\sl-264\slmult0\par\pard\li2205\sb 0\sl-264\slmult0\par\pard\li2205\sb0\sl-264\slmult0\par\pard\li2205\sb0\sl-264\s lmult0\par\pard\li2205\sb0\sl-264\slmult0\par\pard\li2205\sb252\sl-264\slmult0\f i0\tx6624 \up0 \expndtw0\charscalex103 \ul0\nosupersub\cf1\f2\fs23 with indictab le offences\ul0\super\cf8\f9\fs23 113\ul0\nosupersub\cf1\f2\fs23 whereas sectio n\tab \up0 \expndtw0\charscalex103 18 deals with the order against a person\par\ pard\li2205\sb138\sl-264\slmult0\fi0 \up0 \expndtw0\charscalex103 suspected of c ommitting serious offences.\ul0\super\cf8\f9\fs23 114\par\pard\qj \li2205\sb0\sl -405\slmult0 \par\pard\qj\li2205\ri914\sb2\sl-405\slmult0 \up0 \expndtw0\charsca lex100 \ul0\nosupersub\cf1\f2\fs23 Furthermore, section 19 provides that propert y suspected on reasonable grounds of being \up0 \expndtw0\charscalex102 the proc eeds of terrorism offence or an indictable offence or a foreign indictable offen

ce \up0 \expndtw0\charscalex103 can be restrained. Here, it is not necessary to identify the owner of the property or show \up0 \expndtw0\charscalex102 that the owner has committed an offence. The restraining order will lapse if the person is \up0 \expndtw0\charscalex102 not charged with the offence within 28 days.\ul0 \super\cf8\f9\fs23 115 \par\pard\qj \li2205\ri913\sb396\sl-404\slmult0 \up0 \exp ndtw0\charscalex102 \ul0\nosupersub\cf1\f2\fs23 The effect of restraining orders is that the court may prohibit a person from dealing with \line \up0 \expndtw-1 \charscalex100 certain property or prescribe that the property may only be dealt with in ways set out in the \line \up0 \expndtw0\charscalex104 order. However, a person with an interest in property restrained under POCA 2002 can \line \up0 \expndtw-1\charscalex100 apply to have that property excluded from the restraini ng order by showing that it is not the \line \up0 \expndtw0\charscalex103 procee ds of unlawful activity, not under the effective control of the person suspected of \line \up0 \expndtw0\charscalex104 committing the offence and not needed to satisfy a pecuniary penalty order or a literary \line \up0 \expndtw-1\charscalex 100 proceeds order. Specifically, if the property has been restrained on the bas is that the person \line \up0 \expndtw0\charscalex100 has been charged with the commission of an offence, the applicant for exclusion will also \line \up0 \expn dtw0\charscalex103 have to show that the property was not used in the commission of the offence and if the \line \up0 \expndtw0\charscalex108 offence is a serio us offence that the property was not used in the commission of any \line \up0 \e xpndtw-3\charscalex100 unlawful activity.\ul0\super\cf8\f9\fs23 116 \par\pard\qj \li2205\ri915\sb400\sl-400\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub \cf1\f2\fs23 It is an offence to dispose or otherwise deal with property in cont ravention of a restraining \up0 \expndtw0\charscalex104 order and upon convictio n, a person could be liable for five years imprisonment or 300 \up0 \expndtw-3\c harscalex100 penalty unit fine or both.\ul0\super\cf8\f9\fs23 117 \par\pard\qj \ li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li 2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li22 05\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205 \sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\r i940\sb169\sl-220\slmult0\fi0 \up0 \expndtw0\charscalex100 \ul0\super\cf9\f10\fs 18 113\ul0\nosupersub\cf10\f11\fs19 An offence which is normally heard before a judge and jury. Normally, most offences punishable by 12 \up0 \expndtw0\charsca lex100 months imprisonment or more are indictable. \par\pard\qj \li2205\ri3456\s b0\sl-220\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 114\ul0\ nosupersub\cf10\f11\fs19 Money laundering and terrorism financing are considere d serious offences. \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 115\ul 0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Proceeds of Crime Act 2002 \ul0\nosupersub\cf10\f11\fs19 (Cth), s 45. \par\pard\li2205\sb17\sl-218\slm ult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 116\ul0\nosupersu b\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Proceeds of Crime Act 2002\ul0\no supersub\cf10\f11\fs19 (Cth), s 29(1) (2).\par\pard\li2205\sb5\sl-218\slmult0\f i0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 117\ul0\nosupersub\cf10 \f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Proceeds of Crime Act 2002 (Cth)\ul0\no supersub\cf10\f11\fs19 , s 37.\par\pard\li2205\sb3\sl-264\slmult0\fi8243 \up0 \e xpndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 298 {\shp {\*\shpinst\shpleft2205\shptop13033\shpright5006\shpbottom13053\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz159\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g308}{\bkmkend Pg308}\par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205

\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\s b0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb2 41\sl-264\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf4\f5\fs23 b) F orfeiture Orders \par\pard\qj \li2205\ri915\sb24\sl-400\slmult0 \up0 \expndtw0\c harscalex100 \ul0\nosupersub\cf1\f2\fs23 Basically, there are two types of forfe iture under POCA 2002: a forfeiture order made by \up0 \expndtw0\charscalex100 t he court and automatic forfeiture upon conviction of a serious crime. \par\pard\ qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri913\sb20\sl-400\slmult0 \up0 \expndtw0\charscalex104 Sections 46 to 90 deal with forfeiture orders made by t he court. Under section 47, upon \up0 \expndtw0\charscalex102 application by the DPP, a court must make a forfeiture order if the property has been the \up0 \ex pndtw-1\charscalex100 subject of a restraining order for at least six months and the court is satisfied on the balance \up0 \expndtw-1\charscalex100 of probabil ities that the person committed a serious offence within the last six years. In this \up0 \expndtw0\charscalex103 respect, the serious offence need not be the s ame offence on which the restraining order \up0 \expndtw-3\charscalex100 was bas ed and a particular offence need not be proved.\ul0\super\cf8\f9\fs23 118 \par\p ard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri911\sb20\sl-400\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf1\f2\fs23 Section 48 requires th e court to make a forfeiture order if a person has been convicted of an \line \u p0 \expndtw-1\charscalex100 indictable offence and the court is satisfied that t he property is proceeds from such offence. \line \up0 \expndtw-1\charscalex100 T he circumstances where conduct involves indictable offences are prescribed under section \par\pard\qj \li2205\ri914\sb0\sl-400\slmult0\fi0 \up0 \expndtw0\charsc alex100 49. Here, the court is not required to find that the proceeds are from a ny particular offence \up0 \expndtw0\charscalex100 or that particular person has committed an offence.\ul0\super\cf8\f9\fs23 119\ul0\nosupersub\cf1\f2\fs23 How ever, the court must satisfy that \up0 \expndtw0\charscalex100 the DPP has taken all reasonable steps to identify and notify any person with an interest in \up0 \expndtw-1\charscalex100 the property\ul0\super\cf8\f9\fs23 120\ul0\nosupersub\ cf1\f2\fs23 and that there is no existing application for the property to be ex cluded from \up0 \expndtw-2\charscalex100 the restraining order.\ul0\super\cf8\f 9\fs23 121 \par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri915\sb2 0\sl-400\slmult0 \up0 \expndtw0\charscalex104 \ul0\nosupersub\cf1\f2\fs23 It app ears that forfeiture orders under sections 47 to 49 do not depend on a successfu l \line \up0 \expndtw0\charscalex105 prosecution. Furthermore, section 51 clearl y indicates the fact that a person has been \line \up0 \expndtw0\charscalex105 a cquitted of an offence been charged does not affect the courts\u8217? power to m ake such \line \up0 \expndtw-5\charscalex100 forfeiture orders. \par\pard\qj \li 2205\ri914\sb392\sl-410\slmult0 \up0 \expndtw-2\charscalex100 By virtue of secti on 73, any person who claims an interest in the property may apply to the \line \up0 \expndtw0\charscalex106 court to exclude particular property from a forfeit ure order. Upon application by the \line \up0 \expndtw-2\charscalex100 suspect, the court must grant an exclusion order if it is satisfied that the property is not the \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\s lmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb95\sl-218\sl mult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs 18 118\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Proceeds of C rime Act 2002 (Cth), \ul0\nosupersub\cf10\f11\fs19 s 47(2). \par\pard\li2205\sb1 3\sl-218\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 119\u l0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Proceeds of Crime Act 2002 (Cth)\ul0\nosupersub\cf10\f11\fs19 , s 49 (2).\par\pard\li2205\sb6\sl-218\ slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 120\ul0\nosupe rsub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Proceeds of Crime Act 2002 (Ct h)\ul0\nosupersub\cf10\f11\fs19 , s 49(1) (e).\par\pard\li2205\sb5\sl-218\slmult 0\fi0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 121\ul0\nosupersub\c f10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Proceeds of Crime Act 2002 (Cth)\ul0 \nosupersub\cf10\f11\fs19 , s 49(3) (a).\par\pard\li2205\sb3\sl-264\slmult0\fi82 43 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 299

{\shp {\*\shpinst\shpleft2205\shptop13480\shpright5006\shpbottom13500\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz180\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g309}{\bkmkend Pg309}\par\pard\qj \li2205\sb0\sl-403\slmult0 \par\pard\qj\li2205 \sb0\sl-403\slmult0 \par\pard\qj\li2205\sb0\sl-403\slmult0 \par\pard\qj\li2205\r i915\sb238\sl-403\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf1\f2\f s23 proceeds of any unlawful activity. In the case of a third party application, the court must be \up0 \expndtw0\charscalex100 satisfied that the person was no t involved in the offence or offences to which the forfeiture \up0 \expndtw0\cha rscalex100 order relates, and the property to be excluded is not the proceeds of unlawful activity. It is \up0 \expndtw-1\charscalex100 interesting to note that if the property that is subject to the exclusion order has already been \up0 \e xpndtw-1\charscalex100 disposed of, the order must direct the Commonwealth to pa y the applicant an amount equal \up0 \expndtw0\charscalex100 to the value of the property specified in the order.\ul0\super\cf8\f9\fs23 122\ul0\nosupersub\cf1\f 2\fs23 This ensures that the interest of bona \up0 \expndtw0\charscalex100 fide third party is well-protected. \par\pard\qj \li2205\ri915\sb396\sl-405\slmult0\ tx3033 \up0 \expndtw-3\charscalex100 Section \tab \up0 \expndtw0\charscalex107 9 2 specifies circumstances under which automatic forfeiture may take place. \line \up0 \expndtw-1\charscalex100 Initially, there must be a conviction for a serio us offence. Besides, the property in question \line \up0 \expndtw0\charscalex100 must be either the subject of a restraining order or the subject of a restraini ng order but the \line \up0 \expndtw-1\charscalex100 order was revoked under sec tion 44 or the property was excluded from the order under that \line \up0 \expnd tw-2\charscalex100 section.\ul0\super\cf8\f9\fs23 123 \par\pard\qj \li2205\ri915 \sb397\sl-403\slmult0\fi0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs 23 Normally, property will be automatically forfeited six months from the date o f conviction. \up0 \expndtw0\charscalex104 However, this may be extended to up t o 15 months by a court under section 93. In fact, \up0 \expndtw0\charscalex108 e xtensions can only be granted where a person has already applied to have propert y \up0 \expndtw0\charscalex100 excluded from a restraining order under section 3 1.\ul0\super\cf8\f9\fs23 124\ul0\nosupersub\cf1\f2\fs23 Section 94 allows a per son who has \up0 \expndtw0\charscalex109 been convicted of a serious offence to apply for an exclusion order from automatic \up0 \expndtw0\charscalex105 forfeit ure. The court may grant the exclusion order if it is satisfied that the propert y is \up0 \expndtw-3\charscalex100 neither the proceeds nor instrument of unlawf ul activity. \par\pard\qj \li2205\ri915\sb397\sl-404\slmult0 \up0 \expndtw0\char scalex104 Section 99 permits the Commonwealth to sell or deal with the forfeited property after a \line \up0 \expndtw0\charscalex100 person has failed to lodge an appeal within the prescribed period or where the appeal fails. \line \up0 \ex pndtw0\charscalex100 Further, section 100 illustrates how to deal with the forfe ited property. In addition to this, \line \up0 \expndtw-2\charscalex100 section 102 allows the court to restore or compensate the forfeited property to a person with \line \up0 \expndtw0\charscalex103 an interest in the property if the pers on obtained the property in good faith, is not in any \line \up0 \expndtw0\chars calex103 way involved in a relevant offence, and the property has no connection with the \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\ slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\sl mult0 \par\pard\ql\li2205\sb98\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0 \super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 122\ul0\nosupersub\cf10\f11\fs19 \ul 0\nosupersub\cf11\f12\fs19 Proceeds of Crime Act 2002 (Cth),\ul0\nosupersub\cf10 \f11\fs19 s 73(2). \par\pard\li2205\sb17\sl-218\slmult0\fi0 \up0 \expndtw-2\cha

rscalex100 \ul0\super\cf9\f10\fs18 123\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupe rsub\cf11\f12\fs19 Proceeds of Crime Act 2002 (Cth),\ul0\nosupersub\cf10\f11\fs1 9 s 92(1) (a) (b).\par\pard\li2205\sb5\sl-218\slmult0\fi0 \up0 \expndtw-2\chars calex100 \ul0\super\cf26\f27\fs18 124\ul0\nosupersub\cf11\f12\fs19 Proceeds of Crime Act 2002\ul0\nosupersub\cf10\f11\fs19 (Cth), s 92(3).\par\pard\li2205\sb3 \sl-264\slmult0\fi8243 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 300 {\shp {\*\shpinst\shpleft2205\shptop13704\shpright5006\shpbottom13724\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz175\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g310}{\bkmkend Pg310}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i914\sb249\sl-400\slmult0\fi0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf1\ f2\fs23 offence.\ul0\super\cf8\f9\fs23 125\ul0\nosupersub\cf1\f2\fs23 Additional ly, a person with an interest in the property can buy back the property \line \u p0 \expndtw0\charscalex106 under section 103, if the court is satisfied that thi s would not be contrary to the public \line \up0 \expndtw-3\charscalex100 intere st. \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmul t0 \par\pard\ql\li2205\sb5\sl-264\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nos upersub\cf4\f5\fs23 c) Pecuniary Penalty Orders \par\pard\qj \li2205\ri914\sb24\ sl-400\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs23 Section 116 empowers a court to make a pecuniary penalty order (PPO). This refers to an \up0 \expndtw0\charscalex102 order that requires a person to pay an amount of mo ney to the Commonwealth where the \up0 \expndtw-1\charscalex100 court is satisfi ed that the person has derived a benefit from the commission of an indictable \u p0 \expndtw-2\charscalex100 offence or a serious offence.\ul0\super\cf8\f9\fs23 126 \par\pard\qj \li2205\ri914\sb396\sl-405\slmult0\fi0 \up0 \expndtw0\charscale x102 \ul0\nosupersub\cf1\f2\fs23 In assessing whether the person has derived a b enefit, section 116(2) enables the court to \up0 \expndtw0\charscalex105 take in to account property that the court considers is under the effective control of t he \up0 \expndtw0\charscalex100 person against whom the PPO is sought. It must b e remembered that a PPO may be sought \up0 \expndtw0\charscalex100 and made even if another confiscation order has been made in relation to the offence.\ul0\sup er\cf8\f9\fs23 127\ul0\nosupersub\cf1\f2\fs23 A \up0 \expndtw0\charscalex100 PP O may also be made when a person has been acquitted of an offence.\ul0\super\cf8 \f9\fs23 128 \par\pard\qj \li2205\ri912\sb396\sl-404\slmult0 \up0 \expndtw-1\cha rscalex100 \ul0\nosupersub\cf1\f2\fs23 The amount of the PPO is determined by pr escribed calculations under section 121. In fact, \line \up0 \expndtw-1\charscal ex100 a different formulation is used depending on whether the offence is a seri ous or non-serious \line \up0 \expndtw0\charscalex103 offence. If the offence to which the order relates is a non-serious indictable offence, the \line \up0 \ex pndtw0\charscalex100 court must assess the value of the benefits the person deri ved from the commission of the \line \up0 \expndtw0\charscalex102 indictable off ence in accordance with a wide variety of matters set out in sections 122 to \li ne \up0 \expndtw0\charscalex102 124. \par\pard\qj \li2205\ri914\sb400\sl-400\slm ult0 \up0 \expndtw0\charscalex100 If the relevant offence is a serious offence, the same basic equation is followed. However, \line \up0 \expndtw0\charscalex102 the difference is that the benefits taken into account are not limited to those derived from \line \up0 \expndtw0\charscalex102 the particular offence in quest ion, but extend to any benefits the person has derived from \line \up0 \expndtw0 \charscalex102 any unlawful activity within the period commencing six years befo

re either the application \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\l i2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2 205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li220 5\sb81\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\ super\cf9\f10\fs18 125\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs 19 Proceeds of Crime Act 2002\ul0\nosupersub\cf10\f11\fs19 (Cth), s 102(2) (3). \par\pard\li2205\sb13\sl-218\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\sup er\cf9\f10\fs18 126\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Proceeds of Crime Act 2002 (\ul0\nosupersub\cf10\f11\fs19 Cth)\ul0\nosupersub\cf 11\f12\fs19 ,\ul0\nosupersub\cf10\f11\fs19 s 116(1) (b).\par\pard\li2205\sb6\sl -218\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 127\ul0\n osupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Proceeds of Crime Act 200 2\ul0\nosupersub\cf10\f11\fs19 (Cth), s 116(4).\par\pard\li2205\sb5\sl-218\slmu lt0\fi0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 128\ul0\nosupersub \cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Proceeds of Crime Act 2002\ul0\nos upersub\cf10\f11\fs19 (Cth), s 120.\par\pard\li2205\sb3\sl-264\slmult0\fi8243 \ up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 301 {\shp {\*\shpinst\shpleft2205\shptop13480\shpright5006\shpbottom13500\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz164\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g311}{\bkmkend Pg311}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i915\sb249\sl-400\slmult0 \up0 \expndtw0\charscalex106 \ul0\nosupersub\cf1\f2\fs 23 for the PPO or the application for a restraining order if one is in place, an d the date of \up0 \expndtw-3\charscalex100 determining the penalty amount.\ul0\ super\cf8\f9\fs23 129 \par\pard\qj \li2205\ri915\sb396\sl-406\slmult0 \up0 \expn dtw0\charscalex108 \ul0\nosupersub\cf1\f2\fs23 Generally, an application for a P PO must be made by the DPP within six months of \line \up0 \expndtw-1\charscalex 100 conviction of non serious offences or nine months of conviction of serious o ffences.\ul0\super\cf8\f9\fs23 130\ul0\nosupersub\cf1\f2\fs23 The \line \up0 \e xpndtw0\charscalex102 DPP must also comply with the notice requirements to the p roperty owner under section \line \up0 \expndtw0\charscalex102 136. \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb248\sl-264\slmult0 \up0 \expnd tw-1\charscalex100 \ul0\nosupersub\cf4\f5\fs23 7.5.2 Information Gathering Pow ers \par\pard\qj \li2205\sb0\sl-404\slmult0 \par\pard\qj\li2205\ri914\sb17\sl-40 4\slmult0 \up0 \expndtw0\charscalex105 \ul0\nosupersub\cf1\f2\fs23 POCA 2002 als o sets out a number of important information gathering powers. These \up0 \expnd tw0\charscalex108 include examination orders to question the suspect; production orders which enable \up0 \expndtw0\charscalex105 investigators to gain access t o property tracking documents; monitoring orders to gain \up0 \expndtw-1\charsca lex100 access to records for up to a three month continuous period; search warra nts and the power \up0 \expndtw0\charscalex105 to compel examinations of persons on oath into the affairs of that person including the \up0 \expndtw-3\charscale x100 nature and location of their property.\ul0\super\cf8\f9\fs23 131 \par\pard\ ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb248\sl-264\slmult0 \up0 \exp ndtw-3\charscalex100 \ul0\nosupersub\cf4\f5\fs23 a) Examinations \par\pard\qj \l i2205\ri915\sb21\sl-404\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1 \f2\fs23 Section 180 provides that where a restraining order is in force, a cour t may make an order \line \up0 \expndtw-1\charscalex100 that any person be exami ned about the affairs of a person who owns or claims an interest in \line \up0 \ expndtw0\charscalex106 relevant property, and/or spouse or a person named in a r

estraining order as a suspect \line \up0 \expndtw0\charscalex109 and/or their sp ouse. Examination orders can also be made where the DPP makes an \line \up0 \exp ndtw0\charscalex100 application for confirmation of a forfeiture order or pecuni ary penalty order under section \line \up0 \expndtw0\charscalex100 181. \par\par d\qj \li2205\ri914\sb392\sl-410\slmult0 \up0 \expndtw0\charscalex100 Sections 18 6 to 194 describe how the examination is to be conducted. Section 187 enables \l ine \up0 \expndtw0\charscalex100 the DPP and the examiner to examine a person on oath or affirmation. The examiner also \line \up0 \expndtw0\charscalex100 may r equire the person to answer a question that is relevant to the affairs of a pers on \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult 0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb97\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super \cf9\f10\fs19\ul0\super\cf9\f10\fs18 129\ul0\nosupersub\cf10\f11\fs19 \ul0\nosu persub\cf11\f12\fs19 Proceeds of Crime Act 2002\ul0\nosupersub\cf10\f11\fs19 (C th), s 121(3). \par\pard\li2205\sb17\sl-218\slmult0\fi0 \up0 \expndtw-2\charscal ex100 \ul0\super\cf9\f10\fs18 130\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\ cf11\f12\fs19 Proceeds of Crime Act 2002\ul0\nosupersub\cf10\f11\fs19 (Cth), s 134.\par\pard\li2205\sb5\sl-218\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\s uper\cf9\f10\fs18 131\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs1 9 Proceeds of Crime Act 2002\ul0\nosupersub\cf10\f11\fs19 (Cth), Chapter 3.\par \pard\li2205\sb3\sl-264\slmult0\fi8243 \up0 \expndtw-3\charscalex100 \ul0\nosupe rsub\cf1\f2\fs23 302 {\shp {\*\shpinst\shpleft2205\shptop13704\shpright5006\shpbottom13724\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz151\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g312}{\bkmkend Pg312}\par\pard\li2205\sb0\sl-264\slmult0\par\pard\li2205\sb0\sl264\slmult0\par\pard\li2205\sb0\sl-264\slmult0\par\pard\li2205\sb0\sl-264\slmult 0\par\pard\li2205\sb0\sl-264\slmult0\par\pard\li2205\sb252\sl-264\slmult0\fi0\tx 4716\tx6341 \up0 \expndtw0\charscalex105 \ul0\nosupersub\cf1\f2\fs23 described u nder section\tab \up0 \expndtw0\charscalex103 180.\ul0\super\cf8\f9\fs23 132\ul0 \nosupersub\cf1\f2\fs23 Section\tab \up0 \expndtw0\charscalex107 193 allows the examiner to give directions\par\pard\ql \li2205\sb125\sl-264\slmult0 \up0 \expn dtw-2\charscalex100 preventing or restricting public disclosure of any informati on arising from the examination. \par\pard\qj \li2205\sb0\sl-406\slmult0 \par\pa rd\qj\li2205\ri916\sb13\sl-406\slmult0 \up0 \expndtw0\charscalex100 Section 195 makes it an offence for failing to attend an examination. Further, section 196 \ up0 \expndtw-2\charscalex100 creates various offences such as refusing to take a n oath or affirmation, refusing to answer a \up0 \expndtw0\charscalex100 questio n or produce a required document. Upon conviction, the person could be liable fo r \up0 \expndtw0\charscalex100 imprisonment up to six months or 30 penalty units or both. \par\pard\qj \li2205\ri914\sb394\sl-406\slmult0 \up0 \expndtw0\charsca lex106 Section 197 deals with privileged information where a person cannot be co mpelled to \up0 \expndtw-2\charscalex100 answer a question or produce a document if another law allows them to do so. However, the \up0 \expndtw0\charscalex100 person cannot refuse to answer a question on the grounds that the answer may inc riminate \up0 \expndtw-1\charscalex100 him or her, or claims legal privilege.\ul 0\super\cf8\f9\fs23 133 \par\pard\qj \li2205\ri916\sb399\sl-400\slmult0 \up0 \ex pndtw-2\charscalex100 \ul0\nosupersub\cf1\f2\fs23 It is important to note that u nder section 198, an answer given, or document produced, in an \line \up0 \expnd tw0\charscalex102 examination cannot be used in civil or criminal proceedings ag ainst the person who gave \line \up0 \expndtw0\charscalex103 the answer or produ

ced the document except in certain circumstances prescribed by the \line \up0 \e xpndtw-3\charscalex100 Act. \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql \li2205\sb249\sl-264\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf4\f 5\fs23 b) Production Orders \par\pard\qj \li2205\ri915\sb44\sl-400\slmult0 \up0 \expndtw0\charscalex105 \ul0\nosupersub\cf1\f2\fs23 Section 202 provides that up on an application made by the law enforcement agency, a \up0 \expndtw0\charscale x102 magistrate may make a production order requiring a person to produce or mak e available \up0 \expndtw0\charscalex100 for inspection a property tracking docu ment.\ul0\super\cf8\f9\fs23 134\ul0\nosupersub\cf1\f2\fs23 Further, a productio n order can only cover \up0 \expndtw0\charscalex106 documents that are in posses sion, or under the control of a corporation or are used, or \up0 \expndtw0\chars calex100 intended to be used in the carrying on of a business.\ul0\super\cf8\f9\ fs23 135\ul0\nosupersub\cf1\f2\fs23 It must be noted that any document \up0 \ex pndtw0\charscalex100 produced or made available is not admissible in evidence in criminal proceeding against a \up0 \expndtw0\charscalex111 natural person excep t for the standard provision of prosecution for giving false or \up0 \expndtw-3\ charscalex100 misleading information or documents. \par\pard\qj \li2205\sb0\sl-2 20\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220 \slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\ri5846\sb69\ sl-220\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\c f9\f10\fs18 132\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Proc eeds of Crime Act 2002\ul0\nosupersub\cf10\f11\fs19 (Cth), s 187(5). \line \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 133\ul0\nosupersub\cf10\f11\fs 19 \ul0\nosupersub\cf11\f12\fs19 Proceeds of Crime Act 2002\ul0\nosupersub\cf10 \f11\fs19 (Cth), s197 (2). \par\pard\ql \li2205\ri938\sb0\sl-220\slmult0\fi0 \u p0 \expndtw-1\charscalex100 \ul0\super\cf9\f10\fs18 134\ul0\nosupersub\cf10\f11\ fs19 This includes documents relevant to identifying, locating or quantifying p roperty of a person charged with \up0 \expndtw-2\charscalex100 an indictable off ence or suspected of committing a serious offence within the last six years. \li ne \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 135\ul0\nosupersub\cf10 \f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Proceeds of Crime Act 2002\ul0\nosupers ub\cf10\f11\fs19 (Cth), 202 (2). \par\pard\ql \li10449\sb14\sl-252\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 303 {\shp {\*\shpinst\shpleft2205\shptop13256\shpright5006\shpbottom13276\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz165\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g313}{\bkmkend Pg313}\par\pard\qj \li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205 \sb0\sl-402\slmult0 \par\pard\qj\li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205\r i913\sb241\sl-402\slmult0\tx3035 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\c f1\f2\fs23 Section \tab \up0 \expndtw0\charscalex113 209 makes it an offence to make a false or misleading statement in, or in \line \up0 \expndtw-1\charscalex1 00 connection with, an application for a production order. The maximum penalty i s 12 months \line \up0 \expndtw0\charscalex107 imprisonment or a fine of 60 pena lty units, or both. Furthermore, section 210 creates \line \up0 \expndtw0\charsc alex102 offences of disclosing the existence or nature of the production orders to another person. \line \up0 \expndtw0\charscalex103 However, disclosure for th e purpose of obtaining legal advice or in legal proceedings of \line \up0 \expnd tw-1\charscalex100 information covered by a direction does not constitute an off ence. Similarly, the disclosure \line \up0 \expndtw0\charscalex106 made to an em ployee, agent or other person in particular circumstances is also not an \line \ up0 \expndtw-3\charscalex100 offence. \par\pard\qj \li2205\ri915\sb396\sl-405\sl

mult0 \up0 \expndtw0\charscalex100 Section 211 provides that it is an offence to fail to comply with a production order where \up0 \expndtw0\charscalex107 the o rder is given to the person and that the person has not been notified of suffici ent \up0 \expndtw-1\charscalex100 compliance in relation to the order. The maxim um penalty is six months imprisonment or a \up0 \expndtw0\charscalex108 fine of 30 penalty units or both. Additionally, it is also an offence for destroying or \up0 \expndtw-3\charscalex100 interfering with a document subject to a producti on order.\ul0\super\cf8\f9\fs23 136 \par\pard\ql \li2205\sb0\sl-264\slmult0 \par \pard\ql\li2205\sb248\sl-264\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupers ub\cf4\f5\fs23 c) Notices to Financial Organizations \par\pard\qj \li2205\ri912\ sb22\sl-403\slmult0\tx3034 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\ fs23 Section \tab \up0 \expndtw0\charscalex109 213 allows law enforcement author ities to give a written notice to financial \up0 \expndtw0\charscalex100 institu tions to assist them in obtaining preliminary information to confirm the existen ce of \up0 \expndtw0\charscalex107 accounts, basic account information and infor mation concerning transactions. Under \up0 \expndtw0\charscalex100 section 215, a financial institution or any of its officers, employees or agents are protecte d \up0 \expndtw0\charscalex105 from any action, suit or proceeding in relation t o any action taken by the institution or \up0 \expndtw0\charscalex102 person in relation to its or their response to a notice under section 213 or in the mistak en \up0 \expndtw0\charscalex102 belief that action was required under the notice . \par\pard\qj \li2205\ri915\sb395\sl-406\slmult0 \up0 \expndtw0\charscalex110 T his kind of information gathering power is vitally important especially when it is \line \up0 \expndtw0\charscalex100 discovered that the suspects hold an accou nt with the particular institution but the location \line \up0 \expndtw-1\charsc alex100 of their funds is unknown.\ul0\super\cf8\f9\fs23 137\ul0\nosupersub\cf1\ f2\fs23 Undoubtedly, a financial institution plays an important role in \line \ up0 \expndtw-1\charscalex100 collecting critical evidence in identifying crimina ls and tracing their ill-gotten gains. \par\pard\ql \li2205\sb0\sl-218\slmult0 \ par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \pa r\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb218\sl-218\slmult0 \up 0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 136\ul 0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Proceeds of Crime Act 2002\ul0\nosupersub\cf10\f11\fs19 (Cth), s 212. \par\pard\li2205\sb9\sl-218\slm ult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 137\ul0\nosupersu b\cf10\f11\fs19 Explanatory Memorandum, Proceeds of Crime Bill 2002, 72.\par\pa rd\li2205\sb114\sl-264\slmult0\fi8243 \up0 \expndtw-3\charscalex100 \ul0\nosuper sub\cf1\f2\fs23 304 {\shp {\*\shpinst\shpleft2205\shptop13815\shpright5006\shpbottom13835\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz180\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g314}{\bkmkend Pg314}\par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205 \sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\s b0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb2 41\sl-264\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf4\f5\fs23 d) M onitoring Orders \par\pard\qj \li2205\ri914\sb22\sl-402\slmult0 \up0 \expndtw0\c harscalex100 \ul0\nosupersub\cf1\f2\fs23 Section 219 allows a judge of a State o r Territory court to make a monitoring order that a \up0 \expndtw0\charscalex100 financial institution provides information about transactions conducted during a particular \up0 \expndtw0\charscalex103 period through an account held by a pa rticular person with the institution. However, the \up0 \expndtw0\charscalex103

judge must not make the order unless it is satisfied that there are reasonable g rounds for \up0 \expndtw0\charscalex100 suspecting that the person has committed , or is about to commit, a serious offence or was \up0 \expndtw0\charscalex106 i nvolved in the commission or is about to be involved in the commission of a seri ous \up0 \expndtw0\charscalex100 offence, or has benefited directly or indirectl y, or is about to benefit directly or indirectly \up0 \expndtw0\charscalex100 fr om the commission of a serious offence. \par\pard\qj \li2205\ri915\sb398\sl-403\ slmult0\fi0 \up0 \expndtw0\charscalex103 Again, a financial institution or its o fficers, employees or agents are protected from any \up0 \expndtw0\charscalex102 action, suit or proceeding in relation to its or their response to a monitori ng order. More \up0 \expndtw0\charscalex109 importantly, for the prosecution of offences relating to money laundering under the \up0 \expndtw0\charscalex110 Cri minal Code, when they provide information under a monitoring order, they are \up 0 \expndtw0\charscalex100 considered not to have been in possession of that info rmation at any time.\ul0\super\cf8\f9\fs23 138\ul0\nosupersub\cf1\f2\fs23 Secti ons 222 \up0 \expndtw0\charscalex106 to 224 deal with the offences of making fal se statements, unauthorized disclosure and \up0 \expndtw-3\charscalex100 failing to comply with monitoring order. \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\p ard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\par d\ql\li2205\sb140\sl-264\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\c f4\f5\fs23 7.5.3 Search and Seizure \par\pard\qj \li2205\sb0\sl-400\slmult0 \p ar\pard\qj\li2205\ri918\sb24\sl-400\slmult0 \up0 \expndtw0\charscalex102 \ul0\no supersub\cf1\f2\fs23 Section 225 permits a magistrate to issue a search warrant, if satisfied by information on \line \up0 \expndtw0\charscalex102 oath that the re are reasonable grounds for suspecting that there is, or will be within the ne xt \par\pard\qj \li2205\ri916\sb0\sl-400\slmult0 \up0 \expndtw0\charscalex102 72 hours, tainted property or evidential matter at the premises. However, document s and \up0 \expndtw0\charscalex102 other information which are subject to legal professional privilege cannot be seized.\ul0\super\cf8\f9\fs23 139 \par\pard\qj \li2205\ri914\sb396\sl-406\slmult0 \up0 \expndtw0\charscalex111 \ul0\nosupersub\ cf1\f2\fs23 A magistrate may also grant a search assistance order in relation to data held in or \line \up0 \expndtw0\charscalex100 accessible from a computer u nder section 246. Furthermore, searches of vehicles, aircraft, \line \up0 \expnd tw0\charscalex103 ships etc may be made without warrant, if an officer suspect o n reasonable grounds that \line \up0 \expndtw0\charscalex103 they contain tainte d property or evidential material, or it is necessary to seize the thing to \par \pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb172\sl-218\slmult0 \up 0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 138\ul 0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Proceeds of Crime Act 2002\ul0\nosupersub\cf10\f11\fs19 (Cth), s 221. \par\pard\li2205\sb20\sl-218\sl mult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 139\ul0\nosupers ub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Proceeds of Crime Act 2002\ul0\n osupersub\cf10\f11\fs19 (Cth), s 264.\par\pard\li2205\sb3\sl-264\slmult0\fi8243 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 305 {\shp {\*\shpinst\shpleft2205\shptop13928\shpright5006\shpbottom13948\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz177\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g315}{\bkmkend Pg315}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i916\sb249\sl-400\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf1\f2\f s23 prevent concealment, loss or destruction and that it is necessary to act imm

ediately because \up0 \expndtw-2\charscalex100 the circumstances are serious and urgent.\ul0\super\cf8\f9\fs23 140 \par\pard\qj \li2205\ri911\sb398\sl-403\slmul t0 \up0 \expndtw0\charscalex104 \ul0\nosupersub\cf1\f2\fs23 It is clear that POC A 2002 provides extensive confiscation measures and appears to be \up0 \expndtw2\charscalex100 effective. Undoubtedly, the civil forfeiture regime is the backb one of the legislation and has \up0 \expndtw-2\charscalex100 greatly assisted la w enforcement authorities in detecting criminals and depriving their illicit \up 0 \expndtw0\charscalex106 profits. However, it must be noted that the banks and financial institutions also play a \up0 \expndtw0\charscalex105 significant role in ensuring the effectiveness of the regimes. However, the information \up0 \ex pndtw0\charscalex105 gathering and confiscation measures have put significant bu rden on banks and greatly \up0 \expndtw-3\charscalex100 affected their relations hip with customers. \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\ sb0\sl-264\slmult0 \par\pard\ql\li2205\sb4\sl-264\slmult0\tx7674 \up0 \expndtw0\ charscalex107 Apart from an effective confiscation regime, POCA \tab \up0 \expnd tw0\charscalex105 2002 also provides appropriate \par\pard\qj \li2205\ri915\sb24 \sl-400\slmult0 \up0 \expndtw-1\charscalex100 safeguards to protect the rights o f third parties who genuinely acquire the property which is \line \up0 \expndtw0 \charscalex100 subject to the forfeiture orders under the Act. Normally, third p arties may apply to exclude \line \up0 \expndtw0\charscalex100 the forfeiture or ders on the basis that it is not proceeds of any offence and must show this \lin e \up0 \expndtw0\charscalex102 on balance of probabilities. Notably, the legisla tion also establishes a Confiscated Assets \line \up0 \expndtw0\charscalex100 Ac count which keeps the proceeds of confiscated assets to be used to support natio nal and \line \up0 \expndtw0\charscalex100 community programs in combating crime s, drug treatment and diversionary programs.\ul0\super\cf8\f9\fs23 141 \par\pard \ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ ql\li2205\sb225\sl-264\slmult0\tx2907 \up0 \expndtw-3\charscalex100 \ul0\nosuper sub\cf4\f5\fs23 7.6 \tab \up0 \expndtw-3\charscalex100 The Mutual Assistance in Criminal Matters Act 1987 (MACMA) \par\pard\qj \li2205\sb0\sl-402\slmult0 \par\p ard\qj\li2205\ri915\sb80\sl-402\slmult0 \up0 \expndtw0\charscalex103 \ul0\nosupe rsub\cf1\f2\fs23 MACMA sets out the mutual legal assistance mechanisms available to Australia\u8217?s law \line \up0 \expndtw0\charscalex100 enforcement author ities to seek and provide legal assistance for investigation and \line \up0 \expndtw0\charscalex100 prosecution of serious crimes including money laundering and terrorism financing \line \up0 \expndtw-1\charscalex100 activ ities. The mutual legal assistance process is facilitated by bilateral mutual as sistance \line \up0 \expndtw-1\charscalex100 treaties. The treaties allow Austra lia to make a request to a treaty country under the terms \line \up0 \expndtw0\c harscalex100 of the treaty. To date, Australia has entered into bilateral mutual assistance treaties with \line \up0 \expndtw-1\charscalex100 several countries including the United States, Hong Kong, the Netherlands, Indonesia and \line \up 0 \expndtw-1\charscalex100 Malaysia. A request can also be made under some multi lateral international conventions to \par\pard\ql \li2205\sb0\sl-218\slmult0 \pa r\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb74\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 140\ul0 \nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Proceeds of Crime Act 2 002\ul0\nosupersub\cf10\f11\fs19 (Cth), s 251. \par\pard\li2205\sb20\sl-218\slm ult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 141\ul0\nosupersu b\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Proceeds of Crime Act 2002\ul0\no supersub\cf10\f11\fs19 (Cth), Part 4.3.\par\pard\li2205\sb3\sl-264\slmult0\fi82 43 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 306 {\shp {\*\shpinst\shpleft2205\shptop13928\shpright5006\shpbottom13948\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz194\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}}

{\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g316}{\bkmkend Pg316}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i915\sb249\sl-400\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf1\f2\f s23 which Australia is a party, for example the United Nations Convention agains t Illicit Drugs \up0 \expndtw0\charscalex102 and Psychotropic Substances and the United Nations Convention on Transnational \up0 \expndtw0\charscalex10 2 Organized Crime.\ul0\super\cf8\f9\fs23 142 \par\pard\qj \li2205\sb0\sl-400\slm ult0 \par\pard\qj\li2205\ri915\sb20\sl-400\slmult0 \up0 \expndtw0\charscalex106 \ul0\nosupersub\cf1\f2\fs23 Under MACMA, Australia can provide and request a wid e range of assistance which \up0 \expndtw-3\charscalex100 includes the following : \par\pard\li2205\sb120\sl-264\slmult0\fi0\tx2906 \up0 \expndtw-1\charscalex100 a)\tab \up0 \expndtw0\charscalex100 the taking of evidence and production of do cuments or other articles;\ul0\super\cf8\f9\fs23 143\par\pard\li2205\sb139\sl-26 4\slmult0\fi0\tx2906 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf1\f2\fs23 b )\tab \up0 \expndtw0\charscalex100 the issue of a search warrant and the seizure of any thing relevant to a proceeding or\par\pard\li2205\sb138\sl-264\slmult0\f i700 \up0 \expndtw-1\charscalex100 investigation;\ul0\super\cf8\f9\fs23 144\par\ pard\li2205\sb139\sl-264\slmult0\fi0\tx2906 \up0 \expndtw-1\charscalex100 \ul0\n osupersub\cf1\f2\fs23 c)\tab \up0 \expndtw0\charscalex100 the arrangement for pe rsons to give evidence or assist investigations;\ul0\super\cf8\f9\fs23 145\par\p ard\li2205\sb138\sl-264\slmult0\fi0\tx2906 \up0 \expndtw-1\charscalex100 \ul0\no supersub\cf1\f2\fs23 d)\tab \up0 \expndtw-1\charscalex100 the enforcement of pro ceeds of crime actions;\ul0\super\cf8\f9\fs23 146\par\pard\li2205\sb139\sl-264\s lmult0\fi0\tx2906 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf1\f2\fs23 e)\t ab \up0 \expndtw0\charscalex100 the issue and execution of a search warrant in r espect of evidential material in\par\pard\ql \li2906\sb136\sl-264\slmult0 \up0 \ expndtw-3\charscalex100 Australia at the request of a foreign country.\ul0\super \cf8\f9\fs23 147 \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0 \sl-264\slmult0 \par\pard\ql\li2205\sb8\sl-264\slmult0 \up0 \expndtw-1\charscale x100 \ul0\nosupersub\cf4\f5\fs23 7.6.1 Request by Australia \par\pard\qj \li22 05\ri914\sb22\sl-402\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2 \fs23 Australia can request mutual assistance from a foreign country and such a request must be \line \up0 \expndtw0\charscalex104 made by the Attorney General (AG).\ul0\super\cf8\f9\fs23 148\ul0\nosupersub\cf1\f2\fs23 The AG can request t hat a foreign country take \line \up0 \expndtw0\charscalex100 evidence or produc e documents or other articles for the investigation or prosecution of an \line \ up0 \expndtw0\charscalex105 Australian offence. Australia may also request that an opportunity be given for person \line \up0 \expndtw0\charscalex111 giving evi dence, or producing documents or other articles in response to a mutual \line \u p0 \expndtw0\charscalex100 assistance request, to be examined or cross-examined by video-link from Australia. Then, \line \up0 \expndtw0\charscalex100 such evid ence or documents can be used in the Australian investigation or prosecution of \line \up0 \expndtw0\charscalex100 the alleged crime.\ul0\super\cf8\f9\fs23 149 \par\pard\qj \li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \ par\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \pa r\pard\qj\li2205\sb0\sl-220\slmult0 \par\pard\qj\li2205\sb0\sl-220\slmult0 \par\ pard\qj\li2205\ri940\sb109\sl-220\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0 \super\cf9\f10\fs18 142\ul0\nosupersub\cf10\f11\fs19 Australian Government- Att orney General\u8217?s Department, \ul0\nosupersub\cf11\f12\fs19 A Better Mutual Assistance System: A Review of \up0 \expndtw-3\charscalex100 Australia\u8217?s M utual Assistance Law and Practice\ul0\nosupersub\cf10\f11\fs19 (2006) 8. \par\p ard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 < {\field{\*\fld inst {HYPERLINK "http://www.ag.gov.au/" }}{\fldrslt {\ul0\nosupersub\cf29\f30\fs 19\ul http://www.ag.gov.au}}}\ul0\nosupersub\cf10\f11\fs19 > at 1 November 2007. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\supe r\cf9\f10\fs18 143\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 M

utual Assistance in Criminal Matters Act 1987\ul0\nosupersub\cf10\f11\fs19 (Cth ), Part II. \par\pard\ql \li2205\sb22\sl-218\slmult0 \up0 \expndtw-2\charscalex1 00 \ul0\super\cf9\f10\fs18 144\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf1 1\f12\fs19 Mutual Assistance in Criminal Matters Act 1987\ul0\nosupersub\cf10\f1 1\fs19 (Cth), Part III. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2 \charscalex100 \ul0\super\cf9\f10\fs18 145\ul0\nosupersub\cf10\f11\fs19 \ul0\no supersub\cf11\f12\fs19 Mutual Assistance in Criminal Matters Act 1987\ul0\nosupe rsub\cf10\f11\fs19 (Cth), Part IV. \par\pard\ql \li2205\sb2\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 146\ul0\nosupersub\cf10\f11\fs 19 \ul0\nosupersub\cf11\f12\fs19 Mutual Assistance in Criminal Matters Act 1987 \ul0\nosupersub\cf10\f11\fs19 (Cth), Part VI. \par\pard\ql \li2205\sb2\sl-218\s lmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 147\ul0\nosupersub\ cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Mutual Assistance in Criminal Matte rs Act 1987\ul0\nosupersub\cf10\f11\fs19 (Cth), Pt VIIA. \par\pard\qj \li2205\r i2795\sb1\sl-220\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 1 48\ul0\nosupersub\cf10\f11\fs19 In practice, the Minister of Justice and Custom s makes mutual assistance decisions. \up0 \expndtw-2\charscalex100 \ul0\super\cf 9\f10\fs18 149\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Mutua l Assistance in Criminal Matters Act 1987\ul0\nosupersub\cf10\f11\fs19 (Cth), s 12. \par\pard\ql \li10449\sb14\sl-252\slmult0 \up0 \expndtw-3\charscalex100 \ul 0\nosupersub\cf1\f2\fs23 307 {\shp {\*\shpinst\shpleft2205\shptop12139\shpright5006\shpbottom12159\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz207\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g317}{\bkmkend Pg317}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i916\sb249\sl-400\slmult0 \up0 \expndtw0\charscalex105 \ul0\nosupersub\cf1\f2\fs 23 Under section 14, the AG can request that a foreign country obtain a search w arrant or \line \up0 \expndtw0\charscalex111 other instrument that authorizes a search for, and seizure of, a thing relevant to an \line \up0 \expndtw0\charscal ex100 Australian proceeding or investigation. The evidence obtained as a result of the search and \line \up0 \expndtw0\charscalex100 seizure can be used in the Australian investigation or prosecution of the alleged crime. \par\pard\qj \li22 05\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri915\sb20\sl-400\slmult0\fi0 \up0 \ex pndtw0\charscalex102 Furthermore, the AG can request that persons, including pri soners, be transferred from a \line \up0 \expndtw-1\charscalex100 foreign countr y to Australia to give evidence in a proceeding for a criminal matter or assist \line \up0 \expndtw0\charscalex102 in an investigation.\ul0\super\cf8\f9\fs23 15 0\ul0\nosupersub\cf1\f2\fs23 The AG can also request that a foreign country reg ister Australian \line \up0 \expndtw0\charscalex102 proceeds of crime orders, or make proceeds of crime orders on behalf of Australia.\ul0\super\cf8\f9\fs23 151 \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb5\sl-264\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupe rsub\cf4\f5\fs23 7.6.2 Request by Foreign Countries \par\pard\qj \li2205\sb0\s l-400\slmult0 \par\pard\qj\li2205\ri913\sb24\sl-400\slmult0 \up0 \expndtw0\chars calex100 \ul0\nosupersub\cf1\f2\fs23 MACMA also allows Australian authorities to assist foreign countries in the investigation \up0 \expndtw-1\charscalex100 and prosecution of serious offences. Under section 13, the AG can authorize a magis trate to \up0 \expndtw0\charscalex110 conduct the taking evidence or production order proceedings for the purposes of a \up0 \expndtw0\charscalex100 proceeding in a foreign country. In such proceedings, a magistrate may require a person to

\up0 \expndtw0\charscalex106 give evidence on oath for the purposes of the forei gn proceeding. In production order \up0 \expndtw0\charscalex100 proceedings, a m agistrate may require a person to produce documents or other articles for \up0 \ expndtw0\charscalex100 the purposes of the foreign proceeding. \par\pard\qj \li2 205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri914\sb20\sl-400\slmult0\fi0 \up0 \e xpndtw0\charscalex107 The AG can also authorize a mutual assistance search warra nt on behalf of a foreign \line \up0 \expndtw0\charscalex100 country where mater ial relating to serious offence is reasonable suspected of being located \line \ up0 \expndtw-2\charscalex100 on Australia.\ul0\super\cf8\f9\fs23 152\ul0\nosuper sub\cf1\f2\fs23 Further, the AG can authorize material which is already in the possession of \line \up0 \expndtw0\charscalex100 an Australian enforcement agenc y to be provided to a foreign country provided that it was \line \up0 \expndtw-1 \charscalex100 lawfully obtained and is lawfully in possession of that agency.\u l0\super\cf8\f9\fs23 153\ul0\nosupersub\cf1\f2\fs23 Obviously, this allows for \line \up0 \expndtw0\charscalex102 a very efficient means of providing material to foreign countries for use in their criminal \line \up0 \expndtw0\charscalex10 2 proceedings. \par\pard\li2205\sb0\sl-218\slmult0\par\pard\li2205\sb0\sl-218\sl mult0\par\pard\li2205\sb0\sl-218\slmult0\par\pard\li2205\sb0\sl-218\slmult0\par\ pard\li2205\sb0\sl-218\slmult0\par\pard\li2205\sb88\sl-218\slmult0\fi0 \up0 \exp ndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 150\ul0\nosu persub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Mutual Assistance in Crimina l Matters Act 1987\ul0\nosupersub\cf10\f11\fs19 (Cth), Pt IV.\par\pard\li2205\s b6\sl-218\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 151\ ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Mutual Assistance in Criminal Matters Act 1987\ul0\nosupersub\cf10\f11\fs19 (Cth), Pt VI.\par\pard\ li2205\sb6\sl-218\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\f s18 152\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Mutual Assis tance in Criminal Matters Act 1987\ul0\nosupersub\cf10\f11\fs19 (Cth), s 15.\pa r\pard\li2205\sb5\sl-218\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\super\cf 9\f10\fs18 153\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Mutua l Assistance in Criminal Matters Act 1987\ul0\nosupersub\cf10\f11\fs19 (Cth), s 13A.\par\pard\li2205\sb3\sl-264\slmult0\fi8243 \up0 \expndtw-3\charscalex100 \u l0\nosupersub\cf1\f2\fs23 308 {\shp {\*\shpinst\shpleft2205\shptop13480\shpright5006\shpbottom13500\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz172\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g318}{\bkmkend Pg318}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i916\sb249\sl-400\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs 23 Sections 26 to 27 of MACMA permit the AG to arrange for a person, including a prisoner, \up0 \expndtw-2\charscalex100 to travel from Australia to a foreign c ountry for the purposes of giving evidence in a foreign \up0 \expndtw-1\charscal ex100 prosecution or assisting a foreign investigation. The person must consent and be capable of \up0 \expndtw-2\charscalex100 giving evidence or assisting in the investigation. \par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i915\sb20\sl-400\slmult0 \up0 \expndtw0\charscalex103 MACMA also enables Austral ia to assist other countries in tracing and confiscating the \line \up0 \expndtw 0\charscalex103 proceeds of crimes. For this reason, Australia can register and enforce foreign forfeiture \line \up0 \expndtw0\charscalex105 and pecuniary pena lty orders where there is a conviction for a foreign serious offence. \line \up0 \expndtw0\charscalex106 Australia can also use a range of investigative tools,

including monitoring orders and \line \up0 \expndtw0\charscalex100 production or ders, which can be used on behalf of a foreign country to locate the proceeds \l ine \up0 \expndtw-1\charscalex100 of crime.\ul0\super\cf8\f9\fs23 154 \par\pard\ qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri913\sb20\sl-400\slmult0\fi0 \up0 \expndtw0\charscalex103 \ul0\nosupersub\cf1\f2\fs23 It must be noted that s ections 34R to 34W of MACMA provides for notices to financial \up0 \expndtw-1\ch arscalex100 institutions in relation to the execution of the proceeds of crime a ctions. Section 34 enables \up0 \expndtw-1\charscalex100 the AG to require a fin ancial institution to provide information or documents relating to the \up0 \exp ndtw0\charscalex102 customers and their accounts.\ul0\super\cf8\f9\fs23 155\ul0\ nosupersub\cf1\f2\fs23 Failure to comply with the notices is an offence and the \up0 \expndtw0\charscalex100 person could be liable for six months imprisonment or 30 penalty units, or both.\ul0\super\cf8\f9\fs23 156\ul0\nosupersub\cf1\f2\f s23 Section \up0 \expndtw0\charscalex105 34T provides protection from any actio ns for the institution and its officer or agents in \up0 \expndtw-3\charscalex10 0 complying with the notice requirement. \par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri913\sb20\sl-400\slmult0 \up0 \expndtw0\charscalex100 A re quest by foreign country must be made in writing and satisfy section 11 of MACMA . \up0 \expndtw0\charscalex104 Then, the Minister for Justice and Customs will d ecide whether to approve the request, \up0 \expndtw-1\charscalex100 taking into consideration the mandatory and discretionary grounds of refusal. Normally, the \up0 \expndtw-2\charscalex100 Minister must refuse the request when:\ul0\super\c f8\f9\fs23 157 \par\pard\ql \li2205\sb113\sl-264\slmult0 \up0 \expndtw-3\charsca lex100 \ul0\nosupersub\cf1\f2\fs23 (a) the offence is a political offence; \par \pard\qj \li2205\ri915\sb24\sl-400\slmult0 \up0 \expndtw0\charscalex107 (b) the request has been made with a view to prosecuting or punishing a person for a \up 0 \expndtw-3\charscalex100 political offence; \par\pard\ql \li2205\sb0\sl-218\sl mult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmu lt0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult 0 \par\pard\ql\li2205\sb81\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\sup er\cf9\f10\fs19\ul0\super\cf9\f10\fs18 154\ul0\nosupersub\cf10\f11\fs19 \ul0\no supersub\cf11\f12\fs19 Mutual Assistance in Criminal Matters Act 1987\ul0\nosupe rsub\cf10\f11\fs19 (Cth), ss34-34H. \par\pard\ql \li2205\ri3660\sb1\sl-220\slmu lt0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs18 155\ul0\nosupersub\cf1 0\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Mutual Assistance in Criminal Matters Act 1987\ul0\nosupersub\cf10\f11\fs19 (Cth), s 34R (1) (a)-(f). \up0 \expndtw-2 \charscalex100 \ul0\super\cf9\f10\fs18 156\ul0\nosupersub\cf10\f11\fs19 \ul0\no supersub\cf11\f12\fs19 Mutual Assistance in Criminal Matters Act 1987\ul0\nosupe rsub\cf10\f11\fs19 (Cth), s 34W. \line \up0 \expndtw-2\charscalex100 \ul0\super \cf9\f10\fs18 157\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Mu tual Assistance in Criminal Matters Act 1987\ul0\nosupersub\cf10\f11\fs19 (Cth) , s 8. \par\pard\ql \li10449\sb14\sl-252\slmult0 \up0 \expndtw-3\charscalex100 \ ul0\nosupersub\cf1\f2\fs23 309 {\shp {\*\shpinst\shpleft2205\shptop13480\shpright5006\shpbottom13500\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz169\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g319}{\bkmkend Pg319}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r i917\sb249\sl-400\slmult0 \up0 \expndtw0\charscalex103 \ul0\nosupersub\cf1\f2\fs 23 (c) the request was made for the purpose of prosecuting, punishing or otherwi se causing \line \up0 \expndtw0\charscalex103 prejudice to a person because of t

heir race, sex, religion, nationality or political opinions; \par\pard\ql \li220 5\sb113\sl-264\slmult0 \up0 \expndtw-3\charscalex100 (d) the offence is a milita ry offence; \par\pard\qj \li2205\ri915\sb8\sl-420\slmult0 \up0 \expndtw-1\charsc alex100 (e) the granting of the request would prejudice the sovereignty, securit y or national interest \up0 \expndtw-2\charscalex100 of Australia, or the essent ial interest of a State or Territory; or \par\pard\qj \li2205\ri917\sb0\sl-400\s lmult0 \up0 \expndtw0\charscalex106 (f) the person has been acquitted, pardoned or already punished for the offence in the \up0 \expndtw-3\charscalex100 foreign country. \par\pard\qj \li2205\ri916\sb393\sl-406\slmult0 \up0 \expndtw0\charsca lex112 Additionally, a request may be refused if the request relates to the pros ecution or \line \up0 \expndtw0\charscalex100 punishment of an offence where the death penalty may be imposed unless the AG having \line \up0 \expndtw0\charscal ex100 regard to the special circumstances of the case, is of the opinion that th e request should be \line \up0 \expndtw-1\charscalex100 granted.\ul0\super\cf8\f 9\fs23 158 \par\pard\qj \li2205\ri915\sb398\sl-402\slmult0 \up0 \expndtw-2\chars calex100 \ul0\nosupersub\cf1\f2\fs23 At present, the mutual assistance regime ha s emerged as an essential law enforcement tool \line \up0 \expndtw0\charscalex10 6 to prosecute domestic and transnational criminals and confiscate their illicit profits. \line \up0 \expndtw0\charscalex102 Therefore, it is vitally important to ensure the effectiveness of the regime. Any legal or \line \up0 \expndtw0\cha rscalex100 technical obstacles that could affect the efficiency of the regime mu st be eliminated. For \line \up0 \expndtw-2\charscalex100 instance, the problem s with secrecy rule must be resolved. Only then evidence obtained by \line \up0 \expndtw0\charscalex107 way of mutual assistance request can be used effectively in prosecution and related \line \up0 \expndtw0\charscalex106 proceedings. In t he meantime, since mutual assistance process involves various law \line \up0 \ex pndtw0\charscalex106 enforcement agencies, it is imperative to coordinate each agency\u8217?s duties and \line \up0 \expndtw-4\charscalex100 responsib ilities as well as enhancing their skills and knowledge in relation to the proce ss. \par\pard\li2205\sb0\sl-264\slmult0\par\pard\li2205\sb0\sl-264\slmult0\par\p ard\li2205\sb229\sl-264\slmult0\fi0\tx2906 \up0 \expndtw-3\charscalex100 \ul0\no supersub\cf4\f5\fs23 7.7\tab \up0 \expndtw-3\charscalex100 Comparative Analysis\ par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri914\sb79\sl-400\slm ult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf1\f2\fs23 Unlike the Austra lian regime, the Malaysian anti-money laundering regime is principally \line \up 0 \expndtw-3\charscalex100 found in one statute, i.e AMLATFA. The Act criminalis es money laundering and terrorism \line \up0 \expndtw0\charscalex100 financing; imposes AML/CTF obligations; introduces mechanisms for the investigation; \line \up0 \expndtw0\charscalex100 and provides measures for freezing, seizure and for feiture of illegal proceeds derived from \par\pard\ql \li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb0\sl-218\slmult0 \par\pard\ql\li2205\sb195\sl-218\slmult0 \up0 \expndtw-2\charscalex100 \ul0\super\cf9\f10\fs19\ul0\super\cf9\f10\fs18 15 8\ul0\nosupersub\cf10\f11\fs19 \ul0\nosupersub\cf11\f12\fs19 Mutual Assistance in Criminal Matters Act 1987\ul0\nosupersub\cf10\f11\fs19 (Cth), s 8(1A). \par\ pard\ql \li10449\sb104\sl-264\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosuper sub\cf1\f2\fs23 310 {\shp {\*\shpinst\shpleft2205\shptop14040\shpright5006\shpbottom14060\shpfhdr0\s hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz170\shplid0 {\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{ \sn geoRight}{\sv 2801}}{\sp{\sn geoBottom}{\sv 20}} {\sp{\sn pVerticies}{\sv 8;5;(0,20);(2801,20);(2801,0);(0,0);(0,20)}} {\sp{\sn pSegmentInfo}{\sv 2;11;16384;45824;1;45824;1;45824;1;45824;1;45824;3276 8}} {\sp{\sn fFillOK}{\sv 1}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn fillColor}{\sv 0}}{\s p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}} }}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g320}{\bkmkend Pg320}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205 \sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\r

i913\sb249\sl-400\slmult0 \up0 \expndtw0\charscalex106 \ul0\nosupersub\cf1\f2\fs 23 criminal activities. The implementation of AMLATFA is supervised by Bank Nega ra \line \up0 \expndtw0\charscalex100 Malaysia (BNM). Like the Australian regime , the main aim of the Malaysian regime is to \line \up0 \expndtw0\charscalex103 provide effective AML/CTF measures in line with the international standards set out by \line \up0 \expndtw-3\charscalex100 FATF. \par\pard\qj \li2205\sb0\sl-400 \slmult0 \par\pard\qj\li2205\ri914\sb20\sl-400\slmult0 \up0 \expndtw0\charscalex 100 It is beyond the scope of this study to compare both regimes in their entire ty. As such, this \up0 \expndtw0\charscalex104 section will only focus on t he key AML/CTF obligations, such as the customer \up0 \expndtw0\charscale x107 identification and due diligence, reporting of significant and suspicious t ransactions, \up0 \expndtw0\charscalex103 record-keeping and AML/CTF program. Th e role of the Financial Intelligence Unit and \up0 \expndtw0\charscalex106 penal ties for non-compliance will also be considered. The differences and similaritie s \up0 \expndtw-3\charscalex100 between the Australian and Malaysian regimes wil l be highlighted. \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb 0\sl-264\slmult0 \par\pard\ql\li2205\sb5\sl-264\slmult0 \up0 \expndtw-3\charscal ex100 \ul0\nosupersub\cf4\f5\fs23 a) Customer Identification and Due Diligence \ par\pard\qj \li2205\ri915\sb24\sl-400\slmult0 \up0 \expndtw0\charscalex106 \ul0\ nosupersub\cf1\f2\fs23 The Malaysian regime, like the Australian regime, require s banks to comply with the \line \up0 \expndtw0\charscalex106 customer identific ation and due diligence procedures. Before establishing a business \line \up0 \ expndtw0\charscalex103 relationship with customers, a bank must create a risk pr ofile of a particular customer to \line \up0 \expndtw0\charscalex103 identify mo ney laundering and terrorism financing risks associated with the customer. \par\ pard\qj \li2205\ri915\sb396\sl-405\slmult0 \up0 \expndtw0\charscalex107 A bank i s required to verify the identity of a customer, by reliable means such as the \ line \up0 \expndtw0\charscalex106 identity card, passport or business constituen t documents and include the verification \line \up0 \expndtw0\charscalex102 deta ils in a record. Unlike the Australian regime, the Malaysian regime does not dir ectly \line \up0 \expndtw-1\charscalex100 mention electronic verification. As su ch, this method must be considered by the Malaysian \line \up0 \expndtw-1\charsc alex100 government given the extensive use of information technology in banking business. \par\pard\qj \li2205\ri914\sb397\sl-403\slmult0 \up0 \expndtw-1\charsc alex100 The Malaysian regime allows a bank to conduct its customer due diligence process no later \line \up0 \expndtw0\charscalex100 than 14 days after the busi ness relationship is established, if the risks of money laundering \line \up0 \e xpndtw-1\charscalex100 and terrorism financing are low. The Australian regime, o n the other hand, exempts certain \line \up0 \expndtw0\charscalex107 low-risk de signated services from customer identification procedures, except when a \line \ up0 \expndtw-1\charscalex100 suspicious matter obligation arises ( for instance, when a bank suspects that the customer is \line \up0 \expndtw0\charscalex100 no t who it claims to be). However, at the time of writing, the low-risk designated services \line \up0 \expndtw0\charscalex100 have not yet been identified. \par\ pard\ql \li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb168\sl-264\slmult0 \u p0 \expndtw-3\charscalex100 311 \par\pard\sect\sectd\fs24\paperw11900\paperh1684 0\pard\sb0\sl-240{\bkmkstart Pg321}{\bkmkend Pg321}\par\pard\qj \li2205\sb0\sl-4 03\slmult0 \par\pard\qj\li2205\sb0\sl-403\slmult0 \par\pard\qj\li2205\sb0\sl-403 \slmult0 \par\pard\qj\li2205\ri915\sb238\sl-403\slmult0 \up0 \expndtw0\charscale x106 \ul0\nosupersub\cf1\f2\fs23 The Australian banks are also allowed to exclud e existing customers from customer \up0 \expndtw0\charscalex100 identification p rocedures, except when suspicious matter obligation arises. The customer \up0 \e xpndtw-1\charscalex100 must be identified and verified within 14 days of the sus picious matter obligation arising. \up0 \expndtw-3\charscalex100 It appears that the Malaysian regime is silent about this. However, the Malaysian banks are \up 0 \expndtw-1\charscalex100 required to take the necessary measures to ensure tha t the existing customers\u8217? records are \up0 \expndtw-1\charscalex100 update d and remain relevant. Banks must also conduct regular reviews on the customers\ u8217? \up0 \expndtw-2\charscalex100 record in the following circumstances: \par \pard\ql \li2556\sb132\sl-264\slmult0 \up0 \expndtw-3\charscalex100 \u-3913?\ul0

\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 when a significant transa ction is to take place; \par\pard\ql \li2556\sb156\sl-264\slmult0 \up0 \expndtw2\charscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 when there is a material change in the way the account is operated; \par\pard \ql \li2556\sb156\sl-264\slmult0 \up0 \expndtw-2\charscalex100 \u-3913?\ul0\nosu persub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 when the customer\u8217?s docu mentation standards change substantially; or \par\pard\ql \li2556\sb156\sl-264\s lmult0 \up0 \expndtw-2\charscalex100 \u-3913?\ul0\nosupersub\cf6\f7\fs23 \ul0\n osupersub\cf1\f2\fs23 when it discovers that the information held on the custo mer is insufficient. \par\pard\qj \li2205\sb0\sl-404\slmult0 \par\pard\qj\li2205 \ri914\sb17\sl-404\slmult0 \up0 \expndtw-3\charscalex100 For high risk customers , it appears that the Malaysian and Australian regimes adopt similar \up0 \expnd tw-2\charscalex100 approach. Banks in both countries are required to conduct enh anced due diligence on high \up0 \expndtw0\charscalex102 risk customers. Additio nally, the Malaysian banks are required to obtain approval from \up0 \expndtw0\c harscalex100 senior management before establishing a business relationship with high risk customers. \up0 \expndtw-3\charscalex100 Both regimes also require ban ks to conduct ongoing customer due diligence to identify and \up0 \expndtw-3\cha rscalex100 manage money laundering and terrorism financing risks that they may f ace. \par\pard\ql \li2264\sb0\sl-264\slmult0 \par\pard\ql\li2264\sb0\sl-264\slmu lt0 \par\pard\ql\li2264\sb0\sl-264\slmult0 \par\pard\ql\li2264\sb120\sl-264\slmu lt0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf4\f5\fs23 b) Reporting Oblig ations \par\pard\qj \li2205\ri913\sb19\sl-406\slmult0 \up0 \expndtw-2\charscalex 100 \ul0\nosupersub\cf1\f2\fs23 Like the Australian regime, the Malaysian regime requires banks to report cash transaction \up0 \expndtw0\charscalex102 and susp icious transaction. Malaysian banks are required to report cash transactions of \up0 \expndtw0\charscalex100 RM50,000 and above in a day, whereas in Australia, it is AUD10,000. It is clear that the \up0 \expndtw-1\charscalex100 Malaysian re gime sets a higher limit than the Australian regime. \par\pard\qj \li2205\ri914\ sb399\sl-400\slmult0 \up0 \expndtw-3\charscalex100 It also appears that procedur es relating to cash transaction reports are not directly specified \line \up0 \e xpndtw-1\charscalex100 under AMLATFA. In contrast, the Australian AML/CTF Act cl early states that the report \line \up0 \expndtw0\charscalex104 must contain cer tain details about the customer and the nature of a designated service \line \up 0 \expndtw-1\charscalex100 provided. Although such procedures have already been in place because of the FTRA, the \line \up0 \expndtw-1\charscalex100 AML/CTF Ac t extends such reporting obligations to the transfers of e-currency. This is a \ par\pard\ql \li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb109\sl-264\slmult 0 \up0 \expndtw-3\charscalex100 312 \par\pard\sect\sectd\fs24\paperw11900\paperh 16840\pard\sb0\sl-240{\bkmkstart Pg322}{\bkmkend Pg322}\par\pard\qj \li2205\sb0\ sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl -400\slmult0 \par\pard\qj\li2205\ri916\sb249\sl-400\slmult0 \up0 \expndtw0\chars calex102 \ul0\nosupersub\cf1\f2\fs23 positive approach and need to be considered by the Malaysian regulator because it could \up0 \expndtw0\charscalex102 preven t the potential abuse of e-currency channels by criminals and terrorists. \par\p ard\qj \li2205\ri914\sb397\sl-404\slmult0 \up0 \expndtw0\charscalex100 Malaysian banks are required to report suspicious transactions where there are reasonable \line \up0 \expndtw0\charscalex100 grounds to suspect that such transactions ma y be relevant to money laundering. Australian \line \up0 \expndtw0\charscalex100 banks on the other hand, are required to make a suspicious matter report in cir cumstances \line \up0 \expndtw0\charscalex104 where they actually suspect on rea sonable grounds that any one of those circumstances \line \up0 \expndtw0\charsca lex104 specified under the law has arisen. In this respect, it appears that the Australian regime \line \up0 \expndtw-2\charscalex100 provides clearer guidance to banks in regards to submitting suspicious matters reports. \par\pard\qj \li22 05\ri912\sb397\sl-403\slmult0 \up0 \expndtw0\charscalex108 Under the Malaysian r egime, the timing requirement for submission of a suspicious \up0 \expndtw0\char scalex100 transaction report (STR) is not clearly provided. However it states th at banks are required \up0 \expndtw0\charscalex108 to appoint a compliance offic er who is responsible for channelling all internal STRs \up0 \expndtw-2\charscal

ex100 received from the employee of the branch or subsidiary to FIU. Upon receiv ing any internal \up0 \expndtw-1\charscalex100 STR, the compliance officer shoul d evaluate the grounds for suspicion, and if the suspicion \up0 \expndtw-1\chars calex100 is confirmed, promptly submit the STR to FIU. As such, it may be presum ed that banks are \up0 \expndtw-2\charscalex100 given reasonable time to submit STR to FIU. \par\pard\qj \li2205\ri916\sb396\sl-405\slmult0 \up0 \expndtw-2\char scalex100 In contrast, the Australian banks are required to report suspicious ma tters within three days, \up0 \expndtw0\charscalex103 for money laundering offen ces and 24 hours for terrorism financing offences. It appears \up0 \expndtw0\cha rscalex107 that the timing requirement under the Australian regime is more strin gent. Given the \up0 \expndtw0\charscalex103 complexity of money laundering and terrorism financing process, it can be said that the \up0 \expndtw-3\charscalex1 00 Malaysian approach is more appropriate. \par\pard\ql \li2205\sb0\sl-264\slmul t0 \par\pard\ql\li2205\sb248\sl-264\slmult0 \up0 \expndtw-3\charscalex100 \ul0\n osupersub\cf4\f5\fs23 c) Record-Keeping \par\pard\qj \li2205\ri914\sb21\sl-404\s lmult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs23 The Malaysian ba nks are required to maintain certain records for a period of not less than \line \up0 \expndtw0\charscalex100 six years whereas in Australia, it is seven years. The Malaysian regime also requires banks \line \up0 \expndtw0\charscalex100 to keep the records beyond six years when it is subject to a money laundering or te rrorism \line \up0 \expndtw0\charscalex105 financing investigation or prosecutio n. It appears that this requirement is not available \line \up0 \expndtw0\charsc alex102 under the Australian regime. In this respect, it can be said that the Ma laysian approach is \line \up0 \expndtw0\charscalex102 preferable because normal ly money laundering investigation takes a long time due to the \par\pard\ql \li1 0449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb168\sl-264\slmult0 \up0 \expndtw3\charscalex100 313 \par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\s l-240{\bkmkstart Pg323}{\bkmkend Pg323}\par\pard\qj \li2205\sb0\sl-400\slmult0 \ par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \pa r\pard\qj\li2205\ri916\sb249\sl-400\slmult0 \up0 \expndtw0\charscalex109 \ul0\no supersub\cf1\f2\fs23 complicated nature of the process and the challenges faced by the law enforcement \up0 \expndtw-3\charscalex100 agencies. \par\pard\ql \li2 205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li220 5\sb5\sl-264\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf4\f5\fs23 d ) AML/CTF Program \par\pard\qj \li2205\ri915\sb24\sl-400\slmult0 \up0 \expndtw0\ charscalex100 \ul0\nosupersub\cf1\f2\fs23 Similar to the Australian regime, the Malaysian regime also requires banks to establish an \line \up0 \expndtw0\charsc alex103 AML/CTF program to adequately identify and manage money laundering and t errorism \line \up0 \expndtw-1\charscalex100 financing risks that they may face. But unlike the Australian regime, the Malaysian regime \line \up0 \expndtw0\cha rscalex104 has not introduced the concept of designated business group (DBG) whi ch allows for a \line \up0 \expndtw0\charscalex107 joint AML/CTF program and sha ring of customer identification information. This is \line \up0 \expndtw-2\chars calex100 another positive approach which can be considered by the Malaysian auth orities. \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\ slmult0 \par\pard\ql\li2205\sb5\sl-264\slmult0 \up0 \expndtw-3\charscalex100 \ul 0\nosupersub\cf4\f5\fs23 e) The Role and Function of Financial Intelligence Unit (FIU) \par\pard\qj \li2205\ri914\sb24\sl-400\slmult0 \up0 \expndtw0\charscalex1 03 \ul0\nosupersub\cf1\f2\fs23 Like AUSTRAC, the Malaysian FIU acts as the finan cial intelligence unit as well as the \line \up0 \expndtw-2\charscalex100 nation al AML/CTF regulator. As the financial intelligence unit, the Malaysian FIU acts as a \line \up0 \expndtw0\charscalex103 central agency to receive and analyse s uspicious transactions and cash transactions, and \line \up0 \expndtw-2\charscal ex100 disseminate financial information from these reports to the relevant enfor cement agencies. \par\pard\qj \li2205\ri914\sb398\sl-403\slmult0 \up0 \expndtw0\ charscalex100 As AML/CTF regulator, the Malaysian FIU has a wide range of superv isory, monitoring \line \up0 \expndtw-1\charscalex100 and enforcement powers. It also responsible for formulating and implementing education \line \up0 \expndtw 0\charscalex100 and assistance programs to help banks and other regulate d institutions meet their \line \up0 \expndtw-3\charscalex100 obligations und

er the AML/CTF laws. However, in this respect, it appears that AUSTRAC \line \up 0 \expndtw0\charscalex104 has been more active. For example, it has developed AU STRAC Online, AUSTRAC \line \up0 \expndtw-2\charscalex100 Regulatory Guide, AUST RAC Typologies and Case Studies Report 2007 and Introduction \line \up0 \expndtw -2\charscalex100 to AML/CTF e-learning course. The AUSTRAC Regulatory Guide, in particular, provides \line \up0 \expndtw0\charscalex100 detail guidance on AM L/CTF program, customer identification and due diligence, \line \up0 \expn dtw-3\charscalex100 compliance reporting and correspondent banking. This is a po sitive approach because it has \line \up0 \expndtw-3\charscalex100 greatly assis ted the institutions to understand the money laundering and terrorism financing \line \up0 \expndtw-2\charscalex100 and how to meet their obligations under the legislation. As such, the Malaysian FIU needs \line \up0 \expndtw-3\charscalex1 00 to provide more guidance to facilitate compliance with AML/CTF laws. More im portantly, \line \up0 \expndtw-1\charscalex100 it could minimize the banks\u8217 ? uncertainties and thereby minimize unnecessary compliance \line \up0 \expndtw2\charscalex100 costs. \par\pard\ql \li10449\sb0\sl-264\slmult0 \par\pard\ql\li1 0449\sb168\sl-264\slmult0 \up0 \expndtw-3\charscalex100 314 \par\pard\sect\sectd \fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart Pg324}{\bkmkend Pg324}\ par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \p ar\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par \pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb241\sl-264\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf4\f5\fs23 f) Non-Compliance with AML /CTF Obligations \par\pard\qj \li2205\ri914\sb22\sl-403\slmult0 \up0 \expndtw-1\ charscalex100 \ul0\nosupersub\cf1\f2\fs23 The Malaysian regime provides various penalties for non-compliance with the AML/CTF \line \up0 \expndtw0\charscalex102 obligations. The penalties are severe and apply to both the bank and its employ ees. For \line \up0 \expndtw-2\charscalex100 instance, a bank employee may be pe rsonally liable to a fine not exceeding RM100,000 or \line \up0 \expndtw0\charsc alex100 to imprisonment for a term not exceeding six months or to both. To make matters worse, \line \up0 \expndtw-4\charscalex100 BNM may revoke or suspend a b ank\u8217?s licence if it has been convicted under AMLATFA. It \line \up0 \expnd tw0\charscalex107 appears that the Malaysian regime adopts both civil and crimin al penalties for non-\line \up0 \expndtw-5\charscalex100 compliance. \par\pard\q j \li2205\ri914\sb397\sl-403\slmult0 \up0 \expndtw0\charscalex100 In contrast, t he Australian regime\ul0\nosupersub\cf24\f25\fs23 \ul0\nosupersub\cf1\f2\fs23 a dopts a civil penalty regime for breach of AML/CTF \line \up0 \expndtw-1\charsca lex100 obligations, with maximum penalty of AUD11 millions for a body corporate, or AUD2.2 \line \up0 \expndtw0\charscalex104 million in all other cases. It ap pears that the Australian regime recognizes that a civil \line \up0 \expndtw-1\c harscalex100 penalty regime is more appropriate for a regulatory scheme that pla ces obligations largely \line \up0 \expndtw-2\charscalex100 on banks and financi al institutions. This is a good approach because it will be much easier \line \u p0 \expndtw-2\charscalex100 for the law enforcement authority to punish the offe nder where it will only be necessary to \line \up0 \expndtw-2\charscalex100 esta blish on the balance of probabilities that a person contravened a civil penalty provision. \par\pard\li2205\sb0\sl-264\slmult0\par\pard\li2205\sb0\sl-264\slmult 0\par\pard\li2205\sb2\sl-264\slmult0\fi0\tx2906 \up0 \expndtw-3\charscalex100 \u l0\nosupersub\cf4\f5\fs23 7.8\tab \up0 \expndtw-3\charscalex100 Summary\par\pard \qj \li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205\ri915\sb22\sl-402\slmult0 \up 0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 Australia has a comprehen sive package of anti-money laundering laws which can be found \line \up0 \expndt w0\charscalex103 in a number of statutes such as the Criminal Code, the POCA 200 2, MACMA and the \line \up0 \expndtw0\charscalex105 FTRA. However, the FTRA has now been replaced by the AML/CTF Act 2006. The \line \up0 \expndtw-3\charscalex1 00 enactment of the AML/CTF Act is vital because the anti-money laundering measu res under \line \up0 \expndtw-1\charscalex100 the FTRA were inadequate and did n ot fully complied with the international best practice \line \up0 \expndtw0\char scalex107 set by FATF. Apart from compliance with the accepted international sta ndards, the \line \up0 \expndtw-2\charscalex100 enactment of AML/CTF Act is seen as a proactive approach of the Australian government \line \up0 \expndtw-3\char

scalex100 to protect the integrity of its financial system from being abused by criminals and terrorists. \line \up0 \expndtw0\charscalex102 More importantly, t he AML/CTF Act ensures that Australian businesses are not barred \line \up0 \exp ndtw-5\charscalex100 from participating internationally. \par\pard\ql \li2205\sb 0\sl-360\slmult0 \par\pard\ql\li2205\ri915\sb73\sl-360\slmult0\tx10449 \up0 \exp ndtw0\charscalex102 It can be said that the passage of the AML/CTF Act will grea tly change the AML/CTF \line \up0 \expndtw0\charscalex102 regime in Australia. T he most important change is a shift from a prescriptive reporting \line\tab \up0 \expndtw0\charscalex102 315 \par\pard\sect\sectd\fs24\paperw11900\paperh16840\p ard\sb0\sl-240{\bkmkstart Pg325}{\bkmkend Pg325}\par\pard\qj \li2205\sb0\sl-400\ slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\sl mult0 \par\pard\qj\li2205\ri915\sb249\sl-400\slmult0 \up0 \expndtw0\charscalex10 4 \ul0\nosupersub\cf1\f2\fs23 regime to a risk-based approach. It appears that t he Act makes risk management a legal \up0 \expndtw0\charscalex100 requirement. A s such, it places significant obligations on the board of directors and senior \ up0 \expndtw0\charscalex107 management of banks to ensure that their systems can control money laundering and \up0 \expndtw-3\charscalex100 terrorism financing risks effectively. \par\pard\qj \li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205\r i914\sb17\sl-402\slmult0 \up0 \expndtw0\charscalex104 It has been suggested that the risk-based AML/CTF legislation is a better approach that \line \up0 \expndt w0\charscalex107 could minimize the compliance cost faced by the regulated insti tutions. Therefore, it \line \up0 \expndtw0\charscalex108 becomes a key responsi bility of AUSTRAC, as the national AML/CTF regulator, to \line \up0 \expndtw0\ch arscalex100 provide practical and workable guidance for the regulated institutio ns in implementing the \line \up0 \expndtw-2\charscalex100 law. This is utmost i mportant because unworkable legislation would only place unnecessary \line \up0 \expndtw0\charscalex112 burden on the regulated institutions, thereby will affec t the business progress and \line \up0 \expndtw0\charscalex100 competition. For this reason, continuing consultation and cooperation between AUSTRAC \line \up0 \expndtw0\charscalex104 and the regulated institutions is necessary to mini mize unworkable obligation and \line \up0 \expndtw-3\charscalex100 institutio ns uncertainties. \par\pard\qj \li2205\ri913\sb396\sl-405\slmult0 \up0 \expndtw2\charscalex100 A brief comparative analysis of the Malaysian and Australian AML /CTF regime shows that \up0 \expndtw-2\charscalex100 generally there is not much difference in relation to AML/CTF obligations imposed by both \up0 \expndtw-1\c harscalex100 regimes. This is because the laws that have been enacted in both co untries are based on the \up0 \expndtw0\charscalex104 FATF standards which are a ccepted as the international best practice in the war against \up0 \expndtw-3\ch arscalex100 money laundering and terrorism financing. \par\pard\ql \li10449\sb0\ sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb0\ sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb0\ sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb0\ sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb0\ sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb0\ sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb0\ sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb0\ sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb0\ sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb10 0\sl-264\slmult0 \up0 \expndtw-3\charscalex100 316 \par\pard\sect\sectd\fs24\pap erw11900\paperh16840\pard\sb0\sl-240{\bkmkstart Pg326}{\bkmkend Pg326}\par\pard\ ql \li5710\sb0\sl-264\slmult0 \par\pard\ql\li5710\sb0\sl-264\slmult0 \par\pard\q l\li5710\sb0\sl-264\slmult0 \par\pard\ql\li5710\sb0\sl-264\slmult0 \par\pard\ql\ li5710\sb0\sl-264\slmult0 \par\pard\ql\li5710\sb0\sl-264\slmult0 \par\pard\ql\li 5710\sb217\sl-264\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf4\f5\f s23 CONCLUSION \par\pard\qj \li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205\sb0\s l-402\slmult0 \par\pard\qj\li2205\ri912\sb78\sl-402\slmult0 \up0 \expndtw0\chars calex109 \ul0\nosupersub\cf1\f2\fs23 Money laundering refers to an act of hiding or disguising the illicit funds which are \line \up0 \expndtw0\charscalex104 ge nerated from a criminal activity. It helps distance criminals from the proceeds of the \line \up0 \expndtw0\charscalex100 underlying crimes so that they can enj

oy their ill-gotten gains without fear of prosecution \line \up0 \expndtw0\chars calex109 and confiscation. Money laundering not only encourages crime, but also has a very \line \up0 \expndtw0\charscalex105 corrosive impact on financial inst itutions. The underlying rationale behind anti-money \line \up0 \expndtw0\charsc alex106 laundering laws is that if money laundering is criminalized and criminal proceeds are \line \up0 \expndtw0\charscalex105 confiscated, crime will no long er pay and there will be less motivation for criminals to \line \up0 \expndtw0\c harscalex100 commit crimes. Furthermore, combating money laundering is not just a matter of fighting \line \up0 \expndtw0\charscalex106 crime, but also preservi ng the integrity of banks and financial institutions from being \line \up0 \expn dtw0\charscalex103 abused by money launderers. Therefore, many of the efforts to combat the menace have \line \up0 \expndtw0\charscalex103 concentrated on the m easures adopted by banks and financial institutions. \par\pard\qj \li2205\sb0\sl -400\slmult0 \par\pard\qj\li2205\ri915\sb20\sl-400\slmult0 \up0 \expndtw0\charsc alex110 In recent years many countries have implemented anti-money laundering la ws and \line \up0 \expndtw0\charscalex102 Malaysia is no exception. The Anti Mon ey Laundering Act (AMLA) was passed in 2001 \line \up0 \expndtw0\charscalex100 a nd came into force in 2002. In response to the global fight against terrorism, A MLA was \line \up0 \expndtw0\charscalex108 amended by the Anti-Money Laundering (Amendment) Act in 2003. The amending \line \up0 \expndtw0\charscalex100 legisla tion extended the anti-money laundering mechanism to include measures to combat \line \up0 \expndtw0\charscalex102 terrorism financing. Since \up0 \expndtw0\cha rscalex106 6 March 2007, AMLA has been renamed the Anti-Money \par\pard\qj \li22 05\ri915\sb0\sl-410\slmult0 \up0 \expndtw0\charscalex102 Laundering and Anti-Ter rorism Financing Act 2001 (AMLATFA). AMLATFA imposes \up0 \expndtw-2\charscalex1 00 AML/CTF obligations on banks and financial institutions. Apart from AMLATFA, they are \up0 \expndtw-3\charscalex100 also subject to the various AML/CTF guide lines issued by BNM. \par\pard\qj \li2205\ri915\sb387\sl-404\slmult0 \up0 \expnd tw0\charscalex105 The enactment of AMLATFA has filled an important a gap in the fight against money \line \up0 \expndtw0\charscalex102 laundering in Malaysia. A MLATFA translates the international standards on anti-money \line \up0 \expndtw0 \charscalex102 laundering and counter-terrorism financing measures into a nation al law. By comparison \line \up0 \expndtw0\charscalex104 with similar laws in ot her countries, AMLATFA is comprehensive and up-to-date. It is \line \up0 \expndt w0\charscalex100 considered an innovative and comprehensive legislation as it co vers all aspects of criminal \line \up0 \expndtw0\charscalex100 proceeding relat ed to money laundering and terrorism financing. Apart from combating \par\pard\q l \li10449\sb132\sl-264\slmult0 \up0 \expndtw-3\charscalex100 317 \par\pard\sect \sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart Pg327}{\bkmkend P g327}\par\pard\qj \li2205\sb0\sl-405\slmult0 \par\pard\qj\li2205\sb0\sl-405\slmu lt0 \par\pard\qj\li2205\sb0\sl-405\slmult0 \par\pard\qj\li2205\ri915\sb230\sl-40 5\slmult0 \up0 \expndtw0\charscalex107 \ul0\nosupersub\cf1\f2\fs23 money launder ing, AMLATFA has also introduced several powerful and innovative \up0 \expndtw0\ charscalex102 measures to facilitate the recovery of illegal proceeds from almos t any serious crime. As \up0 \expndtw-2\charscalex100 such, AMLATFA can be consi dered a major new tool in the fight against criminal activities \up0 \expndtw0\c harscalex102 in Malaysia. By using AMLATFA as a strategic approach, the law enfo rcement agencies \up0 \expndtw0\charscalex102 can effectively detect and confisc ate the proceeds of crimes. \par\pard\qj \li2205\ri915\sb400\sl-400\slmult0 \up0 \expndtw0\charscalex110 The AML/CTF measures imposed by AMLATFA apply uniformly to all financial \line \up0 \expndtw0\charscalex102 institutions and designated non-financial institutions and professions. They also apply to \line \up0 \expn dtw0\charscalex106 the offshore banks at the Malaysian Offshore Financial Centre which is known as the \line \up0 \expndtw0\charscalex105 Labuan International B usiness and Financial Centre \up0 \expndtw0\charscalex107 (IBFC). While the offs hore and \par\pard\qj \li2205\ri915\sb0\sl-405\slmult0 \up0 \expndtw0\charscalex 107 onshore banks have different regulations for the establishment and operation of their \up0 \expndtw-1\charscalex100 business, it appears that they are gover ned by the very similar AML/CTF laws. This can be \up0 \expndtw-2\charscalex100 considered a positive approach given the negative perception that OFCs are commo

nly used \up0 \expndtw-1\charscalex100 to facilitate money laundering. More impo rtantly, it will reflect the transparency of Labuan \up0 \expndtw-2\charscalex10 0 IBFC as a clean and reputable centre for international business. \par\pard\qj \li2205\ri911\sb394\sl-402\slmult0 \up0 \expndtw0\charscalex109 With the impleme ntation of AMLATFA, Malaysian banks need to comply with an \line \up0 \expndtw-1 \charscalex100 increasing number of regulations and guidelines to counter money laundering and terrorism \line \up0 \expndtw0\charscalex100 financing. Banks are required to identify and verify customers, report cash and suspicious \line \up 0 \expndtw0\charscalex102 transactions, keep records and establish compliance pr ogram. Apart from the AML/CTF \line \up0 \expndtw0\charscalex105 obligations, ba nkers must also be aware of the tipping-off offence which prohibits the \line \u p0 \expndtw0\charscalex100 disclosure of information which is likely to prejudic e money laundering investigation. It is \line \up0 \expndtw0\charscalex100 appre ciated that the AML/CTF measures are critical to protect the stability and integ rity of \line \up0 \expndtw0\charscalex100 Malaysian banking system. However, on e question that needs to be asked is whether these \line \up0 \expndtw0\charscal ex105 obligations are actually effective in preventing money launderers from usi ng banks or \line \up0 \expndtw-2\charscalex100 whether they simply put unreason able burdens on the banks and their customers? \par\pard\qj \li2205\sb0\sl-400\s lmult0 \par\pard\qj\li2205\ri915\sb20\sl-400\slmult0 \up0 \expndtw0\charscalex10 2 It is clear from the findings of the study that compliance with AML/CTF obliga tions can \line \up0 \expndtw-1\charscalex100 increase complexity of banking ope rations. Initially, banks need to comply with substantial \line \up0 \expndtw0\c harscalex100 changes in customer identification and due diligence (CDD) procedur es.\ul0\nosupersub\cf6\f7\fs23 \ul0\nosupersub\cf1\f2\fs23 This requirement \li ne \up0 \expndtw0\charscalex107 produces significant shift in the ways banks int eract with their existing and potential \line \up0 \expndtw0\charscalex100 custo mers. For example, banks are required to obtain more detailed information of hig her \par\pard\ql \li10449\sb33\sl-264\slmult0 \up0 \expndtw-3\charscalex100 318 \par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart Pg3 28}{\bkmkend Pg328}\par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\s b0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri9 18\sb249\sl-400\slmult0 \up0 \expndtw0\charscalex105 \ul0\nosupersub\cf1\f2\fs23 risk customers. However, it appears that the examples of higher risk customers are not \up0 \expndtw0\charscalex102 clearly defined under the laws. Indeed, wit hout clear guidelines, it is doubtful how banks \up0 \expndtw0\charscalex102 cou ld effectively implement the CDD requirements. \par\pard\qj \li2205\sb0\sl-400\s lmult0 \par\pard\qj\li2205\ri914\sb20\sl-400\slmult0 \up0 \expndtw0\charscalex10 0 Banks are also required to monitor customer activity to identify any unusual a ctivity that \line \up0 \expndtw-1\charscalex100 may be indicative of money laun dering and terrorism financing. However, experience has \line \up0 \expndtw0\cha rscalex100 shown that transaction monitoring has been the main cause of increase d AML/CTF cost \line \up0 \expndtw0\charscalex100 faced by banks. Unfortunately, despite the substantial costs incurred by banks, they still \line \up0 \expndtw -2\charscalex100 face a significant challenge in monitoring customer\u8217?s tra nsaction and account status across \line \up0 \expndtw-2\charscalex100 several d ifferent countries particularly due to banking secrecy or data protection rules. \par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\ri913\sb20\sl-400\s lmult0 \up0 \expndtw0\charscalex105 The requirement of suspicious transaction re port (STR) also poses several issues and \line \up0 \expndtw-3\charscalex100 cha llenges. Obviously, it is hard for banks to justify STR because it is very subje ctive. This \line \up0 \expndtw-1\charscalex100 problem would also lead to mista ken reporting and defensive reporting. If left unchecked, \line \up0 \expndtw-3\ charscalex100 this would result in a flood of reporting and thereby may jeopardi ze the effectiveness of the \line \up0 \expndtw0\charscalex100 STR regime. To ma ke matters worse, the UK experience has shown that the STR system \line \up0 \ex pndtw0\charscalex103 has certain weaknesses and under-utilised by legal enforcem ent agencies. Therefore, a \line \up0 \expndtw0\charscalex100 continuous colla borative relationship between AML/CTF regulator, other legal \line \ up0 \expndtw0\charscalex100 enforcement agencies and the banking industry is vit

al to avoid this problem in Malaysia. \par\pard\qj \li2205\sb0\sl-400\slmult0 \p ar\pard\qj\li2205\ri916\sb20\sl-400\slmult0 \up0 \expndtw-1\charscalex100 The AM L/CTF laws also require banks to report suspected terrorism financing activities . \line \up0 \expndtw-1\charscalex100 However, experience has shown that banks a re struggling to adapt anti-money laundering \line \up0 \expndtw0\charscalex103 mechanisms to the peculiarities of terrorism financing. Given the differences be tween \line \up0 \expndtw-2\charscalex100 money laundering and terrorism financi ng, it requires deep skills from banks employees to \line \up0 \expndtw-3\charsc alex100 detect the terrorist funds as it needs much closer analysis of sources a nd destinations of the \line \up0 \expndtw0\charscalex107 funds. Undoubtedly, t his obligation places an additional burden on banks and their \line \up0 \expndt w-5\charscalex100 employees. \par\pard\qj \li2205\sb0\sl-400\slmult0 \par\pard\q j\li2205\ri913\sb20\sl-400\slmult0 \up0 \expndtw0\charscalex109 Banks also face challenges to comply with the requirement of AML/CTF training \line \up0 \expndt w-3\charscalex100 programs. While properly trained employees are known as the be st AML/CTF control, it is \line \up0 \expndtw0\charscalex100 evident that there is a serious deficiency of training programs conducted by the UK and \line \up0 \expndtw0\charscalex100 Australian banks. As such, if this evidence is anything to go by, there is a strong likelihood \par\pard\ql \li10449\sb33\sl-264\slmult0 \up0 \expndtw-3\charscalex100 319 \par\pard\sect\sectd\fs24\paperw11900\paperh1 6840\pard\sb0\sl-240{\bkmkstart Pg329}{\bkmkend Pg329}\par\pard\qj \li2205\sb0\s l-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl400\slmult0 \par\pard\qj\li2205\ri916\sb249\sl-400\slmult0 \up0 \expndtw0\charsc alex102 \ul0\nosupersub\cf1\f2\fs23 that Malaysian banks are no better than thei r overseas counterparts in respect of training \up0 \expndtw0\charscalex100 prog rams. Given the complex and sophisticated nature of money laundering and terrori sm \up0 \expndtw0\charscalex100 financing, this deficiency needs to be addressed seriously by Malaysian banks. \par\pard\qj \li2205\sb0\sl-402\slmult0 \par\pard \qj\li2205\ri916\sb17\sl-402\slmult0 \up0 \expndtw0\charscalex105 The findings o f the study also have shown that the AML/CTF laws can affect banks\u8217? \line \up0 \expndtw0\charscalex100 relationship with customers and other banks. For ex ample, the disclosure of customers\u8217? \line \up0 \expndtw0\charscalex100 inf ormation has overridden the principles of banking secrecy and thereby can underm ine \line \up0 \expndtw0\charscalex100 customer trust. At first glance, it appea rs that AMLATFA makes greater inroads into the \line \up0 \expndtw-3\charscalex1 00 secrecy rule when compared to the common law or BAFIA. Banks can disclose cus tomer\u8217?s \line \up0 \expndtw0\charscalex103 information on even grounds of suspicion of money laundering or terrorism financing \line \up0 \expndtw0\charsc alex107 activities. However, on closer inspection this is not really true as the re are limits to \line \up0 \expndtw-2\charscalex100 disclosure. Banking secrecy is still preserved except where detecting and deterring money \line \up0 \expnd tw-2\charscalex100 laundering outweighs the overall need to protect the customer \u8217?s information. \par\pard\qj \li2205\ri914\sb398\sl-402\slmult0 \up0 \expn dtw0\charscalex105 But despite the limits imposed on disclosure, there are some aspects of the reporting \line \up0 \expndtw0\charscalex100 obligations which wo uld make customers wonder whether they can rely on the banks to \line \up0 \expn dtw0\charscalex104 keep their affairs secret. Traditionally the banker-customer relationship was one built \line \up0 \expndtw0\charscalex103 around mutual trus t, but with the introduction of AML/CTF laws it appears that it will \line \up0 \expndtw-3\charscalex100 eventually be replaced with one built around mutual sus picion. Given the growing threat of \line \up0 \expndtw0\charscalex104 global te rrorism and money laundering, it must be said that this is the price to be paid \line \up0 \expndtw0\charscalex104 because without a flow of information from th e banks, the effective prevention of the \line \up0 \expndtw-5\charscalex100 men ace is not possible. \par\pard\qj \li2205\ri915\sb398\sl-402\slmult0 \up0 \expnd tw-3\charscalex100 It also appears the AML/CTF laws have placed a serious obstac le to correspondent banking \up0 \expndtw0\charscalex106 relationships. The laws have made it more difficult for Malaysian banks to maintain \up0 \expndtw0\char scalex100 correspondent banking relationship with foreign banks. The banks are n ow under greater \up0 \expndtw0\charscalex108 legal requirements to conduct enha

nce due diligence reviews of their foreign bank \up0 \expndtw0\charscalex100 cus tomers, including obtaining information on the foreign bank\u8217?s management, finances, \up0 \expndtw0\charscalex102 reputation, regulatory environment and AM L/CTF measures. It must be said that these \up0 \expndtw0\charscalex102 stringen t rules can curtail the ability of Malaysian banks to expand their correspondent \up0 \expndtw-5\charscalex100 banking networks and overseas business. \par\pard \ql \li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb168\sl-264\slmult0 \up0 \ expndtw-3\charscalex100 320 \par\pard\sect\sectd\fs24\paperw11900\paperh16840\pa rd\sb0\sl-240{\bkmkstart Pg330}{\bkmkend Pg330}\par\pard\qj \li2205\sb0\sl-403\s lmult0 \par\pard\qj\li2205\sb0\sl-403\slmult0 \par\pard\qj\li2205\sb0\sl-403\slm ult0 \par\pard\qj\li2205\ri913\sb238\sl-403\slmult0 \up0 \expndtw0\charscalex103 \ul0\nosupersub\cf1\f2\fs23 Furthermore, the obligation to report suspicious tr ansactions and to avoid tipping off a \line \up0 \expndtw-2\charscalex100 custom er suspected of money laundering can expose the bank to liability as a construct ive \line \up0 \expndtw-4\charscalex100 trustee. However, from the UK experienc e, it appears that the courts approach the matter in \line \up0 \expndtw0\charsc alex107 a way which encourages banks and other regulated institutions to report suspicious \line \up0 \expndtw0\charscalex102 transaction without fear of constr uctive trustee liability. Normally, when banks comply \line \up0 \expndtw0\chars calex109 with the reporting requirement and act in accordance with the relevant authority\u8217?s \line \up0 \expndtw0\charscalex100 directions, the risk to be held liable as a constructive trustee is very slight. Indeed, this is \line \up0 \expndtw-2\charscalex100 vitally important to protect the soundness and sanctit y of the banking industry. At present, \line \up0 \expndtw0\charscalex105 it is not clear whether the banks in Malaysia could possibly face the same problems. \ line \up0 \expndtw-3\charscalex100 However, in complying with the AML/CTF obliga tions, AMLATFA clearly protects banks \line \up0 \expndtw0\charscalex100 from be ing exposed to civil, criminal or even disciplinary proceedings. This is a posit ive \line \up0 \expndtw0\charscalex108 approach and certainly supports banks in their efforts to comply with the reporting \line \up0 \expndtw-5\charscalex100 r equirements under the AML/CTF laws. \par\pard\qj \li2205\ri915\sb398\sl-402\slmu lt0 \up0 \expndtw0\charscalex102 It is also clear that the AML/CTF laws pose sig nificant legal risks on Malaysian banks. \up0 \expndtw0\charscalex107 Non-compli ance with the AML/CTF requirements can expose the banks to serious \up0 \expndtw 0\charscalex104 penalties, such as substantial amount of fines, imprisonment and even revocation of a \up0 \expndtw0\charscalex106 bank\u8217?s license. Besides , non-compliance with the laws would also affect the banks\u8217? \up0 \expndtw0 \charscalex100 reputations. Once a bank\u8217?s reputation is tarnished, it can have serious implication on its \up0 \expndtw-3\charscalex100 business. As such, it is critical for the banks to implement effective AML/CTF measures to \up0 \e xpndtw-2\charscalex100 mitigate and manage money laundering and terrorism financ ing risks associated with their \up0 \expndtw-3\charscalex100 products, services , customers and transactions. \par\pard\qj \li2205\ri916\sb396\sl-405\slmult0 \u p0 \expndtw0\charscalex110 Experience has shown that banks across the globe spen t high cost for AML/CTF \up0 \expndtw-1\charscalex100 compliance. Judging from t he experience, it appears that the amounts spent by Malaysian \up0 \expndtw0\cha rscalex100 banks could be very significant. More importantly, given the increase d costs incurred by \up0 \expndtw-3\charscalex100 banks, it is likely to see the se costs being passed along to the customers. Unfortunately, it is \up0 \expndtw -4\charscalex100 still unclear at this stage whether these costs outweigh the be nefits. \par\pard\qj \li2205\ri916\sb400\sl-400\slmult0 \up0 \expndtw-2\charscal ex100 It is undeniable finding a right balance between the benefits of the AML/C TF laws and the \line \up0 \expndtw0\charscalex103 costs to banks and their cust omers is not easy. However, it must be borne in mind that \line \up0 \expndtw0\c harscalex103 failure to find the right balance will not only create significant compliance problems for \par\pard\ql \li10449\sb33\sl-264\slmult0 \up0 \expndtw3\charscalex100 321 \par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\s l-240{\bkmkstart Pg331}{\bkmkend Pg331}\par\pard\qj \li2205\sb0\sl-400\slmult0 \ par\pard\qj\li2205\sb0\sl-400\slmult0 \par\pard\qj\li2205\sb0\sl-400\slmult0 \pa r\pard\qj\li2205\ri916\sb249\sl-400\slmult0 \up0 \expndtw0\charscalex103 \ul0\no

supersub\cf1\f2\fs23 banks, but also has the potential to adversely affect the s tability, competitive and proper \line \up0 \expndtw0\charscalex104 function of the financial system. Indeed, it is unreasonable if the toughness of the laws \l ine \up0 \expndtw-1\charscalex100 seems to fall on the law abiding and conscient ious banks and their customers rather than on \line \up0 \expndtw-2\charscalex10 0 the criminals. \par\pard\qj \li2205\sb0\sl-402\slmult0 \par\pard\qj\li2205\ri9 15\sb17\sl-402\slmult0 \up0 \expndtw-1\charscalex100 For this reason, it is crit ical for the Malaysian government to constitute a flexible, workable \line \up0 \expndtw0\charscalex100 and effective AML/CTF framework. In its effort to ensure effective implementation of the \line \up0 \expndtw0\charscalex100 laws, it app ears that the Malaysian government has moved away from a prescription-based \lin e \up0 \expndtw0\charscalex104 regime to risk-based AML/CTF regime. This approac h is a welcome change because it \line \up0 \expndtw0\charscalex105 recognizes t hat banks and other regulated institutions are in the best position to design \l ine \up0 \expndtw-1\charscalex100 AML/CTF programs that address the specific ris ks that they may face. This approach could \line \up0 \expndtw0\charscalex102 al so avoid over-regulation where no real money laundering risks occurred. However, the \line \up0 \expndtw0\charscalex102 success of this approach is heavily depe ndant on strong corporate governance and senior \line \up0 \expndtw0\charscalex1 02 management accountability. \par\pard\qj \li2205\ri915\sb398\sl-402\slmult0 \u p0 \expndtw0\charscalex103 Therefore, at this stage, it is critical for the mana gement of banks to understand how the \line \up0 \expndtw-2\charscalex100 AML/CT F obligations apply to their operations and establish effective AML/CTF program. \line \up0 \expndtw0\charscalex100 From the findings of the study, it is clear that more detailed guidance is required from the \line \up0 \expndtw0\charscalex 112 AML/CTF regulator to enable banks and their employees to discharge their leg al \line \up0 \expndtw0\charscalex107 obligations properly. The AML/CTF regulato r should consider adopting some of the \line \up0 \expndtw0\charscalex106 guidel ines issued by its Australian counterpart. Undoubtedly, effective coordination \line \up0 \expndtw-1\charscalex100 between AML/CTF regulator and the banking i ndustry is vital to minimize problems faced \line \up0 \expndtw-1\charscalex100 by the banks and thereby to ensure effective implementation of the laws. \par\pa rd\ql \li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \par\p ard\ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \par\p ard\ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \par\p ard\ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \par\p ard\ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \par\p ard\ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \par\p ard\ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb220\sl-264\slmult0 \up0 \expndtw-3\charscalex100 322 \par\pard\sect\sectd\fs24\paperw11900\paperh16840\ pard\sb0\sl-240{\bkmkstart Pg332}{\bkmkend Pg332}\par\pard\ql \li5581\sb0\sl-264 \slmult0 \par\pard\ql\li5581\sb0\sl-264\slmult0 \par\pard\ql\li5581\sb0\sl-264\s lmult0 \par\pard\ql\li5581\sb0\sl-264\slmult0 \par\pard\ql\li5581\sb0\sl-264\slm ult0 \par\pard\ql\li5581\sb0\sl-264\slmult0 \par\pard\ql\li5581\sb217\sl-264\slm ult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf4\f5\fs23 BIBLIOGRAPHY \par \pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\ pard\ql\li2205\sb68\sl-264\slmult0 \up0 \expndtw-3\charscalex100 1. Articles \pa r\pard\qj \li2205\sb0\sl-260\slmult0 \par\pard\qj\li2205\ri916\sb20\sl-260\slmul t0 \up0 \expndtw0\charscalex106 \ul0\nosupersub\cf1\f2\fs23 A Y Shehu \u8216?Int ernational Initiatives against Corruption and Money Laundering: An \up0 \expndtw -5\charscalex100 Overview.\u8217? (2005) 12(3) \ul0\nosupersub\cf7\f8\fs23 Journ al of Financial Crime\ul0\nosupersub\cf1\f2\fs23 233 \par\pard\qj \li2205\sb0\s l-270\slmult0 \par\pard\qj\li2205\ri915\sb2\sl-270\slmult0 \up0 \expndtw0\charsc alex102 Alison S Bachus, \u8216?From Drugs to Terrorism: The Focus Shift in the International Fight \up0 \expndtw0\charscalex105 against Money Laundering After September 11, 2001\u8217? (2004) 21 \ul0\nosupersub\cf7\f8\fs23 Arizona Journal of \up0 \expndtw-5\charscalex100 International and Comparative Law\ul0\nosupersu b\cf1\f2\fs23 835 \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\s b11\sl-264\slmult0\tx3853 \up0 \expndtw-1\charscalex100 Alyssa Phillips, \tab \u p0 \expndtw0\charscalex103 \u8216?Terrorists Financing Laws Won\u8217?t Wash. It

Ain\u8217?t Money laundering\u8217? \par\pard\ql \li2205\sb1\sl-259\slmult0 \up 0 \expndtw-3\charscalex100 (2004) 23(1) \ul0\nosupersub\cf7\f8\fs23 University o f Queensland Law Journal\ul0\nosupersub\cf1\f2\fs23 81 \par\pard\qj \li2205\sb0 \sl-260\slmult0 \par\pard\qj\li2205\ri915\sb21\sl-260\slmult0 \up0 \expndtw0\cha rscalex102 Andrea Beatty and James Moore, \u8216?Anti-Money Laundering Reform: A Review\u8217? (2006) \up0 \expndtw-5\charscalex100 21(8) \ul0\nosupersub\cf7\f8 \fs23 Australian Banking and Finance Law Bulletin\ul0\nosupersub\cf1\f2\fs23 10 3 \par\pard\qj \li2205\ri916\sb264\sl-280\slmult0 \up0 \expndtw0\charscalex100 A ndrew Haynes, \u8216?Money Laundering and Changes in International Banking Regul ation\u8217? \up0 \expndtw-1\charscalex100 (1993) 11 \ul0\nosupersub\cf7\f8\fs23 Journal of International Banking Law\ul0\nosupersub\cf1\f2\fs23 455 \par\pard\ qj \li2205\ri1091\sb240\sl-280\slmult0 \up0 \expndtw-3\charscalex100 Andrew Hayn es, \u8216?The Wolfsberg Principles - An Analysis\u8217? (2004) 7(3) \ul0\nosupe rsub\cf7\f8\fs23 Journal of Money \up0 \expndtw-4\charscalex100 Laundering Contr ol\ul0\nosupersub\cf1\f2\fs23 207 \par\pard\qj \li2205\sb0\sl-260\slmult0 \par\ pard\qj\li2205\ri915\sb17\sl-260\slmult0 \up0 \expndtw-2\charscalex100 Andrew Ja ckson, \u8216?Recognizing and Reporting Money Laundering: How Well Should You \u p0 \expndtw-2\charscalex100 Know Your Customer?\u8217? (2000) 7(4) \ul0\nosupers ub\cf7\f8\fs23 Journal of Money Laundering Control\ul0\nosupersub\cf1\f2\fs23 3 17 \par\pard\qj \li2205\sb0\sl-270\slmult0 \par\pard\qj\li2205\ri915\sb2\sl-270\ slmult0 \up0 \expndtw0\charscalex100 Angela Veng Mei Leong, \u8216?Anti-Money La undering Measures in the United Kingdom: A \line \up0 \expndtw0\charscalex100 Re view of Recent Legislation and FSA\u8217?s Risk-Based Approach\u8217? (2007) 28( 2) \ul0\nosupersub\cf7\f8\fs23 Company \line \up0 \expndtw0\charscalex100 Lawyer \ul0\nosupersub\cf1\f2\fs23 35 \par\pard\qj \li2205\sb0\sl-260\slmult0 \par\par d\qj\li2205\ri914\sb19\sl-260\slmult0 \up0 \expndtw-3\charscalex100 Annalie Vick ers, \u8216?Protecting from Money Laundering with Minimum Impact\u8217? (2005) 2 2(3) \up0 \expndtw-4\charscalex100 \ul0\nosupersub\cf7\f8\fs23 Business Informat ion Review \ul0\nosupersub\cf1\f2\fs23 166 \par\pard\qj \li2205\sb0\sl-260\slmul t0 \par\pard\qj\li2205\ri915\sb20\sl-260\slmult0 \up0 \expndtw0\charscalex102 An thony Kennedy, \u8216?An Evaluation of the Recovery of Criminal Proceeds in the United \up0 \expndtw0\charscalex102 Kingdom\u8217? (2007) 10(1) \ul0\nosupersub\ cf7\f8\fs23 Journal of Money Laundering Control\ul0\nosupersub\cf1\f2\fs23 33 \ par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb13\sl-264\slmult0\t x4219 \up0 \expndtw0\charscalex100 Anthony Kennedy, \tab \up0 \expndtw0\charscal ex107 \u8216?Dead Fish across the Trail: Illustrations of Money Laundering \par\ pard\ql \li2205\sb16\sl-264\slmult0 \up0 \expndtw-3\charscalex100 Methods\u8217? (2005) 8(4) \ul0\nosupersub\cf7\f8\fs23 Journal of Money Laundering Control\ul0 \nosupersub\cf1\f2\fs23 305 \par\pard\ql \li2205\sb256\sl-264\slmult0\tx4096 \u p0 \expndtw0\charscalex101 Anthony Smellie, \tab \up0 \expndtw0\charscalex106 \u 8216?Prosecutorial Challenges in Freezing and Forfeiting Proceeds of \par\pard\q j \li2205\ri916\sb20\sl-260\slmult0 \up0 \expndtw0\charscalex100 Transnational C rime and the Use of International Asset Sharing to Promote International \up0 \e xpndtw-1\charscalex100 Cooperation.\u8217? (2007) 8(2) \ul0\nosupersub\cf7\f8\f s23 Journal of Money Laundering Control\ul0\nosupersub\cf1\f2\fs23 104 \par\par d\ql \li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \par\pa rd\ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb185\sl-264\slmult0 \up0 \expndtw-3\charscalex100 323 \par\pard\sect\sectd\fs24\paperw11900\paperh16840\p ard\sb0\sl-240{\bkmkstart Pg333}{\bkmkend Pg333}\par\pard\qj \li2205\sb0\sl-270\ slmult0 \par\pard\qj\li2205\sb0\sl-270\slmult0 \par\pard\qj\li2205\sb0\sl-270\sl mult0 \par\pard\qj\li2205\sb0\sl-270\slmult0 \par\pard\qj\li2205\sb0\sl-270\slmu lt0 \par\pard\qj\li2205\ri915\sb206\sl-270\slmult0 \up0 \expndtw0\charscalex104 \ul0\nosupersub\cf1\f2\fs23 Barry A K Rider, \u8216?The Limits of the Law: An An alysis of the Interrelationship of the \up0 \expndtw0\charscalex104 Criminal and Civil Law in the Control of Money Laundering.\u8217? (1999) 2(3) \ul0\nosupersu b\cf7\f8\fs23 Journal of \up0 \expndtw-3\charscalex100 Money Laundering Control \ul0\nosupersub\cf1\f2\fs23 209 \par\pard\qj \li2205\sb0\sl-260\slmult0 \par\par d\qj\li2205\ri912\sb19\sl-260\slmult0 \up0 \expndtw-1\charscalex100 Barry A K Ri der, \u8216?The Control of Money Laundering - A Bridge too Far?\u8217? in Rose-M arie \up0 \expndtw-2\charscalex100 B Antoine (ed), \ul0\nosupersub\cf7\f8\fs23 L

egal Issues in Offshore Financial Services\ul0\nosupersub\cf1\f2\fs23 (2004) 15 6 \par\pard\qj \li2205\sb0\sl-260\slmult0 \par\pard\qj\li2205\ri916\sb20\sl-260\ slmult0 \up0 \expndtw0\charscalex103 B L Bartlett \u8216?The Negative Effects of Money Laundering on Economic Development\u8217? \up0 \expndtw-5\charscalex100 ( 2002) \ul0\nosupersub\cf7\f8\fs23 Platypus Magazine\ul0\nosupersub\cf1\f2\fs23 18 \par\pard\qj \li2205\ri914\sb264\sl-280\slmult0 \up0 \expndtw0\charscalex102 Bala Shanmugam et al,\u8216?Money Laundering in Malaysia\u8217? (2003) 6(4) \ul0 \nosupersub\cf7\f8\fs23 Journal of Money \up0 \expndtw0\charscalex102 Laundering Control\ul0\nosupersub\cf1\f2\fs23 378 \par\pard\qj \li2205\sb0\sl-260\slmult0 \par\pard\qj\li2205\ri915\sb17\sl-260\slmult0 \up0 \expndtw0\charscalex102 Barr y Mertzger and Armando Ramirez \u8216?The Anti-Money Laundering Provisions of th e \line \up0 \expndtw0\charscalex104 United States PATRIOT Act\u8217? (2002) 13( 1) \ul0\nosupersub\cf7\f8\fs23 Journal of Banking and Finance Law and \line \up0 \expndtw-5\charscalex100 Practice\ul0\nosupersub\cf1\f2\fs23 221 \par\pard\qj \li2205\ri914\sb264\sl-280\slmult0 \up0 \expndtw-1\charscalex100 Blum J et al, \ u8216?Financial Havens, Banking Secrecy and Money Laundering\u8217? (1998) \ul0\ nosupersub\cf7\f8\fs23 United \up0 \expndtw-2\charscalex100 Nations Office for D rug Control and Crime Prevention \par\pard\qj \li2205\ri914\sb240\sl-280\slmult0 \up0 \expndtw0\charscalex105 \ul0\nosupersub\cf1\f2\fs23 Bosworth-Davies R \u82 16?Living with the law: A survey of Money Laundering Reporting \line \up0 \expnd tw0\charscalex105 Officers and their attitudes towards the Money Laundering Regu lations.\u8217?(1998) \up0 \expndtw-3\charscalex100 1(3) \par\pard\ql \li2205\sb 1\sl-255\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf7\f8\fs23 Journ al of Money Laundering Control \ul0\nosupersub\cf1\f2\fs23 245 \par\pard\qj \li2 205\ri914\sb233\sl-270\slmult0 \up0 \expndtw0\charscalex102 Bruce Zagaris, \u821 6?Problems Applying Traditional Anti-Money Laundering Procedures to \up0 \expndt w0\charscalex100 Non-Financial Transactions, \u8220?Parallel Banking Systems\u82 21? and Islamic Financial Systems\u8217? \up0 \expndtw-1\charscalex100 (2007) 10 (2) \ul0\nosupersub\cf7\f8\fs23 Journal of Money Laundering Control\ul0\nosupers ub\cf1\f2\fs23 157 \par\pard\qj \li2205\sb0\sl-260\slmult0 \par\pard\qj\li2205\ ri914\sb19\sl-260\slmult0 \up0 \expndtw-2\charscalex100 Canadian Centre for Inte lligence and Security Studies, \u8216?Terrorism Financing and Financial \up0 \ex pndtw-2\charscalex100 System Vulnerabilities: Issues and Challenges\u8217? (2006 ) 3 \ul0\nosupersub\cf7\f8\fs23 ITAC Presents\ul0\nosupersub\cf1\f2\fs23 5 \par \pard\qj \li2205\sb0\sl-260\slmult0 \par\pard\qj\li2205\ri914\sb20\sl-260\slmult 0\tx3660 \up0 \expndtw0\charscalex101 Carl Edward, \tab \up0 \expndtw0\charscale x104 \u8216?The Effects of Domestic Money Laundering Countermeasures on the \up0 \expndtw-2\charscalex100 Banker\u8217?s Duty of Confidentiality\u8217? (1998) 1 3 \ul0\nosupersub\cf7\f8\fs23 Banking and Finance Law Review\ul0\nosupersub\cf1\ f2\fs23 25 \par\pard\qj \li2205\sb0\sl-270\slmult0 \par\pard\qj\li2205\ri915\sb 2\sl-270\slmult0\fi0 \up0 \expndtw-4\charscalex100 Chris Cass, Alexandra Kirk an d Tom O\u8217?Callaghan, \u8216?The Anti-Money Laundering Draft Bill \line \up0 \expndtw-3\charscalex100 2005: Correspondent Banking\u8217? (2006) 21(7) \ul0\no supersub\cf7\f8\fs23 Australian Banking and Finance Law Bulletin \line \up0 \exp ndtw-4\charscalex100 \ul0\nosupersub\cf1\f2\fs23 101 \par\pard\qj \li2205\sb0\sl -260\slmult0 \par\pard\qj\li2205\ri916\sb19\sl-260\slmult0\tx3772 \up0 \expndtw0 \charscalex102 Chris McNeil, \tab \up0 \expndtw0\charscalex104 \u8216?The Austra lian Anti-Money Laundering Reform in the International \up0 \expndtw-4\charscale x100 Context\u8217? (2007) 22(6) \ul0\nosupersub\cf7\f8\fs23 Journal of Internat ional Banking Law and Regulation\ul0\nosupersub\cf1\f2\fs23 340 \par\pard\qj \l i2205\sb0\sl-260\slmult0 \par\pard\qj\li2205\ri917\sb20\sl-260\slmult0 \up0 \exp ndtw0\charscalex100 Courtney J Linn, \u8216?How Terrorists Exploit Gaps in US An ti-Money Laundering Laws to \up0 \expndtw0\charscalex100 Secrete Plunder\u8217? (20050 8(3) \ul0\nosupersub\cf7\f8\fs23 Journal of Money Laundering Control\ul0\ nosupersub\cf1\f2\fs23 200 \par\pard\qj \li2205\ri917\sb264\sl-280\slmult0 \up0 \expndtw0\charscalex100 David A Chaikin, \u8216?Money Laundering: No Clothes-Bi g Bucks\u8217? (1993) 25(2) \ul0\nosupersub\cf7\f8\fs23 Australian \up0 \expndtw 0\charscalex100 Journal of Forensic Science \ul0\nosupersub\cf1\f2\fs23 58 \par\ pard\ql \li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb230\sl-264\slmult0 \u p0 \expndtw-3\charscalex100 324 \par\pard\sect\sectd\fs24\paperw11900\paperh1684

0\pard\sb0\sl-240{\bkmkstart Pg334}{\bkmkend Pg334}\par\pard\ql \li2205\sb0\sl-2 64\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264 \slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\s lmult0 \par\pard\ql\li2205\sb241\sl-264\slmult0\tx4207 \up0 \expndtw0\charscalex 103 \ul0\nosupersub\cf1\f2\fs23 David A Chaikin, \tab \up0 \expndtw0\charscalex 101 \u8216?Commercial Corruption and Money Laundering: A Preliminary \par\pa rd\ql \li2205\sb16\sl-264\slmult0 \up0 \expndtw-5\charscalex100 Analysis\u8217? (2008) 15(3) \ul0\nosupersub\cf7\f8\fs23 Journal of Financial Crime\ul0\nosupers ub\cf1\f2\fs23 269 \par\pard\qj \li2205\ri916\sb243\sl-280\slmult0 \up0 \expndt w0\charscalex100 David D Aufhauser, \u8216?Terrorist Financing: Foxes Run to Gro und\u8217? (2003) 6(4) \ul0\nosupersub\cf7\f8\fs23 Journal of \up0 \expndtw0\cha rscalex100 Money Laundering Control \ul0\nosupersub\cf1\f2\fs23 301 \par\pard\qj \li2205\sb0\sl-260\slmult0 \par\pard\qj\li2205\ri918\sb17\sl-260\slmult0 \up0 \ expndtw0\charscalex103 Donato Masciandaro, \u8216?Money Laundering: The Economic s of Regulation\u8217? (1999) 7(3) \up0 \expndtw-5\charscalex100 \ul0\nosupersub \cf7\f8\fs23 European Journal of Law and Economics \ul0\nosupersub\cf1\f2\fs23 2 25 \par\pard\qj \li2205\sb0\sl-270\slmult0 \par\pard\qj\li2205\ri915\sb2\sl-270\ slmult0 \up0 \expndtw-2\charscalex100 Donato Masciandro and U Filotto, \u8216?M oney Laundering Regulation and Bank Compliance \up0 \expndtw0\charscalex100 Cost s: What Do Your Customers Know? Economics and the Italian Experience\u8217? (200 1) \up0 \expndtw-5\charscalex100 5(2) \ul0\nosupersub\cf7\f8\fs23 Journal of Mon ey Laundering Control \ul0\nosupersub\cf1\f2\fs23 136 \par\pard\qj \li2205\sb0\s l-260\slmult0 \par\pard\qj\li2205\ri917\sb19\sl-260\slmult0 \up0 \expndtw0\chars calex100 Donato Masciandaro and Alessandro Portolano, \u8216?Financial Policy: O ffshore Centre and \up0 \expndtw0\charscalex103 Competition in Regulation: The L axity Problem\u8217? in Donato Masciandaro (ed), \ul0\nosupersub\cf7\f8\fs23 Glo bal \up0 \expndtw-4\charscalex100 Financial Crime: Terrorism, Money Laundering a nd Offshore Centres\ul0\nosupersub\cf1\f2\fs23 (2004) 126. \par\pard\ql \li2205 \sb0\sl-264\slmult0 \par\pard\ql\li2205\sb13\sl-264\slmult0 \up0 \expndtw-3\char scalex100 Ed Charles, \u8216?Dirty Money\u8217? (2006) 76(2) \ul0\nosupersub\cf7 \f8\fs23 In the Black\ul0\nosupersub\cf1\f2\fs23 23 \par\pard\qj \li2205\sb0\sl -260\slmult0 \par\pard\qj\li2205\ri915\sb20\sl-260\slmult0 \up0 \expndtw-1\chars calex100 Edward Bridge \u8216?The Risks faced by Banks in Overstepping their Ant i-Money Laundering \up0 \expndtw-1\charscalex100 Obligations.\u8217? (2005) 20(9 ) \ul0\nosupersub\cf7\f8\fs23 Journal of International Banking Law and Regulatio n \ul0\nosupersub\cf1\f2\fs23 461 \par\pard\qj \li2205\ri917\sb264\sl-280\slmult 0\tx3755 \up0 \expndtw0\charscalex101 Elspeth White \tab \up0 \expndtw0\charscal ex105 \u8216?Money Laundering: Banks-Court would not Order Bank to Commit \up0 \ expndtw-4\charscalex100 Offence.\u8217? (2006) 21(11) \ul0\nosupersub\cf7\f8\fs2 3 Journal of International Banking Law and Regulation\ul0\nosupersub\cf1\f2\fs23 91 \par\pard\qj \li2205\sb0\sl-260\slmult0 \par\pard\qj\li2205\ri914\sb17\sl-2 60\slmult0 \up0 \expndtw-2\charscalex100 Fletcher N Baldwin and Theresa A Di Per na, \u8216?The Rule of Law- An Essential Component \up0 \expndtw0\charscalex103 of the Financial War Against Organized Crime and Terrorism in the Americas\u8217 ? (2007) \up0 \expndtw-5\charscalex100 14(4) \ul0\nosupersub\cf7\f8\fs23 Journal of Financial Crime\ul0\nosupersub\cf1\f2\fs23 405 \par\pard\ql \li2205\sb0\sl264\slmult0 \par\pard\ql\li2205\sb13\sl-264\slmult0\tx4207 \up0 \expndtw0\charsc alex100 G Scott Dowling, \tab \up0 \expndtw0\charscalex100 \u8216?Fatal Broad side: The Demise of Caribbean Offshore Financial \par\pard\ql \li2205\sb16 \sl-264\slmult0 \up0 \expndtw-4\charscalex100 Confidentiality Post USA PATRIOT A ct\u8217? (2004) 17 \ul0\nosupersub\cf7\f8\fs23 Transnational Lawyer\ul0\nosuper sub\cf1\f2\fs23 259 \par\pard\qj \li2205\sb0\sl-260\slmult0 \par\pard\qj\li2205 \ri916\sb20\sl-260\slmult0 \up0 \expndtw0\charscalex105 Graham Rodmell, \u8216?T he \u8220?Costs\u8221? for Banks and Financial Intermediaries of Managing \up0 \ expndtw-3\charscalex100 Corruption and Money Laundering Risk\u8217?, (2007) 28(6 ) \ul0\nosupersub\cf7\f8\fs23 Company Lawyer\ul0\nosupersub\cf1\f2\fs23 183 \pa r\pard\qj \li2205\sb0\sl-260\slmult0 \par\pard\qj\li2205\ri915\sb20\sl-260\slmul t0 \up0 \expndtw-3\charscalex100 H P Bauer and M Peter, \u8216?Global Standards for Money Laundering Prevention\u8217? (2002)10(1) \up0 \expndtw-4\charscalex100 \ul0\nosupersub\cf7\f8\fs23 Journal of Financial Crime\ul0\nosupersub\cf1\f2\fs

23 69 \par\pard\li2205\sb0\sl-264\slmult0\par\pard\li2205\sb23\sl-264\slmult0\f i0\tx7289 \up0 \expndtw0\charscalex103 Haemala Thanasegaran and Bala Shanmug am,\tab \up0 \expndtw0\charscalex103 \u8216?International Trade-Based Money\pa r\pard\li2205\sb4\sl-264\slmult0\fi0\tx6371\tx7125 \up0 \expndtw0\charscalex103 Laundering: The Malaysian Perspective\u8217?\tab \up0 \expndtw-3\charscalex100 ( 2007)\tab \up0 \expndtw0\charscalex103 10(4) \ul0\nosupersub\cf7\f8\fs23 Journal of Money Laundering\par\pard\li2205\sb4\sl-264\slmult0\fi0 \up0 \expndtw0\chars calex103 Control\ul0\nosupersub\cf1\f2\fs23 429\par\pard\ql \li2205\sb0\sl-264\ slmult0 \par\pard\ql\li2205\sb6\sl-264\slmult0\tx7225 \up0 \expndtw0\charscalex1 01 Haemala Thanasegaran and Bala Shanmugam, \tab \up0 \expndtw0\charscalex10 1 \u8216?Combating Money Laundering in \par\pard\ql \li2205\sb1\sl-259\slmult 0 \up0 \expndtw-5\charscalex100 Malaysia\u8217? (2008) 11(4) \ul0\nosupersub\cf7 \f8\fs23 Journal of Money Laundering Control \ul0\nosupersub\cf1\f2\fs23 331 \pa r\pard\qj \li2205\sb0\sl-260\slmult0 \par\pard\qj\li2205\ri917\sb21\sl-260\slmul t0\fi0 \up0 \expndtw-3\charscalex100 Harjit S Sandhu, \u8216?The Global Detectio n and Deterrence of Money Laundering\u8217? (2000) 3(4) \up0 \expndtw-4\charscal ex100 \ul0\nosupersub\cf7\f8\fs23 Journal of Money Laundering Control \ul0\nosup ersub\cf1\f2\fs23 336 \par\pard\ql \li10449\sb197\sl-264\slmult0 \up0 \expndtw-3 \charscalex100 325 \par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl -240{\bkmkstart Pg335}{\bkmkend Pg335}\par\pard\qj \li2205\sb0\sl-260\slmult0 \p ar\pard\qj\li2205\sb0\sl-260\slmult0 \par\pard\qj\li2205\sb0\sl-260\slmult0 \par \pard\qj\li2205\sb0\sl-260\slmult0 \par\pard\qj\li2205\sb0\sl-260\slmult0 \par\p ard\qj\li2205\sb0\sl-260\slmult0 \par\pard\qj\li2205\sb0\sl-260\slmult0 \par\par d\qj\li2205\ri915\sb25\sl-260\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupers ub\cf1\f2\fs23 H D Lawson, \u8216?Bank Secrecy and Money Laundering\u8217? (2002 ) 17 \ul0\nosupersub\cf7\f8\fs23 Banking and Financial \up0 \expndtw0\charscalex 100 Law Review\ul0\nosupersub\cf1\f2\fs23 145 \par\pard\li2205\sb0\sl-264\slmul t0\par\pard\li2205\sb18\sl-264\slmult0\fi0\tx7673\tx8437 \up0 \expndtw0\charscal ex105 He Ping \u8216?Banking Secrecy and Money Laundering\u8217?\tab \up0 \expnd tw-3\charscalex100 (2004)\tab \up0 \expndtw0\charscalex105 7(4) \ul0\nosupersub\ cf7\f8\fs23 Journal of Money\par\pard\li2205\sb4\sl-264\slmult0\fi0 \up0 \expndt w0\charscalex105 Laundering Control\ul0\nosupersub\cf1\f2\fs23 376\par\pard\qj \li2205\sb0\sl-260\slmult0 \par\pard\qj\li2205\ri917\sb7\sl-260\slmult0 \up0 \ex pndtw-2\charscalex100 He Ping, \u8216?New Trends in Money Laundering-From the Re al World to Cyberspace\u8217? (2004) \up0 \expndtw-3\charscalex100 8(1) \ul0\nos upersub\cf7\f8\fs23 Journal of Money Laundering Control\ul0\nosupersub\cf1\f2\fs 23 50 \par\pard\qj \li2205\ri914\sb264\sl-280\slmult0 \up0 \expndtw-2\charscale x100 He Ping, \u8216?Lawyers, Notaries, Accountants and Money Laundering\u8217? (2006) 9(1) \ul0\nosupersub\cf7\f8\fs23 Journal of \up0 \expndtw-3\charscalex100 Money Laundering Control\ul0\nosupersub\cf1\f2\fs23 62 \par\pard\qj \li2205\sb 0\sl-260\slmult0 \par\pard\qj\li2205\ri917\sb17\sl-260\slmult0 \up0 \expndtw-2\c harscalex100 Ian Huskinson \u8216?Money Laundering-Banks\u8217? (2007) 22(2) \ul 0\nosupersub\cf7\f8\fs23 Journal of International Banking \up0 \expndtw-3\charsc alex100 Law and Regulation\ul0\nosupersub\cf1\f2\fs23 29 \par\pard\qj \li2205\s b0\sl-260\slmult0 \par\pard\qj\li2205\ri917\sb20\sl-260\slmult0 \up0 \expndtw-3\ charscalex100 Ian Kaminski, \u8216?International Banking and Money Laundering\u8 217? (2004) 23 \ul0\nosupersub\cf7\f8\fs23 Annual Review of \up0 \expndtw-4\char scalex100 Banking and Financial Law\ul0\nosupersub\cf1\f2\fs23 210 \par\pard\qj \li2205\sb0\sl-270\slmult0 \par\pard\qj\li2205\ri914\sb2\sl-270\slmult0 \up0 \e xpndtw-3\charscalex100 J Harvey, \u8216?Compliance and Reporting Issues Arising for Financial Institutions from Money \up0 \expndtw-2\charscalex100 Laundering R egulations: A Preliminary Cost Benefit Study\u8217? (2004) 7(4) \ul0\nosupersub\ cf7\f8\fs23 Journal of Money \up0 \expndtw-3\charscalex100 Laundering Control\ul 0\nosupersub\cf1\f2\fs23 336 \par\pard\qj \li2205\sb0\sl-260\slmult0 \par\pard\ qj\li2205\ri915\sb19\sl-260\slmult0 \up0 \expndtw0\charscalex100 Jack A Blum et al, \u8216?Financial Havens, Banking secrecy and Money Laundering\u8217? (1998) \line \up0 \expndtw0\charscalex100 Issue 8, \ul0\nosupersub\cf7\f8\fs23 UN Offic e for Drug Control and Crime Prevention (UNDCP) Technical Series \par\pard\qj \l i2205\sb0\sl-260\slmult0 \par\pard\qj\li2205\ri915\sb20\sl-260\slmult0 \up0 \exp ndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs23 Jackie Johnson and Desmond Lim,

\u8216?Money Laundering: Has the Financial Action Task \up0 \expndtw-5\charscale x100 Force Made a Difference?\u8217? (2002) 10(1) \ul0\nosupersub\cf7\f8\fs23 Jo urnal of Financial Crime \ul0\nosupersub\cf1\f2\fs23 8 \par\pard\qj \li2205\ri91 7\sb264\sl-280\slmult0 \up0 \expndtw-2\charscalex100 Jackie Johnson, \u8216?Figh ting Money Laundering: Are Australian Financial Institutions Doing \up0 \expndtw -3\charscalex100 Enough?\u8217? (2000) 44(3) \ul0\nosupersub\cf7\f8\fs23 Journa l of Banking and Financial Services\ul0\nosupersub\cf1\f2\fs23 8 \par\pard\ql \ li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb10\sl-264\slmult0\tx3895 \up0 \e xpndtw0\charscalex101 Jackie Johnson, \tab \up0 \expndtw0\charscalex107 \u8216?I n Pursuit of Dirty Money: Identifying Weaknesses in the Global \par\pard\ql \li2 205\sb1\sl-259\slmult0 \up0 \expndtw-3\charscalex100 Financial System\u8217? (20 01) 5(2) \ul0\nosupersub\cf7\f8\fs23 Journal of Money Laundering Control\ul0\nos upersub\cf1\f2\fs23 124 \par\pard\qj \li2205\sb0\sl-260\slmult0 \par\pard\qj\li 2205\ri914\sb21\sl-260\slmult0 \up0 \expndtw-2\charscalex100 Jackson A \u8216?Re cognizing and Reporting Money Laundering: How Well Should You Know \up0 \expndtw -3\charscalex100 Your Customer?\u8217? (2000) 3(4) \ul0\nosupersub\cf7\f8\fs23 J ournal of Money Laundering Control \ul0\nosupersub\cf1\f2\fs23 317 \par\pard\qj \li2205\sb0\sl-270\slmult0 \par\pard\qj\li2205\ri916\sb2\sl-270\slmult0\tx3748 \ up0 \expndtw-2\charscalex100 Jason Abbott, \tab \up0 \expndtw0\charscalex100 \u 8216?Treasure Island or Desert Island? Offshore Finance and Economic \up 0 \expndtw0\charscalex100 Development in Small Island Economies: The Case of Lab uan\u8217? (2000) 18 \ul0\nosupersub\cf7\f8\fs23 Development \up0 \expndtw0\char scalex100 Policy Review\ul0\nosupersub\cf1\f2\fs23 157 \par\pard\qj \li2205\sb0 \sl-260\slmult0 \par\pard\qj\li2205\ri914\sb19\sl-260\slmult0 \up0 \expndtw-1\ch arscalex100 Joan Wadsley, \u8216?Banks in a Bind: The Implication of the Money L aundering Legislation.\u8217? \up0 \expndtw-1\charscalex100 (2001) 16(5) \ul0\no supersub\cf7\f8\fs23 Journal of International Banking Law\ul0\nosupersub\cf1\f2\ fs23 125 \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb13\sl-26 4\slmult0\tx4068 \up0 \expndtw0\charscalex100 John L Evans, \tab \up0 \expnd tw-2\charscalex100 \u8216?International Money Laundering: Enforcement Ch allenges and \par\pard\ql \li2205\sb1\sl-259\slmult0 \up0 \expndtw-2\charscale x100 Opportunities\u8217? (1996) 3(1) \ul0\nosupersub\cf7\f8\fs23 Southwestern J ournal of Law and Trade in the Americas\ul0\nosupersub\cf1\f2\fs23 1 \par\pard\ ql \li10449\sb197\sl-264\slmult0 \up0 \expndtw-3\charscalex100 326 \par\pard\sec t\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart Pg336}{\bkmkend Pg336}\par\pard\qj \li2205\sb0\sl-260\slmult0 \par\pard\qj\li2205\sb0\sl-260\slm ult0 \par\pard\qj\li2205\sb0\sl-260\slmult0 \par\pard\qj\li2205\sb0\sl-260\slmul t0 \par\pard\qj\li2205\sb0\sl-260\slmult0 \par\pard\qj\li2205\sb0\sl-260\slmult0 \par\pard\qj\li2205\sb0\sl-260\slmult0 \par\pard\qj\li2205\ri916\sb25\sl-260\sl mult0\tx3594 \up0 \expndtw0\charscalex107 \ul0\nosupersub\cf1\f2\fs23 Jos de Wi t, \tab \up0 \expndtw0\charscalex106 \u8216?A Risk-Based Approach to AML: A Con troversy between Financial \line \up0 \expndtw-3\charscalex100 Institutions and Regulators\u8217? (2007) 15(2) \ul0\nosupersub\cf7\f8\fs23 Journal of Financial Regulation and Compliance \line \up0 \expndtw-4\charscalex100 \ul0\nosupersub\cf 1\f2\fs23 156 \par\pard\qj \li2205\ri916\sb264\sl-280\slmult0\fi0 \up0 \expndtw2\charscalex100 Joy M Geary, \u8216?The cleverest section in the Act\u8217? (200 7) \ul0\nosupersub\cf7\f8\fs23 Anti-Money Laundering Magazine \line \up0 \expndt w-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 13 \par\pard\ql \li2205\sb254\sl-2 64\slmult0\tx4910 \up0 \expndtw0\charscalex104 Jude Mc Culloch et al, \tab \ up0 \expndtw-1\charscalex100 \u8216?Contemporary Comments: Suppressing the F inancing of \par\pard\ql \li2205\sb16\sl-264\slmult0 \up0 \expndtw-3\charscalex 100 Terrorism.\u8217? (2004) 16(1) \ul0\nosupersub\cf7\f8\fs23 Current Issues in Criminal Justice\ul0\nosupersub\cf1\f2\fs23 73 \par\pard\qj \li2205\sb0\sl-260 \slmult0 \par\pard\qj\li2205\ri916\sb20\sl-260\slmult0 \up0 \expndtw0\charscalex 106 KC Vohrah, \u8216?Forfeiture of the Profits and Proceeds Derived from Drug T rafficking: \up0 \expndtw-2\charscalex100 Thoughts on Future Action in Malaysia\ u8217? (1984) 36(4) \ul0\nosupersub\cf7\f8\fs23 Bulletin Narcotic\ul0\nosupersub \cf1\f2\fs23 32 \par\pard\qj \li2205\sb0\sl-260\slmult0 \par\pard\qj\li2205\ri9 14\sb20\sl-260\slmult0 \up0 \expndtw0\charscalex100 K Hinterseer \u8216?The Wolf sberg Anti-Money Laundering Principles\u8217?(2001) 5(1) \ul0\nosupersub\cf7\f8\

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rab Law Quarterly\ul0\nosupersub\cf1\f2\fs23 255 \par\pard\qj \li2205\ri916\sb2 64\sl-280\slmult0 \up0 \expndtw-1\charscalex100 Siong Thye Tan, \u8216?Money Lau ndering and E-Commerce\u8217? (2002) 9(3) \ul0\nosupersub\cf7\f8\fs23 Journal of Financial \up0 \expndtw-2\charscalex100 Crime \ul0\nosupersub\cf1\f2\fs23 277 \ par\pard\qj \li2205\sb0\sl-260\slmult0 \par\pard\qj\li2205\ri917\sb17\sl-260\slm ult0 \up0 \expndtw0\charscalex100 Spikes S, \u8216?Banks Increase Spending to Fi ght Money Laundering\u8217? (2004) \ul0\nosupersub\cf7\f8\fs23 The Wall Street \ up0 \expndtw-1\charscalex100 Journal\ul0\nosupersub\cf1\f2\fs23 18 \par\pard\ql \li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb193\sl-264\slmult0 \up0 \exp ndtw-3\charscalex100 329 \par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\ sb0\sl-240{\bkmkstart Pg339}{\bkmkend Pg339}\par\pard\qj \li2205\sb0\sl-280\slmu lt0 \par\pard\qj\li2205\sb0\sl-280\slmult0 \par\pard\qj\li2205\sb0\sl-280\slmult 0 \par\pard\qj\li2205\sb0\sl-280\slmult0 \par\pard\qj\li2205\sb0\sl-280\slmult0 \par\pard\qj\li2205\ri916\sb148\sl-280\slmult0 \up0 \expndtw-2\charscalex100 \ul 0\nosupersub\cf1\f2\fs23 Steven Philippsohn, \u8216?The Dangers of New Technolog y-Laundering on the Internet\u8217? (2001) \up0 \expndtw-3\charscalex100 5(1) \u l0\nosupersub\cf7\f8\fs23 Journal of Money Laundering Control \ul0\nosupersub\cf 1\f2\fs23 87 \par\pard\ql \li2205\sb254\sl-264\slmult0\tx5936 \up0 \expndtw0\cha rscalex107 Stuart Ross and Michelle Hannan, \tab \up0 \expndtw0\charscalex103 \u 8216?Money Laundering Regulation and Risk-Based \par\pard\ql \li2205\sb16\sl-264 \slmult0 \up0 \expndtw-3\charscalex100 Decision-Making\u8217? (2007) 10(1) \ul0\ nosupersub\cf7\f8\fs23 Journal of Money Laundering Control\ul0\nosupersub\cf1\f2 \fs23 106 \par\pard\qj \li2205\sb0\sl-260\slmult0 \par\pard\qj\li2205\ri914\sb2 0\sl-260\slmult0 \up0 \expndtw-3\charscalex100 Timothy D Scrantom \u8216?USA Pat riot Act: Implications for Foreign Financial Institutions and \up0 \expndtw-4\ch arscalex100 International Finance Centres\u8217? (2001) 8(1) \ul0\nosupersub\cf7 \f8\fs23 Trusts & Trustees\ul0\nosupersub\cf1\f2\fs23 25 \par\pard\qj \li2205\s b0\sl-260\slmult0 \par\pard\qj\li2205\ri917\sb20\sl-260\slmult0 \up0 \expndtw-2\ charscalex100 Wassim N. Shahin, \u8216?De-listing from NCCTs and Money Launderin g Control Measures: A \line \up0 \expndtw-2\charscalex100 Banking Regulation Per spective.\u8217? (2005) 8(4) \ul0\nosupersub\cf7\f8\fs23 Journal of Money Launde ring Control\ul0\nosupersub\cf1\f2\fs23 320 \par\pard\qj \li2205\ri919\sb264\sl -280\slmult0 \up0 \expndtw0\charscalex100 William Frei, \u8216?The Protection of Privacy and the Prevention of Financial Crime\u8217? (2004) \up0 \expndtw0\char scalex100 11(4) \ul0\nosupersub\cf7\f8\fs23 Journal of Financial Crime\ul0\nosup ersub\cf1\f2\fs23 397 \par\pard\qj \li2205\ri915\sb240\sl-280\slmult0 \up0 \exp ndtw0\charscalex103 William Gilmore, \u8216?International Initiatives\u8217?, in Parlour, \ul0\nosupersub\cf7\f8\fs23 International Guide to Money \up0 \expndtw -5\charscalex100 Laundering Law and Practice\ul0\nosupersub\cf1\f2\fs23 (1995) 12 \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb10\sl-264\slmul t0\tx4599 \up0 \expndtw-1\charscalex100 William R Schroeder, \tab \up0 \expndt w0\charscalex100 \u8216?Money Laundering: A Global Threat and the Interna tional \par\pard\ql \li2205\sb1\sl-259\slmult0 \up0 \expndtw-5\charscalex100 Com munity Response\u8217? (2001) 70(5) \ul0\nosupersub\cf7\f8\fs23 FBI Law Enforcem ent Bulletin\ul0\nosupersub\cf1\f2\fs23 2. \par\pard\ql \li2205\sb0\sl-264\slmu lt0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb9\sl-264\slmult 0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf4\f5\fs23 2. Books \par\pard\q j \li2205\ri3682\sb48\sl-540\slmult0 \up0 \expndtw-5\charscalex100 \ul0\nosupers ub\cf1\f2\fs23 Abu Bakar Munir, \ul0\nosupersub\cf7\f8\fs23 Internet Banking: La w and Practice\ul0\nosupersub\cf1\f2\fs23 (2004) \up0 \expndtw-5\charscalex100 Alan Tyree, \ul0\nosupersub\cf7\f8\fs23 Banking Law in Australia\ul0\nosupersub\ cf1\f2\fs23 (4\ul0\super\cf8\f9\fs23 th\ul0\nosupersub\cf1\f2\fs23 ed, 2005) \ par\pard\qj \li2205\ri916\sb232\sl-260\slmult0\tx3753 \up0 \expndtw0\charscalex1 17 B Fisse et al \tab \up0 \expndtw0\charscalex107 (eds), \ul0\nosupersub\cf7\f8 \fs23 The Money Trail: Confiscation of Proceeds of Crime, Money \up0 \expndtw-5\ charscalex100 Laundering and Cash Transaction Reporting\ul0\nosupersub\cf1\f2\fs 23 (1992) \par\pard\qj \li2205\ri2193\sb49\sl-540\slmult0 \up0 \expndtw-4\chars calex100 Bank Negara Malaysia, \ul0\nosupersub\cf7\f8\fs23 Anti-Money Laundering Measures in Malaysia\ul0\nosupersub\cf1\f2\fs23 (2004) \up0 \expndtw-5\charsca lex100 Bank Negara Malaysia, \ul0\nosupersub\cf7\f8\fs23 AML/CFT Compliance Hand

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\expndtw0\charscalex105 APG, \ul0\nosupersub\cf7\f8\fs23 Third Mutual Evaluatio n Report on Anti-Money Laundering and Combating the \up0 \expndtw-3\charscalex10 0 Financing of Terrorism\ul0\nosupersub\cf1\f2\fs23 (2006) \par\pard\qj \li2205 \ri4791\sb62\sl-520\slmult0 \up0 \expndtw-3\charscalex100 APG, \ul0\nosupersub\c f7\f8\fs23 Yearly Typologies Report 2005-2006\ul0\nosupersub\cf1\f2\fs23 (2006) \up0 \expndtw-3\charscalex100 APG, Typologies Report 2008 \par\pard\qj \li2205\ ri5363\sb4\sl-540\slmult0 \up0 \expndtw-3\charscalex100 Bank Negara Malaysia, \u l0\nosupersub\cf7\f8\fs23 Annual Report 2004 \line \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 Bank Negara Malaysia, \ul0\nosupersub\cf7\f8\fs23 A nnual Report 2005 \par\pard\qj \li2205\ri2212\sb0\sl-540\slmult0 \up0 \expndtw-2 \charscalex100 \ul0\nosupersub\cf1\f2\fs23 Bank Negara Malaysia, \ul0\nosupersub \cf7\f8\fs23 Financial Stability and Payment Systems Report 2006 \line \up0 \exp ndtw-2\charscalex100 \ul0\nosupersub\cf1\f2\fs23 Bank Negara Malaysia, \ul0\nosu persub\cf7\f8\fs23 Financial Stability and Payment Systems Report 2007 \par\pard \qj \li2205\ri918\sb232\sl-260\slmult0\fi0 \up0 \expndtw0\charscalex106 \ul0\nos upersub\cf1\f2\fs23 Financial Action Task Force on Money Laundering, \ul0\nosupe rsub\cf7\f8\fs23 Trade Based Money Laundering \line \up0 \expndtw-3\charscalex10 0 \ul0\nosupersub\cf1\f2\fs23 (2006) \par\pard\ql \li10449\sb0\sl-264\slmult0 \p ar\pard\ql\li10449\sb193\sl-264\slmult0 \up0 \expndtw-3\charscalex100 332 \par\p ard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart Pg342}{\b kmkend Pg342}\par\pard\qj \li2205\sb0\sl-540\slmult0 \par\pard\qj\li2205\sb0\sl540\slmult0 \par\pard\qj\li2205\ri1467\sb253\sl-540\slmult0 \up0 \expndtw-2\char scalex100 \ul0\nosupersub\cf1\f2\fs23 Financial Action Task Force on Money Laund ering, \ul0\nosupersub\cf7\f8\fs23 Annual Report 1995-1996\ul0\nosupersub\cf1\f2 \fs23 (1996) \line \up0 \expndtw-2\charscalex100 Financial Action Task Force on Money Laundering, \ul0\nosupersub\cf7\f8\fs23 Annual Report 2003-2004\ul0\nosup ersub\cf1\f2\fs23 (2004) \line \up0 \expndtw-2\charscalex100 Financial Action T ask Force on Money Laundering, \ul0\nosupersub\cf7\f8\fs23 Annual Report 2004-20 05\ul0\nosupersub\cf1\f2\fs23 (2005) \par\pard\qj \li2205\ri915\sb232\sl-260\sl mult0 \up0 \expndtw0\charscalex102 Financial Action Task Force on Money Launderi ng, \ul0\nosupersub\cf7\f8\fs23 Annual and Overall Review of Non\up0 \expndtw0\c harscalex102 Cooperative Countries and Territories\ul0\nosupersub\cf1\f2\fs23 ( 2005) \par\pard\qj \li2205\sb0\sl-260\slmult0 \par\pard\qj\li2205\ri916\sb20\sl260\slmult0 \up0 \expndtw0\charscalex102 Financial Action Task Force on Money La undering, \ul0\nosupersub\cf7\f8\fs23 Annual Review of Non-Cooperative \up0 \exp ndtw0\charscalex102 Countries and Territories 2005-2006 \ul0\nosupersub\cf1\f2\f s23 (2006) \par\pard\qj \li2205\ri917\sb264\sl-280\slmult0 \up0 \expndtw-1\chars calex100 Financial Action Task Force on Money Laundering, \ul0\nosupersub\cf7\f8 \fs23 Guidance for Financial Institutions in \up0 \expndtw-2\charscalex100 Detec ting Terrorist Financing\ul0\nosupersub\cf1\f2\fs23 (2002) \par\pard\qj \li2205 \ri916\sb240\sl-280\slmult0 \up0 \expndtw0\charscalex105 Financial Action Task F orce on Money Laundering, \ul0\nosupersub\cf7\f8\fs23 Laundering the Proceeds of VAT \up0 \expndtw-3\charscalex100 Carousel Fraud\ul0\nosupersub\cf1\f2\fs23 (2 007) \par\pard\qj \li2205\sb0\sl-260\slmult0 \par\pard\qj\li2205\ri918\sb17\sl-2 60\slmult0\fi0 \up0 \expndtw0\charscalex106 Financial Action Task Force on Money Laundering, \ul0\nosupersub\cf7\f8\fs23 Policy Brief: Money Laundering \line \u p0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 (1999) \par\pard\qj \li2 205\sb0\sl-260\slmult0 \par\pard\qj\li2205\ri917\sb20\sl-260\slmult0 \up0 \expnd tw0\charscalex110 Financial Action Task Force on Money Laundering, \ul0\nosupers ub\cf7\f8\fs23 Report on Money Laundering \up0 \expndtw-3\charscalex100 Typologi es 1997-1998\ul0\nosupersub\cf1\f2\fs23 (1998) \par\pard\qj \li2205\ri917\sb264 \sl-280\slmult0 \up0 \expndtw0\charscalex110 Financial Action Task Force on Mone y Laundering, \ul0\nosupersub\cf7\f8\fs23 Report on Money Laundering \up0 \expnd tw-3\charscalex100 Typologies 1998-1999\ul0\nosupersub\cf1\f2\fs23 (1999) \par\ pard\qj \li2205\ri917\sb240\sl-280\slmult0 \up0 \expndtw0\charscalex110 Financia l Action Task Force on Money Laundering, \ul0\nosupersub\cf7\f8\fs23 Report on M oney Laundering \up0 \expndtw-3\charscalex100 Typologies 1999-2000\ul0\nosupersu b\cf1\f2\fs23 (2000) \par\pard\qj \li2205\sb0\sl-260\slmult0 \par\pard\qj\li220 5\ri917\sb17\sl-260\slmult0 \up0 \expndtw0\charscalex110 Financial Action Task F orce on Money Laundering, \ul0\nosupersub\cf7\f8\fs23 Report on Money Laundering

\up0 \expndtw-3\charscalex100 Typologies 2000-2001\ul0\nosupersub\cf1\f2\fs23 (2001) \par\pard\qj \li2205\sb0\sl-260\slmult0 \par\pard\qj\li2205\ri917\sb20\sl -260\slmult0 \up0 \expndtw0\charscalex110 Financial Action Task Force on Money L aundering, \ul0\nosupersub\cf7\f8\fs23 Report on Money Laundering \up0 \expndtw3\charscalex100 Typologies 2001-2002\ul0\nosupersub\cf1\f2\fs23 (2002) \par\par d\qj \li2205\ri917\sb264\sl-280\slmult0 \up0 \expndtw0\charscalex110 Financial A ction Task Force on Money Laundering, \ul0\nosupersub\cf7\f8\fs23 Report on Mone y Laundering \up0 \expndtw-3\charscalex100 Typologies 2003-2004\ul0\nosupersub\c f1\f2\fs23 (2004) \par\pard\qj \li2205\ri916\sb240\sl-280\slmult0 \up0 \expndtw 0\charscalex105 Financial Action Task Force on Money Laundering, \ul0\nosupersub \cf7\f8\fs23 Report on New Payment Methods \line \up0 \expndtw-3\charscalex100 \ ul0\nosupersub\cf1\f2\fs23 (2006) \par\pard\qj \li2205\ri917\sb269\sl-270\slmult 0 \up0 \expndtw0\charscalex102 Financial Action Task Force on Money Laundering, \ul0\nosupersub\cf7\f8\fs23 Review to Identify Non-Cooperative \up0 \expndtw0\ch arscalex104 Countries and Territories: Increasing the Worldwide Effectiven ess of Anti-Money \up0 \expndtw-3\charscalex100 Laundering Measures \ul0\nosup ersub\cf1\f2\fs23 (2000) \par\pard\li2205\sb0\sl-264\slmult0\par\pard\li2205\sb8 \sl-264\slmult0\fi0 \up0 \expndtw-2\charscalex100 Financial Action Task Force on Money Laundering, \ul0\nosupersub\cf7\f8\fs23 Terrorist Financing\ul0\nosupersu b\cf1\f2\fs23 (2008)\par\pard\li2205\sb196\sl-264\slmult0\fi8243 \up0 \expndtw3\charscalex100 333\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl -240{\bkmkstart Pg343}{\bkmkend Pg343}\par\pard\qj \li2205\sb0\sl-260\slmult0 \p ar\pard\qj\li2205\sb0\sl-260\slmult0 \par\pard\qj\li2205\sb0\sl-260\slmult0 \par \pard\qj\li2205\sb0\sl-260\slmult0 \par\pard\qj\li2205\sb0\sl-260\slmult0 \par\p ard\qj\li2205\sb0\sl-260\slmult0 \par\pard\qj\li2205\sb0\sl-260\slmult0 \par\par d\qj\li2205\ri916\sb25\sl-260\slmult0 \up0 \expndtw0\charscalex104 \ul0\nosupers ub\cf1\f2\fs23 Financial Action Task Force on Money Laundering,\ul0\nosupersub\c f7\f8\fs23 The Misuse of Corporate Vehicle, \up0 \expndtw-3\charscalex100 Inclu ding Trust and Company Service Providers\ul0\nosupersub\cf1\f2\fs23 (2006) \par \pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb13\sl-264\slmult0 \up0 \expndtw-2\charscalex100 Financial Stability Forum, \ul0\nosupersub\cf7\f8\fs23 Report of the Working Group on Offshore Centres\ul0\nosupersub\cf1\f2\fs23 (20 00) \par\pard\qj \li2205\sb0\sl-260\slmult0 \par\pard\qj\li2205\ri919\sb20\sl-26 0\slmult0 \up0 \expndtw0\charscalex100 International Monetary Fund, \u8216?\ul0\ nosupersub\cf7\f8\fs23 Offshore Financial Centers - The Assessment Program: A \u p0 \expndtw-1\charscalex100 Progress Report and the Future of the Program.\ul0\n osupersub\cf1\f2\fs23 \u8217? (2003) \par\pard\qj \li2205\sb0\sl-260\slmult0 \pa r\pard\qj\li2205\ri916\sb20\sl-260\slmult0 \up0 \expndtw0\charscalex105 Internat ional Monetary Fund, \ul0\nosupersub\cf7\f8\fs23 Labuan, Malaysia: Assessment of the Supervision and \line \up0 \expndtw-3\charscalex100 Regulation of the Finan cial Sector-Review of Financial Sector Regulation and Supervision \par\pard\ql \ li2205\sb17\sl-264\slmult0 \up0 \expndtw-5\charscalex100 \ul0\nosupersub\cf1\f2\ fs23 (2004) \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb12\sl264\slmult0 \up0 \expndtw-2\charscalex100 International Monetary Fund, \ul0\nosu persub\cf7\f8\fs23 Offshore Financial Centers: The Role of the IMF\ul0\nosupersu b\cf1\f2\fs23 (2000) \par\pard\ql \li2205\sb256\sl-264\slmult0 \up0 \expndtw-4\ charscalex100 International Monetary Fund, \ul0\nosupersub\cf7\f8\fs23 Offshore Financial Centers-IMF Background Paper\ul0\nosupersub\cf1\f2\fs23 (2000) \par\p ard\qj \li2205\ri916\sb263\sl-280\slmult0 \up0 \expndtw0\charscalex100 Internati onal Monetary Fund, \ul0\nosupersub\cf7\f8\fs23 Offshore Financial Centres- The Assessment Program: A \up0 \expndtw0\charscalex100 Progress Report and the Futur e of the Program \ul0\nosupersub\cf1\f2\fs23 (2003) \par\pard\qj \li2205\ri915\ sb240\sl-280\slmult0 \up0 \expndtw-3\charscalex100 KPMG International, \ul0\nosu persub\cf7\f8\fs23 Global Anti-Money Laundering Survey 2004: How Banks Are Facin g \up0 \expndtw-4\charscalex100 Up to the Challenge\ul0\nosupersub\cf1\f2\fs23 (2004) \par\pard\qj \li2205\sb0\sl-260\slmult0 \par\pard\qj\li2205\ri915\sb17\sl -260\slmult0 \up0 \expndtw-3\charscalex100 KPMG International, \ul0\nosupersub\c f7\f8\fs23 Global Anti-Money Laundering Survey 2004: How Banks Are Facing \up0 \ expndtw-4\charscalex100 Up to the Challenge\ul0\nosupersub\cf1\f2\fs23 (2007) \ par\pard\qj \li2205\sb0\sl-260\slmult0 \par\pard\qj\li2205\ri916\sb20\sl-260\slm

ult0 \up0 \expndtw0\charscalex106 KPMG, \ul0\nosupersub\cf7\f8\fs23 Money Launde ring: Review of the Regime for Handling Suspicious Activity \up0 \expndtw-5\char scalex100 Reports\ul0\nosupersub\cf1\f2\fs23 (2003) \par\pard\qj \li2205\ri6808 \sb49\sl-540\slmult0 \up0 \expndtw-5\charscalex100 LOFSA Annual Report 2001 \lin e \up0 \expndtw-5\charscalex100 LOFSA Annual Report 2003 \line \up0 \expndtw-5\c harscalex100 LOFSA Annual Report 2004 \line \up0 \expndtw-5\charscalex100 LOFSA Annual Report 2005 \line \up0 \expndtw-5\charscalex100 LOFSA Annual Report 2006 \par\pard\ql \li2205\sb208\sl-264\slmult0 \up0 \expndtw-5\charscalex100 OECD, \u l0\nosupersub\cf7\f8\fs23 Harmful Tax Competition: An Emerging Global Issues\ul0 \nosupersub\cf1\f2\fs23 (1998) \par\pard\qj \li2205\ri919\sb263\sl-280\slmult0 \up0 \expndtw-3\charscalex100 United Nations Office for Drug Control and Crime P revention, \ul0\nosupersub\cf7\f8\fs23 Financial Havens, Banking \up0 \expndtw-4 \charscalex100 Secrecy and Money Laundering \ul0\nosupersub\cf1\f2\fs23 (1998) \ par\pard\qj \li2205\sb0\sl-260\slmult0 \par\pard\qj\li2205\ri915\sb17\sl-260\slm ult0 \up0 \expndtw0\charscalex100 US Senate Committee on Governmental Affai rs, \ul0\nosupersub\cf7\f8\fs23 Minority Staff of the Permanent \up0 \expnd tw-2\charscalex100 Subcommittee on Investigations Report on Correspondent bankin g: A Getaway for Money \up0 \expndtw-3\charscalex100 Laundering\ul0\nosupersub\c f1\f2\fs23 (2001) \par\pard\ql \li10449\sb197\sl-264\slmult0 \up0 \expndtw-3\ch arscalex100 334 \par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-24 0{\bkmkstart Pg344}{\bkmkend Pg344}\par\pard\qj \li2205\sb0\sl-260\slmult0 \par\ pard\qj\li2205\sb0\sl-260\slmult0 \par\pard\qj\li2205\sb0\sl-260\slmult0 \par\pa rd\qj\li2205\sb0\sl-260\slmult0 \par\pard\qj\li2205\sb0\sl-260\slmult0 \par\pard \qj\li2205\sb0\sl-260\slmult0 \par\pard\qj\li2205\sb0\sl-260\slmult0 \par\pard\q j\li2205\ri918\sb25\sl-260\slmult0 \up0 \expndtw0\charscalex103 \ul0\nosupersub\ cf1\f2\fs23 US Senate Permanent Subcommittee on Investigations, \ul0\nosupersub\ cf7\f8\fs23 Money Laundering and Foreign \up0 \expndtw0\charscalex103 Corruption : Enforcement and Effectiveness of the Patriot Act Report\ul0\nosupersub\cf1\f2\ fs23 (2004) \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl264\slmult0 \par\pard\ql\li2205\sb9\sl-264\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf4\f5\fs23 4. Case Law \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb12\sl-264\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosu persub\cf7\f8\fs23 Abou-Rahmah v Abatcha \ul0\nosupersub\cf1\f2\fs23 [2006] EWCA Civ 1492 \par\pard\qj \li2205\ri3502\sb48\sl-540\slmult0 \up0 \expndtw-3\charsc alex100 \ul0\nosupersub\cf7\f8\fs23 Affin Bank Bhd v Datuk Ahmad Zahid Hamidi\ul 0\nosupersub\cf1\f2\fs23 [2005] 1 CLJ 521 \up0 \expndtw-3\charscalex100 \ul0\no supersub\cf7\f8\fs23 Ansari v The Queen\ul0\nosupersub\cf1\f2\fs23 [2007] NSWCC A 204 \par\pard\qj \li2205\ri1757\sb17\sl-520\slmult0 \up0 \expndtw-2\charscalex 100 \ul0\nosupersub\cf7\f8\fs23 Attorney General of Hong Kong v Lorraine Esme Os man & Ors\ul0\nosupersub\cf1\f2\fs23 [1994] 3 MLJ 480 \up0 \expndtw-3\charscale x100 \ul0\nosupersub\cf7\f8\fs23 Baden v Societe Generale\ul0\nosupersub\cf1\f2\ fs23 [1983] BCLC 325 \par\pard\qj \li2205\ri918\sb219\sl-280\slmult0 \up0 \expn dtw0\charscalex100 \ul0\nosupersub\cf7\f8\fs23 Bank Bumiputra Malaysia Bhd v Che ong Yoke Choy; Malaysian Central Depository Sdn \up0 \expndtw0\charscalex100 Bhd (Intervener)\ul0\nosupersub\cf1\f2\fs23 2000] 7 CLJ 157 \par\pard\qj \li2205\r i1893\sb26\sl-540\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf7\f8\f s23 Barlow Clowes International Ltd. V Eurotrust International Ltd\ul0\nosupersu b\cf1\f2\fs23 [2005] UKPC 37 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf7\ f8\fs23 Barnes v. Addy \ul0\nosupersub\cf1\f2\fs23 (1874) LR 9 Ch App 244 \par\p ard\qj \li2205\ri5071\sb0\sl-540\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosu persub\cf7\f8\fs23 BCCI (Overseas) Ltd v Akindele\ul0\nosupersub\cf1\f2\fs23 [2 001] Ch 437 \line \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf7\f8\fs23 Blun t v Park Lane Hotel Ltd.\ul0\nosupersub\cf1\f2\fs23 [1942] 2 ICB 253 \par\pard\ ql \li2205\sb228\sl-264\slmult0 \up0 \expndtw-2\charscalex100 City \ul0\nosupers ub\cf7\f8\fs23 Growth Sdn Bhd & Anor v. The Government of Malaysia\ul0\nosupersu b\cf4\f5\fs23 \ul0\nosupersub\cf1\f2\fs23 [2005] 7 CLJ 422 \par\pard\qj \li2205 \ri1383\sb48\sl-540\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf7\f8 \fs23 Datuk Haji Wasli bin Mohd Said v Federal Attorney General of Malaysia (unr eported) \up0 \expndtw-3\charscalex100 Gilligan v. Criminal Assets Bureau\ul0\no supersub\cf1\f2\fs23 [1997] IEHC 106 \par\pard\qj \li2205\ri1056\sb0\sl-540\slm

ult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf7\f8\fs23 Governor and Comp any of the Bank of Scotland v A Ltd and Others\ul0\nosupersub\cf1\f2\fs23 [2001 ] EWCA Civ 52 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf7\f8\fs23 Hosni Ta yeb v HSBC Bank plc\ul0\nosupersub\cf1\f2\fs23 [2004] EWCH 1529 \par\pard\qj \l i2205\ri3483\sb0\sl-540\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf 7\f8\fs23 K Ltd v National Westminster Bank Plc\ul0\nosupersub\cf1\f2\fs23 [200 6] EWCA Civ 1039 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf7\f8\fs23 K Ltd v Natwest Bank\ul0\nosupersub\cf1\f2\fs23 [2006] EWCA Civ 1039 \par\pard\qj \l i2205\ri3567\sb0\sl-540\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf 7\f8\fs23 Kanagasavey a/l Sinayah v. Public Prosecutor \ul0\nosupersub\cf1\f2\fs 23 [1995] 1LNS 98 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf7\f8\fs23 Kara k Rubber Co Ltd v Burden\ul0\nosupersub\cf1\f2\fs23 [1972] 1 WLR 602 \par\pard\ li2205\sb205\sl-264\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf 7\f8\fs23 Ketua Polis Negara & Anor v Gan Bee Huat & Other Appeals\ul0\nosupersu b\cf1\f2\fs23 [1998] 3 CLJ 1\par\pard\li2205\sb196\sl-264\slmult0\fi8243 \up0 \ expndtw-3\charscalex100 335\par\pard\sect\sectd\fs24\paperw11900\paperh16840\par d\sb0\sl-240{\bkmkstart Pg345}{\bkmkend Pg345}\par\pard\qj \li2205\sb0\sl-520\sl mult0 \par\pard\qj\li2205\sb0\sl-520\slmult0 \par\pard\qj\li2205\sb0\sl-520\slmu lt0 \par\pard\qj\li2205\ri3831\sb70\sl-520\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf7\f8\fs23 Ketua Polis Negara & Anor v Gan Bee Huat [1998] \ul 0\nosupersub\cf1\f2\fs23 3 CLJ 1 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\c f7\f8\fs23 Leask v The Commonwealth \ul0\nosupersub\cf1\f2\fs23 [1996] 187 CLR 3 79 \par\pard\ql \li2205\sb232\sl-264\slmult0 \up0 \expndtw-3\charscalex100 \ul0\ nosupersub\cf7\f8\fs23 Lian Keow Sdn Bhd v Chelliah Paramjothy & Anor\ul0\nosupe rsub\cf1\f2\fs23 [1988] 1 CLJ (Rep) 729 \par\pard\qj \li2205\ri1068\sb48\sl-540 \slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf7\f8\fs23 Lim Lean Heng v Wako Merchant Bank (Singapore) Ltd & Other Appeals\ul0\nosupersub\cf1\f2\fs2 3 [2004] 3 CLJ 9 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf7\f8\fs23 Lipk in Gorman v Karpnale Ltd\ul0\nosupersub\cf1\f2\fs23 [1987] 1 WLR 987 \par\pard\ qj \li2205\ri919\sb232\sl-260\slmult0\fi0 \up0 \expndtw0\charscalex100 \ul0\nosu persub\cf7\f8\fs23 Majlis Agama Islam Negeri Johor v United Merchant Finance Ber had and Anor \ul0\nosupersub\cf1\f2\fs23 [1995] 1 \up0 \expndtw0\charscalex100 L NS 127 \par\pard\qj \li2205\ri955\sb49\sl-540\slmult0 \up0 \expndtw-2\charscalex 100 \ul0\nosupersub\cf7\f8\fs23 Megah Sakti Sdn. Bhd v Oversea-Chinese Banking C orporation Limited.\ul0\nosupersub\cf1\f2\fs23 [2005] 1 LNS 375 \up0 \expndtw-3 \charscalex100 \ul0\nosupersub\cf7\f8\fs23 N2J Ltd v Cater Allen Ltd\ul0\nosuper sub\cf1\f2\fs23 (unreported, February 21, 2006) \par\pard\ql \li2205\sb228\sl-2 64\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf7\f8\fs23 Paragon Fin ance plc v D. B. Thakerar & Co \ul0\nosupersub\cf1\f2\fs23 [1999] 1 All E.R. 400 \par\pard\ql \li2205\sb256\sl-264\slmult0 \up0 \expndtw-2\charscalex100 \ul0\no supersub\cf7\f8\fs23 Pesuruhjaya Ibu Kota Kuala Lumpur v Public Trustee & Ors\ul 0\nosupersub\cf1\f2\fs23 [1971] 2 MLJ 30 \par\pard\qj \li2205\ri1388\sb48\sl-54 0\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf7\f8\fs23 Pharmmalaysi a Bhd v Dinesh Kumar Jashbai Nagjibha Patel & Ors \ul0\nosupersub\cf1\f2\fs23 [2 004] 7 CLJ 465 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf7\f8\fs23 Polly P eck International plc v Nadir\ul0\nosupersub\cf1\f2\fs23 (No 2) [1992] 4 All ER 769 \par\pard\ql \li2205\ri3788\sb0\sl-540\slmult0 \up0 \expndtw-3\charscalex10 0 \ul0\nosupersub\cf7\f8\fs23 Public Finance Bhd v Public Prosecutor \ul0\nosupe rsub\cf1\f2\fs23 [1999] 8 CLJ 485 \line \up0 \expndtw-3\charscalex100 \ul0\nosup ersub\cf7\f8\fs23 Public Prosecutor v Lee Kee Seng & Anor\ul0\nosupersub\cf1\f2\ fs23 [2005] 7 MLJ 336 \line \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf7\f 8\fs23 Public Prosecutor v Lim Ah Kew (unreported) \line \up0 \expndtw-3\charsca lex100 Public Prosecutor v Tan Lee Kok\ul0\nosupersub\cf1\f2\fs23 [1988] 2 CLJ 286 \par\pard\qj \li2205\ri1660\sb0\sl-540\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf7\f8\fs23 Puncakdana Sdn Bhd v Tribunal Tuntutan Pembeli Ruma h & Ors\ul0\nosupersub\cf1\f2\fs23 [2003] 7 CLJ 350 \up0 \expndtw-3\charscalex1 00 \ul0\nosupersub\cf7\f8\fs23 Queensland Bacon v Rees\ul0\nosupersub\cf1\f2\fs2 3 [1965] 115 CLR 266 \par\pard\qj \li2205\ri5849\sb0\sl-540\slmult0 \up0 \expndt w-3\charscalex100 \ul0\nosupersub\cf7\f8\fs23 R v Da Silva \ul0\nosupersub\cf1\f 2\fs23 [2006] EWCA Crim 1654 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf7\f

8\fs23 R v Foster\ul0\nosupersub\cf1\f2\fs23 [2008] QCA 90 \par\pard\li2205\sb2 11\sl-264\slmult0\fi0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf7\f8\fs23 R v Huang\ul0\nosupersub\cf1\f2\fs23 [2007] NSWCCA 259\par\pard\li2205\sb0\sl-2 64\slmult0\par\pard\li2205\sb9\sl-264\slmult0\fi0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf7\f8\fs23 Rogers v The Queen\ul0\nosupersub\cf1\f2\fs23 [1995 ] 64 SASR 280\par\pard\li2205\sb0\sl-264\slmult0\par\pard\li2205\sb9\sl-264\slmu lt0\fi0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf7\f8\fs23 Royal Brunei A irlines Sdn Bhd v Tan\ul0\nosupersub\cf1\f2\fs23 [1995] 2 AC 378\par\pard\li220 5\sb196\sl-264\slmult0\fi8244 \up0 \expndtw-3\charscalex100 336\par\pard\sect\se ctd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart Pg346}{\bkmkend Pg34 6}\par\pard\qj \li2205\sb0\sl-520\slmult0 \par\pard\qj\li2205\sb0\sl-520\slmult0 \par\pard\qj\li2205\sb0\sl-520\slmult0 \par\pard\qj\li2205\ri2251\sb70\sl-520\s lmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf7\f8\fs23 Sabah Bank Bhd v Borneo Housing Mortgage Finance Bhd\ul0\nosupersub\cf1\f2\fs23 [1992] 3 CLJ 5 18 \line \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf7\f8\fs23 Selangor Unit ed Rubber Estates Ltd v Cradock\ul0\nosupersub\cf1\f2\fs23 (No 3) [1968] 1 WLR 1555 \par\pard\qj \li2205\ri916\sb219\sl-280\slmult0 \up0 \expndtw0\charscalex10 3 \ul0\nosupersub\cf7\f8\fs23 Squirrell Ltd v National Westminister Bank plc (cu stoms and excise intervening)\ul0\nosupersub\cf1\f2\fs23 [2005] \up0 \expndtw0\ charscalex103 EWHC 664 \par\pard\ql \li2205\sb254\sl-264\slmult0 \up0 \expndtw-3 \charscalex100 \ul0\nosupersub\cf7\f8\fs23 Tan Eng Seong v Malayan Banking Berha d \ul0\nosupersub\cf1\f2\fs23 [1997] 2 CLJ Supp 552 \par\pard\ql \li2205\sb0\sl264\slmult0 \par\pard\ql\li2205\sb12\sl-264\slmult0 \up0 \expndtw0\charscalex103 \ul0\nosupersub\cf7\f8\fs23 Tan Lay Soon v Kam Mah Theatres Sdn Bhd (Malayan Un ited Finance Bhd, Intervener \par\pard\ql \li2205\sb16\sl-264\slmult0 \up0 \expn dtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 [1993] 1 CLJ 83 \par\pard\ql \li 2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb12\sl-264\slmult0 \up0 \expndtw-3\ charscalex100 \ul0\nosupersub\cf7\f8\fs23 Tan Sri Eric Chia Eng Hock v Public Pr osecutor \ul0\nosupersub\cf1\f2\fs23 [2006] 3 CLJ 693 \par\pard\ql \li2205\sb0\s l-264\slmult0 \par\pard\ql\li2205\sb12\sl-264\slmult0 \up0 \expndtw0\charscalex1 07 \ul0\nosupersub\cf7\f8\fs23 The Attorney General of Hong Kong v Zauyah Wan Ch ik & 3 Ors & Another Appeal \par\pard\ql \li2205\sb1\sl-259\slmult0 \up0 \expndt w-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 [1995] 3 CLJ 35 \par\pard\qj \li22 05\ri2277\sb66\sl-520\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf7\ f8\fs23 Tournier v National Provincial and Union Bank of England \ul0\nosupersub \cf1\f2\fs23 [1924] 1 KB 461 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf7\f 8\fs23 Twinsectra Ltd v Yardley\ul0\nosupersub\cf1\f2\fs23 [2002] 2 Ac 164 \par \pard\ql \li2205\sb232\sl-264\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosuper sub\cf7\f8\fs23 Vohrah-Merican Sdn Bhd v Gombak Land Sdn Bhd\ul0\nosupersub\cf1\ f2\fs23 [2006] 1 LNS 193 \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\l i2205\sb12\sl-264\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf7\f8\f s23 Wako Merchant Bank (Singapore) Ltd v Lim Lean Heng & Ors \ul0\nosupersub\cf1 \f2\fs23 [2000] 4 CLJ 223 \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\l i2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb8\sl-264\slmult0 \up0 \expndtw-3\ charscalex100 \ul0\nosupersub\cf4\f5\fs23 5. Legislation \par\pard\qj \li2205\ri 1175\sb48\sl-540\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf7\f8\fs 23 Anti Money Laundering and Counter-Terrorism Financing Rules Instrument 2007 ( No.1\ul0\nosupersub\cf1\f2\fs23 ) \up0 \expndtw-3\charscalex100 \ul0\nosupersub\ cf7\f8\fs23 Anti-Corruption Act 1997 \par\pard\ql \li2205\sb228\sl-264\slmult0 \ up0 \expndtw-3\charscalex100 Anti-Money Laundering Act (Invocation of Part IV) O rder 2006 \par\pard\li2205\sb0\sl-264\slmult0\par\pard\li2205\sb19\sl-264\slmult 0\fi0\tx8363 \up0 \expndtw0\charscalex101 Anti-Money Laundering and Anti-T errorism Financing\tab \up0 \expndtw0\charscalex101 (Reporting Obligations)\ par\pard\li2205\sb4\sl-264\slmult0\fi0 \up0 \expndtw0\charscalex101 Regulations 2007\par\pard\ql \li2205\sb261\sl-264\slmult0 \up0 \expndtw-3\charscalex100 Anti -Money Laundering and Anti-Terrorism Financing Act 2001 \par\pard\qj \li2205\sb0 \sl-260\slmult0 \par\pard\qj\li2205\ri916\sb20\sl-260\slmult0 \up0 \expndtw0\cha rscalex102 Anti-Money Laundering and Anti-Terrorism Financing Act 2001\ul0\nosup ersub\cf1\f2\fs23 , (Invocation of Part IV) \up0 \expndtw0\charscalex102 Order 2 006 \par\pard\qj \li2205\ri2543\sb49\sl-540\slmult0 \up0 \expndtw-3\charscalex10

0 \ul0\nosupersub\cf7\f8\fs23 Anti-Money Laundering and Counter-Terrorism Financ ing Act 2006\ul0\nosupersub\cf1\f2\fs23 (Cth) \up0 \expndtw-3\charscalex100 \ul 0\nosupersub\cf7\f8\fs23 Anti-Terrorism Act (No.2) Bill 2005\ul0\nosupersub\cf1\ f2\fs23 (Cth) \par\pard\ql \li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb1 44\sl-264\slmult0 \up0 \expndtw-3\charscalex100 337 \par\pard\sect\sectd\fs24\pa perw11900\paperh16840\pard\sb0\sl-240{\bkmkstart Pg347}{\bkmkend Pg347}\par\pard \ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb241\sl-264\slmult0 \up0 \expndt w-3\charscalex100 \ul0\nosupersub\cf7\f8\fs23 Banker\u8217?s Book (Evidence) Act 1949 \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb12\sl-264\sl mult0 \up0 \expndtw-3\charscalex100 Banking and Financial Institutions Act 1989 \par\pard\qj \li2205\sb0\sl-260\slmult0 \par\pard\qj\li2205\ri919\sb20\sl-260\sl mult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf1\f2\fs23 BNM,\ul0\nosuper sub\cf7\f8\fs23 Anti-Money Laundering and Counter Financing of Terrorism Sector al Guidelines 1 \up0 \expndtw-3\charscalex100 for Banking and Financial Institut ions \par\pard\qj \li2205\ri917\sb264\sl-280\slmult0 \up0 \expndtw0\charscalex10 2 \ul0\nosupersub\cf1\f2\fs23 BNM,\ul0\nosupersub\cf7\f8\fs23 Minimum Guideline s on the Provision of Internet Banking Services by Licensed \up0 \expndtw-5\char scalex100 Banking Institutions \par\pard\qj \li2205\ri917\sb240\sl-280\slmult0 \ up0 \expndtw0\charscalex100 \ul0\nosupersub\cf1\f2\fs23 BNM,\ul0\nosupersub\cf7\ f8\fs23 Standard Guidelines on Anti-Money Laundering and Counter Financ ing of \up0 \expndtw0\charscalex100 Terrorism \par\pard\qj \li2205\ri5265\sb62\ sl-520\slmult0 \up0 \expndtw-3\charscalex100 Charter of the United Nations Act 1 945\ul0\nosupersub\cf1\f2\fs23 (Cth) \up0 \expndtw-3\charscalex100 \ul0\nosuper sub\cf7\f8\fs23 Crimes Act 1914\ul0\nosupersub\cf1\f2\fs23 (Cth) \par\pard\ql \ li2205\ri6672\sb4\sl-540\slmult0 \up0 \expndtw-5\charscalex100 \ul0\nosupersub\c f7\f8\fs23 Criminal Code Act 1995\ul0\nosupersub\cf1\f2\fs23 (Cth) \up0 \expndt w-5\charscalex100 \ul0\nosupersub\cf7\f8\fs23 Criminal Procedure Code \up0 \expn dtw-5\charscalex100 Customs Act 1967 \par\pard\qj \li2205\ri4637\sb0\sl-540\slmu lt0 \up0 \expndtw-3\charscalex100 Dangerous Drugs (Forfeiture of Property) Act 1 988 \up0 \expndtw-5\charscalex100 Dangerous Drugs Act 1952 \par\pard\ql \li2205\ sb208\sl-264\slmult0 \up0 \expndtw-3\charscalex100 Excise Act 1976 \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb12\sl-264\slmult0 \up0 \expndtw -5\charscalex100 Federal Constitution \par\pard\ql \li2205\sb0\sl-264\slmult0 \p ar\pard\ql\li2205\sb12\sl-264\slmult0 \up0 \expndtw-5\charscalex100 Financial Tr ansactions Act 1988\ul0\nosupersub\cf1\f2\fs23 (Cth) \par\pard\ql \li2205\sb0\s l-264\slmult0 \par\pard\ql\li2205\sb12\sl-264\slmult0 \up0 \expndtw-5\charscalex 100 \ul0\nosupersub\cf7\f8\fs23 Financial Transactions Report Act 1988\ul0\nosup ersub\cf1\f2\fs23 (Cth) \par\pard\qj \li2205\ri2082\sb48\sl-540\slmult0 \up0 \e xpndtw-5\charscalex100 \ul0\nosupersub\cf7\f8\fs23 Guidelines on Money Launderin g and Know Your Customer Policy(BNM/GP9) \up0 \expndtw-5\charscalex100 Labuan Of fshore Financial Services Authority Act 1996 \par\pard\ql \li2205\sb228\sl-264\s lmult0 \up0 \expndtw-3\charscalex100 Labuan Offshore Trust Act 1996 \par\pard\qj \li2205\ri916\sb243\sl-280\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersu b\cf1\f2\fs23 LOFSA\ul0\nosupersub\cf7\f8\fs23 , AML/CFT Sectoral Guidelines 1 f or Offshore Financial Institutions Licensed or \up0 \expndtw-2\charscalex100 Reg istered under Offshore Banking Act 1990 \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb10\sl-264\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosup ersub\cf1\f2\fs23 LOFSA, \ul0\nosupersub\cf7\f8\fs23 Guidelines on Entry Criteri a for Offshore Bank in Labuan 2001 \par\pard\ql \li10449\sb0\sl-264\slmult0 \par \pard\ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb188\sl-264\slmult0 \u p0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 338 \par\pard\sect\sectd \fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart Pg348}{\bkmkend Pg348}\ par\pard\qj \li2205\sb0\sl-280\slmult0 \par\pard\qj\li2205\sb0\sl-280\slmult0 \p ar\pard\qj\li2205\sb0\sl-280\slmult0 \par\pard\qj\li2205\sb0\sl-280\slmult0 \par \pard\qj\li2205\sb0\sl-280\slmult0 \par\pard\qj\li2205\ri918\sb148\sl-280\slmult 0 \up0 \expndtw0\charscalex107 \ul0\nosupersub\cf1\f2\fs23 LOFSA\ul0\nosupersub\ cf7\f8\fs23 , Standard Guidelines on Anti-Money Laundering and Counter Financing of \up0 \expndtw-3\charscalex100 Terrorism \par\pard\ql \li2205\ri4421\sb26\sl-

540\slmult0 \up0 \expndtw-3\charscalex100 Mutual Assistance in Criminal Matters Act 1987\ul0\nosupersub\cf1\f2\fs23 (Cth) \up0 \expndtw-3\charscalex100 \ul0\no supersub\cf7\f8\fs23 Mutual Assistance in Criminal Matters Act 2002 \line \up0 \ expndtw-3\charscalex100 Offshore Banking Act 1990 \par\pard\qj \li2205\ri6691\sb 0\sl-540\slmult0 \up0 \expndtw-3\charscalex100 Offshore Companies Act 1990 \up0 \expndtw-3\charscalex100 Penal Code \par\pard\qj \li2205\ri6315\sb17\sl-520\slmu lt0 \up0 \expndtw-3\charscalex100 Proceeds of Crime Act 1987 \ul0\nosupersub\cf1 \f2\fs23 (Cth) \line \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf7\f8\fs23 P roceeds of Crime Act 2002 \ul0\nosupersub\cf1\f2\fs23 (Cth) \par\pard\ql \li2205 \sb232\sl-264\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf7\f8\fs23 Standard Guidelines on Anti-Money Laundering and Counter Financing of Terrorism \par\pard\qj \li2205\ri916\sb263\sl-280\slmult0 \up0 \expndtw-1\charscalex100 Su pplementary Notes to GP9: Guidelines on Money Laundering and Know Your Customer \line \up0 \expndtw-2\charscalex100 Policy \par\pard\ql \li2205\sb254\sl-264\slm ult0 \up0 \expndtw-3\charscalex100 The Code of Good Banking Practice \par\pard\q j \li2205\ri3749\sb48\sl-540\slmult0 \up0 \expndtw-3\charscalex100 The Security Commission Anti-Money Laundering Guidelines \up0 \expndtw-3\charscalex100 The US A PATRIOT Act \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb224\ sl-264\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf4\f5\fs23 6. Trea ties \par\pard\qj \li2205\ri917\sb263\sl-280\slmult0 \up0 \expndtw0\charscalex10 0 \ul0\nosupersub\cf1\f2\fs23 European Council Directive 1991 on Prevention of t he Use of the Financial System for the \up0 \expndtw-1\charscalex100 Purpose of Money Laundering \par\pard\qj \li2205\ri2355\sb26\sl-540\slmult0 \up0 \expndtw-2 \charscalex100 The United Nation Convention against Transnational Organized Crim e 2000 \up0 \expndtw-3\charscalex100 The United Nation Terrorist Financing Conve ntion 1999 \par\pard\qj \li2205\ri916\sb232\sl-260\slmult0 \up0 \expndtw0\charsc alex102 The United Nation Convention against Illicit Traffic in Narcotic Drugs a nd Psychotropic \up0 \expndtw0\charscalex102 Substances 1988 \par\pard\ql \li220 5\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\ sb29\sl-264\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf4\f5\fs23 7. Other Sources \par\pard\qj \li2205\ri1743\sb65\sl-520\slmult0 \up0 \expndtw-2\c harscalex100 \ul0\nosupersub\cf1\f2\fs23 AUSTRAC Draft AML/CTF Rules in respect of Ongoing Customer Due Diligence \up0 \expndtw-3\charscalex100 AUSTRAC Guidance Note-Designated Business Groups \par\pard\ql \li10449\sb152\sl-264\slmult0 \up0 \expndtw-3\charscalex100 339 \par\pard\sect\sectd\fs24\paperw11900\paperh16840\ pard\sb0\sl-240{\bkmkstart Pg349}{\bkmkend Pg349}\par\pard\ql \li2205\sb0\sl-264 \slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\s lmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slm ult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb257\sl-264\slm ult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 AUSTRAC Guidance Notes-Correspondent Banking \par\pard\qj \li2205\ri917\sb243\sl-280\slmult0 \up0 \expndtw-2\charscalex100 AUSTRAC Media Release, \u8216?Australia endorses globa l anti-money laundering standards\u8217? 8 \up0 \expndtw-3\charscalex100 Decembe r 2003 \par\pard\qj \li2205\sb0\sl-260\slmult0 \par\pard\qj\li2205\ri917\sb17\sl -260\slmult0 \up0 \expndtw0\charscalex102 Basle Committee on Banking Supervi sion, \ul0\nosupersub\cf7\f8\fs23 Core Principles for Effective Banking \up 0 \expndtw0\charscalex102 Supervision 1997 \par\pard\ql \li2205\sb0\sl-264\slmul t0 \par\pard\ql\li2205\sb13\sl-264\slmult0 \up0 \expndtw-2\charscalex100 \ul0\no supersub\cf1\f2\fs23 Basle Committee on Banking Supervision, \ul0\nosupersub\cf7 \f8\fs23 Customer Due Diligence for Banks\ul0\nosupersub\cf1\f2\fs23 \ul0\nosup ersub\cf7\f8\fs23 2001 \par\pard\qj \li2205\sb0\sl-260\slmult0 \par\pard\qj\li22 05\ri916\sb20\sl-260\slmult0 \up0 \expndtw0\charscalex103 \ul0\nosupersub\cf1\f2 \fs23 Basle Committee on Banking Supervision, \ul0\nosupersub\cf7\f8\fs23 Preven tion of Criminal Use of the Banking \up0 \expndtw-5\charscalex100 System for the Purpose of Money Laundering 1988 \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\p ard\ql\li2205\sb13\sl-264\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\ cf1\f2\fs23 Craig Howie, \u8216?Awash with Dirty Laundry\u8217?, \ul0\nosupersub \cf7\f8\fs23 The Dominion\ul0\nosupersub\cf1\f2\fs23 , 8 September 2000 \par\par d\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb12\sl-264\slmult0\tx3888 \ up0 \expndtw-2\charscalex100 Douglas Farah, \tab \up0 \expndtw0\charscalex100 \

u8216?Russian Crime Finds Haven in Caribbean; Columbian Drug Ties \par\p ard\qj \li2205\ri916\sb0\sl-280\slmult0 \up0 \expndtw-1\charscalex100 Suspected as Secretive Banks Proliferate\u8217?, \ul0\nosupersub\cf7\f8\fs23 The Washingto n Post\ul0\nosupersub\cf1\f2\fs23 (Washington), 7 October \line \up0 \expndtw-2 \charscalex100 1996 \par\pard\qj \li2205\ri916\sb223\sl-280\slmult0\fi0 \up0 \ex pndtw0\charscalex102 Embun Majid, \u8216?Ex-Bank Manager Hit with Record Fine an d jailed 13 Years\u8217?, \ul0\nosupersub\cf7\f8\fs23 The Star \up0 \expndtw-5\c harscalex100 \ul0\nosupersub\cf1\f2\fs23 (Kuala Lumpur), 26 January 2007 \par\pa rd\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb10\sl-264\slmult0 \up0 \e xpndtw-5\charscalex100 Explanatory Memorandum, Proceeds of Crime Bill 2002 \par\ pard\qj \li2205\sb0\sl-260\slmult0 \par\pard\qj\li2205\ri915\sb20\sl-260\slmult0 \up0 \expndtw-3\charscalex100 Explanatory Memorandum, Anti-Money Laundering and Counter-Terrorism Financing Bill \line \up0 \expndtw-4\charscalex100 2006 \par\ pard\qj \li2205\ri941\sb49\sl-540\slmult0 \up0 \expndtw-2\charscalex100 FSA Medi a Release, FSA Fines Abbey National Companies 2,320,000, 10 December, 2003 \up0 \expndtw-3\charscalex100 Gary Neil, \u8216?Places in the Sun\u8217? \ul0\nosuper sub\cf7\f8\fs23 The Economist\ul0\nosupersub\cf1\f2\fs23 , 22 February 2007 \par \pard\ql \li2205\sb228\sl-264\slmult0 \up0 \expndtw-2\charscalex100 M Mageswari, \u8216?Case Makes Legal History\u8217? \ul0\nosupersub\cf7\f8\fs23 The Star\ul0 \nosupersub\cf1\f2\fs23 (Kuala Lumpur), 22 April 2006 \par\pard\qj \li2205\ri91 6\sb243\sl-280\slmult0 \up0 \expndtw-2\charscalex100 M Mageswari, \u8216?Police Revoke Seizure Order Issued against InventQjaya\u8217? \ul0\nosupersub\cf7\f8\fs 23 The Star \ul0\nosupersub\cf1\f2\fs23 (Kuala \up0 \expndtw-3\charscalex100 Lum pur), 10\ul0\nosupersub\cf7\f8\fs23 \ul0\nosupersub\cf1\f2\fs23 January 2006 \ par\pard\qj \li2205\sb0\sl-260\slmult0 \par\pard\qj\li2205\ri915\sb17\sl-260\slm ult0 \up0 \expndtw-1\charscalex100 Marcy Gordon, \u8216?Correspondent Banking Vu lnerable to Laundering, Senate Study Finds\u8217?, \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf7\f8\fs23 Associated Press Newswires\ul0\nosupersub\cf1\f2\fs 23 (Washington), 5 February 2001 \par\pard\qj \li2205\sb0\sl-260\slmult0 \par\p ard\qj\li2205\ri917\sb20\sl-260\slmult0 \up0 \expndtw-3\charscalex100 N A, \u821 6?Call for Banks to Report Suspicious Dealings\u8217? \ul0\nosupersub\cf7\f8\fs2 3 New Straits Times\ul0\nosupersub\cf1\f2\fs23 (Kuala Lumpur), 7 \up0 \expndtw4\charscalex100 June 2001 \par\pard\qj \li2205\ri918\sb264\sl-280\slmult0\fi0 \u p0 \expndtw0\charscalex103 N A, \u8216?ACA seals assets worth RM25 millions\u821 7? \ul0\nosupersub\cf7\f8\fs23 New Straits Times\ul0\nosupersub\cf1\f2\fs23 (Ku ala Lumpur), 24 \up0 \expndtw0\charscalex103 January 2007 \par\pard\ql \li10449\ sb0\sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\ sb186\sl-264\slmult0 \up0 \expndtw-3\charscalex100 340 \par\pard\sect\sectd\fs24 \paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart Pg350}{\bkmkend Pg350}\par\p ard\qj \li2205\sb0\sl-280\slmult0 \par\pard\qj\li2205\sb0\sl-280\slmult0 \par\pa rd\qj\li2205\sb0\sl-280\slmult0 \par\pard\qj\li2205\sb0\sl-280\slmult0 \par\pard \qj\li2205\sb0\sl-280\slmult0 \par\pard\qj\li2205\ri915\sb148\sl-280\slmult0 \up 0 \expndtw-2\charscalex100 \ul0\nosupersub\cf1\f2\fs23 Paul Beckett, \u8216?Citi bank to testify at Money Laundering Hearings\u8217?, \ul0\nosupersub\cf7\f8\fs23 The Wall Street Journal \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs 23 (New York), 26 February 2001 \par\pard\qj \li2205\ri918\sb240\sl-280\slmult0 \up0 \expndtw0\charscalex100 The New York Clearing House Association, \ul0\nosup ersub\cf7\f8\fs23 Guidelines for Counter Money Laundering \up0 \expndtw0\charsca lex100 Policies and Procedures in Correspondent Banking \ul0\nosupersub\cf1\f2\f s23 (2002) \par\pard\qj \li2205\sb0\sl-260\slmult0 \par\pard\qj\li2205\ri917\sb1 7\sl-260\slmult0 \up0 \expndtw0\charscalex102 William Hall, \u8216?Swiss Banking Investigation\u8217?, \ul0\nosupersub\cf7\f8\fs23 Financial Times\ul0\nosupersu b\cf1\f2\fs23 (London), 5 September, \line \up0 \expndtw-5\charscalex100 2000 \ par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb13\sl-264\slmult0 \ up0 \expndtw-4\charscalex100 Wolfsberg Group, \ul0\nosupersub\cf7\f8\fs23 Global Anti-Money Laundering Guidelines for Private Banking\ul0\nosupersub\cf1\f2\fs23 (2002) \par\pard\qj \li2205\sb0\sl-270\slmult0 \par\pard\qj\li2205\ri917\sb2\s l-270\slmult0 \up0 \expndtw0\charscalex104 Eusoff Chin \u8216?Bank Secrecy and C onfidentiality Laws: Their Impact on the Control of \up0 \expndtw0\charscalex105 Economic Crime in the Modern World\u8217? (Speech delivered at Economic Symposi

um, \up0 \expndtw-5\charscalex100 Cambridge University, 10 September 1995). \par \pard\ql \li2205\sb255\sl-264\slmult0\tx4208 \up0 \expndtw0\charscalex106 Huang Sin Cheng \tab \up0 \expndtw0\charscalex106 \u8216?Keynote Address at the Confer ence on Malaysian Anti-Money \par\pard\ql \li2205\sb16\sl-264\slmult0 \up0 \expn dtw-3\charscalex100 Laundering Act 2001\u8217? (Kuala Lumpur, 18 June 2001). \pa r\pard\qj \li2205\sb0\sl-260\slmult0 \par\pard\qj\li2205\ri916\sb20\sl-260\slmul t0 \up0 \expndtw0\charscalex100 Norhashimah Mohd. Yasin \u8216?Money Laundering: An Examination of the Malaysian Anti\up0 \expndtw-3\charscalex100 Money Launder ing Act 2001 (AMLA)\u8217?(Paper presented at the \ul0\nosupersub\cf7\f8\fs23 In ternational Conference on \up0 \expndtw-4\charscalex100 Law and Commerce in the New Millennium, \ul0\nosupersub\cf1\f2\fs23 Kuala Lumpur, 26 June 2002). \par\pa rd\qj \li2205\ri916\sb264\sl-280\slmult0 \up0 \expndtw0\charscalex106 Rais Yatim \u8216?Speech during the Official Opening of the Seminar on the Anti-Money \up0 \expndtw-3\charscalex100 Laundering Act 2001\u8217? (Kuala Lumpur, 21 August 20 01). \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb10\sl-264\slm ult0\tx3914 \up0 \expndtw-2\charscalex100 Rick McDonell \tab \up0 \expndtw-1\ch arscalex100 \u8216?Money Laundering Methodologies and International and Re gional \par\pard\qj \li2205\ri918\sb0\sl-260\slmult0 \up0 \expndtw0\charscalex10 4 Counter-Measure\u8217? (Paper presented at the Conference on Gambling, Technol ogy and \up0 \expndtw-4\charscalex100 Society: Regulatory Challenges for the 21\ ul0\super\cf8\f9\fs23 st\ul0\nosupersub\cf1\f2\fs23 Century,\ul0\nosupersub\cf7 \f8\fs23 \ul0\nosupersub\cf1\f2\fs23 Sydney, 7-8 May 1998). \par\pard\qj \li220 5\ri912\sb264\sl-280\slmult0 \up0 \expndtw-4\charscalex100 Salleh Harun \u8216?I mplementing an Effective Compliance Programme\u8217? (Speech delivered at the \u p0 \expndtw-5\charscalex100 Anti-Money Laundering Conference\ul0\nosupersub\cf7\ f8\fs23 , \ul0\nosupersub\cf1\f2\fs23 Kuala Lumpur, 29 July 2003). \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb10\sl-264\slmult0\tx4040 \up0 \ expndtw0\charscalex101 Tan Keng Song \tab \up0 \expndtw0\charscalex100 \u8216? Welcome Address at the Conference on Malaysian Anti-Money \par\pard\ql \l i2205\sb1\sl-259\slmult0 \up0 \expndtw-3\charscalex100 Laundering Act 2001\u8217 ? (Kuala Lumpur, 18 June 2001). \par\pard\qj \li2205\sb0\sl-270\slmult0 \par\par d\qj\li2205\ri917\sb2\sl-270\slmult0 \up0 \expndtw-1\charscalex100 Zeti Akhtar A ziz, \u8216?Governor\u8217?s Opening Remarks at the ASEAN Anti-Money Laundering \up0 \expndtw0\charscalex100 Workshop\u8217? (Speech delivered at the ASEAN Anti -Money Laundering Workshop\ul0\nosupersub\cf7\f8\fs23 , \ul0\nosupersub\cf1\f2\f s23 Kuala \up0 \expndtw-1\charscalex100 Lumpur, 28 July 2003) \par\pard\qj \li22 05\ri915\sb242\sl-280\slmult0 \up0 \expndtw-3\charscalex100 A Butani, B Chao and NA Session, Commission on Crime Prevention and Criminal Justice \line \up0 \exp ndtw-4\charscalex100 (2002). \par\pard\ql \li2205\sb1\sl-255\slmult0 \up0 \expnd tw-5\charscalex100 <{\field{\*\fldinst {HYPERLINK "http://modelun1.tripod.com /" }}{\fldrslt {\ul0\nosupersub\cf31\f32\fs23\ul http://modelun1.tripod.com\ul0\no supersub\cf1\f2\fs23 }}}\ul0\nosupersub\cf1\f2\fs23 > at 18 December 2006 \par\ pard\ql \li2205\sb0\sl-270\slmult0 \par\pard\ql\li2205\ri913\sb3\sl-270\slmult0 \up0 \expndtw0\charscalex104 Australian Government- Attorney General\u8217?s Dep artment, A Better Mutual Assistance \line \up0 \expndtw-4\charscalex100 System: A Review of Australia\u8217?s Mutual Assistance Law and Practice (2006) 8. \line \up0 \expndtw-5\charscalex100 < {\field{\*\fldinst {HYPERLINK "http://www.ag.go v.au/" }}{\fldrslt {\ul0\nosupersub\cf31\f32\fs23\ul http://www.ag.gov.au}}}\ul0 \nosupersub\cf1\f2\fs23 > at 1 November 2007 \par\pard\ql \li10449\sb0\sl-264\sl mult0 \par\pard\ql\li10449\sb191\sl-264\slmult0 \up0 \expndtw-3\charscalex100 34 1 \par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P g351}{\bkmkend Pg351}\par\pard\qj \li2205\sb0\sl-280\slmult0 \par\pard\qj\li2205 \sb0\sl-280\slmult0 \par\pard\qj\li2205\sb0\sl-280\slmult0 \par\pard\qj\li2205\s b0\sl-280\slmult0 \par\pard\qj\li2205\sb0\sl-280\slmult0 \par\pard\qj\li2205\ri2 418\sb148\sl-280\slmult0 \up0 \expndtw-5\charscalex100 \ul0\nosupersub\cf1\f2\fs 23 Azali Mohamed, \u8216?The Malaysian Economy and the Monetary Policy (2002) \l ine \up0 \expndtw-5\charscalex100 {\field{\*\fldinst {HYPERLINK "http://www.econ .upm.edu.my/~azali/fn.pdf/" }}{\fldrslt {\ul0\nosupersub\cf31\f32\fs23\ul http:/ /www.econ.upm.edu.my/~azali/FN.pdf}}}\ul0\nosupersub\cf1\f2\fs23 at 20 August 2 008 \par\pard\qj \li2205\ri2774\sb240\sl-280\slmult0 \up0 \expndtw-5\charscalex1

00 Bank Negara Malaysia, \u8216?Overview of the Islamic Banking in Malaysia\u821 7?. \line \up0 \expndtw-5\charscalex100 <{\field{\*\fldinst {HYPERLINK "http://w ww.bnm.gov.my/" }}{\fldrslt {\ul0\nosupersub\cf31\f32\fs23\ul http://www.bnm.gov .my}}}\ul0\nosupersub\cf1\f2\fs23 > at 12 April 2008 \par\pard\qj \li2205\sb0\sl -260\slmult0 \par\pard\qj\li2205\ri918\sb17\sl-260\slmult0 \up0 \expndtw-2\chars calex100 Basel Committee, \ul0\nosupersub\cf7\f8\fs23 Banking Secrecy and Intern ational Cooperation in Banking Supervision \line \up0 \expndtw-3\charscalex100 \ ul0\nosupersub\cf1\f2\fs23 (1981) \par\pard\ql \li2205\sb1\sl-259\slmult0 \up0 \ expndtw-3\charscalex100 < {\field{\*\fldinst {HYPERLINK "http://www.bis.org/publ /bcbsorf.pdf/" }}{\fldrslt {\ul0\nosupersub\cf31\f32\fs23\ul http://www.bis.org/ publ/bcbsorf.pdf}}}\ul0\nosupersub\cf1\f2\fs23 > at 5 April 2007 \par\pard\ql \ li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb13\sl-264\slmult0 \up0 \expndtw4\charscalex100 Department of the Treasury, \u8216?Financial Crimes Enforcement Network: Anti-Money \par\pard\qj \li2205\ri1441\sb20\sl-260\slmult0 \up0 \expndt w-4\charscalex100 Laundering Programs: Special Due Diligence Programs for Certai n Foreign Accounts; \up0 \expndtw-5\charscalex100 Final Rule and Proposed Rule ( 2006), 496. \par\pard\ql \li2205\sb17\sl-264\slmult0 \up0 \expndtw-3\charscalex1 00 <{\field{\*\fldinst {HYPERLINK "http://www.fincen.gov/finalrule01042006.pdf/" }}{\fldrslt {\ul0\nosupersub\cf31\f32\fs23\ul www.fincen.gov/finalrule01042006. pdf}}}\ul0\nosupersub\cf1\f2\fs23 > at 10 April 2007 \par\pard\ql \li2205\sb256\ sl-264\slmult0 \up0 \expndtw-5\charscalex100 J Petras, US Banks and the Dirty Mo ney Empire (2001). \par\pard\ql \li2205\sb16\sl-264\slmult0 \up0 \expndtw-4\char scalex100 <{\field{\*\fldinst {HYPERLINK "http://www.thirdworldtravel.com/banks/ dirtymoneyempire.html" }}{\fldrslt {\ul0\nosupersub\cf31\f32\fs23\ul http://www. thirdworldtravel.com/Banks/DirtyMoneyEmpire.html}}}\ul0\nosupersub\cf1\f2\fs23 > at 28 June 2005 \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb1 2\sl-264\slmult0\tx10177 \up0 \expndtw0\charscalex105 L Verwoerd, \ul0\nosupersu b\cf7\f8\fs23 Money Laundering and Economic and Financial Development \tab \up0 \expndtw-5\charscalex100 \ul0\nosupersub\cf1\f2\fs23 (2005) \par\pard\ql \li2205 \sb1\sl-259\slmult0 \up0 \expndtw-4\charscalex100 <{\field{\*\fldinst {HYPERLINK "http://www.austrac.gov.au/text/publications/moneylaundering/11.html" }}{\fldrs lt {\ul0\nosupersub\cf31\f32\fs23\ul http://www.austrac.gov.au/text/publications /moneylaundering/11.html}}}\ul0\nosupersub\cf1\f2\fs23 > at 5 July 2005. \par\pa rd\qj \li2205\sb0\sl-260\slmult0 \par\pard\qj\li2205\ri915\sb21\sl-260\slmult0 \ up0 \expndtw0\charscalex102 Mark Yeandle et al, \ul0\nosupersub\cf7\f8\fs23 Anti-Money Laundering Requirements: Costs, Benefits and \up0 \expndtw0\ch arscalex102 Perceptions\ul0\nosupersub\cf1\f2\fs23 ( 2005) 20 \par\pard\ql \li2 205\sb17\sl-264\slmult0 \up0 \expndtw-3\charscalex100 <{\field{\*\fldinst {HYPER LINK "http://www.corpooflondon.gov.uk/" }}{\fldrslt {\ul0\nosupersub\cf31\f32\fs 23\ul http://www.corpooflondon.gov.uk}}}\ul0\nosupersub\cf1\f2\fs23 > at 2 Novem ber, 2006 \par\pard\qj \li2205\sb0\sl-260\slmult0 \par\pard\qj\li2205\ri916\sb20 \sl-260\slmult0 \up0 \expndtw0\charscalex105 Mc Guire B \u8216?Money Laundering: Addressing Serious Compliance Risk with Serious \up0 \expndtw-5\charscalex100 B anking Technology\u8217? (2001) \par\pard\ql \li2205\sb1\sl-259\slmult0 \up0 \ex pndtw-3\charscalex100 < {\field{\*\fldinst {HYPERLINK "http://www.towegroup.com/ " }}{\fldrslt {\ul0\nosupersub\cf31\f32\fs23\ul http://www.towegroup.com}}}\ul0\ nosupersub\cf1\f2\fs23 > at 18 June 2005 \par\pard\qj \li2205\sb0\sl-270\slmult0 \par\pard\qj\li2205\ri1592\sb2\sl-270\slmult0 \up0 \expndtw-4\charscalex100 M E Beare (2001) \u8216?Critique of a Compliance-Driven Enforcement Strategy: Money \line \up0 \expndtw-4\charscalex100 Laundering and the Financial sector\u8217? Draft working paper presented to Transparency \line \up0 \expndtw-5\charscalex10 0 International \par\pard\qj \li2205\ri1678\sb19\sl-260\slmult0\fi0 \up0 \expndt w-2\charscalex100 <{\field{\*\fldinst {HYPERLINK "http://www.transparency.ca/rep orts/bankingethicspaper_margaretbeare.pdf/" }}{\fldrslt {\ul0\nosupersub\cf31\f3 2\fs23\ul http://www.transparency.ca/reports/bankingEthicsPaper_MargaretBeare.PD F}}}\ul0\nosupersub\cf31\f32\fs23\ul >at\ul0\nosupersub\cf1\f2\fs23 3 \line \up 0 \expndtw-5\charscalex100 December 2006 \par\pard\qj \li2205\sb0\sl-260\slmult0 \par\pard\qj\li2205\ri915\sb20\sl-260\slmult0 \up0 \expndtw-3\charscalex100 M H Fleming, \u8216?UK Law Enforcement Agency Use and Management of Suspicious Acti vity \up0 \expndtw-4\charscalex100 Reports: Towards Determining the Value of the

Regime\u8217? (2005), 7. \par\pard\qj \li2205\ri1004\sb20\sl-260\slmult0 \up0 \ expndtw-2\charscalex100 <{\field{\*\fldinst {HYPERLINK "http://www.jdi.ucl.ac.uk /downloads/pdf/fleming_lea_use_and_magmt_of_sars_june/" }}{\fldrslt {\ul0\nosupe rsub\cf31\f32\fs23\ul http://www.jdi.ucl.ac.uk/downloads/pdf/Fleming_LEA_Use_and _Magmt_of_SARs_June}}} \line \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf31\ f32\fs23\ul 2005.pdf\ul0\nosupersub\cf1\f2\fs23 > at 13 December 2006 \par\pard\ qj \li2205\sb0\sl-260\slmult0 \par\pard\qj\li2205\ri3416\sb20\sl-260\slmult0 \up 0 \expndtw-5\charscalex100 Money Laundering Theme- International Banking Cluster (2001) \line \up0 \expndtw-5\charscalex100 < {\field{\*\fldinst {HYPERLINK "htt p://www.fsa.gov.uk/" }}{\fldrslt {\ul0\nosupersub\cf31\f32\fs23\ul http://www.fs a.gov.uk}}}\ul0\nosupersub\cf1\f2\fs23 > at 18 May 2007 \par\pard\qj \li2205\ri9 19\sb165\sl-400\slmult0 \up0 \expndtw-1\charscalex100 Nikos Passas, \ul0\nosuper sub\cf7\f8\fs23 Informal Value Transfer Systems and Criminal Organization: A Stu dy into \up0 \expndtw-2\charscalex100 so-called Underground Banking Networks \ul 0\nosupersub\cf1\f2\fs23 (1999) 13 \par\pard\li2205\sb130\sl-264\slmult0\fi0 \up 0 \expndtw-3\charscalex100 <{\field{\*\fldinst {HYPERLINK "http://usinfo.state.g ov/eap/img/assets/4756/ivts.pdf at/" }}{\fldrslt {\ul0\nosupersub\cf31\f32\fs23\ ul http://usinfo.state.gov/eap/img/assets/4756/ivts.pdf\ul0\nosupersub\cf1\f2\fs 23 at}}}\ul0\nosupersub\cf1\f2\fs23 > 1 April 2009\par\pard\li2205\sb196\sl-264 \slmult0\fi8243 \up0 \expndtw-3\charscalex100 342\par\pard\sect\sectd\fs24\paper w11900\paperh16840\pard\sb0\sl-240{\bkmkstart Pg352}{\bkmkend Pg352}\par\pard\qj \li2205\sb0\sl-280\slmult0 \par\pard\qj\li2205\sb0\sl-280\slmult0 \par\pard\qj\ li2205\sb0\sl-280\slmult0 \par\pard\qj\li2205\sb0\sl-280\slmult0 \par\pard\qj\li 2205\sb0\sl-280\slmult0 \par\pard\qj\li2205\ri2930\sb148\sl-280\slmult0 \up0 \ex pndtw-3\charscalex100 \ul0\nosupersub\cf1\f2\fs23 OECD, Harmful Tax Competition: An Emerging Global Issues (1998) \line \up0 \expndtw-3\charscalex100 {\field{\* \fldinst {HYPERLINK "http://www.oecd.org/dataoecd/33/1/1904184.pdf/" }}{\fldrslt {\ul0\nosupersub\cf31\f32\fs23\ul http://www.oecd.org/dataoecd/33/1/1904184.pdf }}}\ul0\nosupersub\cf1\f2\fs23 at 23 April 2006 \par\pard\ql \li2205\sb254\sl-2 64\slmult0 \up0 \expndtw-3\charscalex100 Payable Through Accounts (1995) \par\pa rd\ql \li2205\sb16\sl-264\slmult0 \up0 \expndtw-3\charscalex100 <{\field{\*\fldi nst {HYPERLINK "http://www.fdic.gov/news/" }}{\fldrslt {\ul0\nosupersub\cf31\f32 \fs23\ul http://www.fdic.gov/news}}}\ul0\nosupersub\cf1\f2\fs23 > at 18 May 2007 \par\pard\qj \li2205\sb0\sl-260\slmult0 \par\pard\qj\li2205\ri918\sb20\sl-260\s lmult0 \up0 \expndtw0\charscalex102 Pricewaterhouse Coopers LLP, Anti-Money Laun dering Current Customer Review Cost \up0 \expndtw0\charscalex102 Benefit Analysi s (2003) 64. \par\pard\ql \li2205\sb1\sl-259\slmult0 \up0 \expndtw-2\charscalex1 00 < {\field{\*\fldinst {HYPERLINK "http://www.fsa.gov.uk/pubs/other/ml_cost-ben efit.pdf/" }}{\fldrslt {\ul0\nosupersub\cf31\f32\fs23\ul http://www.fsa.gov.uk/p ubs/other/ml_cost-benefit.pdf}}}\ul0\nosupersub\cf1\f2\fs23 > at 18 December 20 06 \par\pard\qj \li2205\ri1940\sb264\sl-280\slmult0 \up0 \expndtw-4\charscalex10 0 R E Bell, \u8216?Prosecuting the Money Launderers Who Act for Organized Crime\ u8217?, 8. \line \up0 \expndtw-4\charscalex100 <{\field{\*\fldinst {HYPERLINK "h ttp://www.iap.nl.com/journal/paper/article_prosecution.html" }}{\fldrslt {\ul0\n osupersub\cf31\f32\fs23\ul http://www.iap.nl.com/journal/paper/article_prosecuti on.html}}}\ul0\nosupersub\cf31\f32\fs23\ul > at 14\ul0\nosupersub\cf1\f2\fs23 J uly 2007. \par\pard\qj \li2205\sb0\sl-260\slmult0 \par\pard\qj\li2205\ri1660\sb1 7\sl-260\slmult0 \up0 \expndtw-4\charscalex100 R Mohan \u8216?Economic Growth, F inancial Deepening and Financial Inclusion\u8217? (2005). \line \up0 \expndtw-4\ charscalex100 <{\field{\*\fldinst {HYPERLINK "http://rbidocs.rbi.org.in/rdocs/sp eeches/pdfs/73697.pdf /" }}{\fldrslt {\ul0\nosupersub\cf31\f32\fs23\ul http://rb idocs.rbi.org.in/rdocs/Speeches/PDFs/73697.pdf }}}\ul0\nosupersub\cf1\f2\fs23 > at 10 May 2007 \par\pard\qj \li2205\sb0\sl-260\slmult0 \par\pard\qj\li2205\ri99 8\sb20\sl-260\slmult0 \up0 \expndtw-4\charscalex100 Senate Legal and Constitutio nal Affairs Committee, Submission in relation to Anti_Money \up0 \expndtw-5\char scalex100 Laundering and Counter-Terrorism Financing Bill 2006(Cth). \par\pard\q j \li2205\ri917\sb20\sl-260\slmult0\fi0 \up0 \expndtw-3\charscalex100 <{\field{\ *\fldinst {HYPERLINK "http://www.apg.gov.au/senate/committee/legcon_cttc/aml_ctf 06/submissions/sub01.pdf/" }}{\fldrslt {\ul0\nosupersub\cf31\f32\fs23\ul www.apg .gov.au/Senate/Committee/legcon_Cttc/aml_ctf06/submissions/sub01.pdf}}}\ul0\nosu

persub\cf1\f2\fs23 > at 10 \line \up0 \expndtw-4\charscalex100 February 2008 \pa r\pard\qj \li2205\sb0\sl-260\slmult0 \par\pard\qj\li2205\ri918\sb20\sl-260\slmul t0 \up0 \expndtw0\charscalex100 Sir Stephen Lander, Review of the Suspicious Act ivity Reports Regime, (2006) Serious \up0 \expndtw0\charscalex100 Organised Crim e Agency UK, 1. \par\pard\ql \li2205\sb7\sl-276\slmult0 \up0 \expndtw-2\charscal ex100 <{\field{\*\fldinst {HYPERLINK "http://www.soca.gov.uk/downloads/socathesa rsreview_final_web.pdf/" }}{\fldrslt {\ul0\nosupersub\cf31\f32\fs23\ul www.soca. gov.uk/downloads/SOCAtheSARsReview_FINAL_web.pdf}}}\ul0\nosupersub\cf1\f2\fs23 > at 20 May 2007 \par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb10 \sl-264\slmult0 \up0 \expndtw-4\charscalex100 Sue Burt, \ul0\nosupersub\cf7\f8\f s23 Correspondent Banking: The Latest BSA Examination Target \ul0\nosupersub\cf1 \f2\fs23 (2004). \par\pard\qj \li2205\ri1548\sb0\sl-260\slmult0 \up0 \expndtw-2 \charscalex100 <{\field{\*\fldinst {HYPERLINK "http://www.complianceheadquarters .com/aml/aml_articles/8_25_04.html /" }}{\fldrslt {\ul0\nosupersub\cf31\f32\fs23 \ul http://www.complianceheadquarters.com/AML/AML_Articles/8_25_04.html\ul0\nosu persub\cf1\f2\fs23 }}}\ul0\nosupersub\cf1\f2\fs23 > at 9 \line \up0 \expndtw-5\ charscalex100 February 2005 \par\pard\qj \li2205\ri915\sb264\sl-280\slmult0 \up0 \expndtw-2\charscalex100 The Commonwealth Model Law for the Prohibition of Mone y Laundering and Supporting \up0 \expndtw-3\charscalex100 Documentation 1996. \p ar\pard\ql \li2264\sb1\sl-255\slmult0 \up0 \expndtw-3\charscalex100 <{\field{\*\ fldinst {HYPERLINK "http://www.imolin.org/pdf/imolin/comsecml.pdf/" }}{\fldrslt {\ul0\nosupersub\cf31\f32\fs23\ul http://www.imolin.org/pdf/imolin/Comsecml.pdf} }}\ul0\nosupersub\cf1\f2\fs23 > at 4 July 2005. \par\pard\ql \li10449\sb0\sl-264 \slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-264 \slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-264 \slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-264 \slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-264 \slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-264 \slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-264 \slmult0 \par\pard\ql\li10449\sb0\sl-264\slmult0 \par\pard\ql\li10449\sb0\sl-264 \slmult0 \par\pard\ql\li10449\sb258\sl-264\slmult0 \up0 \expndtw-3\charscalex100 343 \par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstar t Pg353}{\bkmkend Pg353}\par\pard\ql \li2205\sb0\sl-264\slmult0 \par\pard\ql\li2 205\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li220 5\sb0\sl-264\slmult0 \par\pard\ql\li2205\sb0\sl-264\slmult0 \par\pard\ql\li2205\ sb241\sl-264\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf4\f5\fs23 L IST OF ABBREVIATIONS \par\pard\qj \li2205\sb0\sl-260\slmult0 \par\pard\qj\li2205 \ri6347\sb20\sl-260\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf1\f2 \fs23 ACA - Anti-Corruption Act 1997 \up0 \expndtw-2\charscalex100 AG - Attorney General \par\pard\qj \li2205\ri2489\sb12\sl-270\slmult0 \up0 \expndtw-2\charsca lex100 AML/CFT - Anti-Money Laundering and Counter Financing of Terrorism \up0 \ expndtw-2\charscalex100 AML/CTF - Anti-Money Laundering and Countering Terrorism Financing \up0 \expndtw-2\charscalex100 AMLA - Anti-Money Laundering Act 2001 \ par\pard\qj \li2205\ri1984\sb0\sl-270\slmult0 \up0 \expndtw-2\charscalex100 AMLA TFA - Anti-Money Laundering and Anti-Terrorism Financing Act 2001 \up0 \expndtw1\charscalex100 AMLATF Regulations - Anti-Money Laundering and Anti-Terrorism Fi nancing \up0 \expndtw-2\charscalex100 (Reporting Obligations) Regulations 2006 \ par\pard\ql \li2205\sb1\sl-245\slmult0 \up0 \expndtw-2\charscalex100 APG - Asia/ Pacific Group on Money Laundering \par\pard\ql \li2205\ri3319\sb15\sl-270\slmult 0 \up0 \expndtw-2\charscalex100 AUSTRAC - Australian Transaction Reports and Ana lysis Centre \up0 \expndtw-2\charscalex100 BAFIA - Banking and Financial Institu tions Act 1989 \line \up0 \expndtw-2\charscalex100 BNM - Bank Negara Malaysia \p ar\pard\ql \li2205\sb1\sl-257\slmult0 \up0 \expndtw-1\charscalex100 CA - Customs Act 1967 \par\pard\qj \li2205\ri5471\sb0\sl-280\slmult0 \up0 \expndtw-2\charsca lex100 CBA - Central Bank of Malaysia Act 1958 \up0 \expndtw-2\charscalex100 CDD - Customer Due Diligence \par\pard\qj \li2205\ri4661\sb0\sl-280\slmult0 \up0 \e xpndtw-2\charscalex100 CoTUNA - Charter of the United Nations Act 1945 \up0 \exp ndtw-2\charscalex100 CPC - Criminal Procedure Code \par\pard\ql \li2205\sb1\sl-2 12\slmult0 \up0 \expndtw-2\charscalex100 CTR - Cash Transaction Report \par\pard \qj \li2205\ri3688\sb0\sl-280\slmult0 \up0 \expndtw-2\charscalex100 DDFOP - Dang

erous Drugs (Forfeiture of Property) Act 1988 \up0 \expndtw-2\charscalex100 DDA - Dangerous Drugs Act 1952 \par\pard\qj \li2205\ri3363\sb0\sl-280\slmult0 \up0 \ expndtw-2\charscalex100 DNFBPs - Designated Non-Financial Businesses and Profess ions \up0 \expndtw-2\charscalex100 DPP - Deputy Public Prosecutor \par\pard\ql \ li2205\sb1\sl-221\slmult0 \up0 \expndtw-1\charscalex100 EA - Extradition Act 199 2 \par\pard\qj \li2205\ri6042\sb27\sl-260\slmult0 \up0 \expndtw-2\charscalex100 ECA - Exchange Control Act 1953 \line \up0 \expndtw-2\charscalex100 FATF - Finan cial Action Task Force \line \up0 \expndtw-2\charscalex100 FIU - Financial Intel ligence Unit \par\pard\qj \li2205\ri4720\sb20\sl-260\slmult0 \up0 \expndtw-2\cha rscalex100 FTR Act - Financial Transaction Reports Act 1988 \up0 \expndtw-2\char scalex100 GDP - Gross Domestic Product \par\pard\ql \li2205\sb17\sl-264\slmult0 \up0 \expndtw-2\charscalex100 IBA - Islamic Banking Act 1983 \par\pard\qj \li220 5\ri5057\sb0\sl-280\slmult0 \up0 \expndtw-2\charscalex100 IOFC - International O ffshore Financial Centre \up0 \expndtw-2\charscalex100 ISA - Internal Security A ct 1960 \par\pard\ql \li2205\sb1\sl-235\slmult0 \up0 \expndtw-2\charscalex100 KY C - Know Your Customer \par\pard\ql \li2205\sb10\sl-254\slmult0 \up0 \expndtw-2\ charscalex100 LOFSA - Labuan Offshore Financial Services Authority \par\pard\ql \li2205\ri3119\sb17\sl-266\slmult0 \up0 \expndtw-2\charscalex100 LOFSAA - Labuan Offshore Financial Services Authority Act 1996 \up0 \expndtw-2\charscalex100 MA CMA - Mutual Assistance in Criminal Matters Act 2003 \line \up0 \expndtw-2\chars calex100 ML/TF - Money Laundering and Terrorism Financing \line \up0 \expndtw-2\ charscalex100 MoU - Memorandum of Understanding \par\pard\qj \li2205\ri2625\sb0\ sl-280\slmult0 \up0 \expndtw-2\charscalex100 NCC - National Co-ordination Commit tee to Counter Money Laundering \up0 \expndtw-2\charscalex100 NCCT - Non-Coopera tive Countries and Territories \par\pard\ql \li2205\sb1\sl-235\slmult0 \up0 \exp ndtw-2\charscalex100 OBA - Offshore Banking Act 1990 \par\pard\ql \li2205\sb22\s l-264\slmult0 \up0 \expndtw-2\charscalex100 OCA - Offshore Companies Act 1990 \p ar\pard\ql \li2205\sb1\sl-259\slmult0 \up0 \expndtw-2\charscalex100 PEP - Politi cally Exposed Person \par\pard\qj \li2205\ri5471\sb21\sl-260\slmult0 \up0 \expnd tw-2\charscalex100 POCA 1987 - Proceeds of Crime Act 1987 \up0 \expndtw-2\charsc alex100 POCA 2002 - Proceeds of Crime Act 2002 \up0 \expndtw-2\charscalex100 RMP - Royal Malaysia Police \par\pard\ql \li2205\sb17\sl-264\slmult0 \up0 \expndtw2\charscalex100 STR - Suspicious Transaction Report \par\pard\ql \li10449\sb196\ sl-264\slmult0 \up0 \expndtw-3\charscalex100 344 \par\pard\sect\sectd\fs24}