A threat is anything, be it people, object or activity with the potential to cause harm to the country, society, or the economy. In the money laundering and terrorist financing context this includes criminals, their criminal activities, terrorist groups and their facilitators, their funds, as well as past, present and future money laundering or terrorist financing activities. Identifying the threat is an essential starting point in assessing money laundering and terrorist financing risks. It provides an understanding of the nature, size and volume of the predicate offences and proceeds of crimes and an understanding of the environment in which these offences are committed and the proceeds are generated. The concept of vulnerabilities used in risk assessment comprises those factors that can be exploited by threat or that may support or facilitate its activities. In the money laundering and terrorist financing risks assessment context, vulnerability is distinct from threat because vulnerabilities are the factors that represent weaknesses in certain features of a country, or in the AML/CFT systems or controls. They may also include the features of a particular sector, a financial product or type of service that make them attractive for money laundering and terrorist financing purposes. By assessing the country’s threats and vulnerabilities, we are actually putting the risks assessment in the context of our country’s situation in terms of materiality of these threats and vulnerabilities in our country’s structural elements, and other factors that form important features of our country.

The amended law is now known as “Anti-Money Money Laundering, Anti-Terrorist Financing and Proceeds of Unlawful Activities Act 2001” and has come into effect on 1 September this year. As for the private sector, particularly the financial institutions and key gatekeepers such as lawyers, changes brought about in the operating environment demands greater need for the private sectors to be more vigilance in fulfilling their AML/CFT obligations. Compliance with AML/CFT law and regulations require high commitment from all levels of the staff, particularly the front-liners or staff facing the customers. Around the world, non-compliances with AML/CFT obligations are seriously dealt with. At the international level, we have witnessed banks been penalised to the tune of billion of dollars for their failure to comply with AML/CFT law and regulations. In Malaysia, we have taken and will continue to take strong actions on financial institutions and other reporting institutions that failed to comply and implement AML/CFT law and regulations. Another key element for an effective AML/CFT eco-system is the effective financial intelligence and enforcement. The important source of financial intelligence come from the suspicious transactions reports (or the STRs) submitted by reporting institutions to the financial intelligence unit (FIU) in Bank Negara Malaysia. Overall, the STR submissions had increased on average of 20% over the past 5 years. In terms of disclosure made to domestic law enforcement authorities (LEAs) and foreign FIUs, the numbers of proactive disclosures made had increased steadily over the past 3 years with an average increase of 33% annually.