The financial institutions are expected to identify, assess and understand the money laundering and terrorist financing risks at the institution level and the Financial Institutions’ leadership and senior management need to be involved and be engaged in the risk assessment process. The institution’s risk level assessment can be leveraged through thematic money laundering and terrorist financing risks assessment conducted at by the institution or periodic reporting by compliance department such as updates on STRs submissions, investigation orders received or findings from internal auditors. By getting the leadership and senior management involved in the risk assessment process, the institution would be better informed in making business decisions, such as when venturing into new markets, services or geographical areas, especially when the new area is vulnerable or attractive to money laundering and terrorist financing risks. In addition, having a complete understanding on the risks will assist the institution in allocating resources for the compliance function, including recruitments of competent personnel and investment into management information system. The communication of money laundering and terrorist financing risks identified is equally important. The risks identified should be shared throughout the organization especially with key business units and the front liners. The risks identified shall also act as a guide in coming up with policies procedures and training needs requirements and its robustness for different business units. In return, the business units should be able to provide feedback to the compliance or risk management departments on any new or emerging risks that they face or encounter in their daily business operations.

Another difference is that, transactions associated with TF may be conducted in very small amounts, which when not viewed in the TF context could be the very transactions that are considered as low money laundering risk. Therefore we have chosen to assess money laundering and terrorist financing risks separately. Methodology of the NRA The methodology used in conducting this NRA is loosely based on factors used in the World Bank’s NRA tool and the Asia and Pacific Group on Money Laundering (APG) Strategic Implementation Planning Framework. The NRA is largely a combination of quantitative and qualitative assessment. It draws together statistical information from across key government ministries, supervisory and regulatory authorities (SRAs) and LEAs. Statistics on the mutual legal assistance requests received from other countries and the types of matters to which the requests relate to, and the financial intelligence requested or disclosed by the foreign FIUs are used as indicators as to the level of foreign proceeds of crime being laundered in Malaysia. This is complemented by qualitative information sources such as perception surveys involving respondents from officers of the LEAs, reporting institutions and foreign FIUs, intelligence insights, independent and external studies and public information on current and emerging threats to form a consolidated picture of the country’s money laundering and terrorism financing environment. The findings were then validated through a focus group involving subject matter experts from amongst the NCC members.