Based on statistics, there are high numbers of STRs reported by and on these sectors, and there are also high numbers of investigation carried out by the LEAs on customers or transactions originated from these sectors. Vulnerabilities could also come from the country’s economic and geographical elements, as well as our legal framework. As a highly open economy, there are certain economic factors that contribute to the attractiveness of money laundering risk in the country such as the high integration with international markets, cash-based economy, high existence of non-bank remittance transfer, exposure to international trade, high percentage of informal economy and large volume of physical movement of currency. Vulnerabilities in the country’s geographical elements that may contribute to the attractiveness of money laundering risk is the country’s long and porous border. In the case of drugs trafficking for example, Malaysia position that is close to the “Golden Triangle” and within the route of “Afghanistan Opium” make our country vulnerable to trafficking of drugs from these areas. In the case of human trafficking, our country’s proximity to conflict areas such as Myanmar, makes us vulnerable to smuggling of migrants and trafficking of persons from Rohingya areas. Although in most cases Malaysia is not the final destination, we are the favourite transit points for these refugees. The NRA highlights the money laundering and terrorist financing risks faced by Malaysia, and areas that warrant more resources and attention.

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.