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.

The feedback loop that exists would enable the institutions to keep the money laundering and terrorist financing risks assessment current and relevant. Finally, this in turn would be a source of valuable information to the authorities in conducting the national level money laundering and terrorist financing risks assessment. Comprehensive understanding of money laundering and terrorist financing risks should be translated into a comprehensive risk controls and mitigation. This is key in applying a risk-  8  BIS central bankers’ speeches  based approach in the implementation of preventive measures, where more focus should be channelled to high risk areas identified. The controls and measures should be applied across the overall compliance program, including oversight by management, customer due diligence, staff trainings and suspicious transactions reporting. Equally important, the risk controls and mitigation developed should be executable and applied religiously. To complement this, the policies and procedures should be tested and monitored, by independent parties to ensure its effectiveness and relevancy. Let me conclude my presentation today. The NRA is an important tool to facilitate our understanding of money laundering and terrorist financing risks facing the country. Understanding of risks is important as it set the foundation upon which our AML/CFT regime is implemented. For an AML/CFT regime to be effective, it has to target the resources and AML/CFT initiatives towards areas that pose the greatest risks. At the end of the day, the test is on how good we are in achieving the ultimate objective of an effective AML/CFT regime.