In the short term, a financial institution that is seen condoning money laundering and terrorism activities will lose public confidence and the confidence of their depositors. The institution will also face higher liquidity risks as funds derived from illegal activities tend to be less stable. Ultimately, in the long term, coupled with higher cost of doing business, the institution’s ability to perform its important economic intermediation process will also be affected. Understanding of money laundering and terrorism financing risks is key for an effective AML/CFT measures For an AML/CFT measure to be effective, we need to understand our money laundering and terrorism financing risks and vulnerabilities. Understanding of the risks will facilitate our efforts in channeling our resources and priority towards areas that would pose the greatest risks to the country and the institutions. Recognising these needs and in line with the requirements of the FATF Standards, at the country level, we had conducted a national risk assessment (or the NRA) to identify, assess and understand specific money laundering and terrorism financing threats in the country, in particular the scale, sources and methods of those threats, as well as the vulnerabilities and risks across various sectors. We will share with you shortly the result of the NRA so that you will have better understanding of the risks at the country’s level. Subsequently, the results of this NRA needs to be translated into your institution’s own policies, procedures and risk controls. Effective AML/CFT regime is important.

For instance, maximum penalties under general offence that normally applies for non-compliances with requirements under Part IV of the AMLATFA (that is on reporting obligations by the reporting institutions) have been increased from RM250,000 to RM1 million. Cooperation and collaboration among regulators, supervisors, law enforcement authorities and reporting institutions are vital for an AML/CFT regime to be effective Needless to say, preventing and deterring money laundering and terrorism financing is only possible if there is a working partnership between all the law enforcement authorities, regulators, supervisors and the private sector. Without that, our efforts will be futile. Hence, for an AML/CFT regime to be sound, cooperation and collaboration is not an option but a vital requirement. Having said that, it is important for me to stress that having a comprehensive AML/CFT framework alone is not enough. What is more important is how effective are our implementation and its impact in reducing money laundering and criminal activities. 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, that is to ensure that the financial system and the broader economy are protected from threats of money laundering and the financing of terrorism, thereby strengthening financial sector integrity that contributes to the safety and security of the country. Before I end my speech, let me recap the following key points: i. Crimes and money laundering could pose significant threat to our financial system, economy and society;  ii.