encik abu hassan alshari yahaya : results of the national risk assessment on money laundering and terrorist financing speech by mr encik abu hassan alshari yahaya, assistant governor of the central bank of malaysia, at the international conference on financial crime and terrorism financing ( ifctf ) 2014, kuala lumpur, 8 october 2014. * * * it is my great pleasure to be here today to discuss with all of you the results of the national risk assessment on money laundering and terrorist financing ( or the nra ). first, allow me to thank the compliance officers networking group ( cong ) and the asian institute of finance ( aif ) for organising this conference and inviting me to this morning session. i also would like to extend my special appreciation to mr. roger wilkins, the president of the financial action task force ( or fatf ) for delivering his keynote address and to the delegates from fatf namely mr. rick mcdonell, the executive secretary of fatf, mr liu zhengming and mr young - han byun, members of the steering committee of fatf for attending this morning session. it is an honour to have with us mr wilkins and delegates from fatf, and to get an update on the latest development on aml / cft directly from the fatf president. mr wilkins and the delegates are in malaysia as part of the fatf high level mission to meet the senior ministers, government officials and key agencies such as the royal malaysia police, the attorney general ’ s chambers, malaysia anti - corruption commission, royal malaysia custom and the inland revenue board to assess the level of the country ’ s commitment in implementing the fatf standards to combat money laundering, financing of terrorism and proliferation of weapons of mass destruction. as the competent authority under the amlatfa, we appreciate the opportunity given by the fatf to demonstrate our commitment in ensuring that our aml / cft regime is effective. this international financial crime and terrorism financing ( or ifctf ) conference is the 6th public and private partnership initiatives conference conducted by cong and the aif. in the past 5 conferences, important building blocks have been put in place to raise awareness, develop understanding and nurture the commitment from the financial industry on pertinent areas in contributing to an effective anti - money laundering and counter financing of terrorism ( aml / cft ) in malaysia. as we are aware, an effective aml / cft regime requires strong collaboration and mutual trust between the public and the private sectors

mitigation efforts. findings of risk and more importantly the effectiveness of risk mitigation measures is key to our mutual evaluation reports and the ratings. scope of the nra based on the understanding of what the nra entails, the scope of this nra is broadly categorised under 2 broad elements ; i. e. threats and vulnerabilities. in assessing threats, the extent of money laundering and types of prevailing crimes in malaysia were analysed based on statistical data provided by law enforcement agencies and intelligence data from the fiu. the purpose of this analysis is to understand the extent and types of prevailing crimes that pose money laundering threat in malaysia, gauge the level of the country ’ s attractiveness to money laundering, and identify methods and origins of the proceeds of crime, in particular whether the proceeds are generated domestically or abroad. in assessing vulnerabilities, the country ’ s features or systems, in particular the characteristics of malaysia ’ s economic, legal and geographical environment that make malaysia attractive to money laundering activities were assessed. vulnerabilities in the financial and non - financial sectors and their attractiveness to money laundering arising from the structural risks inherent in the sector / industry, such as, the size of the industry, volume turnover, the products and services offered and the types of clients served were also assessed. the sectors assessed under this nra are the financial institutions, the designated non - financial businesses and professions ( dnfbps ), the non - profit organizations ( npos ) and the legal persons ( body corporate or unincorporated ). terrorism financing is assessed on its own and broadly covers its specific indicators of threats and vulnerabilities. given its unique characteristics, factors associated with terrorist financing are vastly different from those of money laundering. for example, the source of funds for money laundering activities has to come from criminal proceeds, whereas funds used for financing of terrorist activities may come from either criminal activity or legal sources. 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