encik abu hassan alshari yahaya : continuing efforts to combat money laundering and terrorism financing in malaysia keynote address by mr encik abu hassan alshari yahaya, assistant governor of the central bank of malaysia, at the anti - money laundering and counter financing of terrorism ( aml / cft ) compliance conference 2014, sesana kijang, kuala lumpur, 17 september 2014. * * * it is my great pleasure and honour to welcome all of you today to our annual anti - money laundering and counter financing of terrorism ( aml / cft ) conference. today ’ s line up of programme and most importantly, your presence here today underscores our continuing efforts to combat money laundering and terrorism financing in malaysia and the critical importance of the role that financial services industry contributes in supporting regulators, government and law enforcement to tackle and mitigate the threats. i am pleased to note that today we have close to 350 participants representing banking, insurance, takaful, investment and securities industries in malaysia. i also would like to take this opportunity to express my appreciation to all the speakers and moderators for your willingness to share knowledge and views for the two concurrent sessions that we will be having later this morning. money laundering is a serious global problem money laundering is a serious global problem. at the global level, the international monetary fund ( imf ) estimated the extent of money laundering to be at 2 % to 5 % of global gdp. according to the united nation office on drugs and crime ( unodc ), that translated to 800 billion to 2 trillion us dollars in current gdp. unodc acknowledged that the margin between those figures is huge but we will agree that even the lower estimate underlines the seriousness of the problem. money laundering is directly linked with crimes as crimes are largely motivated by money. in malaysia, for the period between 2011 and 2012 alone, total amount investigated for serious crimes by our law enforcement authorities stood at rm13. 1 billion. this is the amount that has the potential to be laundered through our system. we recognize that the actual extent of money laundering is difficult to measure. certain type of crime may not be even reported, let alone investigated. for example, in the case of corruption, if both the giver and taker are willing giver and willing taker, the case will not be reported unless there is report from third party. it also acknowledged by the international convention, that for every 10 crimes committed, only one will get reported.

the strs submitted are bis central bankers ’ speeches valuable to us and to law enforcement agencies. based on the feedback that we received from the law enforcement agencies, the strs submitted have provided leads to their investigation and have resulted in the number of joint initiatives. more than 70 % of the strs disclosed to the enforcement agencies have resulted in the opening - up of enquiry papers or investigation papers. the remaining of the information disclosed will be is used as part of the database for future investigation. compliance with aml / cft law and regulations in the financial institutions require high commitment from all level of staff, particularly the front - liners. non - compliances will be seriously dealt with. at the international level, we have witnessed banks been penalised to the tune of billion of dollars for failure to comply with aml / cft law and regulations. in malaysia, we have also taken and will continue to take strong actions on banks that failed to comply and implement aml / cft law and regulations. with the implementation of the financial services act, there are various forms of enforcement actions that can be taken by bank negara malaysia including private and public reprimand. in terms of the penalties, the amendment to the anti - money laundering, anti - terrorism financing and proceeds of unlawful activities act 2001 ( amlatfa ) that came into force on 1 september 2014 had increased the penalty amount. 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