Reaching out to you

Anti-Money Laundering, Counter

Financing of Terrorism, and Targeted
Financial Sanctions (AML/CFT & TFS)
 Objectives
To create awareness and understanding amongst agents
on the following:
Importance of Customer Due Diligence
(CDD) in combating financial crimes

Obligations towards complying AML/CFT &

TFS requirements prescribed by Bank
Negara Malaysia (BNM) and Hong Leong
Assurance Berhad (HLA)

Detection and reporting of suspicious

transactions to the Compliance Officer
 Money Laundering (ML)
• Engages, directly or indirectly, in transaction that involves proceeds of an unlawful
activity
• Acquires, receives, possesses, disguises, transfers, converts, exchanges,
carries, disposes of or uses proceeds of an unlawful activity

• Removes from or brings into Malaysia, proceeds of an unlawful activity

• Conceals, disguises or impedes the establishment of

true nature, origin, location, movement, disposition,
title of, rights with respect to, or ownership of,
proceeds of an unlawful activity

• Participate in, be an accomplice in, attempt

to, aid to, exhort to, facilitate or provide
counsel regarding any of the acts referred to
in the above previous points.
 Money Laundering (ML)
Where, it may be inferred from objective factual circumstances that:

• the person knows, has reason to believe or has reasonable suspicion that the
property is the proceeds from an unlawful activity; or

• the person without reasonable excuse fails to take

reasonable steps to ascertain whether or not the
property is the proceeds from any unlawful activity.
 Money Laundering (ML)

• Money Laundering is a crime. It is the act of converting money gained from illegal
activity into money or investments that appear to be legitimate so that its illegal
source cannot be traced. In short, it is converting illegal money into legal money.

• Any person who commits a money laundering

offence shall on conviction be liable to
• a fine of not less than 5 times the sum or value
of the proceeds of an unlawful activity or RM5
million, whichever is higher; and
• imprisonment of not less than 15 years
 Money Laundering (ML)
The money laundering process can generally be summarized as
comprising of three stages:

Placement Layering Integration

- Criminal introduces his illegal profits & ill- - Criminal engages in a series of conversions - When layering succeeds, the
gotten gains into the financial system or movements of the funds to distance criminal proceeds have been
- Physical disposal or dealing of the initial them from their source successfully laundered, & are
proceeds derived from illegal activities - illicit proceeds are separated from their regarded for all intent &
source by creating complex layers of purposes as legitimate funds and
Example: are then reintroduced i.e.
financial transactions designed to disguise
•Policies are broken into small value the audit trail & provide an appearance of integrated back into the financial
premiums legitimacy as well as anonymity system through:
•Premium payments for multiple policies Example:
Example:
•Top-up premiums for single premium •Investment in business
policies •Termination/Surrender of policies
•Partial withdrawals or Sales of units in •Purchasing of high value items
investment linked products •Engaging in legal business by
providing capital or loans
 Terrorism Financing (TF)
• Defined as the willful provision or collection, by any means, directly or indirectly,
of funds with the intention that the funds should be used, or in the knowledge
that they are to be used, to facilitate or carry out terrorist acts.

• Terrorism can be funded from legitimate income.

• Terrorism Financing includes the following:

• Providing or collecting property for carrying out an act

of terrorism
• Providing services for terrorism purposes
• Arranging for retention or control of terrorist property
• Dealing with terrorist property
Money Laundering (ML) vs Terrorism Financing (TF)

ML Features TF
Always involve cumulatively Could be in small amount
Amount involved
huge sum of money
Proceeds from illegal activity Could be from legitimate
Origin of funds
income
To convert “dirty money” to To support terrorist
Purpose
clean activities
Individuals who laundered the Ultimate Terrorists
money beneficiary
Conceal funding activity and the nature of the funded activity
 Targeted Financial Sanctions (TFS)
What is a sanction?
▪ A sanction is a punitive measure levied by domestic and international regulatory bodies.
▪ Either political or economic in nature, targeting fugitives that pose a risk to society.
▪ More generally, sanctions aim to impede money launderers, terrorists, etc.

What is a sanctions list?

▪ A sanctions list is a collection of individuals, groups and entities which are the subject of a
sanction.
▪ As mentioned above, many issuing bodies exist and the nature of the lists can vary.
▪ Sanctions lists are established to flag people, businesses and countries that have committed
illegal acts.

Why is sanctions screening important?

▪ Businesses are becoming increasingly exposed to the risk of financial crimes such as money
laundering and terrorist financing.
▪ As such, sanction screening must be done during the customer onboarding process – a
preventive measure against dealing with individuals associated with financial crimes.
▪ Failing to identify such customers pre-emptively can have devastating consequences (i.e.
unwittingly aid the work of terrorists or money launderers).
 Targeted Financial Sanctions (TFS)
Sanctions imposed by the Malaysian government, international bodies and
jurisdiction with extra territorial reach specifically the United Nations Security
Council (UNSC), individuals or entities may expose HLA to sanctions risks upon
establishing business relations with such countries, individuals or entities.

“Targeted Financial Sanctions” refers to asset freezing and

prohibitions to prevent funds or other assets from being made
available, directly or indirectly, for the benefit of persons
designated or entities specified by UNSC and BNM/Minister of
Home Affairs (MOHA) in relation to:
• Terrorism Financing
• Proliferation Financing of Weapons of Mass Destruction;
and
• Other United Nation (UN) – Sanctions Regime
Targeted Financial Sanctions (TFS)
Designation as
Sanctioned
Entity

Remedial Sanctions Monetary

Actions Risk Fines

Revocation of
Business
License
 ML/TF Risk by Product
Life Insurance
Examples of the types of life insurance contracts that are vulnerable as a vehicle for
ML/TF, such as:

Flexibility of payments e.g. allow

High surrender value if
payments from unidentified third
surrender or early
parties, high-value or unlimited-
termination
value or cash premium payments

Ease of access to accumulated

Ease of transfer e.g.
funds e.g. allow partial
assignment of policies to
withdrawals or early surrender Short maturity period
third parties with
at any time with limited/no
limited/no restriction
charges
 Three(3) Line of Defence Model
Roles and Responsibilities
1. The management of ML/TF risks is an ongoing process and the responsibility of
the Board of Directors, Executive Committee, and every employee of HLA.
2. The first line of defence refers to the agents, business units/functional
departments, line managers and employees within HLA and is in charge of
identifying, assessing and controlling the ML/TF risks of their business.
3. The second line of defence refers to the AML/CFT compliance function and other
support functions such as technology, human resources and other risk
management functions. The support functions will work with the business units
and the AML/CFT compliance function to identify ML/TF risks and put in controls
or risk mitigating measures for processing applications or transactions or
deploying systems or technology.
4. The third line of defence is the internal audit function or equivalent function
independently evaluating the AML/CFT risk management framework and
controls for purposes of reporting to the audit committee, the Board of Directors
or similar oversight body.
 AML/CFT & TFS Requirements
Why do we need to conduct Customer Due Diligence (CDD)?

1. Rules and regulations by BNM

• Mandatory and not an option or nice to have
• Financial institutions, including HLA, are obliged to identify and verify their
customers as required under the laws and regulation.

2. Protect the Company’s reputation

• Enable HLA to understand its customers and manage its risks prudently
• To safeguard HLA’s reputation from being used for illegal activities

3. Combating crime
• To restrict money laundering and terrorism financing activities
• To prevent predicate money laundering offences such as theft, fraud,
robbery, child trafficking, corruption, smuggling, etc.
 AML/CFT & TFS Requirements
Customer Due Diligence (CDD)

For any business transactions secured through agents, HLA shall ensure its agents perform
CDD as specified in BNM AML/CFT & TFS for FIs Policy Document

- HLA is required to conduct CDD on customers and persons conducting the transaction, when:
(a) establishing business relations;
(b) it has any suspicion of ML/TF, regardless of amount; or
(c) it has any doubt about the veracity or adequacy of previously obtained information.

- The definition of ‘customer’ includes a payor, thus CDD is applicable to a third party payor. Third party payor is a payor, other than the
proposer, policy owner, and life assured of the insurance contract, who pays the premium for the insurance contract.

- If the HLA is unable to comply with the CDD requirements, HLA should not commence business relationship or conduct any transaction with the potential
customer or in the case of an existing customer, terminate the business relationship.

- Where the Agent identifies any known or suspected ML/TF risks associated with the customer and/or beneficial owner, the Agent shall privately escalate
an email to HLA AML/CFT Compliance Team at Head Office at amlhla@hla.hongleong.com.my. The Agent must provide additional information and
documentation as may be requested by HLA AML/CFT Compliance Team. Please ensure that in the course of escalating the suspicio us transaction,
utmost care must be undertaken to ensure that such escalation is treated with the highest level of confidentiality. HLA AML/CFT Compliance Team has
the sole discretion and independence to report suspicious transactions to Bank Negara Malaysia .
 AML/CFT & TFS Requirements
Customer Due Diligence (CDD)
• HLA/Agent is required to identify an individual customer and beneficial owner by obtaining the following
information i.e.
(a) Full name (as per NRIC and Passport)
(b) NRIC number (Malaysian/Permanent Resident) or Passport number (Foreigner)
(c) Residential and mailing addresses
(d) Date of birth
(e) Nationality
(f) Occupation type
(g) Name of employer or nature of self-employment or nature of business
(h) Contact number (home, office or mobile)
(i) Purpose of transaction

• HLA/Agent is required to verify an individual customer and beneficial owner by obtaining the following document
i.e.
(a) Clear copy of NRIC (Malaysian/Permanent Resident) or Passport number (Foreigner)
(b) Clear copy of Passport and Visa (valid for at least 6 months before expiry date at the time of CDD)
 AML/CFT & TFS Requirements
Customer Due Diligence (CDD)
• HLA/Agent is required to identify an corporate customer and beneficial owner by obtaining the following
information i.e.
(a) Company’s name
(b) Business registration number
(c) Registered/Business address
(d) Place of incorporation
(e) Nature of business
(f) Ownership and control structure
(g) Identify the directors, shareholders (with equity interest of more than 25%) & authorized personnel

• HLA/Agent is required to verify corporate customers and beneficial owner by obtaining the following document i.e.
(a) Copy of Memorandum/Article/Certificate of Incorporation, Business Filling from Local or Foreign
business/Company Registrar
(b) Clear copy of Identification document of directors, shareholders, authorized personnel, beneficiary, and
beneficial owner
(c) Board resolution or equivalent authorizing the purchase of life policy

Where there is doubt:

• Conduct a basic search or enquiry on the background of the corporate customer
• Verify with the Companies Commission of Malaysia
 AML/CFT & TFS Requirements
Customer Due Diligence (CDD) – Full Name
• Full Name as per NRIC/Passport
• Don’t add salutation (unless if salutation title is printed on NRIC/Passport)
e.g. Mr., Ms., En., Puan, Dato’, Datin, etc.
• Chinese Name: Surname + Given Name
• Don’t add fancy/English name e.g. the customer is commonly called by others as “Jack Wong” but his
NRIC is printed “Wong A Sing”, then “Wong A Sing” should be entered for proposal/application
• Malay/Muslim Name: Given Name + Father Name
• If “bin” is printed in NRIC, then “bin” should be entered for proposal/application, not “b” or “b.”
• If “binti” is printed in NRIC, then “binti” should be entered for proposal/application, not “bt” or “bt.”
• Indian Name: Given Name + Father Name
• Correct data entry i.e. “A/L” or “A/P”, not “A / L” or “A /P” (no spacing in between)
• Other data entry flaws
• Observe spacing between names e.g. NRIC shows “Ang Li Sa”, don’t key-in “Ang Li Sa”, “Ang LiSa” or etc.
• Observe spacing between punctuation
e.g. NRIC shows “Puspa A/P R. Nathan”, don’t key-in “Puspa A/P R.Nathan”
• Don’t use punctuation between names (if NRIC is printed with no punctuation)
e.g. NRIC shows “Jane Tan Si Juan”, don’t key-in “Jane, Tan Si Juan”
• Observe spacing between @ e.g. correct data entry format like “Low Bi Bao @ Law Bi Bao” and not “Low Bi
Bao@Law Bi Bao”

HLA Obligation – Yearly Reporting of Customer Risk Profile to BNM (CDD information and documents are essential)
Current Challenges – one customer carries multiple codes/records due to the abovementioned data entry flaws
 AML/CFT & TFS Requirements
Customer Due Diligence (CDD) – NRIC/Passport No.
• Identification Code/Type & ID
• Malaysian – use “NRIC” and key-in “NRIC Number”
• Permanent Resident – use “PR” and key-in “NRIC Number”
• Foreigner – use “PP” and key-in “Passport Number”
• Remark 1 → always use Passport (“PP”) for foreigners, unless the customer has no passport
• Remark 2 → monitor the expiry date of the foreigners’ passport, so that no duplicate records are
created for the said foreigners

• Data Entry Flaws

• Customer named Ong Ai Bu is a Singaporean, but two(2) records were created as follows:
• Code 123 was created for Ong Ai Bu due to her PP (passport) – G234566
• Code 789 was created for Ong Ai Bu due to her SID (Singapore ID) – S2224444
• Customer named Nguyen Thong is a Vietnamese, but two(2) records were created as follows:
• Code 567 was created for Nguyen Thong due to her PP (passport) – W239865
• Code 299 was created for Nguyen Thong due to her FID (Foreign ID) – X125D123
• Customer named Chang Juan is a Permanent Resident, but two(2) records were created as follows:
• Code 421 was created for Chang Juan due to her NRIC – 780512-74-8556
• Code 590 was created for Chang Juan due to her PR (Permanent Resident) – 780512-74-8556

HLA Obligation – Yearly Reporting of Customer Risk Profile to BNM (CDD information and documents are essential)
Current Challenges – one customer carries multiple codes/records due to the abovementioned data entry flaws
 AML/CFT & TFS Requirements
Customer Due Diligence (CDD) – Nationality
• Malaysian – use “Nationality”
• Permanent Resident – use “Negara Asal” printed on NRIC (see sample below)
• Note: there are Malaysians who are PR (e.g. due to lost of identification documents during war)
• Foreigner – use “PP” and key-in “Passport Number”
• Remark 1 → always use Passport (“PP”) for foreigners, unless the customer has no passport
• Remark 2 → monitor the expiry date of the foreigners’ passport, so that no duplicate records are created for
the said foreigners

• Data Entry Flaws

• Customer named Chang Juan is a Permanent Resident, but two(2) records were created as follows:
• Code 421 was created for Chang Juan due to her NRIC – 780512-74-8556
• Code 590 was created for Chang Juan due to her PR (Permanent Resident) – 780512-74-8556

HLA Obligation – Yearly Reporting of Customer Risk Profile to BNM (CDD information and documents are essential)
Current Challenges – one customer carries multiple codes/records due to the abovementioned data entry flaws
 AML/CFT & TFS Requirements
Enhanced Customer Due Diligence (ECDD) – High Risk Customers

Who?
High Net Worth Customers
Financial Action Task Force (FATF) High Risk Countries
Politically Exposed Persons (PEP)
Individuals listed by HLA Internal Demerit List
Individuals listed by World-Check One screening database

What are the extra steps to be taken?

Provide Agent Narration Report
Obtain additional information
Inquiry source of wealth and/or funds
 AML/CFT & TFS Requirements
Enhanced Customer Due Diligence (ECDD) – High Risk Customers

What should be covered under Agent Narration Report?

Who is the customer?
What is the nature of customer’s business/occupation?
Financial Background of Customer:
• Source of funds
• Source of wealth
• Banks statements (if any)
• Income tax statements (if any)
Purpose of transaction
Is the current proposed activity consistent with customer’s
profile/commercial objectives?
 AML/CFT & TFS Requirements
“Call for Action” by FATF (i.e. Blacklisted Countries)
Democratic People's Republic of Korea
HLA prohibits any business relationship or financial transactions with their citizens and any
individual or Legal Person or Arrangement located therein with effect from 1 July 2019.
Iran
HLA prohibits any business relationship or financial transactions with their citizens and any
individual or Legal Person or Arrangement located therein with effect from 1 November 2019.

“Increased Monitoring” by FATF (i.e. Grey-listed Countries)

Grey-listed Countries (as of 25 February 2021): Botswana, Cambodia, Ghana, Pakistan,
Panama, Nicaragua, Syria, Yemen, Zimbabwe, Albania, Barbados, Jamaica, Mauritius,
Myanmar, Uganda, Burkina Faso, The Cayman Island, Morocco, and Senegal.
HLA does not prohibit any business relationship or financial transactions with their citizens
and any individual or Legal Person or Arrangement located therein, so long the situation of
each jurisdiction has been taken into account in the risk analysis on a case-by-case basis, and
enhanced due diligence is applied to these jurisdiction.
 AML/CFT & TFS Requirements
BNM AML/CFT & TFS Policy Document – Politically Exposed Persons (PEP)
individuals who are or have been entrusted with:
1. prominent public functions domestically/by foreign country e.g. Heads of State or Government, senior politicians,
senior government, judiciary or military officials, senior executives of state owned corporations and important
political party officials.
2. a prominent function by an international organisation which refers to members of senior management e.g. directors,
deputy directors and members of the board or equivalent functions

→ applicable to family members or close associates of all types of PEPs

PEP – Family Members
❖ Individuals who are related to a PEP either directly (consanguinity) or through marriage.
❖ A family member of the PEP includes the PEP’s parents*/siblings*/spouse(s)/child*/spouse's parents*.
(* biological and non-biological relationship)

PEP – Close Associates

o Individuals closely connected to a PEP, either socially or professionally.
o An individual who is closely connected to a PEP may include the PEP’s:
a. extended family members, e.g. relatives (biological and non-biological relationship);
b. financially dependent individuals (i.e. persons salaried by PEP e.g. drivers, bodyguards, secretaries);
c. business partners or associates;
d. prominent members of the same organisation as the PEP;
e. individuals working closely with the PEP (i.e. work colleagues); or
f. close friends.
 AML/CFT & TFS Requirements
IMMEDIATE REPORTING OF SUSPICIOUS TRANSACTIONS
Examples of transactions that may trigger suspicion include:
{New Business}
1. A customer is evasive or unwilling to provide full details or information for purposes of verification of identity
– NRIC/Passport/Visa are easily available in wallet/handbag.
– Malaysian/PR can be fined and jailed for not carrying MyKad at all times (source: Section 6(2) of the National Registration Act 1959)
2. For a corporate or trust customer, instances where there is difficulty and delay in verifying its incorporation.
– Sole-Proprietorship/Partnership/Company must be registered with CCM/SSM prior to establishment.
– latest Form24, Form 49 etc. can be easily purchased from CCM/SSM (on premise/online).
3. A customer with no discernible reason for using the insurer’s service, e.g. customers with distant addresses who could find
the same service nearer to their home base, or customers whose requirements are not in the normal pattern of or
inconsistent with the insurer’s business and could be more easily serviced elsewhere.
– Customer was staying in PJ prior to 2007, engaged KL & Ipoh agents for few applications, but thereafter cancelled the proposa ls. Between 2020 & 2021, the
customer stays in Sabah but engaging Penang agents to submit few proposals. HLA has agency force in every state, so it appears that no apparent reason for
the customer to engage agents (not relative/friend) who are geographically dispersed, hence this observation requires investigations.
4. Customer terminates insurance policies without concern for the product’s investment performance.
– Money launderer or terrorist are not concerned with the losses suffered (at the layering stage), whereas genuine customers tend to lodge complaints and/or
publicize their disappointments in social media.
5. Customer purchases insurance products using a single, large premium payment, particularly when payment is made
through unusual methods such as cash or other bearer negotiable instruments.
– Nowadays we are equipped/familiarized with various remittance method e.g. online banking/cheque/e-wallet, and has significantly reduced the usage of
cash notes. No doubt that corruption/bribery can be undertaken via online remittance/cheque, but receiving a bulk of cash notes over the counter (or by the
agent) will trigger the ground of suspicion.
– Advice: Agents are encouraged to go on cashless in the dealings with customers. If customers intended to hand over huge cash notes to the agents for
premium remittance, agents should encourage the customers to deposit the cash notes into bank & thereafter remit premiums using cheque/online.
 AML/CFT & TFS Requirements
IMMEDIATE REPORTING OF SUSPICIOUS TRANSACTIONS
Examples of transactions that may trigger suspicion include:
{New Business}
6. Customer purchases a product that appears outside the customer’s normal range of financial wealth or estate planning
needs.
– Total Annual Premium > Declared Annual Income, and unable to provide supporting documents to corroborate the premium affordability.
– e.g. housewife receives allowances from husband, RM1k/month (RM12k/year), but committed for yearly premium of RM100K, the savings on hand coupled
with husband’s income/savings are not justifiable to afford the huge premium.
7. Customer borrows against the cash surrender value of permanent life insurance policies, particularly when payments are
asked to be made to apparently unrelated third parties.
– customer requested for partial withdrawal and HLA credited into the customer’s account, thereafter customer transferred the monies to person who
involved in organized crime, then agent was aware about this arrangement.
8. Purchase of policies which allow for the transfer of beneficial ownership interests without the knowledge and consent of
the insurance issuer. This would include second hand endowment and bearer insurance policies.
– customer assigned his policies to a company who acquires & resale the insurance policies; agent/HLA has no idea of who is the ultimate beneficial owner of
these insurance policies (could have resold to the money launderers).
9. A customer is known to purchase several insurance products and uses the proceeds from an early policy surrender to
purchase other financial assets.
– if customer used the early surrender value to buy a house for drug trafficking/production, and agent is aware about this (especially if agent who are keen to
keep in touch with the customer for future dealings).
10. Payment is made to unrelated third parties.
– customer submitted application and proposal deposit but requested to cancel the proposal in the following day, with the unjustifiable reason e.g. change of
mind, family objection etc., and thereafter received the underwriting refund (dirty monies would have been cleaned) for other legal/illegal activities.
 AML/CFT & TFS Requirements
IMMEDIATE REPORTING OF SUSPICIOUS TRANSACTIONS
Examples of transactions that may trigger suspicion include:

{Abnormal Transactions} {Transactions without economic sense}

1. Proposals from an intermediary which is not in accordance with the normal business introduced.
2. Proposals that are not in accordance with an insured’s normal requirements, the markets in which
the insured or intermediary is active and the business which the insured operates.
3. Early cancellation of policies with return of insurance premium or surrender of policy with losses for
no discernible purpose or in circumstances which appear unusual.
4. A number of policies entered into by the same insurer or intermediary for small amounts and then
cancelled at the same time.
5. Any transaction in which the nature, size or frequency appears unusual, e.g. early termination or
cancellation, especially where cash had been tendered and/or the refund cheque is to a third party or
a sudden purchase of a lump sum contract from an existing customer whose current contracts are
small and with regular payments only.
 AML/CFT & TFS Requirements
IMMEDIATE REPORTING OF SUSPICIOUS TRANSACTIONS
Examples of transactions that may trigger suspicion include:

{Abnormal Transactions} {Transactions without economic sense}

6. Assignment of policies to apparently unrelated third parties.

7. Transactions not in accordance with normal practice in the market to which they relate, e.g. with
reference to the size or class of business.
8. Other transactions linked to the transaction in question which could be designed to disguise money
and divert it into other forms or other destinations or beneficiaries.
9. Customer purchasing high number of insurance policies for self and family members which is not
consistent with earning capacity or profile.
 AML/CFT & TFS Requirements
IMMEDIATE REPORTING OF SUSPICIOUS TRANSACTIONS
Examples of transactions that may trigger suspicion include:

{Settlement}

1. A number of policies with low insurance premiums taken out by the same insured person, each
purchased for cash and then cancelled with return of insurance premium to a third party.
2. Large or unusual payment of insurance premiums or transaction settlement by cash.
3. Overpayment of insurance premiums with a request to refund the excess to a third party or
different country.
4. Payment by way of third party cheque or money transfers where there is a variation between the
account holder, the signatory and the prospective insured.
5. A customer uses multiple bearer negotiable instruments (e.g. bank draft, traveller’s cheque,
cashier’s cheques and money orders) from different banks and money services businesses to make
payments for insurance policy or annuity payments.
6. Abnormal settlement instructions, including payment to apparently unconnected parties or to
countries in which the insured is not known to operate.
 AML/CFT & TFS Requirements
IMMEDIATE REPORTING OF SUSPICIOUS TRANSACTIONS
Examples of transactions that may trigger suspicion include:

{Claims}

1. Claims which, while appearing legitimate, occurred with abnormal regularity.

2. Regular small claims within insurance premium limit.
3. Recent change of ownership or assignment of policies just prior to claims.
4. Payment of claims to a third party without any apparent connection to the insurance policy owner.
 AML/CFT & TFS Requirements
MAINTENANCE OF RECORDS

• HLA must maintain all records and documents for at least 6 years following the
completion of the transaction, the termination of the business relationship or
after the date of the occasional transaction.
• If the records are subjected to ongoing investigation or prosecution in court,
they must be retained beyond the stipulated retention period until such time
HLA is informed by the relevant law enforcement agencies that they are no
longer required.

• The records must be up-to-date and maintained in a form that is admissible as

evidence in court pursuant to the Evidence Act 1950, and make such records
available to the supervisory authorities and law enforcement agencies in a
timely manner.
 AML/CFT & TFS Requirements

IMPLICATIONS FOR THE INTERMEDIARIES

• The AML/CFT & TFS policies and procedures apply to intermediaries

• It is imperative that intermediaries must familiar with the Standard,

Enhanced, and Ongoing Customer Due Diligence
 AML/CFT Legislations

Important Key Provisions in AMLA and its Penalty for Non-Compliance

Section 4
Any person who engages in or attempts to engage in, or abets the
commission of money laundering, commits an offence

Implications:
Fine not less than 5 times the sum or value of proceeds or RM5 million
(whichever is higher), and 15 years imprisonment.
 AML/CFT Legislations

Important Key Provisions in AMLA and its Penalty for Non-Compliance

Section 14
Obligation on reporting of suspicious transaction

Implications:
Insurance companies are obligated to promptly report on any suspicious
transaction which includes any attempted transaction or proposed
transaction for reason to suspect that:
➢ the transaction involves proceeds of an unlawful activity or
instrumentalities of an offence;
➢ the transaction or property involved is related or linked to, is used or is
intended to be used for or by, any terrorist, terrorist group, terrorist
entity, or person who finances terrorism.
 AML/CFT Legislation and Policy

Important Key Provisions in AMLA and its Penalty for Non-Compliance

Section 24
Protection of Person Reporting
No civil, criminal or disciplinary proceedings shall be brought against a person who discloses or
supplies any information unless it is done in bad faith.

Implications:
Person who aids in the investigation by disclosing or supplying
information will be protected by the law
 AML/CFT Legislation and Policy
Important Key Provisions in AMLA and its Penalty for Non-Compliance

Section 35
Tipping Off (Leakage of Information)
If you disclose any information to anyone about a proposed investigation

Implications:
Liable to a fine ≤RM3 million or to imprisonment for a term ≤5 years or
to both
 Case Study
Section 35 Tipping Off

New Business Officer, Tony had been informed by Compliance that Dato Tam’s insurance application will
be rejected and the information was communicated to the servicing agent, Peter. Peter inquired further
on the reason of rejection from Tony. Tony came to know from Compliance officer that Dato Tam is being
investigated by the Royal Malaysia Police and this information should not be disclosed to the agent nor
the customer. However, Tony accidentally revealed the information to Peter and requested him not to
reveal the information to Dato Tam as it will be deemed as Tipping Off.
Under pressure from Dato Tam, Peter shared the information on why the company had rejected the
insurance application. Thereafter, Dato Tam immediately terminated all his existing insurance policies
with the Company.
Both Tony and Peter’s sharing of the ongoing Royal Malaysia Police’s investigation had alarmed Dato Tam
and likely jeopardizing the investigation. Their actions are deemed as a form of tipping off.

Implications:
Tony and Peter are liable to:
• fine ≤RM3 million; or
• imprisonment for a term ≤5 years; or
• both