Comprehensive AML Laws and Regulations: Malaysia

Malaysia has developed a comprehensive framework to combat money laundering (ML) and terrorist financing (TF), aligning with international standards. These regulations cover various sectors, including banking, insurance, asset management, wealth management, payment processors, fintech, lending, and crypto, ensuring the integrity of its financial system.

Key Laws and Guidelines

• Anti-Money Laundering, Anti-Terrorism Financing, and Proceeds of Unlawful Activities Act 2001 (AMLA: The Anti-Money Laundering, Anti-Terrorism Financing, and Proceeds of Unlawful Activities Act 2001 (AMLA) is the cornerstone of Malaysia's AML/CFT efforts. The act mandates financial institutions to implement comprehensive AML measures, including customer due diligence, transaction monitoring, and the reporting of suspicious activities. The AMLA also established the Financial Intelligence Unit (FIU) within Bank Negara Malaysia (BNM) to oversee AML compliance and conduct investigations.
• Central Bank of Malaysia Guidelines: The Central Bank of Malaysia (BNM) has issued detailed guidelines to support compliance with the AMLA. These guidelines provide specific instructions for various sectors, including banking, insurance, and fintech, on implementing effective AML/CFT measures. The guidelines also outline the responsibilities of financial institutions in conducting customer due diligence and reporting suspicious activities.
• Securities Commission Malaysia (SC) Guidelines: The Securities Commission Malaysia regulates the securities market and virtual asset service providers. The SC has issued guidelines requiring these entities to implement robust AML measures, including customer verification, transaction monitoring, and the reporting of suspicious activities. These guidelines aim to mitigate the risks associated with securities and virtual assets.
• Bursa Malaysia Guidelines: Bursa Malaysia, the country's stock exchange, has issued guidelines to ensure AML compliance within the trading environment. These guidelines mandate that trading participants implement AML programs, conduct customer due diligence, and report suspicious activities. Bursa Malaysia also conducts regular audits to ensure compliance with AML regulations.
• Real Estate Guidelines: Issued by the Board of Valuers, Appraisers, Estate Agents, and Property Managers, these guidelines provide AML/CFT instructions for real estate professionals. The guidelines require real estate agents to conduct customer due diligence, keep transaction records, and report suspicious activities, thereby preventing money laundering in the real estate sector.

Regulatory Bodies

• Financial Intelligence Unit (FIU) within Bank Negara Malaysia (BNM): The FIU, established within Bank Negara Malaysia, is the primary enforcement body for AML/CFT laws in Malaysia. It oversees compliance with the AMLA, conducts investigations into suspicious transactions, and collaborates with other Regulatory Bodies to ensure a comprehensive approach to combating money laundering and terrorist financing.
• Securities Commission Malaysia (SC): The SC regulates the securities market and virtual asset service providers. It ensures that these entities implement robust AML measures, conducts regular inspections, and enforces penalties for non-compliance. The SC also provides guidance and support to enhance AML compliance within the securities sector.
• Labuan Financial Services Authority (Labuan FSA): Labuan FSA regulates financial services and activities within the Labuan International Business and Financial Centre (IBFC). It ensures that entities operating within Labuan IBFC adhere to AML/CFT regulations, including customer due diligence and transaction monitoring.
• Board of Valuers, Appraisers, Estate Agents, and Property Managers (BOVAEP): BOVAEP regulates the real estate sector for AML compliance. It provides guidelines and training to real estate professionals, ensuring they implement effective AML measures. BOVAEP also conducts inspections and enforces penalties for non-compliance.
• Ministry of Finance (MOF): The MOF oversees the implementation of AML policies and regulations across various sectors. It collaborates with other Regulatory Bodies to enhance Malaysia's AML/CFT framework and ensure compliance with international standards.

History of Regulations

• 2001: Enactment of the Anti-Money Laundering, Anti-Terrorism Financing, and Proceeds of Unlawful Activities Act (AMLA).
• 2003: Establishment of the Financial Intelligence Unit (FIU) within Bank Negara Malaysia (BNM).
• 2013: Amendments to AMLA to include stricter penalties and expanded coverage.
• 2017: Introduction of guidelines by the Securities Commission Malaysia for virtual asset service providers.
• 2019: Issuance of detailed AML guidelines by Bursa Malaysia.
• 2021: Implementation of AML guidelines for the real estate sector by BOVAEP.

Sector-specific Regulations

• Banking and Financial Institutions: Regulated by Bank Negara Malaysia (BNM), the banking and financial institutions sector is required to implement robust AML/CFT programs. This includes strict KYC protocols, continuous monitoring of transactions, and the reporting of suspicious activities. Banks and financial institutions must also maintain records for a minimum of seven years.
• Insurance: The insurance sector, overseen by BNM, mandates companies to implement effective AML measures. This includes customer due diligence, transaction monitoring, and the reporting of suspicious activities to the FIU.
• Asset Management and Wealth Management: Regulated by the Securities Commission Malaysia (SC), asset management and wealth management firms must adhere to stringent AML regulations. These firms are required to implement robust AML programs, conduct thorough customer due diligence, and monitor transactions for suspicious activities. They must also report any suspicious transactions and maintain detailed records.
• Payment Processors and Fintech: Payment processors and fintech companies are subject to BNM regulations. These entities must implement comprehensive AML measures, including customer verification, real-time transaction monitoring, and the reporting of suspicious transactions. They must also comply with guidelines issued by the SC for virtual asset service providers.
• Lending: Lending institutions, both traditional and fintech-based, must adhere to AML regulations set by BNM. These institutions are required to conduct customer due diligence, monitor transactions for suspicious activities, and report any suspicious transactions to the FIU. They must also maintain records of all transactions and customer information.
• Crypto: The crypto sector is regulated under guidelines issued by the Securities Commission Malaysia. Virtual asset service providers (VASPs) are required to implement robust AML measures, including customer verification, transaction monitoring, and the reporting of suspicious activities. VASPs must also maintain detailed records of all transactions.