A journal review of Money laundering activity and legal implication according to Law of Banking and Financial Institution.

1. LAW OF BANKING & FINANCIAL INSTITUTIONS
JOURNAL REVIEW
Title of Journal:
Review of Bala Shanmugam and Haemala Thanasegaran, JournaL
“Combating Money Laundering in Malaysia”
Bala Shanmugam and Haemala Thanasegaran (2008), “Combating Money Laundering in
Malaysia”, journal of Money Laundering Control, Vol. 11 Iss 4 pp.331-344
I hereby confirm that the work contained in this assignment is solely our own, except for reliance on
material that is identified and cited according to accepted academic practice.
Marti Sigi

2. SUMMARY
This is a summary of the journal reviewed is titled “Combating Money Laundering in
Malaysia”, journal of Money Laundering Control, Vol. 11 Iss 4 pp.331-344, published in
linking research and practice, Emerald Insight. The author named, Bala Shanmugam and
Haemala Thanasegaran.
In this journal, Bala’s, and Haemala’s aiming to highlight the significance of opposing the
exposed dangers through money laundering activities. The journal stated that, it is
important to present guideline towards battling at risk of terrorism financing and criminal
elements. Bala’s, and Haemala’s also list out the related law which connects to the matter of
tackling the threat of money laundering. One of the most proactive law that has been
attempted is the implementation of Anti-Money Laundering (AML) Act 2001, which
previously an enactment.
Bala’s, and Haemala’s conduct this research by reviewing the real case in onshore and
offshore financial services centre and first-hand resource from BNM regardings to collecting
data of reporting institution under AMLA.
In this Journal, Bala’s, and Haemala’s actual concern about the technique of Malaysian to
encounter with such money laundering activities. Later aspect will be emphasised about the
initiative, but first, Bala’s, and Haemala’s wants the reader to know how money laundering
routine are and to reach the reader's mind about the purpose of an outcome for combating.
Intentionally, it asserts on to the development and ensure the proper implementation law
taken to perceive good deed of protection. To consolidate it, Malaysian banking play role to
make sure AMLA Law implemented at the very first place and so have the title for a positive
business entity through world-wide. Thus, in my opinion, this journal is making way of
important entity such as BNM to think the other side, as to attract and to build trust from
another country for the sake of economic contribution. Apart from that, Manageable or
decreasing number of money laundering could improve Malaysia in income or KDNK. We
need to bear in mind that, gambling activity brings zero benefit to the country as well as
personal ourselves. The term ‘money laundering’ in Islamic called ‘Riba’. Then, it relates to
self-satisfaction later when a person caught on realization of legal and feeling or sinner to
God.
Still with its significance, the significance of the journal are more emphasised on its role to
diminish money laundering activity in Malaysia by looking at quite a number of terrorism and
financial reporting with its bad effect. Bala’s, and Haemala’s bring about the September
11,2001 tragedy (9/11) which gives a clear effect of money laundering activities. Along with
that, at some point USA itself was utilizing a delicate enforcement of anti-money laundering
(AML). Bala’s, and Haemala’s also stressed out the “who started money laundering?” along
with specified answer of US Mafia. An innocence money look falls under an essential
technique as such disguising the trail leading of the money. In Malaysia, money laundering

3. mostly happen with structured transaction. A method with frequent deposit in countless
branches of one financial institution. Other than that, currency exchange, postal order and
buying share take place as another popular money laundering activities which almost
transparent. The Internet, according to author placed at the very possibility with such
illegitimate activities. Well-known as “cyber payment”, the availability to perforated to
international border is high with specialities of instant and anonymous. The success of those
methods at most depending to its speed and anonymity via internet. To resemble its
significant, here are some of institution provide in Malaysia which stated in Bala’s, and
Haemala’s journal, consists of. Malaysian fledging Islamic finance sector subject to the very
same strict supervision towards financial crime such as riba and gharar. FTZ however,
exposes to money laundering resulting from lenient tax and custom treat relative.
Meanwhile, International cooperation performs an agreement to sign a joint declaration to
encounter the absence of criminal terrorist financing.
The big part of Bala’s, and Haemala’s journal is about the regulation and law enforcement to
combat the money laundering activities. There were plenty of measurement that Bala’s, and
Haemala’s has discussed in this journal. The First and utmost is the national coordination
committee (NCC). NCC is the secretariat that will represent internationally meeting for yearly
coordination of initiative regarding counterattacking terrorism financing. Second
measurement which highly influences the government proper curbing is the anti-money
laundering act 2001 (AMLA). There were cited that, section 44 & section 45 of the AMLA
states that, AMLA has the right to freeze and seize property with sound of gains obtained by
way of money laundering activities. AMLA announced to be an official law to consolidate its
role in restricting the illegal activities. If there were suspicious transaction detected, it is “a
MUST” to report it to AMLA and thereafter to Bank Negara Malaysia (BNM). This matter has
been approved and seen as a under law provision. Thirdly is the financial intelligence unit
(FIU). This agency is the one who connects with foreign agencies in term of receiving,
analysing and sharing information & financial intelligence. Thus, this agency plays a role to
supervise offshore banking especially in relate to money laundering. Fourth and fifth are a
department which also important consist of the custom department and the police force.
Customs department is a judicial system follow ALMA, focus on several companies that
believe involved smuggling. While police force entitled to tract the committees as individual
especially. Next is, the Malaysian bar council (MBC). This is another effort to combat money
laundering, which elaborate the lawyer. The bar council follows the amendments of the
AMLA. It is ‘mandatory’ for lawyer of one company to report any suspicious transaction.
Failure to act as mandatory will be penalize of not exceed RM100, 000 or imprisonment or
both. Apart from that, MBC will be helping the lawyer to be able to understand any new
reporting procedure. Non-governmental organization (NGOs) not scattered about by playing
a role to against money laundering. Registration of the company is a “mandate” and to
submit an annual report. AMLA about to expand its scope in reporting charity contribution to
avert charitable giving. This is because, the Malaysian tax law allows deduction of total tax
liability. This could lead to any suspicions of, money laundering if such charity abuse occurs.
The securities commission (SC) conducts under the Securities Industry Act (SIA). It much
relates to the Board of director (BOD) of one companyAs such CEO’s are engaged with
section 130 company act 1965 which stated that any kind of fraudulent including mislead
money using are convicted to imprison of maximum 5 years. SC also not hesitate to remove
or band director of the office under seek of the court order (relates to section 99C (3) of SIA
for non-compliance with exchange rules. SIA enroll under the amendments of act 2004.
Money Changing Act 1998 is one of the acts that being used under foreign exchange issues
It is restricted in control of money cash flow. The procedure then activated which a
statement of the country, not permitted for transmitting money. The procedure involves

4. reporting to the police and registration of the customer identification and transaction record.
Lastly, the journal mentions The International Centre (IOFC). In Malaysia, it's called Labuan
Offshore Financial Service Authority (LOFSA). It is under BNM supervision to make sure an
integrity of an offshore financial institution falls under AMLA framework. Offshore companies
must establish under trust company where the beneficial owner needs to submit a
transaction report as required in AMLA law. LOFSA work close to large enforcement agencies
to certify an effectiveness and initiative to combat money laundering. And therefore,
Malaysia prohibit offshore casino and Internet gaming site.
Bala’s, and Haemala’s journal also point out the KPMG survey conducted in 2004 to
improvise and maintain its aim to eliminate money laundering. KPMG is one of a consulting
firm. The argumentation begins to emerge when the authority of the policymaker and law
enforcement happen to be so effective in avoiding from financial criminal. There is no doubt.
The KPMG result of survey brings extremely positive as many financial service institutions
have met the requirement of AMLA law since previously as they begin to realize the
importance on fighting the money laundering while afraid of experiencing loss from terrorist
of financial. As a result, Malaysian banking shall increase its monitoring service. Likewise,
the system are all upgraded which require the implementation of sophisticated IT system.
Thus, the training being conducted of the staff to have a major experience person in
handling such system. It was revealed that continues survey like what KPMG has done could
affect a continues improvement and enhancement towards effective regulatory and
supervisory framework. Most importantly, to bar terrorism of financial.
The key suggestion of the journal appoint by Bala’s, and Haemala’s is throughout Malaysian
institute of accountant (MIA). The need in exchange information between MIA, AMLA and
CFT will enhance the arrangement of the proper regulation. First to be lookup is the need to
close the chance for financial terrorist operation. By the Exchange Control Act 1953 by
United Nation Security Council Resolution and Controller of foreign Exchange stated that,
any funds that source belong to Osama bin Laden will be frozen immediately. LOFSA is
making its way to issue this regulation. Second is to consent Anti-terrorist laws. It falls
under The panel (1), AMLA 2001, Subordinate Courts Act 1948, Court of judicature Act 1964
and The Criminal Procedure Code. These were the domestic legislation to incorporate with
domestic law while need an amendment. The mechanism to detect and prevent a suspicious
activity through major criminal procedure. The implication include, forfeit an asset and
prosecution of individual who convicted support surveillance of terrorist suspects. Thirdly,
the suggestion, stick with the reporting suspicion transaction. Section 14 (b) AMLA set a
statutory obligation to report compulsory. In order to support the reporting matters, any
financial and non-financial institution need to pay very attention to the client identity for
ongoing monitoring of transactions. Any mismatch arises suspicion. Bala’s, and Haemala’s
makes a relation of ‘due diligence’ as the best practice approach the AMLA on “Know your
Customer” (KYC) policy. While, Malaysia’s bank privacy laws prevent general admission on
financial information. Lastly, the suggestion to combat money laundering through training
initiative. It usually, involve the required skill and proficiency. Continual training making it
even more important.
The final point of Bala’s, and Haemala’s is a little more serious which stressing to call all
financial and non-financial institution to examine and develop stage of financial regulation by
using a consultative approach for BNM’s to minimize potential attack of financial fraudulent.

5. In closing, this journal reveals that, Malaysian is in a middle of conducting an aggressive and
progressive in constructing a wide-ranging AMLA regime. Malaysia is not a centre of money
laundering, however defenceless to abuse of the criminal element of financial. The
establishment of Law from NCC, AMLA, FIU, LOFSA and a lot more as mention above shows
a massive supervision framework at the purpose of combating money laundering. All
guidelines are intended to identify unusual activities. Malaysian has been commended for its
rigorous of efforts in reducing money laundering internationally. This has encouraged
Malaysia to be more professional as a society and responsible as the entity who work
directly with the institution. Not to forget the “fit and proper test” for all management to be
concerned on beneficial owner. There would be a confidential auditing and examination
require for any financial centre to prevent the mismanagement. Practice, by-law and
inspection should be reinforced. Ratification on the conventional order as such Malaysian
Parliament applied to be enacted on terrorist financing legislation. Malaysia continue making
a constant effort in order to overcome money laundering and terrorist financing within its
boundaries.
OPINON
Based on the journal, it came out with a success carry out of needed key point. Money
laundering being explained very details with its implication. The trend applied in Malaysia in
order to encounter Money laundering also sufficient. The utmost priority is the regulation
and law enforcement that has been emphasised is understandable. There were much
enough of a listed section of the act to be aware of. The terrorism awareness and financial
reporting method that's been stressed for combating money laundering in Malaysia gives
unveil as criminal.
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