Money laundering is the bland term used to portray the procedure by which lawbreakers mask the original ownership and control of the returns of criminal lead by making such continues seem to have gotten from a genuine source. There are three stages in money laundering. First is placement, second is layering and third is integration.
a) Discuss the actions, if any, that Ali should take and identify the risks and issues, from a money laundering perspective, involved in the scenario
Risk and Issue
An unusual transaction is one of the measures for a high money-laundering risk. A high-risk customer, generally one who involves in business with very high physical cash, monetary instrument, require wire transfer and huge amount of cash deposits. Aisha, pertinent to the scenario is a high-risk customer as she conducts the business through cash intensive business by bringing the physical cash to the bank for deposits purpose. The main concern here is sudden increased on total deposits. Her average cash deposits on previous month was MYR 20,000 compared to the last two months which was MYR 250,000, it shows unusual transaction amount. Then, the pattern of the transactions activities is inconsistent compared to the previous month.
Ali, as a processor of the money transaction is required to conduct enhance customer due diligence (ECDD) as to investigate further and have processes and procedures to take place. According to Section 16 of AMLATPFUAA, for any managing and account transaction including a sum identical to RM 50,000 or more, customer due diligence must be conducted for higher risk clients. The practical application of enhanced CDD includes obtaining the customer latest profile for example probing on the source of wealth or funds, additional information on the client’s volume of business assets, opening of new branches or having other business which involves high cash as well. Other than that, know the nature of the business. To most cases, collective descriptions are not sufficient. Street vendor, otherwise known as a person who are selling goods in the street with temporary stall without permanent built structure. The details descriptions of the business are required, as in this scenario, obtain the name of the product sold by the vendor, schedule of the business, operating hour and anticipate the volume of currency and total sales in order to know the nature and details of the business. Apart from that, understand the business activities. Acquire is there any business divisions, who is the major clients of the customer, describe major suppliers, is there any competitor and know the main countries or regions where customer does the business. Subsequently, get the information regarding source of fund and the purpose of the incoming fund or transaction. Have better understanding regarding from which the incoming fund is derived, is it from the business activities itself or by sale of assets. Then, justify the purpose of the transaction being conducted which could be for personal saving or supplier payment. The reason of sudden increased on the transactions activities is the highlight of the scenario. Ali need to get the information or any documentation from the customer regarding the different amount of cash deposit to be compared of her average monthly deposit previously. While performing in conducting ECDD, Ali should avoid the Tipping Off.
As indicated by section 14A (1) of the AMLATFPUAA forbids the revelation to different person that a STR is being filed. Likewise, Section 14A (2) additionally precludes scattering of the revelation under section 14A (1). At that point, Section 35 of the AMLATPFUAA restricts the disclosure to different person that an examination into money laundering by any expert is led. This precludes a person from unveiling any data they have gotten from regulators or uncovering any conceivable examination methodology. This does exclude revelation by a lawyer in association with offering exhortation to his customer in his expert limit. The above offenses which may make the individual be subject for a fine not surpassing three million Ringgit or a jail term no surpassing five years or to both.
Suspicious Transactions Report (STR):
After performing the enhance CDD and the transactions seems suspicious, Ali should report to Branch Manager or Assistant Branch Manager. Suspicious transaction here means when customer does not want to elaborate further about the transaction specifically about the source of fund and purpose of the transactions. Or, if the transactions are not jive to the customer business nature. For example, in this case, upon conducting enhance CDD for Aisha and it is found that her street vendor business is not equivalent to the amount of profit she might earn to be compared to the cash deposits have been conducted, thus it signifies suspicious transactions. On top of that, customer does not want to provide any related documentation about the business for example business review report from Companies Commission of Malaysia (SSM) Branch manager later will conduct the electronic STR to compliance officer and subsequently the compliance officer investigates the transactions and files the STR if deem suspicious.
However, compliance officer should not do STR if customer seems to not be suspicious. Non suspicious fund transaction of high risk customer resembled when the transaction conducted is jive to the customer’s business nature and activities with known sources of fund. In addiction if customer can provide adequate and complete documents regarding her business. Compliance officer should also take into consideration for any changes of the customers business for example if she has added up her vendor branches, set up new business or if the previous transaction difference was during festive session of the year for example during Hari Raya Aidilfitri, Chinese New Year or others celebrations.