KUALA LUMPUR: Malaysian financial institutions should strengthen their due diligence procedures for corporate remittances in line with existing regulations under the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act (AMLATFPUAA) 2001.
Anti-money laundering and counter-financing of terrorism expert Muhamad Nazri Shaidon said Section 16 of AMLA places a clear obligation on banks to perform proper customer due diligence, especially when handling corporate remittances.
With nearly a decade of experience in Bank Negara Malaysia’s (BNM) Financial Intelligence and Enforcement Department, Muhamad Nazri said that while ‘Know Your Customer’ (KYC) requirements are standard across the financial sector, the depth and effectiveness of implementation vary significantly among institutions.
“Effective KYC is not a checkbox exercise. Banks must actively verify customer information to ensure it aligns with declared business activities,” he told Bernama recently.
Muhamad Nazri, who is also an anti-money laundering trainer and practitioner, noted that financial institutions are required to screen corporate clients and their associated individuals against various sanctions lists and blacklists.
“This is particularly critical for clients identified as high-risk. For high-risk customers, enhanced due diligence (EDD) is necessary. These include individuals or entities linked to politically exposed persons (PEPs), complex ownership structures, high-risk industries such as gambling, defence, registered estate agents, dealers in precious metals or precious stones (DPMS), and professional service providers such as lawyers and accountants,” he said.
Muhamad Nazri added that clients linked to adverse media reports may also fall under a high-risk classification, warranting a deeper scrutiny of their background, source of funds, and ongoing transactional behaviour.
“Banks must also clearly understand the nature and purpose of the business relationship and ensure that all transaction activities are consistent with the customer’s established risk profile.
“Accurate identification of beneficial owners, defined as individuals who directly or indirectly control 25 per cent or more of the entity, is essential. Where irregularities or suspicions arise, banks are required to promptly submit a suspicious transaction report (STR) to BNM, in accordance with regulatory obligations,” he said.
