The Anti Money Laundering Act (AMLA)

In July 2001, the AMLA was gazetted as law. BNM was appointed as the competent authority under the AMLA. Following this, a new department, the Financial Intelligent Unit (FIU), was established within BNM on 8th August 2001, to carry out the functions of the competent authority as provided by AMLA.

The AMLA come into force on 15th January 2002, concurrently with the appointment of BNM as the competency authority by the ministerial order. The AMLA provides for the FIU to collaborate with the relevant domestic regulatory, supervisory and enforcement agencies in intelligent gathering, analysis and dissemination. The national money laundering programme emphasises on terrorist financing. Any person funding terrorist is deemed to be abetting the terrorist and commit an offence under the Penal Code. Those receiving the funds also commit money laundering offences for dealing with proceeds from illegal activities.

FAMOUS REASON - DUE TO SEPTEMBER 11, 2001 ATTACKED ON WTC

What is Money Laundering?
Changing the identity of illegally obtained money into a legitimate source.

A common form of money laundering encountered by banks is cash deposits in the banking system or exchanged for value items. This is the key stage for detection of money laundering operations - where the cash first enters the banking system.

3 Stages of Money Laundering

1. Placement - the physical disposal of Cash proceeds derived from illegal activities
2. Layering - separating illicit proceeds from their source by creating complex layers of financial transactions designed to disguise the audit trail and provide anonymity
3. Integration - the turning of criminally derived wealth into legitimate funds

If the layering process succeeds, the integration phase places the laundered proceeds back in the economy in such a way that the funds re-enter the financial system as legitimate business funds.

Policies And Procedures Of Financial Institution
There is no legal requirement only a moral one to report to the appropriate authority and to not facilitate money laundering.

Source: BNM