MONEY LAUNDERING - Part 2

Recognition and reporting of suspicious transaction
a) Recognition of suspicious transactions - which is inconsistent with a customer's known, legitimate business or personal activities or with the normal business for that type of account.

b) Monitoring types of suspicious transactions - An assigned senior management staff needs to continually overseen an suspicious transactions. Each banking institution should formally designate an officer to be responsible for money laundering recognition and reporting procedures.

c) Reporting suspicious transactions - banking institutions are required to report all cases of suspicious transactions which they come across to Bank Negara Malaysia (BNM).

d) Procedure for disclosure - each banking institution may have its own procedure for reporting to BNM.

e) Funds offer by non-account holders (occasional customers) - sometimes banks decline to open an account for a potential customer or refuse to have dealing due to serious doubt regarding the identity.

Examples of suspicious money laundering transactions
Examples can be broken into the following categories:
1) using cash transactions
2) using bank accounts
3) investment related transactions
4) international off-shore activities
5) involving financial institutions' employees and agents
6) secured and unsecured lending:
a) customers who unexpectedly repay problem loans
b) request to borrow against assets held by the banking institution or a third party, where
the assets' origin is not known or they are inconsistent with the customers standing
c) request by a borrower for a banking institution to provide or arrange for finance where
the source of the customer's financial constribution to a deal is unclear, particularly
where property is involved.
d) using fixed deposits as collateral of unclear source. Example, a small company with
yearly sales turnover of RM50,000 and Net Worth of RM70,000 offered a fixed deposit
of RM5.0M as collateral for its credit facilities. Seems the company cannot afford to
to have RM5.0M in-hand unless borrowered from somewhere. The duty is to track the
origin of the RM5.0M money.