Issue #6

We are pleased to share with you our latest updates on Anti-Money Laundering / Counter Financing of Terrorism ("AML/CFT") and sanctions.

In the News

Global

FATF and regulators issue statements on AML/CFT measures amid COVID-19

In response to the COVID-19 pandemic, the global AML watchdog, the Financial Action Task Force ("FATF"), has recently issued a guidance to encourage governments to work with financial institutions and other businesses on addressing the challenges posed by COVID-19. Following FATF's statement, regulators across the globe including , the United States ("US") and Hong Kong have also issued further guidance to financial institutions on AML/CFT measures amid COVID-19. More here, here, here, and here

KPMG Insights: AML/CFT in times of COVID-19

As the public scrambles to adapt to the impact of COVID-19 to their businesses and livelihoods, criminals have been quick to exploit the fear and uncertainties in these unprecedented times. We have seen a major shift in financial crime trends and techniques, including an increase of money mule scams, medical product scams, telephone and SMS message frauds, fake websites selling medical products, mobile apps used to obtain personal and sensitive information and fundraising for fake charities, just to name a few. During the restrictive movement period, most institutions did not have access to adequate solutions to effectively screen and monitor the client activity as was needed during this turbulent time while customers who are stuck at home may opt to perform their transactions through online channels, resulting in a double whammy of increase in online banking activities and a decrease in resources to monitor such transactions and patterns in a timely manner.

In times like this, institutions need to assess their level of exposure to the changes caused by the COVID-19 pandemic, as well as their level of readiness to combat any financial crime that arise from the chaos, by asking themselves some key probing questions: • Do you have adequate measures in place to ensure active governance and oversight on AML/CFT matters such as obtaining special approvals from Senior Management remotely during the restrictive movement period including for the interim measures that have been put in place ? • Do you have the capability to screen and monitor transactions based on certain keywords mentioned in the transaction remarks e.g. "face masks, protective equipment" or detect multiple transactions involving the same parties? • Does your Transaction Monitoring system have the capability to monitor online transactions, detect changes in customers' behaviour, analyse transaction patterns and trends while avoiding false positive alerts? • Do you perform adequate due diligence on customers and counterparties and are able to identify fake invoices, forged documents, compromised emails and counterfeit products? • Have you provided role-based / advanced training for employees to ensure their awareness of AML/CFT measures and expertise on countering the latest ML/TF and fraud trends and techniques?

Malaysia

Cash Transaction Limit to be introduced by BNM

The National Coordination Committee to Counter Money Laundering ("NCC") will be consulting the public on imposing a limit of RM50,000 on the usage of physical cash for transactions, which will be overseen by Bank Negara Malaysia under the proposed Currency Act 2020 in an effort to prevent abuse of cash to support illicit activities. The Act also imposes a legal tender limit for coins at 25 pieces per transaction. More here and here

Malaysia

BNM publishes its 2019 Annual Report

Bank Negara Malaysia ("BNM") has published its 2019 Annual Report and which stated that they have tightened their supervisory and enforcement actions and provided figures on the actions taken against financial crime including money laundering and terrorism financing ("ML/TF"). More here

Malaysia

Malaysia recovers RM1.4 billion of 1MDB funds

Malaysia has recovered RM 1.4 billion (USD 322 million) allegedly taken from the sovereign wealth fund 1MDB, a fraction of the more than RM 19 billion (USD 4.5 billion) US prosecutors say was looted. Another RM 6.9 billion (USD 1.6 billion) allegedly plundered from 1MDB has been identified and steps are being taken to recover the money. More here and here

Malaysia

Politician's account raised millions but did not raise bank?s ML red-flags

Cash deposits and subsequent proceeds raised from Datuk Seri Ahmad Zahid Hamidi's account amounting more than RM 99 million did not trigger a Malaysian bank's red flag as the transactions involved the account of his appointed law firm Messrs Lewis & Co. The actual amount raised could not be accurately ascertained as many transactions were highlighted in court. It was previously reported that Zahid was charged with receiving over RM 71 million of proceeds from ML, over RM 20 million for criminal breach of trust and over RM 21 million of purported bribe. More here and here

Global

Wolfsberg Group released new version of the its Correspondent Banking Due Diligence Questionnaire The Wolfsberg Group released a new version of the Correspondent Banking Due Diligence Questionnaire on 17 April 2020 which includes changes of terms in certain questions, removal of a question under the sanctions section and an update to the response column of various questions. More here

European Union

Four African countries blacklisted by EU As a result of the risk posed from ML/TF, the European Union ("EU") added Botswana, Ghana, Mauritius, and Zimbabwe into its ML blacklist which will take effect from October 2020 and intends to create an arm to fight financial crime and monitor banks. More here and here

India

India has 3rd highest illicit trade flow globally, says GFI Global Financial Integrity ("GFI") has stated that India has the third highest trade-related illicit financial flow among 135 countries with MYR 358 billion (USD 83.5 billion) or 3.1 per cent of gross domestic product ("GDP") escaping the tax net during 2008-2017. The GFI classifies illicit flow funds as funds that are illegally earned, transferred or utilised across an international border. The primary sources of illicit flows include grand ML, corruption, commercial tax evasion and transnational crime. More here

United States

Increase in seizures of dirty money in the US as COVID-19 impacts International ML Schemes Throughout three weeks in April, federal authorities in Los Angeles seized more than MYR 12.8 million (USD 3 million) in three separate seizures of suspected drug proceeds as the coronavirus slows down trade-based money laundering schemes normally used to move such funds. More here

Fines and Enforcement Actions

Malaysia

Malaysia drops 1MDB ML case against stepson of former prime minister Malaysian prosecutors dropped five ML charges involving MYR 1.1 billion (USD 248 million) against the stepson of former prime minister Datuk Seri upon reaching a deal which the Deputy Public Prosecutor say would see the government receiving "a substantial sum running into several million ringgit." More here

Malaysia

Asia Media founder wanted by SC for ML AMLATFUPUAA offences The Securities Commission Malaysia ("SC") is seeking information or assistance from the public and Interpol on the whereabouts of the founder of Bhd, Wong Shee Kai @ Ricky Wong, following an arrest warrant against Wong for failing to appear before the SC?s Investigating Officer under the AML/CFT act. More here and here

Singapore

Man arrested for ML offences linked to SGD 10.2 million COVID-19 scam for surgical masks, hand sanitisers The Singapore Police Force announced that they had arrested a man for suspected ML offences in relation to a COVID-19-linked scam which saw an overseas pharmaceutical company defrauded to the tune of MYR 31 million (SGD 10.2 million) over the purchase of surgical masks and hand sanitisers. More here and here

Australia

Westpac faces USD589 million fine for potential ML breaches Westpac Banking Corporation estimated that it might receive an MYR 2.6 billion (AUD 900 million) fine for failing to prevent up to 23 million breaches of AML/CFT laws. Westpac's system failed to raise any red flags on transactions sent to the Philippines allegedly to pay for child abuse material. This scandal brought down Westpac's leadership, forcing the resignation of its chief executive and the early retirement of its chairman. It also reported that Westpac has created a role to oversee financial crime and compliance amidst breaches in Australian AML laws. More here and here

Australia

HSBC reports potential ML breaches in Australia HSBC has reported itself to Australia?s financial regulator for possible breaches of AML rules in a regulatory filing by its Australian subsidiary. The breaches are related to small amounts of cross-border foreign currency transactions involving non-banking financial institutions that the Bank was unable to properly report for technical reasons. More here and here

United States

US charges two individuals for aiding North Korea in laundering stolen cryptocurrency The US Department of Justice charged two individuals with laundering more than MYR 429 million (USD 100 million) in cryptocurrency on behalf of North Korea in court filings that detail Pyongyang's use of hackers to circumvent sanctions. According to an indictment filed in federal court in Washington, D.C., the two individuals allegedly laundered cryptocurrency stolen by North Korean hackers between December 2017 and April 2019, helping to hide the stolen currency from police. More here and here

United States

Pharmacy owner convicted for fraud and ML conspiracies The owner and operator of Physician Specialty Pharmacy was convicted of conspiracy to commit health care fraud and wire fraud and conspiracy to commit ML by conspiring to defraud a federal health care programme of more than MYR 20.6 million (USD 4.8 million). More here and here

Bahrain

Bahrain sentences suspects in ML related cases to Iran Bahrain fined three suspects a sum of MYR 38.7 million (USD 9 million) and sentenced them to prison after the general prosecution unveiled in February that about MYR 30 billion (USD 7 billion dollars) had vanished from Bahrain's Future Bank's records and were utilised to fund Iranian groups, in violation of the sanctions imposed against the country. It has been found out that Future Bank had carried out thousands of international financial transactions while providing covers for the Iranian entities through deliberate concealment or removal of basic information while remitting money via the SWIFT network. More here

Israel

Israeli bank fined nearly USD1 billion in US tax evasion, ML cases Israel's largest bank, Bank Hapoalim, will pay more than MYR 3.8 billion (USD 900 million) after admitting it helped US customers evade taxes in illegal offshore accounts and that it laundered money as part of a bribery scheme paid to FIFA, the international football body. More here

Sweden

Swedbank fined over AML measures Sweden's financial supervisory authority slapped Swedbank with a MYR 1.7 billion (USD397 million) fine and after an investigation concluded the lender?s Baltic operations had serious deficiencies in its AML/CFT measures. Some of the former employees that were involved in ML also being charged by authorities in Latvia. In a statement, the Swedish authority said the bank's awareness of the risk of ML and its processes, routines and control systems had been insufficient. More here and here

India

Jet Airways founder booked for ML, house raided India's Enforcement Directorate has registered a case under the country's AML/CFT act against Jet Airways founder Naresh Goyal carried out "doubtful" transactions under the guise of selling, distribution and operating expenses relating to fraudulent flight tickets. More here, here and here

China

BNP Paribas' Chinese unit fined for AML violations The Chinese unit of European banking giant BNP Paribas SA was fined RM 1.6 million (2.7 million yuan) by China's central bank for failure to verify client identification and report large and suspicious transactions as required. Three executive were also levied fines ranging from RM 27, 000 (45,000 yuan) to RM 36,000 (60,000 yuan) for responsibility in the violations. More here

Tan Kim Chuan Khurram Pirzada Dayana Abdul Head of Forensic, Executive Director, Rahman Malaysia AML & Sanctions Associate Director, Services, Malaysia AML & Sanctions Services, Malaysia

Kyran McCarthy Rani Kamaruddin Cathy Zhou Asia Pacific Head of Partner Partner AML & Sanctions Hong Kong China Services

Jeremy Allan Suveer Khanna Chiharu Yamazaki Director Partner Managing Director Australia India Japan

Yong Soo Park Stephen Bell Jeffree M Tapia Partner Partner Partner Korea New Zealand Philippines

Chin Kok Lem Christopher Ross Macallister Partner Saunders Managing Partner Singapore Partner Vietnam Thailand

What would you like to read about?

Email our Head of Forensic for KPMG in Malaysia, Tan Kim Chuan, or our Executive Director of AML & Sanctions Services for KPMG in Malaysia, Khurram Pirzada, with your suggestions.

Visit www.kpmg.com.my/forensic/aml for more information about KPMG in Malaysia's AML & Sanctions Services.

kpmg.com/socialmedia KPMG Malaysia app:

Privacy | Legal

To unsubscribe, kindly click here.

© 2020 KPMG Management & Risk Consulting Sdn. Bhd., a company incorporated under Malaysian law and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.

The KPMG name and logo are registered trademarks or trademarks of KPMG International.