Amla Manual

Anti Money Laundering Manual

ANTI MONEY LAUNDERING MANUAL TABLE OF CONTENTS CORPORATE STATEMENT....................................................................................................................................3 1.

Introduction................................................................................................................................................4

2.

Applicability ................................................................................................................................................4

3.

Definition of Money Laundering and Financing of Terrorism ...........................................................4

4.

Scope of Application..................................................................................................................................5

5.

Roles and Responsibilities of Board of Directors and Senior Management ...................................5

6.

Responsibilities for AML/CFT Compliance ............................................................................................6

7.

Staff Integrity.............................................................................................................................................8

8.

Customer Integrity and Customer Due Diligence (CDD) Process ....................................................8

9.

Management Information System (MIS) ............................................................................................13

10.

AML/CFT Risk Management...................................................................................................................13

11.

Follow-up of Existing Policy Owners/ Participants ..........................................................................16

12.

Keeping of Records..................................................................................................................................17

13.

Recognition and Reporting of Suspicious Transaction/ Financing of Terrorism ........................18

14.

Compliance Program ...............................................................................................................................19

15.

Training......................................................................................................................................................19

16.

Non-Compliance with Provision under The Act .................................................................................20

GLOSSARY ...........................................................................................................................................................22

2

CORPORATE STATEMENT 1. Mayban Fortis Group of Operating Entities (herein referred as the ‘Group’) is committed to uphold the highest standard of integrity and reputation with regards to anti money laundering and counter financing of terrorism in all the markets and jurisdictions in which the Group operates. 2. The Group shall comply with relevant and applicable laws, rules and standards pertaining to Anti Money Laundering and Counter Financing of Terrorism. 3. The Group shall co-operate fully with local and international competent authorities and law enforcement agencies in combating money laundering and countering financing of terrorism.

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1.

Introduction Mayban Fortis group of Operating Entities (herein referred as ‘the Group’) is committed to prevent its operations and those of its subsidiaries from being abused for money laundering or other financial crimes, including the financing of terrorism. The Group values an impeccable reputation as a trustworthy insurance services group and therefore will not enter into relationships with individuals or organisations engaged in or suspected of illegal or unethical activities. New customers are accepted with due care and the Group shall be protected at all times from being abused by criminal organisations or individuals. The Group also committed to pursue high standards of Anti Money Laundering and Counter Financing of Terrorism (AML/ CFT) policy and requires all staff to adhere to these standards.

2.

Applicability This manual is applicable to all operation under the Group including branches and subsidiaries outside Malaysia. Overseas branches and subsidiaries shall comply with this manual and where there is conflict between the manual and the regulatory requirement of the host country, the more stringent requirement shall be adopted to the extent that it is permitted by the host country’s laws and regulations. In addition, special attention should be given to overseas subsidiaries/ branches operating in countries which have insufficiently implemented the internationally accepted AML/ CFT measures. In the event an overseas branch or subsidiary is unable to observe the more stringent requirements, including the reporting of suspicious transaction to the Financial Intelligence Unit (FIU) of Bank Negara Malaysia (BNM) due to the prohibition of the host country’s law and regulations, Compliance Officer of such overseas branch or subsidiary shall issue an exception report to the centralised AML & Fraud Prevention Unit under Compliance Division, which shall inform the FIU. The Board of Directors (BoD) may consider cease the operation of overseas branch or subsidiary that failed to observe the AML/ CFT requirement or put in place the necessary mitigating control. This manual is applicable to all products and services offered by both the insurance and takaful industries. The conventional terms used in this manual correspond to the Islamic products, terms and concepts listed in Appendix I.

3.

Definition of Money Laundering and Financing of Terrorism i)

Money laundering covers all activities and processes to change the identity of illegally obtained money so that it appears to have been originated from a legitimate source. Money laundering is defined as the act of a person whoa) Engages, directly or indirectly, in a transaction that involves proceeds of an unlawful activity. b) Acquires, receives, possesses, disguises, transfers, converts, exchanges, carries, disposes, uses, removes from or brings into Country proceeds of any unlawful activity. c) Conceals, disguises or impedes the establishment of the true nature, origin, location, movement, disposition, title of, rights with respect to, or ownership of, proceeds of an unlawful activity. d) Participate in, be an accomplice in, attempt to, aid to, exhort to, facilitate or provide counsel regarding any of the acts referred to the above. 4

where:a) The person has knowledge, facts or reason to believe that the property is proceeds from any unlawful activity. b) Negligence in taking reasonable steps under normal circumstances to ascertain whether or not the property is proceeds from any unlawful activity. ii)

Financing of terrorism involves any transactions linked to terrorists’ activities. The fund used may be legitimate and not necessarily owned by terrorist but focus is on the primary intention that is to assist terrorism activities. Essentially, financing of terrorism involves:a) Providing or collecting property for carrying out an act of terrorism. b) Providing services for terrorism purposes. c) Arranging for retention or control of terrorist property. d) Dealing with terrorist property.

iii)

There are three stages of money laundering: a)

Placement

The criminal introduces his illegal profits and ill-gotten gains into the financial system. This is the physical disposal or dealing of the initial proceeds derived from illegal activities. b)

Layering

In this phase, the criminal engages in a series of conversions or movements of the funds to distance them from their source. The illicit proceeds are separated from their source by creating complex layers of financial transactions designed to disguise the audit trail and provide an appearance of legitimacy as well as anonymity. c)

Integration

Once layering succeeds, the criminal proceeds have been successfully laundered, i.e. cleaned and are regarded for all intent and purposes as legitimate funds and then reintroduced, i.e. bring back into the financial system through investment, purchase of assets, etc.

4.

Scope of Application The provisions of the Malaysian laws list various acts covering serious offences. Please refer to Appendix II for the details of relevant and applicable laws.

5.

Roles and Responsibilities of Board of Directors and Senior Management Commitment and leadership of BoD and Senior Management play significant role in the success of AML/ CFT implementation. i)

Board of Directors a) The BoD or a committee of the Board shall be responsible for overseeing the overall management of compliance risk, including the approval and implementation of AML/CFT measures.

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b) c)

6.

Ensure necessary steps are taken to rectify AML/ CFT issues effectively and expeditiously. To determine the risk appetite with regards to AML/ CFT.

ii)

Audit Committee a) Ensure that regular independent audits are conducted to check and test the effectiveness of the internal controls for AML/ CFT measures. b) Ensure the effectiveness of internal audit function in assessing and evaluating the AML/ CFT controls. c) Ensure the AML/ CFT measures are in compliance with the AMLA, its regulation and the relevant guidelines. d) Assess whether current AML/ CFT measures which have been put in place are in line with the latest developments and changes of the relevant AML/ CFT requirements. e) Review of internal control issues highlighted by auditors and regulatory authorities. f) Report the audit findings to the Board of Directors on a regular basis to highlight inadequacies of AML/ CFT measures and control systems.

iii)

Senior Management a) Formulate strategic direction to counter money laundering and terrorism financing activities. b) Evaluate AML/CFT internal controls effectiveness and adequateness. c) Approve business relationship with higher risk customers on the basis of enhanced customer due diligence (CDD) process. d) Develop clear customer acceptance policies and procedures, including a description of the types of customer that are likely to pose a higher risk. e) Ensure that these policies will consider factors such as customers’ background, country of origin, public or high profile position, linked accounts, business activities or other risk indicators that may be identified. The extension of the required due diligence should be related to the level of identified risk.

Responsibilities for AML/CFT Compliance The approach towards the management of AML/CFT compliance within the Group shall be similar to the management of other types of risk, which is premised on three lines of defence as follows:o o

First line of defence Second line of defence

- Business Units - Risk control units such as Compliance and Risk Management - Internal Audit

o

Third line of defence

i)

Business Units Business units shall be constantly vigilant in deterring criminals and prevent the Group from being part of money laundering and financing of terrorism activities. The duty of vigilant consists mainly of the following:a) Customer Due Diligence (CDD), including underwriting checks and verification of identity. b) Recognition and reporting of suspicious customers/transactions to Compliance Officers.

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c)

Provisions affecting the business units and the staff, such as keeping of records, the recruitment of staff and training. d) Identification of money laundering and financing of terrorism risks associated with new products or services or arising from insurance service provider’s operational changes, including the introduction of new technology and processes. Business units shall be responsible for the day-to-day management of compliance with AML/CFT that inherent in their operation and activities. ii)

Compliance Officers a) Review compliance with relevant AML/CFT acts and regulation. b) Implementation of the AML/CFT policies. c) Ensure appropriate AML/CFT procedures, including customer acceptance policy, customer due diligence, record keeping, on-going monitoring, reporting of suspicious transactions and combating the financing of terrorism are implemented effectively. d) Review risk assessment process of money laundering and financing of terrorism with regards to new products or services including introduction of new technology and process. e) Ensure the AML/CFT mechanism is regularly assessed to ensure that it is effective and sufficient to address any change in money laundering and financing of terrorism trends. f) Develop specific money laundering/ financing of terrorism indicators that assist in detecting money laundering/ financing of terrorism. g) Review and verify internal generated suspicious transaction and evaluate before submission to FIU of BNM. h) Act as a central point representing the business units in dealing with BNM and other relevant law enforcement, including receipt and submission of reports on suspicious money laundering activity. i) Assemble and distribute information, policy and procedure related to AML/CFT measures and channel of reporting to key personnel, front line staff, relevant department/ functional heads and branches. j) Assist in the provision of AML/CFT training. k) Ensure audit findings and reports issued by auditor are submitted to the FIU within two weeks of from the issuance date.

iii)

Functional Head/ Branch Manager a) Ensure compliance with relevant AML/CFT laws, rules and standards. b) Ensure distribution of information, direction, policies and procedural matters to staff, Financial Executive (FE) and agents are carried out on timely basis. c) Ensure that key personnel, front line staff, FE and agents are familiar with the monitoring, detection and reporting procedures. d) Ensure records in relation to AML/CFT matters are properly kept. e) Ensure that no staff is in a position to handle the entire customer acceptance process autonomously. f) Ensure sufficient and appropriate attention to front line staff, FE and agents’ training in order to promote and ensure adhesion to AML/CFT manual and strict compliance with it. g) Ensure staff are aware of the risk entailed by irresponsible customer acceptance. h) Commercial staff shall adopt a critical attitude towards new customers and uses the evaluation tools available. They should systematically check the situation, motivation and antecedents of new customers.

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i) j) iv)

7.

Internal Audit a) Conduct independent review of compliance framework and effectiveness of the AML/CFT measures undertaken on a periodical basis. b) Report the audit findings to the Audit Committee, which should be used to highlight inadequacies of any internal AML/ CFT measures and controls. c) Checking and testing the compliance with, and effectiveness of AML/ CFT policies, procedures and controls. d) Assessing whether current measures are in lines with the latest developments and changes of the relevant AML/ CFT requirements.

Staff Integrity i)

ii)

8.

Identify and know every person entering into a business and obligation to identify the persons for whom, as the case may be, their customers are acting and the ultimate economic beneficial owner. Identify the originator of every occasional transaction and retain copies of the documents connected with the identification and the transactions carried out.

The highest standard of staff integrity should be maintained at all the times. Appropriate staff assessment system (commensurate with the size of operations and risk exposure of the business units to money laundering and financing of terrorism) that is approved by the BoD should be in place to screen its staff. The assessment system should include evaluation of an staff’s personal information, including criminal records, employment and financial history as part of the recruitment process.

Customer Integrity and Customer Due Diligence (CDD) Process CDD process is vital when: i) Establishing business relationship with new customer. ii) Carrying out cash or occasional transaction that involves a sum in excess of RM5,000 and RM10,000 per annum in respect of individual and group respectively (both single and annual insurance premium policies). iii) Suspicion of money laundering or financing of terrorism. iv) Doubt about the veracity or adequacy of previously obtained information. To preserve the integrity and reputation of the Group, only the following new customers are accepted: i) Whose identity is correct, complete and ascertained by means of valid documents such as passports or identity cards. ii) Whose moral standing is irreproachable. iii) Whose source of wealth and funds can be reasonably established to be legitimate. iv) Who are not subject to economic or trade sanctions or legal freeze lists. v) In case of a corporate customer, its legal existence, good financial standing, proper management and correct business activity are ascertained. vi) The same criteria apply to: a) Representatives and/or beneficial owners of policy owners. b) Main shareholders and top management of policy owners.

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Front line staff, FE and agents should verify and satisfied with the identity of their customers and the nature and legitimacy of the insurance transactions to be undertaken, be it individual, group, corporate or even direct-mail customers. They should gather such information, including by consulting available external data deemed useful in order to find out more about the new customer. The front line staff, FE and agents should satisfy themselves that the new customers demonstrate beyond doubt that this rule is complied with.

8.1 Subject of Verification Verification of all parties to an insurance contract/certificate should be undertaken, for e.g. – proposer/applicant, policy owners, principals, nominee/ beneficiary, underlying principals that the policy owners/ participants are acting on behalf of and all the joint proposers/ applicants.

8.2 Methods of Verification ‘Know Your Customer Policy/Certificate’ - satisfactory evidence of the identity of proposer/ applicants and policy owners is required to be obtained and the purpose and intention underlying the proposed contract/ certificate be known. The relevant supporting documents should be sighted, and details of the applicant must be verified against original documents. For insurance policies (both single and annual insurance premium policies) with insurance premium exceeding RM50,000 and RM100,000 per annum in respect of individual and group policies respectively, a copy of the verified documents should be retained by the business units as follows. i)

For individual customers, verify and/ or substantiate against the original document:a) Copy of NRIC/ passport (substantiated by NRIC/passport No). b) Current permanent & mailing address. c) Occupation type/ self employed. d) Name and address of employer. e) Nature of business. f) Contact number (home, office or mobile). g) Specimen signature. h) Where there is doubt, produce other supporting identification documents (with photograph) issued by official authority.

ii)

For corporate customers, verify and/ or substantiate against the original document:a) Memorandum/ Article/ Certificate of Incorporation/ Partnership. b) Identification document of Directors/ Shareholders/ Partners. c) Board of Directors’ Directors Resolution. d) Authorisation for any person to represent the company/ business. e) Identification document of authorised person. f) Identify the source of fund and beneficial owner in case of changes in business structure or ownership or payment profile. g) Where there is doubt:o Conduct a basic search or enquiry on the background. o Verify with the Companies Commission. o Understand the ownership and control structure.

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iii)

For clubs, societies and charities, verify and/ or substantiate against the original document :a) Relevant constitution documents (or other similar documents). b) The identification of the office bearer. c) Authorisation for any person to represent the club, society or charity.

iv)

For legal arrangements, verify and/ or substantiate against the original document:a) Establish customer relationship with a party to a legal arrangement, for e.g. trustee or nominees. b) Understand the relationship among the relevant parties handling a trustees or nominee business and obtain satisfactory evidence of its legal status, the identity of the said trustee, settler or nominee, authorised signatories, beneficiaries and the nature of their capacity and duties as trustee or nominee. c) Business units are allowed to rely on verification of identity of beneficial owner performed by trustee or nominee. For this purpose, it is a requirement to obtain written undertaking from trustee or nominee that identification and documentation process have been conducted according to the Group standard. The record shall be made available upon request.

v)

For beneficial ownership and control, verify and/ or substantiate against the original document:a) If the transaction appears to be conducted on behalf other person, business units should pay attention to the person who ultimately owns or controls the transaction. b) CDD process should cover at least the same process that covered individual customer.

vi)

For the a) b)

vii)

Non-face to face customers (business relationship via information communication technology for e.g. the internet, post, fax or telephone). a) Verification for insurance premium exceeding RM5,000 per annum or RM10,000 for any single insurance premium shall be performed in the same process as conducted through face-to-face interaction. b) The insured is required to produce a certified copy of the identification documents. c) Business units shall only establish business relationship upon completion of the CDD process conducted through face-to-face interaction.

corporations registered outside Malaysia, verify and/ or substantiate against original document:Comparable documents to the items (i), (ii) or (iii). Verify the place of origin of the documents, nature of business relationships and transactions with person who ultimately control the entities, especially from countries which do not or insufficiently apply Financial Action Task Force (FATF) recommendations. c) Perform appropriate verification of identity of the directors except for entities listed in a recognised stock exchange.

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viii)

Foreign Politically Exposed Person (PEP). Business relationship with PEP, company or family members or close associate clearly related to them may expose the Group to reputation and/or legal risk. Business units, in addition to perform normal due diligence measures, should: a) Have appropriate risk management process to determine whether the customer is PEP – gather sufficient and appropriate information from the customer and through publicly available information. b) Obtain Senior Management approval for establishing business relationship with PEP. c) Take reasonable measure to establish the source of wealth and source of funds. d) Conduct enhanced ongoing due diligence through the business relationship with foreign PEP.

ix)

Intermediaries Business units are permitted to rely on intermediaries (FE, agents and brokers) or other third parties to perform CDD process or to introduce business provided the following criteria are met: a) Intermediaries have adequate CDD process. b) Intermediaries have a reliable mechanism to verify customer identity. c) Immediately obtain the necessary information of CDD process and take adequate steps to satisfy that copies of identification data and other relevant documentation relating to the CDD requirements will be made available from the third party upon request without delay. d) Intermediaries are regulated, supervised and has measures in place to comply with CDD requirements. The relationship between business units and intermediaries should be governed by an agreement that clearly specifies the rights, responsibilities and expectations of all parties. However, business units are responsible to conduct CDD based on own record or record produced by intermediaries.

x)

Reinsurance arrangements Due to the nature of the business and the lack of contractual relationship between the insurance policy owner and the reinsurer, business units are required to carry out verification only on the ceding company, and not their ceding company’s customers. The following verification procedure applies to reinsurance arrangements: a) Verification is not required where the ceding company is licensed under the Insurance Act 1996 or the Offshore Insurance Act 1990, or a takaful operator licensed under The Takaful Act 1984. b) Reinsurers should take necessary steps to verify that the ceding company is authorised to carry on insurance business in its home jurisdiction which enforce AML standards equivalent those in AMLA.

xi)

Higher risk customers a) To conduct enhanced CDD. o More detailed information from the customer and through publicly available information i.e. purpose of transaction and source of funds. o Obtain approval from Senior Management before establishing the business relationship with the high risk customer.

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b)

Examples of higher risk customers are as follows: o High net worth individuals. o Non-resident customers. o Countries with inadequate AML/CFT laws and regulations such NCCT. o Foreign PEP. o Excessive cash based businesses. o Unregulated industries.

Business units should pay attention to all complex, unusual large transactions, which have no apparent economic or visible lawful purpose. If business units suspect or have reasonable grounds to suspect that funds are the proceeds of a criminal activity or are related to terrorism financing, the background and purpose of such transaction should be properly examined, the findings established in writing and helpful to Compliance Officers. AML law and regulation required prompt reporting of suspicious case to FIU. Business units should pay special attention to any money laundering threats from new and developing technologies that might favour anonymity and take measures to prevent their use in money laundering schemes. Business units should ensure effectiveness of the on going CDD process that would enable detection of money laundering and financing of terrorism transactions at the point of customer contact. Business units should not commence business relations or perform any transaction, or in case of existing business relations with customers, it should terminate such business relations if the customer fails to comply with the customer due diligence requirement and consider lodging a suspicious transaction report to AML and Fraud Prevention of Compliance Division for deliberation. However, business units should assess its contractual obligation before making such decision. 8.3 Cases Exempted From Verification At Point of Sales Identification and verification of the customer/beneficiary may take place after the insurance contract has been concluded, but at or before the time of payout or when the beneficiary intends to exercise vested right under the insurance policy. The verification procedure may be performed at or before the time the benefits are paid out in the following circumstances: i) Any insurance policies sold with insurance premiums not exceeding RM5,000 per annum or RM10,000 for any single insurance premium policy (applicable to insurance policies with surrender value or death benefits). ii) Verification of beneficiaries (if different from the applicant). iii) Verification of individual members covered under group insurance policies (verification of the group policy owners/ participants should be carried out at the point of sale). iv) Similarly, verification for insurance policies sold without face-to-face contact (e.g. through call centres, internet, direct mailing and telemarketing) may be performed at or before the time the benefits are paid out if the premium do not exceed RM 5,000 per annum or RM10,000 for any single insurance premium policy. v) In the event, the risk of money laundering and financing of terrorism are low and there are publicly available measures to sufficiently identify a customer (e.g. Government agency, public educational institution or company listed on Bursa Malaysia), the reporting institution would only need to ascertain whether such customer, falls within the categories mentioned in this paragraph. 12

8.4 Cases Exempted From Verification Where customer due diligence has previously been conducted by the reporting institution, further verification by the reporting institution is not required: i) For renewal and reinstatement of policies with no significant changes to the terms and conditions of the policy (including benefits under the policy). ii) For application of pure insurance covers which do not provide for payment of surrender values, including hospital and surgical insurance, critical illness insurance and pure term life insurance covers if the annual insurance premium does not exceed RM5,000 per annum or RM10,000 for single insurance premium. iii) For general insurance application if the annual insurance premium does not exceed RM5,000 per annum.

9.

Management Information System (MIS) Efficient management information system should be in place to support customer due diligence process. The MIS will provide timely information on a regular basis to enable detection of any suspicious activity. The information would include multiple transaction over a certain period, large transactions, abnormality in transaction trend and transaction that trigger the red flag indicator.

10.

AML/CFT Risk Management Functional Head should ensure appropriate risk management process with regards to AML/CFT is in place. Business units should determine the level of risk whether prohibited, caution (extra verification effort need to be carried out) or allowable. Sometimes a single indicator is sufficient for this purpose, but in most cases a combination of indicators is involved and it is a matter of looking for and establishing the connection between them. To assess the risk, the business unit should conduct the risk assessment. This assessment should weight a number of factors, including the risk identification and measurement of products and services, customers (for e.g. PEP, Non Resident Alien (NRA), nongovernmental organisations (NGO) and charities) and geographic locations (for e.g. embargoes, countries supporting terrorism, Non-cooperative Countries & Territories (NCCT)). As change in existing products and services and the Group expands through mergers and acquisitions, management of AML/CFT should evolve. Furthermore, even without such changes, the management of AML/CFT should be periodically reassessed.

i)

Geographical Location

The Group regards the Organisations for Economic Corporations and Development (OECD) countries as safe and no additional measures is required, provided there is no indication (for e.g. on the basis of other risk indicators) of a higher risk. All geographical elements need to be taken into account (for e.g. country of beneficiary, country of insured risk, country of policy owners/participants). a)

Prohibited Various sanction regimes apply towards certain countries and/or regions. In some cases the sanction regimes are de facto aimed exclusively at certain specific individuals. Sometimes these financial sanction regimes prohibit, limit or otherwise influence the provision of financial services to certain countries, companies or individuals. The regimes may also involve a requirement for the 13

freezing of balances. UN Security Council resolutions and European Union regulations underlie these sanction regimes. b)

Cautioned Risk FATF is an intergovernmental organisation with the task of developing and promoting policy at international level in order to combat money laundering. One of the areas of attention is the identification and monitoring of NCCT countries. The FATF has drawn up a list of NCCT countries that display serious shortcomings with respect to the combating of money laundering and/or fight against terrorism financing. In the case of direct or indirect links with an NCCT country the non-routine acceptance procedure is followed. The Office of Foreign Assets Controls (OFAC) is part of the US Treasury Department. The OFAC’s area of responsibility includes the imposition and application of economic and trade sanctions. The sanctions arise from US foreign policy and the national security policy aimed at certain countries, drug traffickers and terrorisms. Many of the OFAC sanctions are based on UN mandates. For countries falling outside the scope of the Group core business (for e.g. a new country for the Group) there is a risk-increasing factor and acceptance takes place on a non-routine basis. This is because the current activities of the Group are not geared to the characteristics of these countries and other countries generally also attract different types of customers which might require a different kind of customer due diligence.

ii)

Commercial activities/ Industry

The ‘commercial activity/industry’ indicator relates to the customer’s activities and the industry to which the customer has been assigned and in which it is active. In some cases the products and/or services are also to be examined. a)

Prohibited The Group does not provide any services to persons involved with illegal practices or to industries falling outside the strategy. These include illegal activities, such as trafficking in ivory, exotic animals, people and drugs. It also includes firms and individuals whose financial resources are suspected to have come from such activities. Non-strategic are trade and industry in diamonds, gambling and sex. Gambling is qualified as non-strategic if it is not regulated by the government. The trade and industry in gambling and sex are regarded as non-strategic on account of money laundering and reputational risks. Trade and industry in diamonds are regarded as non-strategic if the diamonds are mined in countries suffering from civil war and it is clear or there is evidence to suggest that the war and related matters are financed with diamonds.

b)

Caution Risk For activities falling outside the scope of the Group (for e.g. a new market or industry) there is a risk-increasing factor and acceptance takes place on a nonroutine basis. This is because the current activities of the Group are not geared to the characteristics of these divergent activities and other services generally also attract different types of customers which might require a different kind of customer due diligence.

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If a person may be regarded as forming part of the weapons industry or its activities, products and/or services are related to the weapons industry and/or arms trade or if there is a link with war-related activities (either offensive or defensive), there is then an increased risk for the Group and the acceptance of the customer takes place on a non-routine basis. The financial situation of a person needs to be transparent so that the nature of its activities and the source and allocation of the cash flows can be clearly established. In the case of firms with sizeable cash transactions the situation may be less transparent. In addition, these transactions may involve an increased risk of money laundering. Persons involved in the hospitality/catering industry fall into this category and are accepted under the non-routine procedure. Pressure groups and international organisations expose problems worldwide in such fields as environmental pollution, child labour and violations of human rights. The focus in these circumstances is also on persons and governmental authorities that play a significant role in the facilitation or coming into being of such practices. The potential exists for pressure groups and organisations to place the focus in the future on the financing of these firms, governmental authorities, activities and related matters. If a customer and/or the latter’s commercial activity is susceptible to pressure groups, acceptance is at nonroutine level.

iii)

Product/ Service

By ‘product/service’ is understood the specific product or service being sought from the Group by the customer. In determining the risk particular attention needs to be paid to a product or service having the ability or potential for criminally obtained means to be channelled away and/or recycled in concealed or disguised form. To ensure new insurance or takaful products or services as well as delivery mode does not create an avenue for money laundering and terrorism financing activities, business units must ensure all the relevant controls are in place prior to the launch of any new insurance or takaful products/ services or engagement of a new technology. a)

Prohibited

Cash consignments are prohibited if these take place at the request of a

customer, whereby the staff is asked to play an active role in the physical transport of the money.

b)

vi)

Caution Risk Naturally, life insurances present a bigger risk than property insurances.

Customer, behaviour and background

Under ‘customer behaviour’ comes any behaviour that is unusual and gives therefore cause to special vigilance. By ‘customer background’ is meant in particular the structure and management of a firm, both of which are indicators for determining the risk. The structure and organisation of a firm is clear and transparent (how is the organisation structured, who is behind it and how do the organisational elements tie up). Structure means more than just the organisation chart of the firm but also includes identifying matters such as the relationship between the firm and a parent company and/or other companies forming part of the group. The way in which the share capital is structured and divided is also relevant. The underlying notion is that it is transparent to the Group who it is dealing with (‘who is running the show’), so as to

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prevent a reputational risk from being incurred and/or an ambiguous structure from being used to recycle funds. a)

Prohibited The Group shall not have any business relationship with blacklisted or freeze list UN Security Council resolutions and European Union. Providing incorrect, misleading and/or intentionally incomplete statements, information or documents is considered unacceptable. The same goes for a customer who refuses to answer questions. If funds do not tally with the customer profile or if their source is unclear, the customer must not be accepted.

b)

Caution Risk Some of the OFAC are aimed at drug traffickers and terrorisms. The Group also may be exposed to reputation or other risks if there is any business relationship with PEP. Such individuals or networks are in a position to abuse their power for purposes of unauthorised enrichment; in brief, these are individuals or networks whose position makes it possible for them to abuse their power. This risk also exists for their families and close associates. It must be possible to establish with certainty that the firm is in fact a corporate entity and not projecting itself as such, or that for example a corporate entity is

being used by a natural person so as to use anonymous accounts. The management of a firm can also be an indicator of an increased risk. Here again the reputation must be known and sound and it must be possible to establish with whom the Group is dealing. Risk increasing factors are negative publicity and/or a doubtful or poor reputation, frequent changes in management, not personally known and/or not known in the past or an unusual shareholder structure under which one or several minority shareholders have extensive decision-making powers. The examples of factors that give rise to particular vigilance in case of a life insurance policy are as follows: o a customer who is not interested at all in the return of his life insurance investment, o a customer who seems preoccupied by his right of termination and by recuperating his investment, o a customer who proposes abnormal payment schemes (for e.g. cash payments, complicated money transfers), o a customer who gives an unusual domicile (for e.g. in a country with which he has no connection, a P.O. Box).

11.

Follow-up of Existing Policy Owners/ Participants All existing policy owners/ participants are to be followed-up either by means of a permanent monitoring process evidencing unusual or unexpected behaviour and/or transactions or by means of a periodic review. Follow-up of those policy owners/ participants who have been non-routinely accepted is to be organised on a more systematic and more frequent basis. Business units should update existing customer records and profile, including further evidence in identifying the existing customers, to ensure compliance with customer due diligence requirements.

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Causes for particular vigilance in the case of a life insurance policy are for e.g.: ¾ Inexplicable termination. ¾ Premature surrender. ¾ Surrender by a third party who does not have a legitimate connection with the policy owners/ participants. Subsequent payments by a third party that does not have a legitimate connection with the policy owners/ participants are also cause for further investigation. Follow-up of existing policy owners/ participants may result in: ¾ Cancelling the existing business relationship, if legally possible. ¾ Reporting the business relationship to the relevant public authorities. The decision to cancel an existing business relationship is to be taken by Senior Management. The decision whether to report suspicious customer to the relevant public authorities is to be taken by the Compliance Officers.

12.

Keeping of Records Business units are required to: i)

Maintain any records for a minimum period seven (7) years from the date an account has been closed or the transaction has been completed or terminated.

ii)

Maintain records to enable the reconstruction of any transaction in excess of such amount as the competent authority may specify, for a minimum period seven (7) years from the date the transaction has been completed or terminated. Subject to on going investigation or prosecution in court, the record must be retained until it satisfies the requirement by the competent authority.

The business units have to ensure that, there are adequate procedures and records to access: i)

Initial proposal documentation inclusive of customer’s personal data, copies of regulatory documentation, details of the payment method, illustration of benefits and copy documentation in support of verification by insurance licensees.

ii)

All post-sale records associated with the maintenance of the contract, up to and including maturity of the contract/ certificate; and details of the maturing processing and/or claim settlement, including completed “discharge documentation”.

The records should contain: i)

Details of personal data, including the names and addresses of the policy owner and any other parties connected to contract.

ii)

Transaction details should be recorded and include the nature of transactions, contract/ certificate prices and valuation (for unit-linked policies), destinations of funds, memoranda of instructions and authorities, the date of transaction and the mode of premium payment.

All the records should be kept in readily retrievable forms and be accessed with ease. The records may be retained by way of original document or as scanned documents.

17

Any records maintained by vendors, through any outsourced agreements, are regarded as readily retrievable only if the Group is satisfied, as contracted, that the vendor is able and willing to keep such records and to disclose them as and when required. The business units have to maintain a separate register or logbook for all enquiries made to them by any law enforcement authority. The minimum details to be put in the register are: i) ii) iii) iv)

13.

The date and nature of the enquiry. The name and agency of the enquiring office. The powers being exercised. The details of the policies/ certificates involved.

Recognition and Reporting of Suspicious Transaction/ Financing of Terrorism Transactions are deemed suspicious when: i) It exceeded predetermined parameter or threshold limit. ii) Customer fails in complying with the CDD requirements. iii) Sum insured or premium amount that not match the customer profile. iv) It is believed to have connection with terrorism activities. The consolidated list of terrorist linked individuals and entities is published by United Nation Security Council (UNSC) in their website, http:www.un.org/ Docs /sc /committees/ 1267/1267/ ListEng.htm. Business units should consolidate the UNSC list together with the order issued by Ministry of Internal Security and ensure their database is updated regularly. v) Existing customer that unreasonably evasive or uncooperative. The examples of suspicious transaction are listed in Appendix III. Upon the detection of a suspicious transaction, the front line staff, FE or agents should report to the Head of Department, for recommendation and endorse it before forwarding this suspicious transaction, using the "Internal Suspicious Transaction Report on Money Laundering/ Financing of Terrorism” form (as per Appendix V) to the respective Compliance Officers. After investigation of the file and of the disclosed unusual financial transactions in particular, the Compliance Officers will evaluate whether such transactions are effectively suspicious within the nature of money laundering or financing of terrorism. Upon affirmation of the same, the Compliance Officers shall forward this via a prescribed form to the FIU for their further action. If the customers’ names perfectly match any name in the database, Compliance Officer should update FIU promptly and the business units should immediately: o Reject the customer, if the transaction has not commenced. o Freeze the customer’s transaction, if it is an existing customer. If there is no reasonable ground for suspicion, the Compliance Officer should document the decision and ensure it is supported by the relevant document and file the report. The Senior Management and the BoD will be informed and updated accordingly. i)

Code of conduct relating to suspicious transactions a) b)

Refrain from making any comment with regard to the customer concerned. Gather as much information as possible concerning: the transaction and the reason (why, context) for the transactions.

18

c)

Remain vague about the competent internal decision making circuits of the Business units for the assessment and the taking of the decision about the proposals made and/or the transactions proposed. Abstain from providing any document with the Group letterhead.

d) ii)

AMLA Suspicious Transactions Reporting Structure Board of Directors

Senior Management / Management Team

Maybank’s Compliance Department

The Company’s AML Compliance Officer

Financial Executives

Functional Head

Financial Intelligence Unit - BNM

Branches

Intermediaries / Front line staff

Agencies

14.

Information limited to modus operandi, nature of AML/ CFT activity and statistic only. No details of individuals to be shared.

Compliance Program The responsibilities of the compliance function should be carried out under compliance program that sets out its planned activities, such as the implementation and review of specific policies and procedures, risk assessment, compliance testing and educating staff on compliance matters. The compliance program should be risk-based and subject to oversight by the Head of Compliance to ensure appropriate coverage across businesses and coordination among risk management functions.

15.

Training All staff, Financial Executives (FE) and agents should be made aware of their responsibilities with regards to reporting and identification of suspicious transactions relating to money laundering and financing of terrorism activities. The training and awareness program should be conducted regularly and supplemented with refresher courses for staff, with special emphasis for those staff who are exposed to higher risk of potential money laundering and financing of terrorism activities, for example front-line 19

staff. These programs should update staff on the latest AML/ CFT development such as products or transaction modes, which are vulnerable to the risk of money laundering and financing of terrorism and remind them of their responsibilities under the AML/ CFT program. The minimum training requirements should at least adapt the needs to the following levels of staff:

i)

New Staff

a) b) c)

ii)

“Front-Line” Staff/ Agents

a)

b)

iii)

16.

General background on money laundering and financing of terrorism. Requirement and obligation under Group policy to monitor and report suspicious transactions to the Compliance Officer of AML and Fraud Prevention unit under Compliance Division. Importance of ‘Know Your Customer’ policy. The business units must adopt a risk-based approached in ensuring that its frontline staff/ agents received initial and on-going training relevant AML/ CFT measures: 1. Conduct on-going customer due diligence, as the agent deals directly with new businesses and the acceptance of the new customers. 2. Factors that may give rise to suspicion, such as dealing with non-regular customers transacting in large cash, foreign PEP, higher risk customers and the circumstances where enhanced customer due diligence is required. 3. Detect suspicious transaction. 4. Measures that need to be taken upon determining a transaction as suspicious. The front-line staff/ agents and should be made aware of their legal responsibilities and the AML/ CFT policies and procedures of the Group, in particular:1. Customer acceptance policy and all other relevant policies and procedures. 2. Requirements of verification and records. 3. Recognition and reporting of transaction suspected to involve in ML/ FT to the centralised AML and Fraud Prevention unit of Compliance Division.

Managers, Senior Management and Board of Directors

The training should include higher level of instructions covering all aspects of AML/ CFT procedures, in particular: a) Risk-based approach to customer acceptance. b) Customer due diligence. c) Customer risk profiling. d) Penalties for non-compliance to the AML/ CFT requirement. e) Procedure addressing the financing of terrorism issues.

Non-Compliance with Provision under The Act The Act stipulates various offences that will subject staff or any person to a fine and imprisonment as follows: i) Any person is subject to a fine maximum of RM 250,000 for failure to comply with any provision under the Act (Section 86). ii) Bank Negara Malaysia has right to take appropriate enforcement action, including obtaining Court Order against any or all of the officers or staff of the reporting institution, for failure to comply with reporting obligation (Section 22).

20

iii) iv) v)

The Officers is subject to a fine maximum RM100,000 or maximum 6 months imprisonment or both for failure to comply with the Act, or failure to implement specific compliance program as instructed by Bank Negara Malaysia (Section 22). Additional fine maximum 50% of the maximum fine for that offence, including daily fine for continuing offence (Section 92). Fine maximum RM100,000 for refusing to comply with guidelines by relevant authorities (Section 66E(5)).

21

APPENDIX I

GLOSSARY Contribution/ Premium

The monetary contribution payable once or periodically by a participant to a takaful operator/ insurance company for the purpose of investment and tabarru’.

Mudharabah

Arrangement or agreement between a capital provider and an entrepreneur, whereby the entrepreneur can mobilise funds for its business activities. Any profit made will be shared between the capital provider and the entrepreneur according to an agreed ratio while losses are borne solely by the capital provider.

Takaful

Mutual guarantee provided by a group of people against a defined risk or catastrophe befalling one’s life, property or any form of valuable things.

Wakalah

Agency-principal relationship, where a person nominates another to act on his behalf.

Claims

Notification to a insurance company/ takaful operator that payment of an amount is due under term of the certificate/ policy.

Certificate/ Policy

An evidence of the contract/ certificate between a participant/ policy holder and a takaful operator/ insurance company and fellow participants which set out terms and condition of the particular certificate.

Politically Exposed Person

Senior foreign political figures and their immediate family members and close associates.

Intermediaries

Consist of Brokers, Financial Executives and Agents.

Policy Owners/ Participants

The person who has legal title to a policy and include a) Where a policy has been assigned, the assignee. b) The personal representative of a deceased policy owner, where such personal representative is entitled as against the insurer to the benefit of a policy. c) In relation to a policy providing for the payment of annuity, an annuitant; and d) Where under a policy, moneys are due to payable, whether periodically or otherwise, the person to whom the moneys are due or payable.

Beneficial owner

Refers to any natural person(s) who ultimately owns or controls a customer and/or the person on whose behalf a transaction is being conducted. It also incorporates those persons who exercise ultimate effective control over a legal person or arrangement. o For companies the person(s) who ultimately owns or controls a customer and/or the person on whose behalf a

22

APPENDIX I (Cont’d) transaction is being conducted includes the natural person with a controlling interest and the natural persons who comprise the mind and management of company. Constituent document

In relation to an institution, means the statute, charter, memorandum of association and articles of association, rules and by-laws, partnership agreement, or other instrument, under, or by, which the institution is established and its governing and administrative structure and the scope of its functions and business are set out, whether contained in one or more documents.

Intermediaries

Generally refers to third parties, namely persons or businesses who are relied upon by the reporting institution to conduct the customer due diligence process.

Person

Includes a body of persons, corporate or unincorporated.

Property

Means: a) Assets of every kind, whether corporeal or incorporeal, moveable or immovable, tangible or intangible, however acquired. b) legal documents or instruments in any form, including electronic or digital, evidencing title to, or interest in, such assets, including bank credits, traveler’s cheques, bank cheques, money orders, shares, securities, bonds, drafts and letters of credit.

Reporting institution

Means any person, including branches and subsidiaries outside Malaysia of that person, who carries on any activity listed in the First Schedule to the AMLA.

Terrorist property

Means: a) Proceeds from the commission of a terrorist act. b) Property that has been, is being, or is likely to be used to commit a terrorist act. c) Property that has been, is being, or is likely to be used by a terrorist, terrorist entity or terrorist group. d) Property owned or controlled by or on behalf of a terrorist, terrorist entity or terrorist group, including funds derived or generated from such property. e) Property that has been collected for the purpose of providing support to a terrorist, terrorist entity or terrorist group or funding a terrorist act.

Terrorist act

An act or threat of action within or beyond Malaysia thata) Involves serious bodily injury to a person. b) Involves serious damage to property. c) Endangers a person’s life. d) Creates a serious risk to the health or the safety of the public or a section of the public. e) Involves the use of firearms, explosives or other lethal devices.

23

f)

g)

h) i) j)

APPENDIX I (Cont’d) Involves releasing into the environment or any part of the environment or distributing or exposing the public or any part of the public toi) Dangerous, hazardous, radioactive or harmful substance. ii) Toxic chemical. iii) Microbial or other biological agent or toxin. Designed or intended to disrupt or seriously interfere with any computer system or the provision of any services directly related to communications infrastructure, banking or financial services, utilities, transportation or other essential infrastructure. Designed or intended to disrupt, or seriously interfere with the provision of essential emergency services such as police, civil defence or medical services. Involves prejudice to national security or public safety. Involves any combination of any of the acts specified in paragraphs (a) to (i)

Where the act or threat is intended or may reasonably be regarded as being intended to: a) Intimidate the public or a section of the public. b) Influence or compel the Government of Malaysia or the Government of any State in Malaysia, any other government, or any international organization to do or refrain from doing any act, and includes any act or omission constituting an offence under the Aviation Offences Act 1984 [Act 307].

CONVENTIONAL TERM

ISLAMIC TERM

Bancassurance Contract General Insurance Life Insurance Insurance Insurance policy Insurance premium Reinsurers Premium

Bancatakaful Aqad General Takaful Family Takaful Takaful Takaful plan Takaful contribution Retakaful Contribution

ACCRONYM 24

APPENDIX I (Cont’d) AML/CFT CDD NCCT OFAC FATF FIU PEP NRA BoD BNM OECD

Anti Money Laundering / Counter Financing Terrorism Customer Due Diligence Non-cooperative Countries & Territories Office of Foreign Assets Controls Financial Action Task Force Financial Intelligence Unit Politically Exposed Person Non Resident Alien Board of Directors Bank Negara Malaysia Organisations for Economic Cooperation and Development

25

APPENDIX II

ANTI-MONEY LAUNDERING ACT 2001 1

Subsection 4(1) of this Act

Offence of money laundering

ANTI-CORRUPTION ACT 1997 ( ACT 575 ) 2

Section 10

Offence of accepting gratification

3

Section 11

Offence in giving or accepting gratification by agent

4

Section 12

Acceptor or giver of gratification to be guilty notwithstanding that purpose was not carried out or matter not in relation to principles’ affairs or business

5

Section 13

Corruptly procuring withdrawal of tender

6

Section 14

Bribery of officer of public body

7

Section 15

Misuse of position

8

Section 16

Dealing with, using, holding, receiving or concealing gratification of advantage in relation of any offence

9

Section 17

Attempts, preparations, punishable as offences

abetments

and

criminal

conspiracies

BANKING AND FINANCIAL INSTITUTIONS ACT 1989 (ACT 372) 9A

Section 4

Carrying on banking, finance company, merchant banking, discount house and money-broking business without a valid license

10

Section 25

Receiving, taking or acceptance of deposits prohibited except under and in accordance with valid license granted under subsection 6(4)

10A

Section 26

Unsolicited calls

10B

Section 27

Advertisements for deposits by person other than licensed institutions

10C

Section 28

Fraudulent inducement in relation to deposits

10D

Section 112

Attempts, preparations, abetments and conspiracies punishable as offences

10E

Section 115

Prohibition on receipt of gifts, commissions, etc.

BETTING ACT 1953 ( ACT 495) 11

Section 4

Common betting-houses and betting information centres

12

Section 6(3)

Betting in a common betting-house, and book-making

CHILD ACT 2001 (ACT 611) 12A

Section 43

Offences relating to selling, procuring, detention, etc. or any attempts thereto, of a child for prostitution

12B

Section 48

Unlawful transfer of possession, custody or control of child

12C

Section 49

Importation of child by false pretences

COMMON GAMING HOUSES ACT 1953 (ACT 289) 13

Section 4

Common gaming houses

14

Section 4A

Assisting in carrying on a public lottery etc.

26

APPENDIX II (Cont’d) COMPANIES ACT 1965 (ACT 125) 15

Section 27

Invitation to public by private companies

16

Section 38

Invitation to public to lend or deposit money with a corporation

17

Section 366

Including persons to invest money

COPYRIGHT ACT 1987 (ACT 332) 18

Section 41

Infringement of copyright

CORROSIVE AND EXPLOSIVE SUBSTANCES AND OFFENSIVE WEAPONS ACT 1958 (ACT 357) 19

Section 3

Possession of corrosive or explosive substance for the purpose of causing hurt

CUSTOMS ACT 1967 (ACT 235) 19A

Section 133

Making incorrect declarations and falsifying documents

20

Section 135

Smuggling offences

DANGEROUS DRUGS ACT 1952 (ACT 234) 21

Section 4

Restriction on importation of raw opium, coca leaves, poppy-straw and cannabis

22

Section 5

Restriction on exportation of raw opium, coca leaves, poppy-straw and cannabis

23

Section 12

Restriction on import and export of certain dangerous drugs

24

Section 19(4)

Export of dangerous drugs

25

Section 20(5)

Import of dangerous drugs

26

Section 39B

Trafficking in dangerous drugs

DANGEROUS DRUGS ( FORFEITURE OF PROPERTY) ACT 1988 (ACT 340) 27

Section 3

Use of property for activity constituting certain offences

28

Section 4

Dealing with, or using, holding, receiving or concealing illegal property

29

Section 56

Attempts, abetments and criminal conspiracies punishable as offences

EXPLOSIVE ACT 1957 (ACT 207) 30

Subsection 4(2)

Power to prohibit the manufacture, possession or importation of specifically dangerous explosives

31

Section 5

Acts causing explosions or fire

32

Section 6

Causing explosion likely to endanger life or property

33

Section 7

Attempt to cause explosion, or making or keeping explosive with intent to endanger life or property

34

Section 8

Making or possessing explosives under suspicious circumstances

FIREARMS (INCREASED PENALTIES) ACT 1971 (ACT 37) 34A

Section 7

Trafficking in firearms

27

APPENDIX II (Cont’d) FUTURE INDUSTRY ACT 1993 (ACT 499) 35

Section 3

Establishment of futures markets

36

Section 16

Future brokers to be licensed

37

Section 16A

Future fund managers to be licensed

38

Section 79

False trading

39

Section 80

Bucketing

40

Section 82

Manipulating of price futures contract and cornering

41

Section 83

Employment of devices, etc,. to defraud

42

Section 86

Prohibition or abuse of information obtained in official capacity

INSURANCE ACT 1996 (ACT 553) 42A

Section 9

Carrying on insurance, insurance broking or adjusting business without a license

42B

Section 10

Holding out as an insurer, insurance broker or adjuster without a license

42C

Section 184

Acting as agent or insurance broker for an unlicensed person without the approval of the Bank

42D

Section 205

Falsifying, omitting, altering, etc. entries in documents with intent to deceive

42E

Section 212

Attempts, abatements and conspiracies

INTERNAL SECURITY ACT 1960 (ACT 82) 42F

Section 5

Prohibition of quasimilitary organization

42G

Section 6

Illegal drilling

KIDNAPPING ACT 1961 (ACT 365) 43

Section 3

Abduction, wrongful restraint or wrongful confinement for ransom

44

Section 5

Knowingly receiving ransom

45

Section 6

Knowingly negotiating to obtain, or for payment of, ransom

MONEY-CHANGING ACT 1998 (ACT 577) 45A

Section 4

Carrying on money-changing business without a license

OPTICAL DISC ACT 2000 (ACT 606) 46

Section 4

Manufacturing without a valid license

47

Section 21

Applying false manufacturer’s code

PENAL CODE (ACT 574) 47A

Section 125

Waging war against power in alliance with the Yang Di-Pertuan Agong

47B

Section 125A

Harbouring or attempting to harbour any person in Malaysia or person residing in a foreign State at war or in hostility against the Yang Di-Pertuan Agong

47C

Section 121

Waging or attempting to wage war or abetting the waging of war against the Yang Di-Pertuan Agong, a Ruler or Yang Di-Pertua Negri

28

APPENDIX II (Cont’d) 47D

Section 121A

Offences against the person of the Yang Di-Pertuan Agong, Ruler or Yang Di-Pertua Negeri

47E

Section 121B

Offences against the Authority of the Yang Di-Pertuan Agong, Ruler or Yang Di-Pertua Negeri

47F

Section 121C

Abetting offences under section 121A or 121B

48

Section 161

Public servant taking gratification, other than legal remuneration in respect of an official act

49

Section 162

Taking gratification in order, by corrupt or illegal means, to influence a public servant

50

Section 163

Taking a gratification, for the exercise of personal influence with a public servant

51

Section 164

Abetment by public servant of the offences under section 163

52

Section 165

Public servant obtaining any valuable thing, without consideration, from person concerned in any proceeding or business transacted by such public servant

53

Section 207

Fraudulent claim to property to prevent its seizure as a forfeiture or in execution of decree

54

Section 213

Taking gifts, etc, to screen an offender from punishment

55

Section 214

Offering gifts or restoration of property in consideration of screening offender

56

Section 215

Taking gifts to help recover stolen property, etc

57

Section 216A

Harbouring robbers or gang-robbers etc

58

Section 217

Public servant disobeying a direction of law with intent to save person from punishment, or property from forfeiture

59

Section 218

Public servant framing an incorrect record or writing with intent to save person from punishment or property forfeiture

59A

Section 300

Murder

60

Section 327

Voluntarily causing hurt to extort property or to constrain to an illegal act

61

Section 329

Voluntarily causing grievous hurt to extort property, or to constrain to an illegal hurt

62

Section 330

Voluntarily causing hurt to extort confession or to compel restoration or property

63

Section 331

Voluntarily causing grievous hurt to extort confession or to compel restoration of property

64

Section 347

Wrongful confinement for the purpose of extorting property or constraining to illegal act

65

Section 348

Wrongful confinement for the purpose of extorting confession or of compelling restoration of property

66

Section 363

Kidnapping

67

Section 364

Kidnapping or abducting in order to murder

68

Section 365

Kidnapping or abducting with intent to secretly and wrongfully to confine a person

29

APPENDIX II (Cont’d) 69

Section 366

Kidnapping or abducting a woman to compel her marriage, etc

70

Section 367

Kidnapping or abducting in order to subject a person to grievous hurt, slavery, etc

71

Section 368

Wrongfully concealing or keeping in confinement a kidnapped person

72

Section 369

Kidnapping or abducting child under 10 years with intent to steal movable property from the person of such child

73

Section 370

Buying or disposing of any person as a slave

74

Section 371

Habitual dealing in slaves

75

Section 372

Selling minor for purposes of prostitution, etc

76

Section 373

Buying minor for purposes of prostitution, etc

77

Section 373A

Importing for purpose of prostitution

77A

Section 374

Unlawful compulsory labour

78

Section 379

Theft

79

Section 379A

Theft of a motor vehicle

80

Section 380

Theft in dwelling house, etc

81

Section 381

Theft by clerk or servant of property in possession of master

82

Section 382

Theft after preparation made for causing death or hurt in order to commit theft

83

Section 384

Extortion

84

Section 385

Putting person in fear of injury in order to commit extortion

85

Section 386

Extortion by putting a person in fear of death or grievous hurt

86

Section 387

Putting person in fear of death or of grievous hurt in order to commit extortion

87

Section 389

Putting person in fear of accusation of offence, in order to commit extortion

88

Section 392

Robbery

89

Section 394

Voluntary causing hurt in committing robbery

90

Section 395

Gang-robbery

91

Section 396

Gang-robbery with murder

92

Section 399

Making preparation to commit gang-robbery

93

Section 400

Belonging to gang of robbers

94

Section 402

Assembling for purpose of committing gang-robbery

95

Section 403

Dishonest misappropriation of property

96

Section 404

Dishonest misappropriation of property possessed by a deceased person at the time of death

97

Section 406

Criminal breach of trust

98

Section 407

Criminal breach of trust by carrier, etc

99

Section 408

Criminal breach of trust by clerk or servant

30

APPENDIX II (Cont’d) 100

Section 409

Criminal breach of trust by public servant, or by banker, merchant or agent

101

Section 411

Dishonest receiving stolen property

102

Section 412

Dishonest receiving property stolen in the commission of a gangrobbery

103

Section 413

Habitual dealing in stolen property

104

Section 414

Assisting in concealing of stolen property

105

Section 420

Cheating and dishonestly inducing delivery of property

106

Section 421

Dishonest or fraudulent removal or concealment of property to prevent distribution among creditors

107

Section 422

Dishonest of fraudulently preventing from being made available for his creditors a debit or demand due to the offender

108

Section 424

Dishonest or fraudulent removal or concealment of consideration

109

Section 465

Forgery

110

Section 468

Forgery for the purpose of cheating

111

Section 489A

Forging or counterfeiting currency notes or bank notes

111A

Section 489B

Using as genuine, forged or counterfeit currency notes or bank notes

112

Section 489C

Possession of forged or counterfeit currency notes or bank notes

112A

Section 489D

Making or possessing instruments or materials for forging or counterfeiting currency notes or bank notes

SECURITIES INDUSTRY ACT 1983 (ACT 280) 113

Section 7

Establishment of stock market

114

Section 12

Dealer’s license

115

Section 15A

Fund Manager’s license

116

Section 84

Market rigging

117

Section 85

Market manipulation

118

Section 87A

Use of manipulative and deceptive devices

119

Section 89E

Insider trading.

TAKAFUL ACT 1984 (ACT 312) 120

Section 4

Carrying on business as takaful operator without a license

121

Section 35

Carrying on takaful business as an agent or broker for a person other than a licensed takaful operator

31

APPENDIX III AML RED FLAGS INDICATOR Life Business

a) New Business 1. 2. 3. 4. 5.

6. 7.

Premium via cash exceeding RM50,000 per annum. New Business with Total Sum At Risk (TSAR) exceeding RM1,000,000. A customer introduced by an overseas broker, affiliate or other intermediary, when both customer and introducer are based in Non Cooperative Countries Territory (NCCT) or countries where production of drugs or drug trafficking may be prevalent. Single premium proposal. A customer with no discernible reason for using the insurer’s service, e.g. customers with distant addresses who could find the same service nearer their home base, or customers whose requirement are not in the normal pattern of or inconsistent with the insurer’s business and could be more easily serviced elsewhere. A personal line customer for whom verification of identity proves unusually difficult, who is evasive or reluctant to provide full details. A corporate/ trust customer where there are difficulties and delays in obtaining a copy of statements of accounts or other documents of incorporation.

b) Claims, surrender and cancellation 1. 2. 3. 4.

5.

Multiple Surrender/ Cancellation within short period. Refund of premium/contribution other than policy/ certificate owner. Similar pattern on claims & purchase of policy/certificate. Maturity Payment with Premium/contribution Suspense exceeding 50% of sum assured or Premium Paid in Advance (PPA)/ Discounted Advance Premium (DAP) exceeding RM50,000 per annum whichever is higher. Early Policy/certificate cancellation exceeding RM100,000 for regular premium/contribution & exceeding RM500,000 per annum for single premium/contribution.

c) Transaction which are abnormal or do not make economic sense 1. 2. 3. 4. 5. 6.

Assignment to natural persons with TSAR exceeding RM1,000,000 for regular premium/contribution & exceeding RM500,000 for single premium/contribution. Policy/certificate assigned to unrelated party/ beneficiary other than applicant. Increased in sum assured with TSAR exceeding RM1,000,000 for regular premium/contribution & exceeding RM500,000 per annum for single premium/contribution. Reinstatement with TSAR exceeding RM1,000,000 for regular premium/contribution & exceeding RM500,000 for single premium/contribution. Top-up with TSAR exceeding RM1,000,000 for regular premium/contribution & RM500,000 for single premium/contribution. Inclusion of rider for level term policies with TSAR exceeding RM1,000,000.

d) Payment 1. 2. 3.

4.

Policies’ premium/contributions paid by third party cheques. Pre-payment or early payment of premium/contributions. Unmatched Premium/contribution exceeding RM100,000 for regular premium/contribution & exceeding RM500,000 per annum for single premium/contribution. Large or unusual payment of insurance premiums or transaction settlement by cash.

APPENDIX III (Cont’d) 5. 6. 7.

Overpayment of insurance premiums with a request to refund the excess to a third party or different country. Payment by way of third party cheque or money transfers where there is a variation between the account holder, the signatory and the prospective insured. Policy loan repayment.

Non Life Business a) New Business 1. Premium via cash RM 50,000. 2. Premium payment with exceeding RM50,000 (individual) and RM100,000 (group plan) per annum. 3. Any transaction in which the insured is unknown ( for e.g. treaty reinsurance, business introduced under binding authorities, etc.) 4. A customer introduced by an overseas broker, affiliate or other intermediary, when both customer and introducer are based in Non Cooperative Countries Territory (NCCT) or countries where production of drugs or drug trafficking may be prevalent. 5. A personal line customer for whom verification of identity proves unusually difficult, who is evasive or reluctant to provide full details. 6. A corporate/ trust customer where there are difficulties and delays in obtaining a copy of statements of accounts or other documents of incorporation. 7. A customer with no discernible reason for using the insurer’s service, e.g. customers with distant addresses who could find the same service nearer their home base, or customers whose requirement are not in the normal pattern of or inconsistent with the insurer’s business and could be more easily serviced elsewhere. b) Payment 1. Multiple policy taken out by the same insured for low insurance premiums, each purchased for cash and then cancelled with return of insurance premium to third party. 2. Large or unusual payment of insurance premiums or transaction settlement by cash. 3. Overpayment of insurance premiums with a request to refund the excess to a third party or different country. 4. Payment by way of third party cheque or money transfers where there is a variation between the account holder, the signatory and the prospective insured. 5. Policy loan repayment. c) Claims and reinsurance 1. Strong likelihood of risk occurring, resulting in substantial claims, with consequently high insurance premiums. 2. Claims paid to persons other than the insured. 3. Claims which, appear legitimate, occur with abnormal irregularity. 4. Regular small claims within insurance premium limit. 5. Treaty reinsurance with high incidence of small claims. 6. Regular reinsurance claims paid overseas to third parties. 7. Recent change of ownership/ assignment of policies just prior to a loss. 8. Abnormal loss ratios for the nature and class of risk bound under a binding authority. 9. Early claims with huge amount.

APPENDIX III (Cont’d) d) Transaction which are abnormal or do not make economic sense 1. A customer with no discernible reason for using the insurer’s service, e.g. customers with distant addresses who could find the same service nearer their home base, or customers whose requirement are not in the normal pattern of or inconsistent with the insurer’s business and could be more easily serviced elsewhere. 2. Proposal from an intermediary not in keeping with the normal business introduced. 3. Proposal not in keeping with an insured’s normal requirements, the market in which the insured or intermediary is active and the business which the insured operates. 4. Early cancellation of policies with return of insurance premium, for no discernible purpose or in circumstances which appear unusual. 5. A number of policies entered into by the same insurer/ intermediary for small amounts and then cancelled at the same time, the return of insurance premium being credited to an account different from the original account. 6. Any transaction in which the nature, size or frequency appears unusual, e.g. early termination or cancellation, especially where cash had been tendered and/ or the refund cheque is to a third party or a sudden purchase of a lump sum contract from an existing customer whose current contracts are small and with regular payments only. 7. Assignment of policies apparently to unrelated third parties. 8. Transactions not in keeping with normal practice in the market to which they relate, for e.g. with reference to the size or class of business. 9. Other transactions linked to the transaction in question which could be designed to disguise money and divert it into other forms or other destinations or beneficiaries. 10. Willingness to pay insurance premiums on high risks, which have a likelihood of regular claims being made. 11. Policy/certificate cancellation/ surrender recurrence for the same policy/certificate owner for 2 year period.

34

APPENDIX IV

Contact Persons Head, AML and Fraud Prevention Ishak bin Mohamad Nor [email protected] 03-22971801 Head, Regulatory Supervision Azhar Azlam Yatim [email protected] 03-27825676 Compliance Staff Nizar Mohamed Daud [email protected] 03-22971710 Compliance Staff Radhiha Bt Mohd Naim [email protected] 03-26125336

APPENDIX V SUSPICIOUS TRANSACTION REPORT OF MONEY LAUNDERING

Note: The person reporting should exercise due care to ensure that the customer does not become aware that such a report has been made against him. Part A: Particulars of Person Reporting Name

Department

PF number

Tel.

(authorisation i/d)

Date

Part B: Documents Attached

Individual Customers: ‰

Copy of identity card(s) and/or passport(s) for the policy owners/ participants and life insured; and

‰

Copy of the life insurance proposal, nomination form, trust application form, and assignments, if any; and/or

‰

Any other related documents:

……………………………………………………………………………………………..

Corporate customers: ‰

Copy signature card(s);

‰

Copy power(s) of attorney;

‰

Copy articles of association and any modifications thereof;

‰

Copy minutes of the extraordinary and/or annual general meetings;

‰

Copy evidence of registration in the trade register;

‰

Copy accounting documents;

‰

Copy statement of account – ledger;

‰

Copy of the life insurance proposal, policy owners/ participants document regarding the life insurance;

‰

Other documents (to be detailed):

……………………………………………………………………………………………..

Direct Mail Customers: ‰

Documents as forwarded by mail:

……………………………………………………………………………………………..

APPENDIX V (Cont’d) Part C: Particulars Relating to the Suspicious Transaction 1. Identity and residence of the policy owners/ participants (if it concerns a individual customer as well as a body corporate). ………………………………………………………………………………………… ………………………………………………………………………………………… 2. Did the policy owners/ participants readily disclose proper address for residence or business establishment? ‰ Yes ‰

No

If NO, why not? ………………………………………………………………………………………… 3. Is your branch the nearest to the policy owners/ participants’ place of residence or place of business • inform the immediate supervisor about the unusual situation with which he has been confronted. ‰ Yes No If NO, why does he call on you? …………………………………………………………………………………………

‰

4. If the answer to the above is YES, please answer this question. Do you know the policy/certificate owner? ‰ Yes ‰

No

If YES, since when and in what capacity? ………………………………………………………………………………………… 5. Overall information a) Do you know the origin premium/contribution? ‰ Yes ‰

of

the

money

that

is

being

used

No

If YES, tick one: ‰

Lump sums derived from a previous investment ?

‰

Sale of real estate or corporation ?

‰

Inheritance or donation

‰

Revenues derived from the normal occupational or corporate business

‰

Others (to be specified):

……………………………………………………………………………………

to

pay

the

APPENDIX V (Cont’d) b)

What is the occupational or corporate business practiced by the policy owners/ participants?

……………………………………………………………………………………… c) Is the transaction proportional to the financial capacity of the policy owners/participants known by you or to the result of the annual financial accounts? ‰ Yes No

‰

If NO, specify: ……………………………………………………………………………………… 6. In which way(s) is the premium/contribution being paid? ‰ debiting of his own bank account ‰

debiting of a third party's bank account

7. Is such third party an exchange office? ‰ Yes. Please specify the name of the exchange office. ……………………………………………………………………………………… ‰ No. Please specify the relationship between the third party and the policy owners/ participants. ‰

Check issued by the policy owners/ participants

‰

Certified check of a bank

‰

Cash delivered by an intermediary

‰

Cash deposited by another bank

‰

Cash deposited with the insurer

‰

Others, (to be specified):

……………………………………………………………………………………… 8. Is the policy owners/ participants acting on his own behalf or that of a third party? ‰ Yes ‰

No

If YES, what is the relationship of such third party with the policy owners/ participants? …………………………………………………………………………………………

Part D: Additional Remarks: Specify hereafter any useful information which does not match any where else. .....................................................................................................................................….. ..........................................................................................................................................

APPENDIX V (Cont’d)

Part E: Policy/Certificate Details on Suspicious Transaction

Suspicious Transaction of Anti Money Laundering A.

Transaction Details

1. Policy Number / Proposal No. / Claim No.: 2. Policy 3. Commencement Date: 4. Payment (Cash/Cheque/Debit ac/Credit Card) 5. Payment 6. 7. Premium Amount: 8. Payment/Issue Amount:

(Please only indicate the Proposal No. or Policy No. if others are not applicable)

(Top-up/Increase in Sum Assured/Reinstatement/Cancellation/Refund of Unmatched Premium/All other refunds/Maturity/Claim Amount/Surrender/Withdrawal)

9. Sum Assured: 10. TSAR Amount: (functional areas as defined in the parameters) 11. Request 12. Effective Date: (for requested transaction- e.g. top-up/withdrawal/assignment e.t.c.) 13. Transaction Date: (Payment /

B. Particulars of Policy Owners/ Participants 14. Name: 15. NRIC No. / Passport No./ Business Reg. No.: 16. Relationship to Life Assured: 17. 18. Occupation / Business: 19. Address:

Particulars of Life Assured C. 20. Name: 21. NRIC No. / Passport No. / Business Reg. No.: 22. 23. Occupation / Business: 24. Address

Particulars of Assignee D. 25. Name: 26. NRIC. No. / Passport No. / Business Reg. No.: 27. Relationship to Policyowner/Life Assured: 28. 29. Occupation / Business: 30. Address

This report is to be submitted to AML and Fraud Prevention Unit by the staff authorising the transaction

APPENDIX V (Cont’d) The undersigned ..................................................... declares in good faith that he/she has correctly completed the questionnaire on the basis of all information known to him/her at this point in time. Signature (s) Name (as contained in the I/C) I/C No

: : :

.....................................................

Part F: Comments / Recommendation by Functional Head The Head of Division/Department/Unit is required to put forward his recommendation based on the information given by the person reporting the suspicious transaction. …………………………………………………………………………………………………………………. …………………………………………………………………………………………………………………. …………………………………………………………………………………………………………………. …………………………………………………………………………………………………………………. …………………………………………………………………………………………………………………. ………………………………………………………………………………………………………………….

Signature (s) Name I/C No Designation

*Note

: : : :

....................................................

APPENDIX VI

SECRET FIU/STR/02/02 Please send completed form to: FINANCIAL INTELLIGENCE UNIT BANK NEGARA MALAYSIA JALAN DATO' ONN, 50480 KUALA LUMPUR Tel: 03- 26988044 ext 8071 / 7367 Fax: 03 - 26933625

REFERENCE NUMBER:

SUSPICIOUS TRANSACTION REPORT a. This report is made pursuant to the requirement to report suspicious transactions under the Anti-Money Laundering Act 2001(AMLA). b. Under section 24 of the AMLA, no civil, criminal or disciplinary proceedings shall be brought against a person who makes a report unless it was made in bad faith.

PART A: INFORMATION ON CUSTOMER 1. Name(s): (Include all aliases / commonly used names. If organisation, please provide registered business / organisation name.)

2. NRIC No. / Passport No. / Business Reg. No.: (NRIC number for Malaysian, passport number for foreigners, and business registration number for businesses.)

3. Nationality: 4. Occupation / Business: (Where appropriate, principal activity of the person conducting the transaction, if known to the person making the report.)

5. Address:

6. Town:

7. Postcode:

8. State:

PART B: INFORMATION ON INTERMEDIARY AND BENEFICIARY 9. Name(s) of intermediary: (Include all aliases / commonly used names. If organisation, please provide registered business / organisation name.)

10. Intermediary NRIC No. / Passport No. / Business Reg. No.: (NRIC number for Malaysian, passport number for foreigners, and business registration number for businesses.)

11. Name(s) of beneficiary: (Include all aliases / commonly used names. If organisation, please provide registered business / organisation name.)

12. Beneficiary NRIC No. / Passport No. / Business Reg. No.: (NRIC number for Malaysian, passport number for foreigners, and business registration number for businesses.)

13. Occupation / Business: (Where appropriate, principal activity of the person conducting the transaction, if known to the person making the report.)

14. Address of beneficiary:

15. Town:

16. Postcode:

17. State:

PART C: TRANSACTION DETAILS 18. Policy / application number: 19. Claim number: 20. Type of insurance: 21. Type of policy: 23. Date of policy commencement:

22. Date of transaction: d

d

m m

y

y

y

y

24. Sum insured (RM):

25. Currency type:

26. Payment mode: (Yearly / half-yearly / quarterly / monthly / lump sum.)

27. Premium amount (RM):

28. Currency type:

41

d

d

m m

y

y

y

y

APPENDIX VI (Cont’d)

PART D: DESCRIPTION OF SUSPICIOUS TRANSACTION 29. Give details of the nature and the circumstances surrounding it:

(e.g. nature / type of transaction, source of funds, destinations, etc.)

30. Grounds for suspicion:

(Please include attachments if space is insufficient.)

31. Date of reporting: d

d

m m

y

y

y

y

PART E: FOR BANK NEGARA MALAYSIA USE ONLY Receiving officer:

Date received: d

42

d

m m

y

y

y

y