Sir Muhammad Nazri, CFI

Lawyers and AMLA in Malaysia.

Lawyers are classified as a Reporting Institutions under Designated Non Financial Businesses and Professions (DNFBPs)

So? They are required by Law to undertake preventive measures to prevent their Institutions from being used as a conduit for Money Laundering and Terrorism Financing Activities including:

1) carrying Out risk assessment

2) Conducting Customer Due Diligence

3) Submitting Suspicious Transaction Report and Cash Threshold Report (Financial Institution and Casino)

4) Maintaining and retaining records of transaction and ;

5) implementing Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) compliance programme based on ML/TF risk exposure, it’s size, nature and complexity Bar Council Malaysia has issued Circular No. 119/2018 dated 8 May 2018 about good practices and common lapses identified by Bank Negara Malaysia (BNM) during previous on site examination.

The good practices were:😀👍

(1) maintenance and centralisation of customer database at the law firm level;

(2) adequate management information system (“MIS”) using both manual records and a simple system to capture customer due diligence (“CDD”) and transaction records, commensurate with the firm’s size and complexity; and

(3) retention of basic CDD and transaction records for at least six years.

The lapses identified were:🆘👮🏧

(1) lapses in Enhanced Customer Due Diligence (“EDD”) on higher-risk customers due tothe absence of / inadequate customer risk profiling;

(2) absence of transaction monitoring on clients;

(3) gaps in establishing internal criteria (“red flags”) to detect suspicious transactions and reporting mechanisms for suspicious transactions;

(4) lapses in maintaining a database of names and details of sanctioned individuals and entities;

(5) lapses in conducting checks on the names of new and existing clients against the list of sanctioned entities;

(6) lapses in money laundering / terrorism financing (“ML/TF”) risk assessment in relation to the firm’s customers, products, and services, transactions or delivery channels and geographical presence;

(7) absence of / inadequate risk profiling of clients;

(8) absence of written AML/CFT policies and procedures on key areas of AML/CFT requirements;

(9) absence of senior management oversight on AML/CFT matter 10) Gaps in conducting AML/CFat awareness and training programme for employees and 11) Gaps in appointing a Compliance Officer to undertake COMPLIANCE Function for AML/CFT matters.

Sir Nazri

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