In Malaysia the obligation on a reporting institution to design and Implement an internal reporting system can be found in section 19 AMLATFPUAA and the standard guidelines section 8.2.
Besides that as required under section 14 of the AMLATFPUAA, employees are required to submit information on suspicious transactions to their compliance officer of their branch who will then report the STR to the compliance officer of their reporting institution who will then promptly submit a suspicious transaction report to the financial intelligence and enforcement department, BNM.
Section 10 of the BNM Standard Guidelines sets out the AML/CFT Compliance Programme requirement for reporting institutions and outlines the respective the roles and responsibilities of the Board of Directors and Senior Management responsibilities of the compliance officer.
Firstly, the operation staff in branch will identify the suspicious transaction activity on customer. Then the staff will immediately do enhanced CDD and perform suspicious transaction report and passed the report to department head (or branch head in the absence of the department head).
The department head then will verify the report and might close the case as not suspicious. If the department head have ground of suspicious on the report, then the department head will send the report to DMLRO to further research on the customer’s transaction.
After does further research, the DMLRO will either reject the suspicious report or will draft the report in FIN if he identify the customer transaction is suspicious. Once the DMLRO done with the draff, the report will be sent to money laundering reporting officer (MLRO).
Then the MLRO will further review the report and will draft the report in FIN if he identify the customer transaction is suspicious. If the transaction is not suspicious the the DMLRO will reject the report and close the case as non-suspicious.
Further on that the MLRO will review the report in fins which has been draf by DMLRO. Once the suspicion is confirmed, the MLRO must promptly authorise the draft suspicious transaction report. In the case where the MLRO decided that there are no grounds for suspicion, the MLRO must document and file the decision, supported by the relevant documents. Lastly, the MLRO will provide the report and details of the customer to oversea group Head compliance.
BNM upon receiving and analysing the STR or CTR and is convinced at its level on the quality of suspicious information, will instruct the relevant enforcement agencies to open investigation file. The enforcement agencies upon completion of their investigation and with sufficient evidence, will then charge the criminals in court.
STR Reporting System
Submit STR in fins
It is reasonable to suspect any customer who is reluctant to provide normal information and documents required routinely by bank in the course of the business relations. Bank should pay attention to customer who provide minimal, false or misleading information, or when applying to open an account, provide information that is difficult or expensive for the bank to verify. Below are the circumstances for the firm to externalise the STRs to FIU.
Transactions Which Do Not Make Economic Sense
1) Large amounts of funds deposited into an account, which is inconsistent with the salary of the customer.
2) Unexpected repayment of an overdue credit without any plausible explanation
3) Cash deposited at one location is withdrawn at another location almost immediately
Transactions Involving Large Amounts of Cash
1) Frequent withdrawal of large cash amounts that do not appear to be justified by the customer’s business activity.
2) Frequent withdrawal of large amounts by means of cheques, including traveller’s cheques.
3) A large amount of cash is withdrawn and immediately deposited into another account.
Transactions Involving Accounts of the Customer with the Bank
1) Frequent deposits of a company’s cheques into an employee’s account.
2) Multiple depositors using a single account
3) Paying in large third party cheques endorsed in favour of the customer
1) Large transfers of securities to non-related accounts.
2) Buying and selling of a security with no discernible purpose or in circumstances which appear unusual.
Tax Crimes Related Transactions
1) Negative tax-related reports from the media or other credible information sources.
2) Purchase or sale of large amounts of precious metals by a customer which is not in line with his business or background.
Other Types of Transactions
1) Account activity is not commensurate with the customer’s known profile (e.g. age, occupation, income).
2) The customer uses intermediaries which are not subject to adequate AML/CFT laws.
3) When a person receives funds from a religious or charitable organisation and utilises the funds for purchase of assets or transfers out the funds within a relatively short period.
The Japanese regulators ordered Citigroup to close its private bank operations over their concerns about the failure of the group AML internal controls.