Malaysian Prime Minister Mahathir Mohamad on Tuesday announced the launching of a public-private partnership where financial institutions can share information with law enforcers to combat money laundering and terrorism financing.
Speaking at the 11th International Financial Crime and Terrorism Financing conference, Mahathir said the initiative would allow for more effective detection of suspicious transactions.
“Everyone needs to play their part against financial crime so that Malaysia can transform into a value-driven developed nation. Shared prosperity can only be achieved through shared responsibility,” he told participants.
The initiative is jointly undertaken by the central bank, the securities commission, financial institutions and law enforcers. Mahathir promised that personal data and confidentiality would not be compromised in the effort to track down illegal transactions, using the European Union General Data Protection Regulation as a benchmark.
Nor Shamsiah Mohd Yunus, governor of Bank Negara Malaysia, the country’s central bank, called on banks and other financial institutions to strengthen their policies to counter money laundering and terrorism financing.
“Reporting institutions must strengthen their internal governance and controls to preserve financial integrity, not because Bank Negara tells them so, but because it is the right thing to do,” Shamsiah said at the conference.
“As a regulator, Bank Negara can only do so much to protect the financial system against terrorism financing risk. Reporting institutions, as responsible corporate citizens, must also play their parts to safeguard the financial system and the economy.”
Mahathir said the effort must be continuous.
“This will ultimately enable Malaysia to effectively play its role in the global fight against financial crime and terrorism financing. We must be persistent and remain focused in delivering this agenda,” he said.
The latest U.S. State Department Country Report on Terrorism said Malaysia “remained a source, transit point, and, to a significantly lesser extent, destination country for terrorist groups” such as Islamic State, Abu Sayyaf, Al-Qaeda and Jemaah Islamiyah.
The report noted that Bank Negara had issued a policy directive last year aimed at ensuring that effective measures were in place against money laundering and terrorism financing risks associated with the use of digital currencies and to increase the transparency of digital currency activities in Malaysia.
It requires all entities and persons involved in the exchange of digital currencies into money and vice versa, as well as the exchange of one digital currency for another, to register with the central bank. The move also established requirements for suspicious transaction reporting and record keeping.
Terrorist transit center designation
While Mahathir and Shamsiah discussed the new initiative, Malaysia’s counter-terrorism chief Ayob Khan Mydin Pitchay blamed the lax travel visa system for the country’s image as a transit center for terrorists.
“There is no visa required for entry into this country for many foreign nationals, therefore their citizens, including terrorists, have easy access,” he told conference attendees.
“However, since 2013 we have apprehended 38 foreign terrorists in transit,” he said, adding “some of them have been charged in court and some have been deported back to their home countries.”
Ayob said his team remains vigilant to take on any terror elements, adding police are tracking ideologically radical groups not involved in militant activities but are considered high risk.
“There is but a thin line separating the terror groups from radical groups,” he said citing the Hizbut-Tahrir group as an example.
The group’s objective is to set up an Arab caliphate in the Middle East with Sharia law, with the aim of emancipating Palestine.
“For example Hizbut Tahrir – this group rejects democratic ideas and wants to establish an Islamic state,” Ayob said. “Their ideology is extreme but not up to the level of terrorism so we have to consider this factor because of its risks.”
The U.S. counterterrorism report also credited Malaysia with doing due diligence in monitoring, detaining, deporting and prosecuting suspected terror group supporters.
It also credited Malaysia for cooperating with the United States and other countries to enhance its border security capabilities at airports and at the Sulu Sea, to defeat messaging by terror groups on social media and to increase prosecution of terrorists.