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SECTION ONE
Major Aspects of the Role and Work Carried Out by a Compliance Officer (AML) in Bank Negara, Malaysia
Money laundering (ML) is an activity affecting economic development in a country thus influencing the investment climate adversely. The activities including the Terrorism Financing (TF) and money laundering activities are enhanced by the intensive use of the technology available (D'Souza, 2011, p. 174). Therefore, technological advancement has been recognized as one of the contributors for the increased cases of ML. The criminals have identified new and more effective ways of committing financial crimes through overcoming the cyber security measures that are established. The increased cases of ML led to the government and the institution’s management to adopt policies to curb the ML activities. One of the bodies launched to assist fighting ML includes the Anti-Money Laundering and Counter-Financing of Terrorism (AML/CFT). The body ensures that all the vulnerabilities or the risks are minimized. The frameworks used with the consideration of the international standards enhance the efforts of AML/CFT.
The policies governing the scenarios including ML/TF are formulated in consideration of the Anti-Money Laundering and Anti-Terrorism Financing Act 2001(AMLATFA) as well as the FATF (Hamin, Wan Rosli, & Razak, 2014, p. 1). Financial institutions are expected to observe the policies and comply with them. Additionally, the obligations of the policies ought to be met by the institutions through their daily routines as a way of minimizing the ML/TF cases in the region. The financial institutions appoint individuals, Compliance Officers (AML) who assist in carrying out various duties that enhance ML/TF are dealt with in accordance with the policies. The directive of this section is to provide a description of the major aspects of the role and work carried out by a Compliance Officer (AML).
A Compliance Officer has the obligation of guaranteeing risk control and mitigation in an institution (Wheeler, 2011, p. 161). Potential risks have evolved with the evolving technology. As a way of curbing the risks, the AML should ensure that the procedures, controls as well as the policies are identified in the institution. The international standards, as well as the global financial environment, facilitate the identification process. Once identification process is achieved the procedures, controls and the policies are implemented in Bank Negara and monitored. Wheeler (2011) identifies that efficiency of the guidelines is dependent on the management and the objectives such as the reduction of the ML risks involving the institution and in the neighbourhood. The policies and the process of monitoring will assist the Compliance Officers to identify new risks that may arise.
The AML handle the ML risk profiling in the financial institution (International Monetary Fund, 2007, p. 182). The process requires conducting the investigation of the Bank’s customers. ML requires an individual to have an account or access to the institution’s information thus the clients might be victims or the perpetrators of the ML/TF practices. The AML ought to consider the customer risk in view of information such as the type of occupation, type of customers, country of residence, and legal person structure amongst other variables. Another significant area that is included in the risk profiling activity includes the consideration of the delivery channels, transactions, products, and services of the financial institution according to (International Monetary Fund, 2007).
Another responsibility of the AML includes reporting of the risks to the Board as well Senior Management in the institutions (Cox, 2014, p. 555). The reports ought to include the risk profile, assessment, control and mitigation measures undertaken at a specified moment. The report involves the environment that the institution operates in such as the geographical information and the level of the risks identified. The monitored activities should be included in the report to assist the management expose the ML risks. Through the reports, the compliance officers will detect and monitor the suspicious transaction trends that may take place through the bank (International Monetary Fund, 2007). The report includes any risk events that exist whether internally or externally. Such information includes the impact of the risk events to the bank or the financial institutions involved. Finally, the report should be provided with inclusions such as the developments in the policies governing AML/CFT and the respective implications on the organization.