Businesses engaged in foreign transactions must exercise heightened diligence under AMLA

The Sun

a day ago

KUALA LUMPUR: Malaysian business owners engaged in international transactions are advised to maintain comprehensive records and promptly report any suspicious activity to Bank Negara Malaysia (BNM) to ensure compliance with the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001(AMLA).
Lawyer Guok Ngek Seong, who has nearly 25 years of experience in civil and criminal litigation, told Bernama that companies operating in high-risk sectors such as maritime, petroleum and logistics, which frequently conduct foreign exchange transactions, must exercise heightened diligence in documenting their operations.
He was speaking on the matter in light of recent actions taken by BNM, which imposed administrative monetary penalties amounting to RM4.95 million on several financial institutions for breaches of statutory and regulatory obligations.
The penalties involved non-compliance with provisions under the Development Financial Institutions Act 2002 as well as failures to adhere to requirements under the Anti-Money Laundering, Countering Financing of Terrorism and Targeted Financial Sanctions for Financial Institutions Policy Document.
These regulatory actions reflect the heightened scrutiny placed on financial and corporate entities, reinforcing the need for robust compliance measures, especially in sectors exposed to cross-border transactions.
Guok stressed that proper record-keeping may constitute a key line of defence should a company come under investigation for alleged money laundering or involvement in unlawful activities.
'BNM has the authority to conduct annual checks on such entities to ensure compliance with AMLA regulations,' he said.
When asked whether litigants may obtain court orders through pre-action discovery or the Norwich Pharmacal process, Guok explained that such orders are available to parties seeking disclosure from individuals or entities not directly involved in the anticipated proceedings.
He noted that Norwich Pharmacal orders permit a litigant to compel a third party, who is not itself implicated in the alleged wrongdoing but is mixed up in it innocently, to disclose information necessary to identify or pursue the actual wrongdoer.
'However, the court must balance such applications to prevent any form of abuse or 'fishing expeditions', particularly in light of, among other considerations, the principle of banker-client privilege.
'It is sometimes crucial for clients to obtain documents from banks, especially in cases where suspicious transactions have been traced to accounts held by corporations later found to be involved in fraudulent activities,' he said.
He said the only viable means for victims to substantiate such transactions is by obtaining the relevant documentation, which may be instrumental in identifying the mechanisms or systems employed to facilitate the fraudulent activity.
Commenting on the Bankers' Books (Evidence) Act 1949 (BBEA), Guok noted that while Section 6 restricts the compellability of bank officers to produce bankers' books where the bank is not a party to the proceedings, the court nonetheless retains the discretion to issue such an order where appropriate.
'The court must balance the interests of banker-client confidentiality against the issues in the particular suit before making appropriate orders.
'While some discovery applications may be deemed an abuse of process, others are genuine, especially when litigants require documents from banks to trace the money trail in their cases,' he added.