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  • 8TH INTERNATIONAL CONFERENCE ON FINANCIAL CRIME AND TERRORISM FINANCING (IFCTF)

8TH INTERNATIONAL CONFERENCE ON FINANCIAL CRIME AND TERRORISM FINANCING (IFCTF)

KEYNOTE ADDRESS BY
YB DATUK NUR JAZLAN BIN  MOHAMED
DEPUTY MINISTER OF HOME AFFAIRS, MALAYSIA
AT THE
8TH INTERNATIONAL CONFERENCE ON FINANCIAL CRIME
 AND TERRORISM FINANCING (IFCTF)
 
DATE:     5TH OCTOBER 2016 (WEDNESDAY)
VENUE:  THE MAJESTIC HOTEL, KUALA LUMPUR, MALAYSIA
 
THEME:  “EMERGING COMPLIANCE RISKS: ADDRESSING RISING TRENDS IN FINANCIAL CRIMES AND TERRORISM FINANCING”
 
 
YANG BERBAHAGIA ENCIK ABU HASSAN ALSHARI YAHYA
ASSISTANT GOVERNOR OF BANK NEGARA MALAYSIA
 
YANG BERBAHAGIA DATUK DR. NIK NORZUL THANI NIK HASSAN THANI
BOARD MEMBER OF THE ASIAN INSTITUTE OF FINANCE
 
YANG BERBAHAGIA DATO’ AHMAD FAIRUZ ZAINOL ABIDIN
DEPUTY CHIEF EXECUTIVE OF SECURITIES COMMISSION MALAYSIA AND EXCO MEMBER OF THE ASIAN INSTITUTE OF FINANCE
 
DISTINGUISHED GUESTS, LADIES AND GENTLEMEN
 
 
 
 
1. IT IS INDEED A GREAT HONOUR FOR ME TO BE HERE TODAY. I WOULD LIKE TO THANK THE CONFERENCE ORGANISERS, NAMELY THE ASIAN INSTITUTE OF FINANCE, AND MALAYSIA'S COMPLIANCE OFFICERS' NETWORKING GROUP, FOR INVITING ME TO DELIVER THE KEYNOTE ADDRESS FOR THIS YEAR’S ‘INTERNATIONAL CONFERENCE ON FINANCIAL CRIME AND TERRORISM FINANCING’ OR IFCTF. 
 
2. ALLOW ME TO ALSO CONVEY THE WARM WISHES FROM THE HONOURABLE DATO’ SERI DR. AHMAD ZAHID HAMIDI, DEPUTY PRIME MINISTER AND MINISTER OF HOME AFFAIRS, WHO DESPITE NOT BEING WITH US TODAY, EXTENDS HIS REGARDS TO EVERYONE PRESENT HERE.
 
DISTINGUISHED GUESTS, LADIES AND GENTLEMEN
 
3. I AM PLEASED THAT THIS ANNUAL CONFERENCE HAS RECEIVED STRONG SUPPORT AND PARTICIPATION FROM BOTH THE PUBLIC AND PRIVATE SECTORS SINCE ITS INCEPTION IN 2009. IT HAS CONTINUED TO RECEIVE ACTIVE PARTICIPATION FROM RENOWNED INTERNATIONAL EXPERTS, FINANCIAL REGULATORY AUTHORITIES AS WELL AS THE INDUSTRY PLAYERS. WITH THE PARTICIPATION OF ALL THE STAKEHOLDERS, I AM CONFIDENT THAT THE CONFERENCE WILL PROVIDE INSIGHTS THAT LEAD TO SOLUTIONS TO THE CHALLENGES FACED BY COMPLIANCE AND RISK PROFESSIONALS, IN PREPARING THEM TO MEET FUTURE RISKS.
4. THE THEME OF THE CONFERENCE THIS YEAR IS “EMERGING COMPLIANCE RISKS: ADDRESSING RISING TRENDS IN FINANCIAL CRIMES AND TERRORISM FINANCING”. IN TANDEM WITH THIS THEME, THE OBJECTIVE OF THE CONFERENCE IS TO IDENTIFY THE COMPLIANCE RISKS FACED BY THE INDUSTRY THAT ARE EMERGING DUE TO FINANCIAL CRIMES AND TERRORISM FINANCING. THE CONFERENCE WILL EXPLORE THE LATEST TRENDS AND MODUS OPERANDI OF FINANCIAL CRIMES AND TERRORISM FINANCING, AS WELL AS TO EXAMINE THE REGIONAL AND GLOBAL REGULATORY RESPONSES TO DEAL WITH THESE CRIMES. I PERSONALLY BELIEVE THE IMPORTANCE OF THIS CONFERENCE INBRINGING TOGETHER ALL STAKEHOLDERS TO JOIN FORCES IN ADDRESSING THE INCREASING RISKS POSED BY FINANCIAL CRIMES AND TERRORISM FINANCING. 
 
DISTINGUISHED GUESTS, LADIES AND GENTLEMEN
 
5. I AM GLAD TO INFORM YOU THAT IN ITS 2015 MUTUAL EVALUATION REPORT, THE FINANCIAL ACTION TASK FORCE OR THE FATF ACKNOWLEDGED THAT MALAYSIA HAD ACHIEVED A GOOD LEVEL OF COMPLIANCE WITH THE FATF RECOMMENDATIONS. IN ADDITION, MALAYSIA HAS ALSO SUCCESSFULLY DEVELOPED AN ACTION PLAN TO ADDRESS THE KEY ISSUES IDENTIFIED DURING THE EVALUATION. BASED ON THE COMMITMENT DEMONSTRATED AND THE CONTINUING EFFORTS TO IMPROVE ITS ANTI MONEY LAUNDERING AND COUNTER TERRORIST FINANCING INITIATIVES, MALAYSIA WAS GRANTED A MEMBERSHIP TO FATF IN FEBRUARY 2016. 
 
6. THE INCLUSION OF MALAYSIA AS A MEMBER OF THE FATF SIGNIFIES THE GLOBAL RECOGNITION TOWARDS MALAYSIA’S LEGAL AND REGULATORY FRAMEWORK IN FIGHTING FINANCIAL CRIMES AND TERRORISM FINANCING, IN ADDITION TO THE STABILITY OF MALAYSIA’S FINANCIAL SYSTEM AND ECONOMIC DEVELOPMENT.
 
7. THE IMMEDIATE CHALLENGE OF THE ADMISSION TO THE FATF IS THE INCREASED SCRUTINY ON MALAYSIA’S AML/CTF FRAMEWORK, AND THE PLEDGES THAT MALAYSIA HAS MADE, SPECIFICALLY TO PROSECUTE MONEY LAUNDERING CASES. AGAINST THIS BACKDROP, THE BENEFITS OF THEFATF MEMBERSHIP CANNOT BE UNDERESTIMATED.  AS AN FATF MEMBER COUNTRY, THE INTERNATIONAL COMMUNITY RECOGNIZES MALAYSIA AS BEING COMMITTED TOWARDS COMBATING MONEY LAUNDERING AND TERRORISM FINANCING. SUCH RECOGNITION WOULD ENHANCE THE COUNTRY’S STRATEGIC POSITION IN GAINING WIDER ACCESS TO THE GLOBAL FINANCIAL MARKET, PARTICULARLY THE CAPITAL MARKET. MOVING FORWARD, THIS WOULD FURTHER DEVELOP MALAYSIA AS AN EXCELLENCE HUB FOR FINANCE AND BANKING IN THE REGION AND IN THE WORLD AT LARGE. 
 
 
DISTINGUISHED GUESTS, LADIES AND GENTLEMEN
 
8. WE LIVE IN A WORLD TODAY WHERE ACCESS TO TECHNOLOGY IS IN OUR FINGERTIPS. TECHNOLOGY HAS BROUGHT ADVANCEMENT IN MANY ASPECTS OF OUR LIFE, BUT AT THE SAME TIME, IT ALSO CREATES AN OPPORTUNITY AND PLATFORM FOR UNSCRUPULOUS PARTIES TO ABUSE THE SYSTEM FOR THEIROWN PERSONAL BENEFITS. IT IS DISHEARTENING TO NOTE THAT THE PROBLEM OFCYBERCRIME CONTINUES TO ESCALATE, AND RANKED ASTHE SECOND MOST REPORTED ECONOMIC CRIME BY THE PWC GLOBAL ECONOMIC CRIME SURVEY 2016.
 
9. ON THE DOMESTIC FRONT, STATISTICS FROM CYBERSECURITY MALAYSIA FOR THE PERIOD FROM JANUARY TO AUGUST 2016 SHOWED THAT 45% OF THE TOTAL OF 5,802 REPORTED CYBERCRIME CASES ARE FRAUD  RELATED, AND THE TREND IS LIKELY TO INCREASE BY THE YEAR END. ROYAL MALAYSIAN POLICE STATISTICS SHOWED THAT IN 2015, THERE WERE 14,627 CASES OF ONLINE SCAMS WITH ECONOMIC LOSSES AMOUNTING TO RM1.09 BILLION.   IT IS CLEARLY EVIDENT THAT MORE AND MORE CRIMINALS ARE EXPLOITING THE SPEED, CONVENIENCE AND ANONYMITY OF THEIR IDENTITY IN THE INTERNET TO COMMIT A DIVERSE RANGE OF CRIMINAL ACTIVITIESTHAT TRANSCEND BOTH PHYSICAL AND VIRTUAL BORDERS, AND POSE REAL THREATS TO VICTIMS WORLDWIDE.
 
10. THE FUTURE OF TECHNOLOGY IS UNCERTAIN. WHAT IS NEW TODAY WILL BE SUPERSEDED BY THE NEXT GENERATION OF CONNECTIVITY TOMORROW. WHAT IS CERTAIN, HOWEVER, IS THE NEED TO MANAGE THE CORRESPONDING RISKS, BEFORE THEY BECOME EPIDEMIC. THIS IS WHERE OUR RESPONSIBILITY LIES. THE PUBLIC AND PRIVATE SECTOR STAKEHOLDERS MUST ACT RESILIENTLY AGAINST THESE EMERGING TRENDS AND CONTINUE INTERAGENCY COLLABORATION TOWARDS ERADICATING FINANCIAL CRIMES. 
 
11. IT IS NOTEWORTHY THAT MALAYSIA HAS PUT IN PLACE INITIATIVES TO COUNTER FINANCIAL CRIMES IN THE FORM OF NUMEROUS TASK FORCES IN COMBATING FRAUD, AND AMONGST THEM ARE THE ESTABLISHMENT OF THE NATIONAL REVENUE RECOVERY ENFORCEMENT TEAM, THE STEERING COMMITTEE ON ELECTRONIC PAYMENTS FRAUD AND THE SUB COMMITTEE ON OFFENCES RELATED TO FINANCIAL FRAUD AND SCAMS. MORE  NEEDS TOBE DONE, AND I AM PLEASED TO NOTE THAT THE CROSS-BORDER ISSUES ON CYBERCRIME AND FINANCIAL TECHNOLOGY WILL BE DISCUSSED AND ADDRESSED OVER THE COURSE OF THIS TWO-DAY CONFERENCE. 
 
 
 
DISTINGUISHED GUESTS, LADIES AND GENTLEMEN
 
12. RECENT EVENTS IN THE CURRENT GLOBAL LANDSCAPE CLEARLY SHOWS THAT NO NATION IS IMMUNE TO THE THREAT OF TERRORISM. THE RISE OF NON-STATE ACTORS, SUCH AS DAESH OR THE ISLAMIC STATE, BOKO HARAM AND AL-SHABAAB HAS CAUSED INSTABILITY AND INSECURITY OF NATIONS. IN MALAYSIA, IT IS NO LONGER SUFFICIENT TO RELY ON THE EXISTING PROVISIONS DUE TO THE CURRENT NATURE OF SUCH THREATS AND THEIR FINANCIAL RESOURCES AT THEIR DISPOSAL. THE MALAYSIAN GOVERNMENT HAD ENACTED SEVERAL NEW PROVISIONS SUCH AS THE PREVENTION OF TERRORISM ACT 2015 OR POTA, AND SPECIAL MEASURES AGAINST TERRORISM IN FOREIGN COUNTRIES ACT  2015 (SMATA), SPECIFICALLY TO COMBAT ACTS RELATED TO TERRORISM.
 
13. MONEY IS SAID TO BE OXYGEN OR LIFEBLOOD FOR TERRORISM.  TERRORISTS WOULD NEED SUBSTANTIAL RESOURCES TO ACTUALIZE THEIR IDEOLOGY AND VENTILATE THEIR GRIEVANCES AGAINST INSTITUTIONS, GOVERNMENTS AND INNOCENT PEOPLE. THEY REQUIRE SUCH RESOURCES TO OPERATE THEIR TRAINING FACILITIES, ACQUIRE WEAPONS, AND TRAVEL TO PERPETUATE THEIR NEFARIOUS ACTIVITIES. THE SPATE OF TERRORIST ATTACKS HAS CONTINUED TO RISE, AND THE CORRELATION BETWEEN SUCH ATTACKS AND TERRORISM FINANCING IS SIGNIFICANT. HENCE, THE REQUIREMENT TO DETECT, REDUCE AND CUT THE FINANCIAL FLOWS OF TERRORIST CRIMINAL ORGANIZATIONS BY PUBLIC AUTHORITIES IS AN ABSOLUTE NECESSITY.  
 
14. IN 2007, MALAYSIA JOINED THE GLOBAL MOVE IN COMBATING TERRORISM FINANCING BY ACCEDING TO THE UNITED NATIONS INTERNATIONAL CONVENTION FOR THE SUPPRESSION OF THE FINANCING OF TERRORISM. THE FOREGOING DEVELOPMENT LED TO THE ENACTMENT OF THE ANTI-MONEY LAUNDERING AND ANTI-TERRORISM FINANCING ACT 2001 OR AMLATFA WHICH CAME INTO FORCE IN 2002 TO COMBAT ILLEGAL FINANCIAL FLOWS. THE EXISTING LEGAL FRAMEWORK FOR COMBATING MONEY LAUNDERING IN MALAYSIA INCLUDES TERRORISM FINANCING IN ITS GENERAL SCOPE AS RECOMMENDED BY THE FINANCIAL ACTION TASK FORCEAFTER THE SEPTEMBER 11 ATTACKS. UNDER AMLATFA, REPORTING INSTITUTIONS ARE REQUIRED TO PROMPTLY SUBMIT SUSPICIOUS TRANSACTION REPORTS (STR) TO THE FINANCIAL INTELLIGENCE UNIT OF THE CENTRAL BANK OF MALAYSIA.   
 
DISTINGUISHED GUESTS, LADIES AND GENTLEMEN
 
15. AT THE REGIONAL FRONT, THE SOUTH EAST ASIA AND AUSTRALIA’S FINANCIAL INTELLIGENCE UNIT HAS PUT IN A CONCERTED EFFORT IN COMBATING TERRORISM FINANCING ACTIVITIES. THE FIRST TERRORISM FINANCING REGIONAL RISK ASSESSMENT FOR SOUTH EAST ASIA AND AUSTRALIA WAS PRESENTED AT THE 2ND COUNTER-TERRORISM FINANCING SUMMIT HELD IN NUSA DUA, BALI IN AUGUST THIS YEAR.
 
16. THE FINDINGS OF THIS FIRST TERRORISM FINANCING REGIONAL RISK ASSESSMENT ARTICULATED FOUR MAJOR TERRORISM FINANCING RISKS TO THE REGION. THERE ARE, SELF-FUNDING FROM LEGITIMATE SOURCES, NON-PROFIT ORGANISATIONS, CROSS-BORDER MOVEMENT OF FUNDS, AND EXTERNAL FUNDING INTO THE REGION. DEEPER INTELLIGENCE COOPERATION, STRONGER DOMESTIC AND REGIONAL FRAMEWORKS, AND BETTER UNDERSTANDING OF HIGH RISK TERRORISM FINANCING CHANNELS ARE NEEDED BY ALL PARTIES TO EFFECTIVELY DEAL WITH THESE RISKS. WE SHOULD ALSO NOT DISCOUNT OTHER CHANNELS WHICH ARE FORECASTED TO POSE INCREASING RISKS OVER THE MEDIUM TERM SUCH AS THE USE OF SOCIAL MEDIA AND CROWD FUNDING PLATFORMS FOR RAISING TERRORISM FUNDS. WE SHOULD ALSO BE WARY OF VULNERABILITIES THE REMITTANCE SECTOR WHERE SUSPICIOUS TRANSACTIONS ARE RELATIVELY LOW.
 
 
17. THE CHALLENGE NOW WOULD BE TO DISTINGUISH TERRORISM FUNDING TRANSACTIONS FROM THE LARGE VOLUME OF LEGITIMATE ORDINARY DAILY FINANCIAL TRANSACTIONS, AND TO ENCOURAGE CONTINUOUS INVOLVEMENT OF THE PRIVATE SECTOR IN DISRUPTING AND PREVENTING TERRORISM FINANCING.
 
18. IN LINE WITH THE THEME OF THE CONFERENCE, IT IS ONLY APPROPRIATE THAT THE CRITICAL REGIONAL REGULATORY EXPECTATIONS AND COOPERATION WITHIN THE FINANCIAL SECTOR ARE DISCUSSED IN THE CONTEXT OF PRESERVING THE INTEGRITY OF THE FINANCIAL SYSTEM. 
 
DISTINGUISHED GUESTS, LADIES AND GENTLEMEN
 
19. I CANNOT EMPHASIZE ENOUGH THE IMPATIENCE OF THE COOPERATION AND COLLABORATION AMONG THE REGULATORS, THE FINANCIAL INDUSTRY AND THE LAW ENFORCEMENT AGENCIES, TO SUCCESSFULLY MOVE TOWARDS OUR SHARED GOAL TO PROTECT THE INTEGRITY OF OUR FINANCIAL SYSTEM AGAINST CRIMINAL ABUSE. IT IS SURELY IS ABOUT HAVING THE RIGHT PEOPLE AND RIGHT PROCESS, KNOWING WHO YOU ARE DEALING WITH, UNDERSTANDING THE RISKS THAT LIE AHEAD, AND BE FULLYMINDFUL OF HOW  TECHNOLOGY CAN BE ABUSED.
 
20. ON THAT NOTE, LADIES AND GENTLEMEN, I AM CONFIDENT THAT THIS CONFERENCE WILL PROVIDE A GREAT PLATFORM FOR A SERIES OF PRODUCTIVE AND MUTUALLY BENEFICIAL DISCUSSIONS. I HOPE THAT EVERYONE WOULD BE ABLE TO BENEFIT FROM THE EXCHANGE OF VIEWS ON KEY ISSUES RELATING TO ANTI-MONEY LAUNDERING AND COUNTER TERRORISM FINANCING AT BOTH THE DOMESTIC AND INTERNATIONAL LEVEL.    
THANK YOU.