Training Material PEP Year 1 - M2 (eModule)

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PEP Year Year 1 – M2 (eModu (eModule) le)

Part 2: PEP Year 1 M2 (eModule)

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PEP Year Year 1 – M2 (eModu (eModule) le)

The eModu eModule le wil willl cover cover the the follow following ing topic topic Topic 1: Anti Money Laundering/ Counter Financing of Terrorism Topic 2: Code of Ethics and conduct Topic 3: Replacement of Policies Topic 4: Fraud Awareness and Agency Conduct

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PEP Year Year 1 – M2 (eModu (eModule) le)

The eModu eModule le wil willl cover cover the the follow following ing topic topic Topic 1: Anti Money Laundering/ Counter Financing of Terrorism Topic 2: Code of Ethics and conduct Topic 3: Replacement of Policies Topic 4: Fraud Awareness and Agency Conduct

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PEP Year Year 1 – M2 (eModu (eModule) le)

After completing this module, participants will be able:

• To identify and list the importance of anti-money laundering (AML) and counter financing of terrorism (CFT), code of ethics and conduct (COE) , replacement of policies (ROP) and Fraud Awareness and agency conduct. • To observe and follow the guidelines of AML/CFT, COE, ROP and Fraud Awareness and agency conduct. • To appreciate the existence of AML/CFT, COE, ROP and Fraud Awareness and agency conduct in upholding the professionalism of  Life Planning Advisor.

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PEP Year 1 – M2 (eModule)

Topic 1: AML/CFT Reading Material

Disclaimer  “This power-point presentation is purely a training tool for the internal agency training programmes of Great Eastern Life Assurance (Malaysia) Berhad. All or any part of the contents of this presentation shall not be used directly or indirectly for  soliciting insurance business, policyholder services and/or facilitating any other form of communications with any external party whatsoever. This information is correct as at 29112010” 4

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PEP Year 1 – M2 (eModule)

Understanding Anti Money Laundering  (AMLA)

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PEP Year 1 – M2 (eModule)

COURSE OBJECTIVES To create awareness amongst agents on anti-money laundering (AML) and counter financing of terrorism (CFT) and appreciate its importance To understand the relevant regulations and laws governing AML & CFT

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PEP Year 1 – M2 (eModule)

TODAY’S OVERVIEW 1. 2. 3. 4. 5. 6. 7.

Definition BNM Guidelines & Governing Regulations AML/CFT Framework Reporting Structure Suspicious Cases - Modus Operandi Other Developments On AML Q&A

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PEP Year 1 – M2 (eModule)

MONEY LAUNDERING DEFINED UNDER AMLA Money laundering is the act of a person who:

a.

Engages, directly or indirectly, in a transaction that involves proceeds from any unlawful activity.

b.

Acquires, receives, possesses, disguises, transfers, converts, exchanges, carries, disposes, uses, removes from or brings into Malaysia proceeds of any unlawful activity.

b.

Conceals, disguises or impedes the establishment of the true nature, origin, location, movement, disposition, title of, rights with respect to, or ownership of, proceeds of any unlawful activity.

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PEP Year 1 – M2 (eModule)

WHAT IS MONEY LAUNDERING Money laundering is the “whitewashing” of proceeds derived from illegal/unlawful  activities or the processing of criminal proceeds to disguise their illegal origin. This process enables the criminals to enjoy these profits without  jeopardizing their source.

Vigilant – not expected to be “willfully blind”

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PEP Year 1 – M2 (eModule)

WHAT IS SERIOUS OFFENCE Serious offence = unlawful activity = illegal activity = predicate offence. Define as activity which is related, directly or indirectly to Offense specify in the 2 nd Schedule of AMLA 2001, or   An attempt to commit any of those offences, or   Abetment of any of those offences.  Cover serious offences committed in Malaysia and offence committed in a foreign country which would also constitute a serious offence in Malaysia. Currently there are 248 serious offences as set out in the 2 nd schedule of AMLA.

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PEP Year 1 – M2 (eModule)

2nd

WHAT IS SERIOUS OFFENCE

Schedule of AMLA = An excerpt of offences from 36 Legislations:

1)

Anti-Corruption Act,

18)

Kidnapping Act,

2)

BAFIA Act,

19)

Money Changing Act,

3)

Betting Act,

20)

Optical Disc Act,

4)

Child Act,

21)

Penal Code,

5)

Common Gaming House Act,

22)

Security Industry Act,

6)

Companies Act,

23)

Takaful Act.

7)

Copyright Act,

24)

Labuan Offshore Securities Industry Act

8)

Corrosive & Explosive Substances & Offence Weapons Act,

25)

Labuan Trust Companies Act

26)

Islamic Banking Act

9)

Customs Act,

27)

Offshore Banking Act

10)

Dangerous Drugs Act,

28)

Payment Systems Act

11)

Dangerous Drugs (Forfeiture of  Property) Act,

29)

Securities Commission Act

12)

Development Financial Institutions Act,

30)

Offshore Insurance Act

31)

Anti-Money Laundering Act

13)

Explosive Act,

32)

Trade Description Act

14)

Firearms Act,

33)

15)

Futures Industry Act,

Malaysian Timber Industry Board (Incorporation) Act

16)

Insurance Act,

34)

Moneylenders Act

17)

Internal Security Act,

35)

Pawnbrokers Act

36)

Income Tax Act 1976 (Act 53)

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PEP Year 1 – M2 (eModule)

WHAT IS SERIOUS OFFENCE Some examples of serious offences include : 

Corruption/ bribery.



Smuggling offences.



Trafficking in firearms/ drugs.



Unlawful gambling, deposit taking or investment schemes.



Robbery/ murder/ theft/ extortion/ kidnapping/ abduction.



Infringement of copyright.



Person living on or trading in prostitution.



Criminal breach of trust (CBT)/ cheating/ forgery.



Insider trading/ market manipulation.



Carrying on banking/FI/merchant banking/discount house/ moneybroking, insurance, insurance broking, adjusting business, Takaful business without valid license.

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PEP Year 1 – M2 (eModule)

WHAT IS SERIOUS OFFENCE Whilst you are not required to have extensive knowledge of serious offences listed in the 2nd schedule, you are required to have the knowledge that a reasonable person in your position would have about such offences.

You are expected to recognize the major offences that are likely to generate illegal proceeds, such as drug trafficking, theft, corruption etc.

However you are not expected to be sure that a serious offence has been committed or whether or not something is actually an unlawful activity for  the purpose of AMLA.

It is sufficient that you suspect.

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PEP Year 1 – M2 (eModule)

MONEY LAUNDERERS Typical Characteristics - Money Launderers are: *

Focused on Intent

*

Innovative

*

Rich

*

Prepared to lose some money

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PEP Year 1 – M2 (eModule)

MONEY LAUNDERING PROCESS Placement   – the physical disposal of the initial proceeds, eg: Smuggle

over borders, depositing into many bank accounts, payment of premiums (generous policies for self or related parties), purchasing of hefty investment linked policies or top ups for single premium policies

Layering  (whitewashing)   – series of conversions or creating complex

layer to distant from the source to disguise the audit trial and provide anonymity, eg: borrowing against insurance policies, premature termination of policies and liquidating investment linked policies

Integration   – returning the criminally derived wealth into legitimate funds,

eg: funds reinvested into assets, real estate, stocks, business ventures

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PEP Year 1 – M2 (eModule) 

LAYERING

Conversion / movements to separate the illicit proceeds from their source * To disguise audit trail * Provide an appearance of legitimacy * Provide anonymity

HOW IS MONEY LAUNDERED? 

PLACEMENT

Introducing illegal profits into the financial system



INTERGATION

After the Layering process, the money are then reintroduced into the financial / business system - for  example: investments in business, purchase of assets

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PEP Year 1 – M2 (eModule)

DEFINITION OF FINANCING OF TERRORISM Financing of terrorism generally refers to carrying out of transaction involving funds that may or may not be owned by terrorists, or have been or intended to be used to assist the commission of terrorism Financing of terrorism includes: 1) providing or collecting of property for carrying out an act of terrorism 2) providing services for terrorism purposes 3) arranging for retention or control of terrorist property or   dealing with terrorist property In the financing of terrorism, the focus is on the determination or use of  funds, which may have been derived from legitimate sources

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PEP Year 1 – M2 (eModule)

GOVERNING GUIDELINES Purpose : To ensure that insurance industry is not a weak link in money laundering. 



Current Governing Guidelines on AML for insurance industry includes :

1)

The Anti-Money Laundering Act (AMLA) 2001 - effective on January 15, 2002.

2)

UPW/GP1 : Standard Guidelines on Anti Money Laundering and Counter  Financing of Terrorism (AML/CFT) dated 3 November 2006 UPW/GP1[2] amended February 2009

3)

UPW/GP1 [2]: Sectoral Guidelines 2 for Insurance and Takaful Industries dated 3 November 2006 amended February 2009

Note: UPW/GP1 & UPW/GP1[2] – Issued in accordance with the AMLA 2001 and FATF’s 40 Recommendations & 9 Special Recommendations for  Implementation wef 15/11/06 

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PEP Year 1 – M2 (eModule)

GOVERNING GUIDELINES Previous Guidelines On AML By BNM Which Had Been Superceded By The Issuance Of The Standard & Sectoral Guidelines: 

1) Guidelines on Anti-Money Laundering Measures for the Insurance Industry JPI/GPI 27 - issued on April 25, 2001 2) JPI 20/2004 – AMLA 2001 Verification Procedures – issued on August 21, 2004 BNM is the Competent Authority appointed for the purpose of AMLA 2001 and Great Eastern is a Reporting Institution 

BNM established the National Co-ordination Committee - comprising of 12 other government agencies - to combat money laundering. They include the MACC, Inland Revenue Board, AG’s Chambers, Royal Malaysian Police, Security Commissions, SSM, LOFSA, Anti Narcotics , Ministry Of Finance, Ministry Of Foreign Affairs, Ministry of Home Affairs and Royal Malaysian Customs 