|
|
Sanctions:
None applicable
____________________________________________________
Offshore Jurisdiction Blacklists:
As a recognised offshore finance jurisdiction this country may fall
under various country offshore jurisdiction blacklists.
____________________________________________________
US State Department Money Laundering Report - 2011:
Malaysia is a growing regional financial center and has a well-
developed anti-money laundering/counter-terrorist financing
(AML/CFT) framework. Malaysia’s long porous land and sea
borders and its strategic geographic position increase its
vulnerability to transnational criminal activity, including money
laundering and terrorist financing in the region. Drug trafficking is
the main source of illegal proceeds in Malaysia.
Malaysia’s offshore financial center on the island of Labuan is
subject to the same AML/CFT laws as those governing onshore
financial service providers. The financial institutions operating in
Labuan are generally among the largest international banks and
insurers. Offshore companies must be established through a trust
company, which is required by law to establish true beneficial
owners and submit suspicious transaction reports (STRs).
Free trade zones in Malaysia are divided into Free Industrial
Zones (FIZ), where manufacturing and assembly takes place, and
Free Commercial Zones (FCZ), generally for warehousing
commercial stock. The FIZs are designed mainly to promote
manufacturing industries producing goods mostly for export and
are dominated by large international manufacturers attracted to
the zones because they offer preferential tax and tariff treatment.
Currently there are 17 FIZs and 17 FCZs in Malaysia. Companies
wishing to operate in an FIZ or FCZ must be licensed.
DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY
TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS
TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF U.S.
CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN
THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE
U.S.: NO
CRIMINALIZATION OF MONEY LAUNDERING:
“All serious crimes” approach or “list” approach to predicate
crimes: List approach
Legal persons covered: criminally: YES civilly: YES
CRIMINALIZATION OF TERRORIST FINANCING:
Ability to freeze terrorist assets without delay: YES
UN lists of designated terrorists or terrorist entities distributed to
financial institutions: YES
(Please refer to the Department of State’s Country Reports on
Terrorism, which can be found here: http://www.state.
gov/s/ct/rls/crt/)
KNOW-YOUR-CUSTOMER RULES:
Covered entities: Financial institutions from the conventional,
Islamic, and offshore sectors; offshore listing sponsors and
trading agents; stock and futures brokers; unit trust, investment
fund, and futures fund managers; money lenders and
pawnbrokers; money remitters; charge account and credit card
issuers; insurance financial advisers; e-money issuers; leasing
and factoring businesses; lawyers, public notaries, accountants,
and company secretaries; licensed casinos and gaming outlets;
registered estate agents; trust companies, and dealers in
precious metals and stones
Enhanced due diligence procedures for PEPs: Foreign: YES
Domestic: YES
SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:
Covered entities: Financial institutions from the conventional,
Islamic, and offshore sectors; offshore listing sponsors and
trading agents; stock and futures brokers; wholesale money
changers; unit trust, investment fund, and futures fund managers;
money lenders and pawnbrokers; money remitters; charge
account and credit card issuers; insurance financial advisers; e-
money issuers; leasing and factoring businesses; lawyers, public
notaries, accountants, and company secretaries; licensed casinos
and gaming outlets; registered estate agents; trust companies,
and dealers in precious metals and stones
Number of STRs received and time frame: 12,489 (2009) and
4,260 (January to April 2010)
Number of CTRs received and time frame: Not available
MONEY LAUNDERING CRIMINAL
PROSECUTIONS/CONVICTIONS:
Prosecutions: 106 money laundering cases (from 2004-December
2010)
Convictions: 15 convictions (from 2004-December 2010)
Assets forfeited: criminally: $178,000 (from 2004-December 2010)
civilly: $16.2 million (from 2004-December 2010)
RECORDS EXCHANGE MECHANISM:
With U.S.: YES
With other governments/jurisdictions: YES
Malaysia is a member of the Asia/Pacific Group on Money
Laundering (APG), a Financial Action Task Force (FATF)-style
regional body. Its most recent mutual evaluation can be found
here: http://www.apgml.org/documents/docs/17/Malaysian%
20MER%20-%20FINAL%20August%202007.pdf
ENFORCEMENT AND IMPLEMENTATION ISSUES AND
COMMENTS:
Reporting institutions are subject to strict customer due diligence
(CDD) rules, and the Government of Malaysia (GOM) has
adopted banker negligence laws that extend criminal liability to
bank directors if their institution launders money or finances
terrorism.
As of December 2010, the Attorney General’s Chambers was
prosecuting 86 money laundering cases involving a total of 4,576
charges with a cumulative total value of RM2 billion (approximately
$645 million) which also includes self-laundering cases.
The use of informal remittances, which are not subject to
AML/CFT controls, creates vulnerability for abuse by money
launderers and terrorist financiers. Malaysia’s competent authority
for implementing its AML/CFT laws, Bank Negara Malaysia (BNM),
should continue its efforts to encourage the use of formal
remittances. Additionally, law enforcement and customs
authorities should examine trade based money laundering and
invoice manipulation and their relationship to underground
finance and informal remittance systems.
A number of terrorist organizations have been active on
Malaysian territory, and authorities have taken action against
Jemaah Islamiyah and other terrorist networks. Terrorist financing
in Malaysia is predominantly carried out using cash and relies on
trusted networks. In 2010, Malaysia initiated five new terror
finance investigations, its first under the AML/CFT legal
framework. Malaysia should take further steps to increase law
enforcement capacity to identify, investigate, and prosecute
terrorist and proliferation financing.
Malaysia’s Labuan Financial Services Authority (LFSA) is
responsible for ensuring AML/CFT compliance on Labuan.
Malaysia passed the Labuan Financial Services and Securities
Act of 2010 (LFSSA) in February to address the remaining
regulatory issues that led the OECD in April 2009 to briefly
designate Labuan as an uncooperative tax haven. The LFSSA
gives LFSA more regulatory, investigative and enforcement
authorities over offshore financial services companies licensed in
Labuan and removes privacy restrictions on its access to Labuan-
based account activities.
In February 2009, LFSA issued an operating license to First East
Export Bank (FEEB), a wholly owned subsidiary of Iran-based
Bank Mellat, which in 2007 was designated by the United States
under E.O. 13382 for its proliferation finance activities. FEEB
opened its Labuan operation in August 2009. The United States
designated FEEB under E.O. 13382 on November 5, 2009, based
on its relationship to Bank Mellat. On June 9, 2010, UNSCR 1929
listed FEEB as an entity subject to UN sanctions. The GOM
ordered FEEB’s assets frozen and prohibited Malaysian banks
from transacting business with FEEB on July 14, 2010, in full
compliance with UNSCR 1929. LFSA should remain vigilant to any
attempts to use Labuan for proliferation and terrorism finance
activities.
____________________________________________________
US State Dept Narcotics Report 2012 (introduction):
Malaysia is neither a significant source country nor a major transit
point for U.S.-bound illegal drugs. Nevertheless, regional and
domestic drug-trafficking remains a problem, and international
drug syndicates are increasingly turning to Malaysia as a
production site for crystal methamphetamine and ecstasy
(MDMA). Illicit drugs smuggled into Malaysia include heroin and
amphetamine-type stimulants (ATS) from the Golden Triangle
area (Thailand, Burma, Laos), as well as ecstasy, cocaine, erimin-
5 (Nimetazepam), and crystal methamphetamine from several
countries, particularly Iran. In 2011, one clandestine
methamphetamine lab operated by Iranians was seized in Kuala
Lumpur. There is no notable cultivation of U.S.-listed drug crops
in Malaysia.
Drugs transiting Malaysia do not appear to make a significant
impact on the U.S. market. However, Malaysia's proximity to the
heroin production areas and methamphetamine labs of the
Golden Triangle leads to smuggling across Malaysia’s northern
border. Most heroin and ATS is destined for Taiwan, Singapore,
Indonesia, and other markets in the region. Smaller amounts of
ecstasy from Amsterdam are flown into Kuala Lumpur
International Airport (KLIA) for domestic use and for distribution to
Thailand, Singapore, and Australia. Large quantities of ketamine
come from Chennai or Tamil Nadu, India, and are exported to
several countries in the region. Nigerian trafficking organizations
continue to mail quantities of cocaine from South America to
Kuala Lumpur. Nigerian and Iranian drug trafficking organizations
continue to use Kuala Lumpur as a hub for illegal trafficking. From
January to October 2011, Royal Malaysian Police Narcotics
Criminal Investigations Division arrested 53 Iranians who were
attempting to smuggle methamphetamine into Malaysia through
airports, and seized over 245 kilograms of methamphetamine
during these investigations. This number does not include the
couriers from Turkey, Bulgaria, Uzbekistan, Georgia, and other
countries who were also arrested and who worked for Iranian
trafficking syndicates. Iranians continue to appear in large
numbers as traffickers and as domestic drug refiners in Malaysia.
Local demand and consumption of drugs is limited in Malaysia,
but police officials have expressed concern about the increased
use of methamphetamine. Ketamine from India and erimin-5 also
remain very popular drugs on the local market.
The government continues promoting ASEAN’s “Drug-Free by
2015” policy. Malaysia's counter-narcotics officials and police
officers have the full support of senior government officials, but
systemic problems with the legal system hinder the overall
effectiveness of enforcement and interdiction efforts. Malaysia is a
party to the 1988 UN Drug Convention.
For Full report, click here
____________________________________________________
US State Dept Trafficking in Persons Report 2011
(introduction):
(Tier 2 Watch List)
Malaysia is a destination, and to a lesser extent, a source and
transit country for men, women, and children who are subjected to
conditions of forced labor, and women and children subjected to
sex trafficking. The overwhelming majority of trafficking victims are
among the two million documented and 1.9 million undocumented
foreign workers in Malaysia. They migrate willingly to Malaysia
from countries including Indonesia, Nepal, India, Thailand, China,
the Philippines, Burma, Cambodia, Bangladesh, Pakistan, and
Vietnam in search of greater economic opportunities. Some of
them subsequently encounter forced labor or debt bondage at the
hands of their employers, employment agents, or informal labor
recruiters. While many of Malaysia’s trafficking offenders are
individual business people, large organized crime syndicates are
also behind trafficking. A significant number of young foreign
women are recruited for work in Malaysian restaurants and hotels,
some of whom migrate through the use of “Guest Relations
Officer” visas, but subsequently are coerced into Malaysia’s
commercial sex trade. Many Malaysian labor outsourcing
companies recruit excess workers from Bangladesh, Vietnam, and
other countries, who are then often held in warehouses or other
locations and handed over to unscrupulous employers, who
subject them to conditions of forced labor. Many migrant workers
in plantations, construction sites, textile factories, and employed
as domestic workers throughout Malaysia are subject to practices
indicative of trafficking such as restrictions on movement, deceit
and fraud in wages, passport confiscation, or debt bondage at the
hands of agents or employers. Passport confiscation is
widespread, and there were reports that employers also opened
joint bank accounts as a form of control on workers. Some
employees reported that their employers exercised control over
them by threatening to take the workers’ passports to immigration
authorities where the employer would allege that the worker had
breached the terms of their labor contract, which could result in
the revocation of the worker’s visa and their subsequent
deportation. Some Malaysian employers reportedly did not pay
their foreign domestic workers three to six months’ wages in order
to recoup recruitment agency fees and other debt-bonds charged
to employers. In some cases, employers illegally withheld
employee wages in escrow until completion of the contract,
resulting in workers continuing to work for fear of not receiving
financial compensation if they did not continue to do so.
Refugees, particularly from Burma, were especially vulnerable to
trafficking, and Malaysians from rural communities and indigenous
groups were also vulnerable. The People’s Volunteer Corps
(RELA) continued to conduct raids targeting illegal migrant
communities and detained refugees, asylum seekers, and
trafficking victims along with allegedly illegal migrants, though this
practice has reportedly decreased compared to previous years.
Although they did sign an Letter of Intent (LOI) to amend their
Memorandum of Understanding (MOU), the Indonesian and
Malaysian governments have not amended or replaced a 2006
MOU covering the employment of Indonesian domestic workers in
Malaysia, which authorizes Malaysian employers to confiscate and
hold the passports of domestic employees. The government
reports that there are approximately 300,000 female domestic
servants employed in the country, many of which may be
trafficking victims. According to NGOs, the number of domestic
servants legally employed in Malaysia has fallen from 300,000 to
230,000 during the past year. These NGOs estimate that for
every domestic servant legally employed in Malaysia there is one
working in the country illegally. Ninety percent of these domestic
servants are from Indonesia. A small number of Malaysian citizens
were reportedly trafficked internally and abroad to Singapore,
China, and Japan for commercial sexual exploitation.
The Government of Malaysia does not fully comply with the
minimum standards for the elimination of trafficking; however, it is
making significant efforts to do so. Because the assessment that
the government had made significant efforts is based in part on its
commitments to undertake actions over the coming year – notably,
far more effective and even implementation of Malaysia’s anti-
trafficking law and improved victim protection efforts – Malaysia is
placed on Tier 2 Watch List for a second consecutive year. While
the government increased the number of convictions obtained
under the Anti-Trafficking in Persons and Anti-Smuggling of
Migrants Act during the year and continued public awareness
efforts on trafficking, it did not effectively investigate and
prosecute labor trafficking cases, and failed to address problems
of government complicity in trafficking and lack of effective victim
care and counseling by authorities. There remain many serious
concerns regarding trafficking in Malaysia, including the detention
of trafficking victims in government facilities.
For full report click here
____________________________________________________
US State Dept Terrorism Report 2010
Overview: As a result of a combination of effective law
enforcement efforts and close counterterrorism cooperation with
the United States and the international community, Malaysia has
not suffered a serious incident of terrorism in recent years.
Malaysia has been used as a transit and planning site for
terrorists, however. Royal Malaysian Police (RMP) cooperated
closely with the international community on counterterrorism
efforts, and RMP officers received training in a range of
counterterrorism skills. The effectiveness of the police in
identifying terrorist networks was limited by their continued
reliance on the Internal Security Act to detain suspects on the
basis of intelligence rather than on information gained through
investigations. Moreover, in spite of new measures to tighten
immigration requirements for some foreign citizens, the country
remained vulnerable to potential terrorist activity as a result of
weak border controls and gaps in maritime security in the areas
bordering Thailand in Northern Malaysia and the Philippines and
Indonesia in Eastern Malaysia. Persons with terrorist affiliations
were able to take advantage of these weak controls to travel
within Malaysia and to transit to third countries.
2010 Terrorist Incidents: In January, Malaysian police detained 10
persons reportedly involved in a plot to carry out terrorist attacks
against Hindu and Buddhist religious shrines in Kuala Lumpur. In
February, two Malaysians citizens were kidnapped in Sabah state,
by members of the Abu Sayyaf Group terrorist organization, and
taken to the Philippines to be held for ransom. The two men were
subsequently rescued by Philippine armed forces in late
December.
Legislation and Law Enforcement: During 2010, the Royal
Malaysian Police Special Task Force-Operations/Counter-
Terrorism detained 15 suspected terrorists under the Internal
Security Act. Most of those detained were foreigners with
connections to Jemaah Islamiya or to Jamaah Anshorut Tauhid,
and were later deported to their home countries. At the end of the
year, three terrorist suspects remained in detention. The
recruiting activities within Malaysian universities of a number of
these suspects led the Malaysian Government to more closely
scrutinize foreign students and to begin publicizing its
counterterrorism successes.
In general, immigration authorities' vetting of arriving travelers was
perfunctory, although the Ministry of Home Affairs announced the
implementation of a new biometrics system for arriving travelers
beginning in December 2010. Malaysian authorities detained
terrorist suspects when the authorities became aware of the
suspects’ presence in the country. Malaysian authorities also
actively cooperated with other countries to deport suspect
foreigners to their home countries.
Countering Terrorist Finance: Malaysia's central bank (Bank
Negara Malaysia) has signed memoranda of understanding on
the sharing of financial intelligence with the Financial Intelligence
Unit of many countries in the region. Malaysia is an active
member of the Asia/Pacific Group on Money Laundering, and its
subsidiary Donors and Provider Group for Technical Assistance,
and has worked with the World Bank, International Monetary
Fund, Asian Development Bank, the UN Counterterrorism
Committee Executive Directorate, and the UN Office on Drugs and
Crime.
Malaysia acted on UNSCRs 1267 and 1373 requests to freeze
terrorist assets. While Malaysia improved the legislative
framework to criminalize terrorist financing, there have been no
investigations, prosecutions, or convictions related to terrorist
financing under this new scheme. The Government of Malaysia
continued to use the Internal Security Act as a preventive
measure instead of investigating cases.
Regional and International Cooperation: The Malaysian
government engaged on issues related to counterterrorism and
transnational crime with its neighbors, both bilaterally and in
international fora such as the ASEAN and APEC. The Ministry of
Foreign Affairs operated the Southeast Asian Regional Center for
Counterterrorism, which has served to facilitate the training of
Malaysians officials involved in counterterrorism efforts, but has
done less to identify forward-looking or regional counterterrorism
priorities. The Ministry of Home Affairs announced plans to
establish a Counterterrorism Training Center, focused on
improving the skills of law enforcement officers, on Langkawi
Island.
In September, Malaysian authorities extradited known terrorist
Mas Selamat Kastari to Singapore, from where he had been
imprisoned and had escaped in 2008. The RMP has a good
working relationship with both regional and international law
enforcement agencies.
Countering Radicalization and Violent Extremism: Malaysia took
the view that "extremists," at least those who have not yet
committed a crime, are misguided individuals who can best be
treated by rehabilitation rather than by punishment. School
curricula and instruction encouraged tolerance and Malaysian
authorities were quick to take action when they detected efforts to
undermine social harmony. The Malaysian government monitored
radical Internet web sites, but generally did not attempt to disrupt
these sites, believing it can better follow radical activity by allowing
such sites to operate. The government did not have a
comprehensive strategic communication approach to counter-
radicalization, but during the year, the RMP began to publicize the
detentions of terrorist suspects, which has resulted in greater
public awareness of the dangers posed by extremists and has led
to an increase in public tips to the police regarding activities of
extremists, according to RMP contacts.
The RMP operated a de-radicalization program for terrorist
suspects in Malaysia's Kamunting Prison. The police employed
clerics, family members, and former radicals to convince terrorist
suspects to renounce violence. On release from detention, these
persons continued to face restrictions on their activities, including
curfews and limits on their travel and contacts, until they have
demonstrated that they no longer have affiliations with violent
extremists.
While the government touts the deradicalization program as
highly successful, there were no available figures on the rates of
recidivism of those who have completed it.
____________________________________________________
Links:
Worldwide AML Legislation (International Bar Association)
None applicable
____________________________________________________
Offshore Jurisdiction Blacklists:
As a recognised offshore finance jurisdiction this country may fall
under various country offshore jurisdiction blacklists.
____________________________________________________
US State Department Money Laundering Report - 2011:
Malaysia is a growing regional financial center and has a well-
developed anti-money laundering/counter-terrorist financing
(AML/CFT) framework. Malaysia’s long porous land and sea
borders and its strategic geographic position increase its
vulnerability to transnational criminal activity, including money
laundering and terrorist financing in the region. Drug trafficking is
the main source of illegal proceeds in Malaysia.
Malaysia’s offshore financial center on the island of Labuan is
subject to the same AML/CFT laws as those governing onshore
financial service providers. The financial institutions operating in
Labuan are generally among the largest international banks and
insurers. Offshore companies must be established through a trust
company, which is required by law to establish true beneficial
owners and submit suspicious transaction reports (STRs).
Free trade zones in Malaysia are divided into Free Industrial
Zones (FIZ), where manufacturing and assembly takes place, and
Free Commercial Zones (FCZ), generally for warehousing
commercial stock. The FIZs are designed mainly to promote
manufacturing industries producing goods mostly for export and
are dominated by large international manufacturers attracted to
the zones because they offer preferential tax and tariff treatment.
Currently there are 17 FIZs and 17 FCZs in Malaysia. Companies
wishing to operate in an FIZ or FCZ must be licensed.
DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY
TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS
TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF U.S.
CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN
THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE
U.S.: NO
CRIMINALIZATION OF MONEY LAUNDERING:
“All serious crimes” approach or “list” approach to predicate
crimes: List approach
Legal persons covered: criminally: YES civilly: YES
CRIMINALIZATION OF TERRORIST FINANCING:
Ability to freeze terrorist assets without delay: YES
UN lists of designated terrorists or terrorist entities distributed to
financial institutions: YES
(Please refer to the Department of State’s Country Reports on
Terrorism, which can be found here: http://www.state.
gov/s/ct/rls/crt/)
KNOW-YOUR-CUSTOMER RULES:
Covered entities: Financial institutions from the conventional,
Islamic, and offshore sectors; offshore listing sponsors and
trading agents; stock and futures brokers; unit trust, investment
fund, and futures fund managers; money lenders and
pawnbrokers; money remitters; charge account and credit card
issuers; insurance financial advisers; e-money issuers; leasing
and factoring businesses; lawyers, public notaries, accountants,
and company secretaries; licensed casinos and gaming outlets;
registered estate agents; trust companies, and dealers in
precious metals and stones
Enhanced due diligence procedures for PEPs: Foreign: YES
Domestic: YES
SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:
Covered entities: Financial institutions from the conventional,
Islamic, and offshore sectors; offshore listing sponsors and
trading agents; stock and futures brokers; wholesale money
changers; unit trust, investment fund, and futures fund managers;
money lenders and pawnbrokers; money remitters; charge
account and credit card issuers; insurance financial advisers; e-
money issuers; leasing and factoring businesses; lawyers, public
notaries, accountants, and company secretaries; licensed casinos
and gaming outlets; registered estate agents; trust companies,
and dealers in precious metals and stones
Number of STRs received and time frame: 12,489 (2009) and
4,260 (January to April 2010)
Number of CTRs received and time frame: Not available
MONEY LAUNDERING CRIMINAL
PROSECUTIONS/CONVICTIONS:
Prosecutions: 106 money laundering cases (from 2004-December
2010)
Convictions: 15 convictions (from 2004-December 2010)
Assets forfeited: criminally: $178,000 (from 2004-December 2010)
civilly: $16.2 million (from 2004-December 2010)
RECORDS EXCHANGE MECHANISM:
With U.S.: YES
With other governments/jurisdictions: YES
Malaysia is a member of the Asia/Pacific Group on Money
Laundering (APG), a Financial Action Task Force (FATF)-style
regional body. Its most recent mutual evaluation can be found
here: http://www.apgml.org/documents/docs/17/Malaysian%
20MER%20-%20FINAL%20August%202007.pdf
ENFORCEMENT AND IMPLEMENTATION ISSUES AND
COMMENTS:
Reporting institutions are subject to strict customer due diligence
(CDD) rules, and the Government of Malaysia (GOM) has
adopted banker negligence laws that extend criminal liability to
bank directors if their institution launders money or finances
terrorism.
As of December 2010, the Attorney General’s Chambers was
prosecuting 86 money laundering cases involving a total of 4,576
charges with a cumulative total value of RM2 billion (approximately
$645 million) which also includes self-laundering cases.
The use of informal remittances, which are not subject to
AML/CFT controls, creates vulnerability for abuse by money
launderers and terrorist financiers. Malaysia’s competent authority
for implementing its AML/CFT laws, Bank Negara Malaysia (BNM),
should continue its efforts to encourage the use of formal
remittances. Additionally, law enforcement and customs
authorities should examine trade based money laundering and
invoice manipulation and their relationship to underground
finance and informal remittance systems.
A number of terrorist organizations have been active on
Malaysian territory, and authorities have taken action against
Jemaah Islamiyah and other terrorist networks. Terrorist financing
in Malaysia is predominantly carried out using cash and relies on
trusted networks. In 2010, Malaysia initiated five new terror
finance investigations, its first under the AML/CFT legal
framework. Malaysia should take further steps to increase law
enforcement capacity to identify, investigate, and prosecute
terrorist and proliferation financing.
Malaysia’s Labuan Financial Services Authority (LFSA) is
responsible for ensuring AML/CFT compliance on Labuan.
Malaysia passed the Labuan Financial Services and Securities
Act of 2010 (LFSSA) in February to address the remaining
regulatory issues that led the OECD in April 2009 to briefly
designate Labuan as an uncooperative tax haven. The LFSSA
gives LFSA more regulatory, investigative and enforcement
authorities over offshore financial services companies licensed in
Labuan and removes privacy restrictions on its access to Labuan-
based account activities.
In February 2009, LFSA issued an operating license to First East
Export Bank (FEEB), a wholly owned subsidiary of Iran-based
Bank Mellat, which in 2007 was designated by the United States
under E.O. 13382 for its proliferation finance activities. FEEB
opened its Labuan operation in August 2009. The United States
designated FEEB under E.O. 13382 on November 5, 2009, based
on its relationship to Bank Mellat. On June 9, 2010, UNSCR 1929
listed FEEB as an entity subject to UN sanctions. The GOM
ordered FEEB’s assets frozen and prohibited Malaysian banks
from transacting business with FEEB on July 14, 2010, in full
compliance with UNSCR 1929. LFSA should remain vigilant to any
attempts to use Labuan for proliferation and terrorism finance
activities.
____________________________________________________
US State Dept Narcotics Report 2012 (introduction):
Malaysia is neither a significant source country nor a major transit
point for U.S.-bound illegal drugs. Nevertheless, regional and
domestic drug-trafficking remains a problem, and international
drug syndicates are increasingly turning to Malaysia as a
production site for crystal methamphetamine and ecstasy
(MDMA). Illicit drugs smuggled into Malaysia include heroin and
amphetamine-type stimulants (ATS) from the Golden Triangle
area (Thailand, Burma, Laos), as well as ecstasy, cocaine, erimin-
5 (Nimetazepam), and crystal methamphetamine from several
countries, particularly Iran. In 2011, one clandestine
methamphetamine lab operated by Iranians was seized in Kuala
Lumpur. There is no notable cultivation of U.S.-listed drug crops
in Malaysia.
Drugs transiting Malaysia do not appear to make a significant
impact on the U.S. market. However, Malaysia's proximity to the
heroin production areas and methamphetamine labs of the
Golden Triangle leads to smuggling across Malaysia’s northern
border. Most heroin and ATS is destined for Taiwan, Singapore,
Indonesia, and other markets in the region. Smaller amounts of
ecstasy from Amsterdam are flown into Kuala Lumpur
International Airport (KLIA) for domestic use and for distribution to
Thailand, Singapore, and Australia. Large quantities of ketamine
come from Chennai or Tamil Nadu, India, and are exported to
several countries in the region. Nigerian trafficking organizations
continue to mail quantities of cocaine from South America to
Kuala Lumpur. Nigerian and Iranian drug trafficking organizations
continue to use Kuala Lumpur as a hub for illegal trafficking. From
January to October 2011, Royal Malaysian Police Narcotics
Criminal Investigations Division arrested 53 Iranians who were
attempting to smuggle methamphetamine into Malaysia through
airports, and seized over 245 kilograms of methamphetamine
during these investigations. This number does not include the
couriers from Turkey, Bulgaria, Uzbekistan, Georgia, and other
countries who were also arrested and who worked for Iranian
trafficking syndicates. Iranians continue to appear in large
numbers as traffickers and as domestic drug refiners in Malaysia.
Local demand and consumption of drugs is limited in Malaysia,
but police officials have expressed concern about the increased
use of methamphetamine. Ketamine from India and erimin-5 also
remain very popular drugs on the local market.
The government continues promoting ASEAN’s “Drug-Free by
2015” policy. Malaysia's counter-narcotics officials and police
officers have the full support of senior government officials, but
systemic problems with the legal system hinder the overall
effectiveness of enforcement and interdiction efforts. Malaysia is a
party to the 1988 UN Drug Convention.
For Full report, click here
____________________________________________________
US State Dept Trafficking in Persons Report 2011
(introduction):
(Tier 2 Watch List)
Malaysia is a destination, and to a lesser extent, a source and
transit country for men, women, and children who are subjected to
conditions of forced labor, and women and children subjected to
sex trafficking. The overwhelming majority of trafficking victims are
among the two million documented and 1.9 million undocumented
foreign workers in Malaysia. They migrate willingly to Malaysia
from countries including Indonesia, Nepal, India, Thailand, China,
the Philippines, Burma, Cambodia, Bangladesh, Pakistan, and
Vietnam in search of greater economic opportunities. Some of
them subsequently encounter forced labor or debt bondage at the
hands of their employers, employment agents, or informal labor
recruiters. While many of Malaysia’s trafficking offenders are
individual business people, large organized crime syndicates are
also behind trafficking. A significant number of young foreign
women are recruited for work in Malaysian restaurants and hotels,
some of whom migrate through the use of “Guest Relations
Officer” visas, but subsequently are coerced into Malaysia’s
commercial sex trade. Many Malaysian labor outsourcing
companies recruit excess workers from Bangladesh, Vietnam, and
other countries, who are then often held in warehouses or other
locations and handed over to unscrupulous employers, who
subject them to conditions of forced labor. Many migrant workers
in plantations, construction sites, textile factories, and employed
as domestic workers throughout Malaysia are subject to practices
indicative of trafficking such as restrictions on movement, deceit
and fraud in wages, passport confiscation, or debt bondage at the
hands of agents or employers. Passport confiscation is
widespread, and there were reports that employers also opened
joint bank accounts as a form of control on workers. Some
employees reported that their employers exercised control over
them by threatening to take the workers’ passports to immigration
authorities where the employer would allege that the worker had
breached the terms of their labor contract, which could result in
the revocation of the worker’s visa and their subsequent
deportation. Some Malaysian employers reportedly did not pay
their foreign domestic workers three to six months’ wages in order
to recoup recruitment agency fees and other debt-bonds charged
to employers. In some cases, employers illegally withheld
employee wages in escrow until completion of the contract,
resulting in workers continuing to work for fear of not receiving
financial compensation if they did not continue to do so.
Refugees, particularly from Burma, were especially vulnerable to
trafficking, and Malaysians from rural communities and indigenous
groups were also vulnerable. The People’s Volunteer Corps
(RELA) continued to conduct raids targeting illegal migrant
communities and detained refugees, asylum seekers, and
trafficking victims along with allegedly illegal migrants, though this
practice has reportedly decreased compared to previous years.
Although they did sign an Letter of Intent (LOI) to amend their
Memorandum of Understanding (MOU), the Indonesian and
Malaysian governments have not amended or replaced a 2006
MOU covering the employment of Indonesian domestic workers in
Malaysia, which authorizes Malaysian employers to confiscate and
hold the passports of domestic employees. The government
reports that there are approximately 300,000 female domestic
servants employed in the country, many of which may be
trafficking victims. According to NGOs, the number of domestic
servants legally employed in Malaysia has fallen from 300,000 to
230,000 during the past year. These NGOs estimate that for
every domestic servant legally employed in Malaysia there is one
working in the country illegally. Ninety percent of these domestic
servants are from Indonesia. A small number of Malaysian citizens
were reportedly trafficked internally and abroad to Singapore,
China, and Japan for commercial sexual exploitation.
The Government of Malaysia does not fully comply with the
minimum standards for the elimination of trafficking; however, it is
making significant efforts to do so. Because the assessment that
the government had made significant efforts is based in part on its
commitments to undertake actions over the coming year – notably,
far more effective and even implementation of Malaysia’s anti-
trafficking law and improved victim protection efforts – Malaysia is
placed on Tier 2 Watch List for a second consecutive year. While
the government increased the number of convictions obtained
under the Anti-Trafficking in Persons and Anti-Smuggling of
Migrants Act during the year and continued public awareness
efforts on trafficking, it did not effectively investigate and
prosecute labor trafficking cases, and failed to address problems
of government complicity in trafficking and lack of effective victim
care and counseling by authorities. There remain many serious
concerns regarding trafficking in Malaysia, including the detention
of trafficking victims in government facilities.
For full report click here
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US State Dept Terrorism Report 2010
Overview: As a result of a combination of effective law
enforcement efforts and close counterterrorism cooperation with
the United States and the international community, Malaysia has
not suffered a serious incident of terrorism in recent years.
Malaysia has been used as a transit and planning site for
terrorists, however. Royal Malaysian Police (RMP) cooperated
closely with the international community on counterterrorism
efforts, and RMP officers received training in a range of
counterterrorism skills. The effectiveness of the police in
identifying terrorist networks was limited by their continued
reliance on the Internal Security Act to detain suspects on the
basis of intelligence rather than on information gained through
investigations. Moreover, in spite of new measures to tighten
immigration requirements for some foreign citizens, the country
remained vulnerable to potential terrorist activity as a result of
weak border controls and gaps in maritime security in the areas
bordering Thailand in Northern Malaysia and the Philippines and
Indonesia in Eastern Malaysia. Persons with terrorist affiliations
were able to take advantage of these weak controls to travel
within Malaysia and to transit to third countries.
2010 Terrorist Incidents: In January, Malaysian police detained 10
persons reportedly involved in a plot to carry out terrorist attacks
against Hindu and Buddhist religious shrines in Kuala Lumpur. In
February, two Malaysians citizens were kidnapped in Sabah state,
by members of the Abu Sayyaf Group terrorist organization, and
taken to the Philippines to be held for ransom. The two men were
subsequently rescued by Philippine armed forces in late
December.
Legislation and Law Enforcement: During 2010, the Royal
Malaysian Police Special Task Force-Operations/Counter-
Terrorism detained 15 suspected terrorists under the Internal
Security Act. Most of those detained were foreigners with
connections to Jemaah Islamiya or to Jamaah Anshorut Tauhid,
and were later deported to their home countries. At the end of the
year, three terrorist suspects remained in detention. The
recruiting activities within Malaysian universities of a number of
these suspects led the Malaysian Government to more closely
scrutinize foreign students and to begin publicizing its
counterterrorism successes.
In general, immigration authorities' vetting of arriving travelers was
perfunctory, although the Ministry of Home Affairs announced the
implementation of a new biometrics system for arriving travelers
beginning in December 2010. Malaysian authorities detained
terrorist suspects when the authorities became aware of the
suspects’ presence in the country. Malaysian authorities also
actively cooperated with other countries to deport suspect
foreigners to their home countries.
Countering Terrorist Finance: Malaysia's central bank (Bank
Negara Malaysia) has signed memoranda of understanding on
the sharing of financial intelligence with the Financial Intelligence
Unit of many countries in the region. Malaysia is an active
member of the Asia/Pacific Group on Money Laundering, and its
subsidiary Donors and Provider Group for Technical Assistance,
and has worked with the World Bank, International Monetary
Fund, Asian Development Bank, the UN Counterterrorism
Committee Executive Directorate, and the UN Office on Drugs and
Crime.
Malaysia acted on UNSCRs 1267 and 1373 requests to freeze
terrorist assets. While Malaysia improved the legislative
framework to criminalize terrorist financing, there have been no
investigations, prosecutions, or convictions related to terrorist
financing under this new scheme. The Government of Malaysia
continued to use the Internal Security Act as a preventive
measure instead of investigating cases.
Regional and International Cooperation: The Malaysian
government engaged on issues related to counterterrorism and
transnational crime with its neighbors, both bilaterally and in
international fora such as the ASEAN and APEC. The Ministry of
Foreign Affairs operated the Southeast Asian Regional Center for
Counterterrorism, which has served to facilitate the training of
Malaysians officials involved in counterterrorism efforts, but has
done less to identify forward-looking or regional counterterrorism
priorities. The Ministry of Home Affairs announced plans to
establish a Counterterrorism Training Center, focused on
improving the skills of law enforcement officers, on Langkawi
Island.
In September, Malaysian authorities extradited known terrorist
Mas Selamat Kastari to Singapore, from where he had been
imprisoned and had escaped in 2008. The RMP has a good
working relationship with both regional and international law
enforcement agencies.
Countering Radicalization and Violent Extremism: Malaysia took
the view that "extremists," at least those who have not yet
committed a crime, are misguided individuals who can best be
treated by rehabilitation rather than by punishment. School
curricula and instruction encouraged tolerance and Malaysian
authorities were quick to take action when they detected efforts to
undermine social harmony. The Malaysian government monitored
radical Internet web sites, but generally did not attempt to disrupt
these sites, believing it can better follow radical activity by allowing
such sites to operate. The government did not have a
comprehensive strategic communication approach to counter-
radicalization, but during the year, the RMP began to publicize the
detentions of terrorist suspects, which has resulted in greater
public awareness of the dangers posed by extremists and has led
to an increase in public tips to the police regarding activities of
extremists, according to RMP contacts.
The RMP operated a de-radicalization program for terrorist
suspects in Malaysia's Kamunting Prison. The police employed
clerics, family members, and former radicals to convince terrorist
suspects to renounce violence. On release from detention, these
persons continued to face restrictions on their activities, including
curfews and limits on their travel and contacts, until they have
demonstrated that they no longer have affiliations with violent
extremists.
While the government touts the deradicalization program as
highly successful, there were no available figures on the rates of
recidivism of those who have completed it.
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Links:
Worldwide AML Legislation (International Bar Association)
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*Please note that FATF deems that a country has significant aml deficiencies if any
of the 'Core' Recommendations, R1, R5, R10, R13, SRII, or SRIV are rated either
Partially of Non-Compliant. These are marked in red.
For FATF to remove a country from the regular follow-up process, it has to be rated
Compliant or Largely Compliant in the above mentioned Core Recommendations
and the following Key Recommendations: -
R3, R4, R23, R26, R35, R36, R40, SRI, SRIII, SRV
Please also note that any risk assessment should take into consideration all
follow-up reports.
of the 'Core' Recommendations, R1, R5, R10, R13, SRII, or SRIV are rated either
Partially of Non-Compliant. These are marked in red.
For FATF to remove a country from the regular follow-up process, it has to be rated
Compliant or Largely Compliant in the above mentioned Core Recommendations
and the following Key Recommendations: -
R3, R4, R23, R26, R35, R36, R40, SRI, SRIII, SRV
Please also note that any risk assessment should take into consideration all
follow-up reports.
| MALAYSIA |
| KnowYourCountry |
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| Last Updated: 16 April 2012 |