Kuala Lumpur: Malaysian financial institutions should strengthen their due diligence procedures for corporate remittances in line with existing regulations under the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act (AMLATFPUAA) 2001.

According to BERNAMA News Agency, anti-money laundering and counter-financing of terrorism expert Muhamad Nazri Shaidon highlighted that Section 16 of AMLA places a clear obligation on banks to perform proper customer due diligence, especially when handling corporate remittances. Muhamad Nazri, who has nearly a decade of experience in Bank Negara Malaysia’s (BNM) Financial Intelligence and Enforcement Department, emphasized the importance of effective ‘Know Your Customer’ (KYC) requirements across the financial sector. He noted that the depth and effectiveness of KYC implementation vary significantly among institutions.

Muhamad Nazri stressed that effective KYC is not merely a checkbox exercise, urging banks to actively verify customer information to ensure it aligns with declared business activities. He pointed out that financial institutions are required to screen corporate clients and their associated individuals against various sanctions lists and blacklists. This process is particularly critical for clients identified as high-risk, including those linked to politically exposed persons (PEPs), complex ownership structures, or high-risk industries such as gambling, defence, registered estate agents, dealers in precious metals or stones (DPMS), and professional service providers like lawyers and accountants.

He further explained that clients linked to adverse media reports might also fall under a high-risk classification, necessitating deeper scrutiny of their background, source of funds, and ongoing transactional behaviour. Banks must also understand the nature and purpose of the business relationship, ensuring that all transaction activities are consistent with the customer’s established risk profile.

Additionally, Muhamad Nazri underscored the importance of accurately identifying beneficial owners, defined as individuals who directly or indirectly control 25 per cent or more of the entity. He stated that where irregularities or suspicions arise, banks are required to promptly submit a suspicious transaction report (STR) to BNM, in accordance with regulatory obligations.