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2

The FATF Standards have been revised to strengthen global safeguards and 

 further protect the integrity of the financial system by providing governments

with stronger tools to take action against financial crime. At the same time, these

new standards will address new priority areas such as corruption and tax crimes.

Required:

a.  Explain why the revamp was necessary?. What were the aims for such revamp?

( 5 marks)

b.  Discuss the key changes which have been included in the new FATF’s Recommendations

in its March 2012 announcement (10 marks)

The revision of the Recommendations aims at achieving a balance:

  On the one hand, the requirements have been specifically strengthened in areas

which are higher risk or where implementation could be enhanced. They have

been expanded to deal with new threats such as the financing of proliferation of 

weapons of mass destruction, and to be clearer on transparency and tougher on

corruption.

  On the other, they are also better targeted – there is more flexibility for simplified

measures to be applied in low risk areas. This risk-based approach will allow

financial institutions and other designated sectors to apply their resources to

higher risk areas.

The FATF Recommendations are the basis on which all countries should meet the

shared objective of tackling money laundering, terrorist financing and the

financing of proliferation. The FATF calls upon all countries to effectively

implement these measures in their national systems.

Question 3

In 2007, the Asia-Pacific Group on Money Laundering (APG) conducted its first Mutual

Evaluation Assessment on Malaysia. Premised on the original “40 + 9 Recommendations”,

Malaysia received the following results:

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3

Ratings Total Recommendations

Full Compliant (C) 9

Largely Compliant (LC) 24

Partial Compliant (PC) 15Non-Compliant (NC) 1

Total 49

Required:

a.  Choose any five (5) items that received the PC Rating and explain the summary of 

factors underlying such rating.

(10 marks)

Refer to APG Mutual Evaluation 2007 and choose any 5

b.  Item “Special Recommendation No 9 (SR. IX)  related to  Cash couriers" was given an

“NC” rating. Recommend relevant initiatives that should be undertaken to counter the

factors underlying the rating.

(10 marks)

No Comments Recommendations1 While Malaysia has a system for completing a cross-

border declaration for cash and travellers cheques, in

practice the systems is deficient and does not meet the

requirements as set down in the FATF recommendations.

Malaysia should establish a cross-border currency &

bearer negotiable instrument declaration &

disclosure system that meet the purpose & intent of 

FATF standards

2 While sanctions are available for false disclosure of cross

border currency movements, they are rendered

ineffective due to deficiencies in the declaration system.

There’s a need for enhanced coordination between

agencies to design and implement an effective cross-

border currency declaration system which is

supported by effective power of competent

authority, information sharing provisions and

sanction for non-compliance

3 While a limited number of cross border currency

detections have occurred over the past 10 years, they

generally do not derive from the operation of thedeclaration system.

Country should establish a specialized unit to detect

cross-border transportation of currency and bearer

negotiable instruments in relation to moneylaundering and terrorism financing

Total 50 marks