The FATF Standards requires, amongst others, that countries and financial institutions identify and assess their money laundering and terrorist financing risks and apply AML/CFT measures that commensurate with the identified risks. Therefore, the two main purposes of the NRA are: •  Firstly: to identify, assess, and understand key money laundering / terrorist financing threats and vulnerabilities facing the country; and  •  Secondly: to apply appropriate control measures to mitigate the risks. The identification of money laundering and terrorist financing risks would enhance our understanding of the specific money laundering and terrorist financing threats in Malaysia, in particular the scale, sources and methods of money laundering and terrorist financing, and identify vulnerabilities and risks across the various sectors. This, in turn, will provide guidance to the authorities and reporting institutions in allocating and prioritizing AML/CFT resources efficiently and towards areas that present the highest risks and impact. Results of the NRA will also serve as input in applying the appropriate national AML/CFT strategy and policy response proportionate to the identified risks, such as, the AML/CFT Strategic Plan, amendments to the law, revision of guidelines/policies, guidance to reporting institutions, manpower review and budget allocation. Understanding of risks form the main principles in the FATF revised standards and methodology. Riskin the context of money laundering and terrorist financingis a function of three factors: threat, vulnerability and consequence, and the money laundering and terrorist financing risks assessment involves making judgments about these 3 factors.
As I understand from the organiser, this year’s conference has a fairly diverse audience comprising more than 400 participants from the financial sector, government agencies and the public including participants from other countries. This reflects the strong level of interest and commitment by all parties involved in AML/CFT. Money laundering is a serious global problem. At the global level, the International Monetary Fund (or the IMF) estimated the extent of money laundering to be at 2% to 5% of global GDP. According to the United Nation Office on Drugs and Crime (UNODC), this translated to 800 billion to 2 trillion US dollars in current GDP. Whilst the UNODC acknowledged that the margin between those figures is huge, even at the lower estimate it underlines the seriousness of the problem and the devastating impact that it would bring to any country. In Malaysia, for the year of 2011 and 2012, the law enforcement agencies investigated serious crimes involving a total amount of RM13.1 billion. This is the amount that has the potential to be laundered through our system. We recognized that the actual extent of money laundering is difficult to measure. As it is widely acknowledged internationally, for every 10 crimes committed, only one will get reported. Certain types of crime may not be reported, let  BIS central bankers’ speeches  1  alone be investigated. For example, in the case of corruption, if both the giver and taker are willing parties, the case will not be reported unless there are reports from the third party.