Gemma Aiolfi, Head of Compliance, Corporate Governance and Collective Action at the Basel Institute of Governance, presented at the 10th International Conference of Financial Crime and Terrorism Financing (IFCTF) in Kuala Lumpur on 30 October 2018. Organised by the Asian Institute of Finance, the conference brought together about 1,000 compliance officers from Malaysian and international financial institutions.

The conference took place against a growing body of evidence emerging from the worldwide investigations into the 1Malaysia Development Berhad (1MDB) scandal. Former Malaysian Prime Minister Najib Razak has been accused of criminal offences in relation to the misuse of funds from the sovereign wealth fund. As the evidence unfolds, allegations of wrongdoing are spreading to numerous politicians and banks worldwide, with the US Department of Justice recently filing 1MDB-related charges against two ex-bankers from Goldman Sachs. So the conference theme this year, “The rising voice of compliance – towards greater governance and transparency”, was highly appropriate.

Gemma Aiolfi spoke during the first plenary session, focusing on how to address government-linked companies that have been sharply criticised by the new Malaysian government as having increased corruption risks. There is a lack of transparency around government-linked companies generally, so Ms Aiolfi spoke about what financial institutions should be doing to understand the companies’ structure, ownership, business goals and reasons for transactions.

The participants also heard from the Governor of the Malaysian Central Bank, Negara Malaysia Nor Shamsiah Mohd Yunus, about the need for strong anti-money laundering controls in their operations. The Governor took the opportunity to announce a new regulation that will come into force in January 2019. This measure will require the reporting of all cash transactions above USD 5,000, half the current threshold. Her announcement was greeted with surprise and a touch of shock by the audience. 

It can only be hoped that Malaysia will now start to mount investigations and cases against banks located in Malaysia that were involved in the 1MDB scandal, rather than leave it to other jurisdictions to play that role. This would certainly help further strengthen Malaysia's reputation as a country tough on financial crime.

To see the conference highlights and photos, please visit the Asian Institute of Finance website.