BANK Negara continues to receive a high volume of tip-offs from the public – an average of 187 cases a year over the past five years – on illegal remmitance activities, or “hawala”, despite enforcement and surveillance carried out to detect these activities, says deputy Finance Minister Lim Hui Ying.

She said these unlicensed activities were not only exposing the industry to the risk of money laundering or terrorism financing but also bringing about other negative effects, including the loss of revenue for the country, an unrecorded outflow of capital, and a loss of confidence in the integrity of the financial system.

Lim said amendments to the Act were necessary to overcome the risk of money laundering and terrorism financing effectively.

“Although enforcement efforts are continuously stepped up, Bank Negara still faces challenges in terms of legal process under the existing legal framework,” she said in her speech when tabling the Money Services Business (Amendment) Bill for second reading.

Citing the central bank’s statistics, Lim said the penalties imposed on such cases had been “extremely small”, at only 0.02% as opposed to the estimated value of the hawala trade.

She said the existing penalty was inadequate for effective prevention of such cases, especially those involving large transactions or syndicates.

Lim noted that in the past, courts did not have the authority to seize any evidence presented during legal proceedings and prevent wrongdoers from profiting from their illegal activities.

“It is also difficult for Bank Negara to act on any entities in cahoots with unlicensed money service providers as the definition of being in cahoots is not clearly spelt out (in the existing Act).”

The amendment was tabled for the second and third readings and passed in the Dewan Rakyat yesterday. It was tabled for the first reading on Feb 28.

https://www.thestar.com.my/news/nation/2024/03/27/tougher-laws-to-tackle-unlawful-money-transfers