Combating Financial and RelatedCrimes
A New Dimension of Cooperation andCollaboration
Dato’ Sani Abd HamidDeputy CEO
National Financial Crime Centre (NFCC)NFCC PMO (Nucleus team)
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1. Financial crimes continue to pose significantthreats to financial stability and nationaleconomy
2. Government losses huge revenues
a) Outflow of illicit funds
b) Tax evasion and customs duties
c) Smuggling of prohibited goods
3. Effective and deterrent measures remains anongoing hurdles for enforcement agencies incombating financial crime effectively
Issues that need immediate and collective action…
1. Criminals are getting smarter,more advance and high-tech
2. Offences cut across agenciesand legislations
3. Lack of coordination atnational level – LEAs workingin silos
4. Fragmented investigations5. Long and porous border
control
Main factors ….
3
37 3741
34
62
50 48 4844
34
0
10
20
30
40
50
60
70
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Illicit Flows Trade Misinvoicing
USD bn
222.1
42.933.7 31.0
16.1 14.7 12.2 10.6 10.6 10.2
0.0
50.0
100.0
150.0
200.0
250.0
China Mexico Malaysia Russia SaudiArabia
Thailand Brazil Indonesia Vietnam SouthAfrica
USD bn
Malaysia is ranked third in terms of total illicit financial flows for 2015Illicit Financial Flows for year 2015 Top 10 Countries Malaysia’s Estimated Yearly Illicit Financial Flows
from 2006 to 2015
Most of Malaysia’s illicit financial flows are mainly due to trade mispricing channel, similar to other export-oriented economies
80% Deliberate Trade Mispricinga) Transfer Pricing by MNC : practice of shifting profits overseas by over/under
invoicing intra-company transactions.b) Over/under declaration by importers and exportersc) Third party Invoicing
20% Error and Omission, e.g.a) Smugglingb) Kickbacks and corruptionc) Tax and custom duties evasiond) Cross border movements of cash
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Long and porous borders facilitate smuggling activities
Big challenges for enforcement to control entire border1. Beach 4,675km (Sem. Malaysia 2,068km, East Malaysia 2,607km)2. Lot of secret alleys (‘lorong tikus’) and landing places - including private jetty3. Open land borders4. Need drastic actions and the co-operation of all parties to control borders
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Combating Financial Crimes : Key Lessons Learned fromother Jurisdictions (e.g. US,UK, Australia, Ireland, Nigeria)
1. Establishment of a Centralised Agency to Combat Seriousand Organised Crime
2. Effectiveness of Unified and Coordinated Departments3. Effective and Efficient Multi-Agency Task Force4. Accessibility to Information and Intelligence5. Strong Support from Government and LEAs
- availability of Resources and Funding6. Strong Governance and Oversight7. Public-Private Sector Partnership8. Centralised Seized Asset Management9. Supportive Legislations and Guidelines
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Prior to the establishment of NFCC, Special Task Force was formed to dealwith leakages in revenue and outflow of illicit funds
STF[SPECIAL TASK FORCE]
March 2011 – Nov. 2014 Dec. 2014 – July 2015
AMLTFANTI-MONEY LAUNDERING
TASK FORCE
NRRETNATIONAL REVENUE RECOVERY
ENFORCEMENT TEAM
8 Aug. 2015 - Nov. 2018
Mandate Mission Function
Supported the Government: Reduced leakages in
spending Improved collection of
revenue
Spearhead more effectivecoordination and collaborationamong key law enforcementauthorities in the country as wellas between local and internationalenforcement agencies to mitigateillicit activity and financial flowsand other related crimes
Provided inter-agency coalition and collaboration tocombat:a) economic sabotageb) organized financial crimesc) corruptiond) recover proceeds of crimese) strengthen border control to curb smuggling
and inflow and outflow of illicit fundsf) improve/increase Government revenues
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25.91 28.33 30.38 32.24 33.09 35.19 37.9734.90 37.95
88.40 86.50109.61
124.89 128.93 133.70121.23
113.94 123.00
REVENUE COLLECTION (RM ‘billion)
Total collection by RMCTotal collection by IRBM
20092010 2011 2012
20132014 2015
20162017
Impact on the success of integrated actions…. increase in revenue collections by IRBM and RMC
Multi-agency SpecialTask Force was
established in early2011
Kembali
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Impact on the success of integrated actions.... Less illicit outflow of funds from 2011 - 2014
13
20 2127
35 37 3741
35
65
54
49 4844
0
10
20
30
40
50
60
70
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Illicit flows Trade Mispricing
USD bnbMulti-agency
Special Task Forcewas established in
2011
Kembali
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RMCCustoms duties
evasion, smuggling ofgoods
MACCBribery, abuse of
power etc.
RMPGambling , Loan
shark etc.
BNMFinancial stability
IRBMTax avoidance and
evasion
JIMTrafficking inpersons etc.
KPDNHEPMalpractises ingoods subsidies
NFCCCo-ordination
NFCC has been established to collectively combat financial crimes and related illegal activities- New Dimension of Cooperation and Collaboration
CCMIllegal investment,
breach of trust etc.
MMEASmuggling of control
goods at sea
SCIllegal investment
LFSAOffshore Financial
Institution
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NFCC to Co-ordinate investigations on Financial Crimes
1. Formalize joint operations platform for law enforcement agenciesa) Formulate coordinated strategies and action plansb) Remove unwarranted working in ‘silo’c) Authority to undertake task and coordinate among the LEAs to ensure
criminals and networks of organized crime disrupted and preventedd) Single point of reference – Pool of specialist with combination of skills and
expertise2. Establish a common database
a) Equipped with latest technological capabilitiesb) Significant multi-agency intelligence capability
3. Provide effective and efficient management of frozen, seized and forfeitedassets
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Tax Evasion
CorruptionRelated Activities
IllicitOutflow of
funds
Customs DutiesEvasion
Smuggling ofCurrencies and other
Contraband Items
NFCC complements LEAs in Combating Financial andOrganized Crimes
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Guiding Principles
1. NFCC will not erode / eliminate / remove / reduce existing roles andfunctions of LEAs
2. NFCC will focus on investigations to recover proceed of crimesinvolvinga. Multiple agencies and legislationsb. Cross-border crimesc. Complex crimes, i.e. financial crimes, cyber crimes, economic
crimes, etc3. NFCC to conduct investigations on cases
a) Approved by the Executive Committeeb) Referred by LEAs to NFCC and approved by the Executive
Committee
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FUNDAMENTAL
NATURE
MANDATE /FUNCTION
ADVISORYBOARD
A broad coalition of law enforcement agencies that investigate organisedfinancial crimes
Co-ordinate investigations with regards to organized financial crimes as per agreedstrategies and scopes set by the Executive Committee
Provide intra-agency collaboration to combat organised financial crimes thatwould harm Malaysia.
National Financial Crime Centre (NFCC)
High profile individual with experiences in investigation and prosecution
Chairman/Champion
To be appointed by Prime Minister
ExecutiveCommittee
To operationalize as per agreed strategies and scopes set by the AdvisoryBoard in combating financial and economic crimes activities
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Governance Structure of NFCCPRIME
MINISTER
DIRECTORGENERAL
DirectorSeized & Forfeited Asset
Management
AssetTracking
AsetRecovery
AssetManagement
DirectorIntegrated Enforcement
Intelligence Analysis Investigation ExpertSupport
DirectorManagement
Services
IT Support
Legal
Advisory Board1. Chairman (appointed by the
Prime Minister)2. Others (selected based on
certain criterias and approvedby the PM)
Advisory Board1. Chairman (appointed by the
Prime Minister)2. Others (selected based on
certain criterias and approvedby the PM)
DEPUTYDIRECTORGENERAL
HumanCapital
Finance
Legal Advisory
Executive Committee1. Director General of NFCC2. Deputy Director General3. Other Enforcement Directors
from relevant enforcementagencies
4. Representatives from othergovernment entities
Executive Committee1. Director General of NFCC2. Deputy Director General3. Other Enforcement Directors
from relevant enforcementagencies
4. Representatives from othergovernment entities
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POWEROF
NFCC
Incorporation of NFCC withadequate powerObjectives and Functions
Governance
Financial
Establishment
Advisory Board, ExecutiveCommittee, StandardOperating Procedures
Financial sources andexpenditure
Appointment of Chairman,Director General, Deputy DG
and other officers
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POWER OFINTEGRATED
ENFORCEMENT
Intelligence and InvestigationInformation
Sharing of Information
Joint investigation
Centralised Database
Preparation of investigationofficers & tools
Enforcement based onidentified target(s) approved
by Executive Committee
Comprehensive criminaldatabase
Involvement by all relevantenforcement agencies
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Centralised NationalIntelligence Database
IT Team Forensic & AnalysisTeam
Intelligence SupportTeam
Financial Info- BNM, LHDN, EPF, Bursa, SC
Personal & Corporate Info- SSM, LHDN, JPN, Jab. Insolvensi
Properties Info- Land Office, PBT, TNB, SYABASInvestment Info- Tabung Haji, PNB, EPF, Bursa, SC
Communication Info- TM, Celcom, MAXIS, Digi
Criminal Info- PDRM, MACC, BNM, JKDM, KPDNKK
Vehicles Info- JPJ, Puspakom, JKDM, MITI
Travel Info- JIM, MAB, DCA, MAS, Air Asia, Firefly
Import & Export Info- JKDM, Port and Airport Authorities
Sharing of data is critical in identifying common targets
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POWEROF SEIZED &FORFEITED
ASSETMANAGEMENT
Seized and forfeitedproperties by Law
Enforcement Agencies (LEAs)Take control of property
Manage property
Share proceeds of forfeitedproperty
Obtain information onproperty
Preserve & enhance valueof seized & forfeited
properties
With domestic agencies &relevant foreign countries
Provide support to LEAs indetecting details of properties
(if required)
