COUNTRY REPORT ON CURRENT SITUATION OF CORRUPTION AND MONEY LAUNDERING IN MALAYSIA

1. COUNTRY REPORT ON CURRENT SITUATION OF CORRUPTION AND MONEY LAUNDERING IN MALAYSIA

2. Respondents • Corruption : Malaysia Anti-Corruption Commission • Money Laundering : Central Bank of Malaysia

3. Prevalence Of Corruption • Moderate and widespread among the public sectors • Slightly lower than previous years • CPI does not fairly reflects the reality of corruption 2011 : score 4.3 / rank 60 2012 : score 49 / rank 54 • GII does not fairly reflects the reality of corruption

4. Tolerant level Towards Corruption • The country’s population moderately intolerant towards corruption • Steps taken by the govt against corruption - strong • Corruption as one of the 6 National key Result Area • Enhance Enforcement agencies • Combat grand corruption • Transform Auditor General Reporting process; fast-tracking access to AG PA report (thrice yearly), Action Committee, Online dashboard, Putrajaya Inquisition • Enhance govt procurement process; myporecurement portal • Raise public support and enhance punlic education

5. Pattern Of Corruption • Unpredictable • Occur equally in public and private entities

6. Types Of Corruption • Most prevalent : Petty, grand & corruption at enterprise level • Most common types(1-9): CBT, bribery, kickback, abuse of position, influence peddling, nepotism, embezzlement, extortion, forgery • Most corrupted sector(1-13) : Law enforcement, customs, state-owned enterprise, local govt, public service delivery, agriculture, environment, health, education, legislature, energy, judiciary, taxation • Greatest probability of corruption occurring at the government level : Procurement contracts, licensing, public fund disbursement procedures, electoral irregularities, revenues(taxes) collection

7. Petty Corruption • Prevalence : moderate • Most likely involve rank and file employees

8. Grand Corruption • Prevalence : Low • Most likely people involved : specific business interest and / or political group

9. Corruption At Budgeting Level • Corruption during bugdet formulation is primarily grand of political corruption : neither agree nor disagree • Unchecked and excessive executive discretion in budget process tends to create opportunities for political corruption : agree • Public Financial Management System weakness during budget formulation can increase the administrative corruption during budget execution : agree

10. Main Cause Of Corruption • To become rich as quick as possible • Unclear rules and loopholes for manipulation • Culture, customs and habits of giving bribes to get things done • Complicated and cumbersome administrative procedures • Low salary levels • Rapid population and economic growth • Lack of financial rules and procedures • Absence, weakness or failure in regulatory and legal system to combat corruption

11. Main Cause Of Corruption “ Actually the main cause of grand corruption and petty corruption is derivrd from the patronage-client system” Answer : Strongly agree “ Weak accounting practices, including lack of timely financial management are conditions favorable for corruption Answer : Strongly agree

12. Consequences of Corruption • Damage done by corruption to the govt budget – Very serious • Damage done by corruption to the private sector - Very serious • Damage done by corruption to the citizens - Very serious

13. Corruption’s Proceed • Mostly used to ; (1) Acquire assets (2) Invest in real estate (3) Bank deposits (4) Leisure, social activities (5) Stock investment

14. Enforcement by Anti-Corruption Agency • In terms of monitoring, priority is always essential

15. Management of Complaints • Complaints lodged with the agency is given highest priority • Recognize the role of whistle blower as extremely important • Whistle blowing a very effectiveavenue to lodge complaints of corruption

16. Current Situation of Money Laundering • Manageable level • Partially disagree : ML tends to increase in recent years • Partly agree : ML tends to be more sophisticated

17. Pattern of Money Laundering • Main pattern : Other The common methods for ML include placement in banking system, using nominees of family members, setting up front companies and use cash transactions to conceal money trails • Segment having the highest risk of ML (i) Money service business (2) Finance, banking (3) Real estate

18. Pattern of Money Laundering • Most common method of ML 1). Cash transaction 2). Money exchange 3). Remittance 4). Through financial institutions 5). Casino 6). Real estate • Environment favorable for ML - International economic integrating - Use of cash and illegal money transfer

19. Offences Associated With Money Laundering • Embezzlement • Corruption • Drugs Amount of monetary involved : More than USD100M

20. Root Cause of Money Laundering • Avoiding prosecution • Become legitimate • Evade taxes • Hide illegal accumulated wealth • Increase profit

21. Consequences of Money Laundering • Increase crime and corruption • Weakened financial institutions • Compromised economy and private sector • Negative impact on foreign investment • Reduce govt. tax revenue and weakened govt. control over the economy • ML caused serious but manageable economic and social consequences • Have serious impact on national security & national reputation

22. General Assessment of ML • With effective Anti-Money laundering/Counter Financing of Terrorism (AML/CFT) framework and countermeasures in place, money laundering in Malaysia is currently at manageable levels.

23. Thank You