KUALA LUMPUR, April 6 — Deputy Finance Minister Steven Sim said today that Malaysians and local companies abroad will face greater scrutiny by banks if Putrajaya retracts its financial policy on politically-exposed persons (PEP).
Speaking in Dewan Negara, Sim said banking institutions had to implement enhanced customer due diligence (ECDD) as a preventive measure to ensure that there's no financial malpractice.
"These measures are preventive and should not be interpreted as a negative perception of PEP," he said, responding to Barisan Nasional's (BN) Senator Tan Sri Mohamad Fatmi Che Salleh on the relevance of PEP policy.
Sim also said that the need to implement the ECDD was established based on international standards issued by the Financial Action Task Force (FATF).
He said that the FATF is an international body that sets the standards that all banks, whether domestic or foreign, must adhere to.
"Any FATF decision on non-compliance with the outlined standards could have negative impact, including blacklisting of the country," he added.
From the legislative perspective, Sim said that these requirements are set out under the Anti-Money Laundering, Countering the Financing of Terrorism and Proceeds of Unlawful Activities Act 2001 (Amla), as well as its subsidiary legislations: Anti-Money Laundering (AML), Countering Financing of Terrorism (CFT) and Targeted Financial Sanctions (TFS).
However, he said that the government would examine the matter and make improvements from time to time further to strengthen the credibility of the Malaysian banking system while ensuring the competitiveness of the banking system can be maintained.