FATF and Lawyers’ Obligations under the AML/ATF Regime in Malaysia

Abstract

Abstract The Financial Action Task Force (FATF) as an international standard-setter and an inter-governmental body established in 1989 and has set various measures consisting of legal, regulatory and operational ones in governing money laundering and terrorism financing. Given the threats of such crimes and the vulnerabilities of some professions and businesses to such crimes, in 2003 the FATF included them under the AML/CFT regime. Since then, those professions and businesses became the gate-keepers and known as the designated non-financial business and professions (DNFBPs). As a consequence of such inclusion, several mandatory obligations were imposed on these gate-keepers, involving customer due diligence, record-keeping, reporting obligation, the compliance function and training programme for employees. It is within this context that the objective of this paper is to examine the extent to which the FATF is moulding the AML/CFT regime in Malaysia, which in turn, is shaping the compliance of legal profession, who now have to “police” their clients for evidence of money laundering and terrorist financing. The authors contend that the gate-keeping role of the legal practitioners inevitably raises controversial issues involving the violation of ethical conduct, professional legal privilege and also the independence of the legal profession.