Purpose -The aim of this paper is to highlight the importance of countering the dangers posed by money laundering activities and the measures taken to date by the Malaysian authorities in this respect. Design/methodology/approach -The paper achieves this by looking at the current money laundering trends in Malaysia, followed by a detailed account of the initiatives taken by the Malaysian authorities to curb such activities. These proactive initiatives range from the enactment and implementation of the Anti-Money Laundering (AML) Act 2001, the establishment of the Financial Intelligence Unit of the Central Bank of Malaysia and the Southeast Asia Regional Centre for Counter-Terrorism which work with international enforcement agencies, to the requirement of suspicious transaction reporting amongst professional accountants and lawyers and more. Findings -Malaysia continues to make a broad and sustained effort to combat money laundering and terrorist financing flows within its borders. Practical implications -The practical implication of this paper is to stress the importance of keeping abreast with the increased challenges posed by money laundering, especially via the internet and the vital need for the banking and financial sector to invest heavily in transaction monitoring devices/software and training in AML detection, in order to tackle the menace. Originality/value -This paper makes for a useful read for practitioners, academics, policymakers and students alike.
The recent wave of mergers and acquisitions in the financial institutions all over the developed nations has also taken its toll in Malaysia. Factors such as globalization, liberalization and information technology developments have contributed to the need for a more competitive, resilient and robust financial systems in Malaysia. This is added by the recent 1997 Asian financial crisis, which contributed for speeding the mergers and acquisitions process in the Malaysian banking sector. The end result is the formation of ten anchor banks from a total of 54 financial institutions as at end of 2001. This paper has explored the causes and the process of the mergers and acquisitions as well as the future implications in the Malaysian banking system.
In Islamic finance, many scholars advise against the use of derivatives, which is still in its infancy. Conventional law even voiced its objections to derivatives as early as the 17th century. This article surveys and compares the relationship between present-day legal objections to derivatives in Islamic finance and those objections held in the past by conventional finance. It was found that objections to derivatives, held by both separate fields of finance, show similarities as well as differences. For example, both Islamic and conventional finance object to the gambling nature inherent in derivative trading; in contrast, under Sharīah law, the scope of Islamic finance’s objections is broader, including other elements such as uncertainty and ignorance. Furthermore, Sharīah scholars also object to option trading that requires payment of a fee and to futures trading that involves payment of a debt with a debt.
Purpose -The purpose of this paper is to highlight the dangers posed by money-laundering activities undertaken by criminals through the international trade mechanism, from the Malaysian perspective. Design/methodology/approach -This is to be achieved by providing a description of the money-laundering process in general and, more specifically, the international trade-based money-laundering mechanism. This is followed by an account of the development of international trade in Malaysia and related control mechanisms undertaken, so as to highlight the scope available to curb money laundering via the international trade mechanism in Malaysia. Findings -The research showed two things: first, that the common techniques of laundering money via international trade involve over-and under-invoicing of goods, multiple invoicing of goods, overand under-shipment of goods, falsely described goods and complex trade approaches; and second, the unfortunate state of affairs pertaining to the lack of data/information available on the existence and workings of such activity in the Malaysian context (which has in part hampered the aims of this paper). Practical implications -Nevertheless, this paper has the practical implication of being something of a wake-up call to the Malaysian policymakers (and the policymakers of developing countries), in that awareness of the impending challenges brought about by money laundering to international trade is crucial in tackling the menace. Originality/value -This paper's call for increasing awareness and identification of international trade-based money laundering and improving international cooperation and interaction makes it a useful read for policymakers, academics and students alike.
Defines “Hawala” as an Arabic word meaning “change” or “transform”. Describes it as a system which goes back to 11th century India and allows money to be transferred around the globe without actual money movement or wire transfers, depending on a system of family, clan or ethnic connections. Outlines the benefits of hawala remittance as its cost effectiveness, reliability, efficiency, speed, and convenience for foreign workers who may be semi‐illiterate and certainly not familiar with formal banking systems. Relates this to actual hawala money changers in Malaysia’s Klang Valley, who provided the information for this article, and to the potential of the hawala system to facilitate money laundering and, ultimately, terrorism. Reports that Malaysia is a country named by the Pentagon as a country in which terrorists launder funds, and that it has implemented focused and wideranging measures to combat this menace.
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