Management should be liable for compliance lapses


The multibillion-dollar 1Malaysia Development Bhd (1MDB) scandal has highlighted flaws in the global financial practices and the absence of individual accountability.

International Compliance Training Academy MD Andrew Glover said the 1MDB issue had also triggered a shift that compliance officers and senior managers should be held accountable over compliance failings, instead of just the firm.

He said anti-money laundering enforcement could be enhanced with a stronger individual accountability as the industry seeks to address financial crimes.

“Enough is enough. We got to restore confidence in our industry and in the country. We want people to understand that if things go wrong under their watch, they are responsible for it,” Glover told The Malaysian Reserve (TMR) at the opening of International Compliance Association’s (ICA) Malaysia office in Kuala Lumpur recently.

Presently, Glover said the liability largely lies with the organisation despite inactivity or incompetency of individuals within the firm where money-laundering or other non-compliance issues occurred.

“By making these people responsible, by putting in the contract of employment and saying they are responsible, they can personally go to jail and be fined. Hopefully, that makes people realise how important their role is and its accountability,” he added.

Glover said Bank Negara Malaysia (BNM) is currently active discussing with stakeholders to map individual responsibility in relation to compliance matters.

He said Malaysia is among top five progressive countries including the UK, Hong Kong, Australia and Singapore to have put individual liability in anti-money laundering enforcement.

In what is seen as a move to curb money laundering, BNM announced in October that it would reduce the daily cash threshold report to RM25,000 effective Jan 1, 2019, from the current RM50,000.

Meanwhile, Zico Law chairman Datuk Seri Dr Nik Norzrul Thani Nik Hassan Thani said Malaysia needs to cultivate an enabling environment for people to highlight and report any compliance issue without fear.

“There must be an enabling environment to ensure people are willing to whistleblow or highlight mistakes and possible frauds. The fear of being caught when making a report will dissipate,” Nik Norzrul Thani said.

He said many people are afraid to make reports due to the repercussions and punishments they may have to endure after making such reports.

The legal expert said the country has sufficient laws, but there could be some gaps that need to be reviewed.

He said law enforcement must be improved and the rule of law must be upheld.

The 1MDB financial, which is being investigated in no less than six countries, saw billions siphoned by close connected individuals to the fund and their associates.

The new government aims to put a stop to corruption and money laundering.

Last month, the Department of Justice of the US had brought criminal charges against Low Taek Jho, or better known as Jho Low, together with two former Goldman Sachs Group Inc bankers over billions of dollars misappropriated from 1MDB and paying bribes to various Malaysian and Abu Dhabi officials.

Meanwhile, Glover said ICA’s new Malaysian office would provide qualifications and training in the field of anti-money laundering and combatting financial terrorism.

Glover said the local office would further facilitate the discussion on how to increase the level of professionalism of compliance officers in the country.