Compliance determinants of anti-money laundering regime among professional accountants in Malaysia
| DOI | https://doi.org/10.1108/JMLC-01-2022-0003 |
| Published date | 12 April 2022 |
| Date | 12 April 2022 |
| Pages | 361-387 |
| Subject Matter | Accounting & finance,Financial risk/company failure,Financial compliance/regulation,Financial crime |
| Author | Masetah Ahmad Tarmizi,Salwa Zolkaflil,Normah Omar,Suhaily Hasnan,Sharifah Nazatul Faiza Syed Mustapha Nazri |
Compliance determinants of
anti-money laundering regime
among professional
accountants in Malaysia
Masetah Ahmad Tarmizi
Faculty of Accountancy, Universiti Teknologi MARA, Perak Branch,
Tapah Campus, Malaysia
Salwa Zolkaflil and Normah Omar
Accounting Research Institute, Universiti Teknologi MARA,
Shah Alam, Malaysia
Suhaily Hasnan
Faculty of Accountancy, Universiti Teknologi MARA, Shah Alam,
Selangor, Malaysia and International School, Vietnam National University,
Hanoi, Vietnam, and
Sharifah Nazatul Faiza Syed Mustapha Nazri
Faculty of Accountancy, Universiti Teknologi MARA, Puncak Alam, Malaysia
Abstract
Purpose –Money laundering offences occur worldwide, with recent discussions involving issues
related to the low levels of compliance among professional accountants towards the anti-money
laundering (AML) regime. Under the regime, professional accountants are required to implement
compliance programs (Know Your Customer, Clients Due Diligent, Record Keeping) and to submit any
suspicious transaction report encounters to the authorities. Due to the lack of research in this sector,
this study aims to examine the compliance determinants towards AML regimes among professional
accountants in Malaysia.
Design/methodology/approach –Premised on protection motivation theory, a questionnaire was
developed and distributedamong 1,100 professional accountants.Of which 275 questionnaires were returned
and subjectedto regressionanalysis.
Findings –Based on the findings, “perceived risk of non-compliance”and “awareness of Anti-Money
Laundering Act 2001 and Financial Action Task Force standard”were significantly related to the level
of compliance towards the AML regimes. Meanwhile, “compliance cost”did not influence the
compliance behaviour of professional accountants. Moreover, the find ingsd emonstrated that awareness
programs among the reporting institutions should be enhanced, specifically the professional
accountants.
Practical implications –This study recommends the professional bodies particularly professional
accountants in Malaysia to establish a blueprint as a guideline for money laundering reporting.
The authors extend their sincere gratitude to the Malaysian Ministry of Education for HICoE
Research Funding (600-RMC/ARI5/3(029/2020)), Faculty of Accountancy, Universiti Teknologi
MARA Tapah Campus, and Accounting Research Institute, Universiti Teknologi MARA (UiTM),
Malaysia for funding and facilitating this research.
Anti-money
laundering
regime
361
Journalof Money Laundering
Control
Vol.26 No. 2, 2023
pp. 361-387
© Emerald Publishing Limited
1368-5201
DOI 10.1108/JMLC-01-2022-0003
The current issue and full text archive of this journal is available on Emerald Insight at:
https://www.emerald.com/insight/1368-5201.htm
Originality/value –This is one of the pioneer studies looking into AML compliance determinantsamong
the professional accountants in Malaysia. This study will provide insights on the current practices and
recommendways to improve the current AML reporting practices among the professionalaccountants.
Keywords Competency, Perceived risk, Auditor, Protection motivation theory,
Anti-money laundering compliance
Paper type Research paper
1. Introduction
Money laundering crimes that extend beyond tax evasion include drug and human
trafficking, trade and insurance fraud, prostitution, various illegal profit-motivated crimes
derived from banks, securities, arms smuggling, gambling, extortion and terrorism (Irwin
et al.,2012).As such, the complex nature of money laundering has become challengingto the
law enforcement agencies and relevant authorities in prosecuting money laundering
offences (Zolkaflil et al.,2019). Even though money laundering and terrorism financing
prosecutions remain low in Malaysia,only 132 of 821 cases were prosecuted, whilst 54 cases
remain ongoing (FATF, 2015). Although Malaysia practices a comprehensive anti-money
laundering (AML) regime, one of the reasons for the low number of prosecutions is the
difficulties faced by the investigatingofficers in gathering sufficient evidence to support the
money laundering charges (Mohamedand Ahmad, 2012;Zolkaflil et al.,2019;Zolkaflil et al.,
2021). Moreover, it is difficult to determinethe illegal proceeds once it is integrated into the
legitimate economy(Buchanan, 2004).
In response, many countries have strengthened the reporting requirement mechanism
among the reporting institutions, both financial and non-financial institutions alike
(Kamaruddin and Hamin, 2019).They are required to report large cash transactions and any
suspicious activities performed by customers, within their jurisdiction to the competent
authority, for example, the Financial Intelligence Unit (FIU). FIU is known as the Financial
Intelligence and EnforcementDepartment (FIED) in Malaysia, under the auspiciousof Bank
Negara Malaysia (BNM) which is responsible for analysing data and disseminating
information to the relevant law enforcement agencies on potential money laundering
activities ensued withinthe country.
Traditionally, the “final journey”of the cleaning process of money laundering involves
financial institutions, especially banks (Rahman, 2013). However, money laundering
offenders are shifting their modus operandi from the extensive use of financial institutions
to the sly use of professionalslike accountants, lawyers, real estate agents, casino operators,
metal dealers and company secretaries to clean their dirty money (MER, 2007; Teichmann,
2020;Chisenga and Phiri,2020;Pacini et al.,2021).
The introduction of AML under the Anti-TerrorismFinancing and Proceeds of Unlawful
Activities Act (AMLATFPUAA 2001[1]) do not only govern financial institutions but also
encompasses a wider range of industries and professions including casino operators,
lawyers, notaries, legal professionals, accountants, real estate agents, precious metal and
stone dealers, also known as Designated Non-Financial Businesses and Professions
(DNFBPs). Although legislations were formulated to curb money laundering offences, the
crime continues to expand due to several factors. It includes a lack of awareness and
understanding of the legal requirements by professionals, along with the participation of
professionals, especiallythe professional accountants in facilitating offenders to commit the
crime (Omar et al., 2015).
Therefore, money launderers choose professionals like accountants and lawyers to
facilitate their activities as it is less regulated compared to financial institutions.
JMLC
26,2
362
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