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The impact of customer due diligence in the Islamic banking institutions in Malaysia: a legal perspective

Raja Alias, Raja Madihah and Mohd Yasin, Norhashimah and Ng, See Teong (2018) The impact of customer due diligence in the Islamic banking institutions in Malaysia: a legal perspective. In: International Conference on Law and Islamic Jurisprudence (ICIJ 2018), 30th April 2018, Phuket, Thailand.

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The money laundering and terrorism financing are the financial crimes that caused global threat to the financial integrity and economic activities of the country. In combating these financial crimes, the international standards imposed by the Financial Act ion Task Force (“FATF”) requires that all financial institutions in all countries to undertake the Customer Due Diligence (“CDD”) as its preventive measurements in combating these financial crimes. In Malaysia, this CDD requirement is regulated under Section 16 of the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (Act 613) (“AMLATFPUAA”). This CDD requirements is applicable to all the ‘Reporting Institutions’ listed under the First Schedule of the AMLATFPUAA which includes the Islamic banking institutions in Malaysia. As such, the legal requirements provide that there is no exception for the Islamic banking institutions to follow this statutory requirement. Therefore, the objective of this paper is to highlight the standards in conducting CDD requirements on the Islamic banking institutions in Malaysia. This paper is significant by emphasising the Policy Document on conducting CDD under the ‘Anti- Money Laundering and Counter Financing of Terrorism (AML/CFT)- Banking and Deposit- Taking Institutions (Sector 1)’ which is set out by the Central Bank of Malaysia (“BNM”). This paper employs library based research by analysing the primary and secondary legal sources on CDD standards and legal requirements. This paper suggests that the Islamic banking institutions in Malaysia are in compliance with the international standards on CDD as imposed by the FATF and the statutory obligations under the AMLATFPUAA. Therefore, continuous efforts by the Islamic banks in Malaysia are required in combating these financial crimes.

Item Type: Conference or Workshop Item (Plenary Papers)
Additional Information: 580/65710
Uncontrolled Keywords: AML/CFT, Financial Crimes, Customer Due Diligence, Islamic Banking
Subjects: B Philosophy. Psychology. Religion > BP Islam. Bahaism. Theosophy, etc > BP1 Islam > BP173.75 Islam and economics
H Social Sciences > HG Finance > HG3368 Islamic Banking and Finance
K Law > K Law (General)
K Law > KBP Islamic Law > KBP1 Islamic law.Shariah.Fiqh > KBP490 Furūʻ al-fiqh. Substantive law. Branches of law. > KBP639 Muʻāmalāt
Kulliyyahs/Centres/Divisions/Institutes (Can select more than one option. Press CONTROL button): Ahmad Ibrahim Kulliyyah of Laws > Department of Civil Law
Ahmad Ibrahim Kulliyyah of Laws
Depositing User: Prof. Dr. Norhashimah Mohd Yasin
Date Deposited: 20 Sep 2018 13:42
Last Modified: 20 Sep 2018 13:42
URI: http://irep.iium.edu.my/id/eprint/65710

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