1MDB: Tracking billions gets tougher as money-laundering tactics evolve

KUALA LUMPUR: The methods used to conceal the origins of "dirty" money from the authorities are constantly evolving.

Malaysian Anti-Corruption Commission Anti-Money Laundering (AML) Division director Datuk Norhaizam Muhammad said this was the reality behind money laundering activities, which had now become a serious threat to the integrity of the country's financial system.

He said money laundering was, tactically, a planned process to conceal the origins of funds obtained through criminal activities.

"Among the criminal activities that often lead to illicit money flows are extortion, bribery, drug trafficking and organised crime.

"The main objective of money laundering is to integrate illicit funds into the financial system without raising suspicion among law enforcement agencies or financial regulators.

"Its primary purpose is to make 'dirty' money appear as though it came from legitimate sources," he told Harian Metro.

He said the 1Malaysia Development Bhd (1MDB) scandal was a complex case involving one of the most high-profile financial misappropriation scandals in the country's history.

The United States Department of Justice (DoJ) was among the earliest law enforcement agencies to conduct a comprehensive investigation and expose the 1MDB case as one of the largest kleptocracy scandals in the world.

"The DoJ reported that the scandal involved the misappropriation of approximately RM42 billion, which was channelled to various countries, including the US, Switzerland, Singapore, Luxembourg and the United Kingdom through a complex network of financial transactions," said Norhaizam.

He said he use of funds in the 1MDB case involved large financial flows, including cross-border transactions, the use of various corporate entities and offshore accounts, as well as the involvement of several foreign jurisdictions in the tracing, freezing, forfeiture and repatriation of assets.

"This situation makes the 1MDB case a highly significant example for understanding the actual picture of money laundering crimes.

"Besides assessing the challenges in recovering assets, the recovery process does not depend solely on enforcement action, asset seizures, freezing, forfeiture and repatriation.

"It also requires domestic coordination, legal assistance, cooperation between international enforcement agencies and technical expertise to trace the flow of money and identify the true ownership of assets.

"Through international cooperation and collaboration, RM31.3 billion, or 74.5 per cent of the RM42 billion in misappropriated 1MDB funds, had been successfully traced and returned to the Malaysian government," he said.

Norhaizam said money laundering activities not only jeopardised national security and the rule of law, but also negatively affected a country's economy and the global economy.

"At the national level, the misappropriation of illicit funds can reduce government revenue because money from criminal activities is linked to tax evasion.

"The flow of such money can also disrupt financial markets, distort asset prices such as property and cause economic resources to be channelled into less productive activities," he said.