Examining Compliance Cost Challenges in Suspicious Transaction Reporting among Financial Institutions in Malaysia: A Concept Paper

Abstract

Non-compliance with anti-money laundering (AML) laws and regulations, specifically in the timely submission of suspicious transaction reports, renders heavy penalties and unfavourable consequences for financial institutions (FIs) in Malaysia. As a result, FIs need to invest in high-cost compliance measures to mitigate the risk of regulatory breach. This paper aims to examine compliance costs challenges faced by FIs in the submission of high-quality suspicious activity reports, with the key area of concern including the demand for workforce expertise and enhancing technology for monitoring purposes. Additionally, this paper also explores the impact of non-adherence, which will cost FIs a hefty monetary penalty amount that adds to the potential compliance cost faced by FIs.