Focus View
Lower threshold good but stop illicit outflows
FocusM | 02 Nov 2018 00:30
The recent move by Bank Negara Malaysia to compel banks from Jan 1 to report cash transactions above RM25,000 will help tame the black economy. Currently, the daily cash threshold report (CTR) limit is RM50,000.

Its governor Datuk Nor Shamsiah Yunus says “cash is still being used by criminals to launder illegal proceeds, as we have seen from some highprofile cases over the past year or so”.

While this might be a good move by the central bank, will it be effective? Are there loopholes in the system that will enable criminals to still send cash abroad undetected in smaller amounts over several days?

Perhaps, the bigger and more serious problem that needs to be addressed by Bank Negara is that of illicit outflows. Malaysia is one of the top countries in the world for illicit outflows. It has the highest illicit financial outflows per capita based on a report by Global Financial Integrity (GFI).

In 2014, Malaysia lost between US$26.6 bil and US$44.3 bil in illicit outflows. This is between 7.87% and 13.1% of our 2014 GDP of US$338.1 bil. This means at an average percentage of 10.49%, Malaysia would have lost some US$35.45 bil in 2014 in terms of illicit outflows. In fact, between 2005 and 2014, it lost up to US$431 bil (RM1.8 tril) in illicit outflows.

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