Malaysia’s money services businesses — money changers and remittance agents — don’t see any business threat from those providing illegal means to transfer money outside the country, a surprising revelation at a time when flight of illegal money is a concern for most countries around the world.
While citing the availability of competitive rates for the services provided by them and the industry regulations by the banking and financial regulator Bank Negara Malaysia (BNM), the leading players in the sector are, in fact, oozing with optimism on the prospects of growing their businesses in Malaysia.
“We do not see illegal money transfers as a threat. If anything, their customer base is an opportunity for companies like ours to offer a convenient, fast, secure, cost-effective option,” Western Union Malaysian CEO Chew Mei Ling (picture) told The Malaysian Reserve (TMR).
The company, the largest industry player in Malaysia, has extensive policies, procedures and controls to spot and prevent criminal activities, as well as leading technology and processes for monitoring transactions, she added.
In fact, with rising costs, parent Western Union Co, which is the world’s largest money transfer company, had reported a drop in profits in the fourth-quarter mainly due to high costs linked to tightened regulations to prevent money laundering.
Western Union spends more than US$100 million (RM322.27 million) annually on anti-money laundering and other compliance efforts, according to an estimate.
Despite that, Western Union is facing a probe by the Federal Trade Commission and a US district court over fraud-induced money transfers, an indication as to how big the problem of money laundering remains globally.
It may be noted that despite the issue of illicit money being transferred out of the country having flared up in the past, Malaysia has no official estimates to reveal the quantum that finds its way outside the country annually and through illegal channels.
While the existence of illegal money taking off from the country cannot be denied, Malaysia has in the past affirmed that US$150 billion of illicit money have flown out of the country in the 10 years from 2002-2012, though not saying anything about the mode of transfer, mostly illegal, for such transfers.
This was a response to a report from Global Financial Integrity which estimated US$370 billion (RM1.2 trillion at that time) of illicit capital flight from the country from 2002-2012.
The Malaysian Association of Money Services Business (MAMSB) president Ramasamy K Veeran said: “We (money services businesses) are providing such competitive rates to the service users that it does not make sense to use illegal means to transfer money.”
“There is no major threat to our business from these illegal channels,” he said, adding that the industry might take off in the future due to increasing numbers of tourists and foreign workers coming to the country.
According to BNM’s annual report for 2013, the outward remittances through legal channels like banks and licensed money services firms in 2013 grew by 27% to RM25.1 billion from the RM19.7 billion recorded in 2012. Of this amount, remittance agents accounted for only about RM1 billion involving 1.1 million transactions.
Giving an industry perspective, Chew said in encouraging consumers to make use of legal remittance channels, one must first and foremost do the job right — to attract them with convenient, fast, secure, costeffective services.
In 2013, the number of licensed entities were reduced to 474 from 515 in 2012 as a result of consolidation in the industry and the surrender of licences by smaller entities, a move taken up by BNM.
“There will be further consolidation but we do not have a target for the final number. It will depend on the demand from the market and the review results of the agencies,” a BNM official told TMR earlier.
Source: The Malaysian Reserve