While no reasons were given, Reuters had pointed that this action could be linked to a notification from Bank Negara on the statement from Financial Action Task Force (FATF). July this year, FATF had reminded their members to enhance their due diligence process on Iranians. Straits Times had reached the same conclusion, except they had included US State Sponsors of Terrorism list.
FATF (some of us call them as Fat F) is the global watchdog on anti-money laundering. In fact, nearly every iteration of anti-money laundering laws in every country is a derivative from FATF recommendation known as FATF 40. For the record, Malaysia is a member of FATF since 2016 and its Asia Pacific version known as Asia Pacific Group (APG).
While it may seems to be unfair to single out Iranians (and North Koreans), FATF's recommendation isn't with any basis.
At a glance, FATF action is being seen linked to US sanctions on Iran via the auspices of OFAC (Office of Foreign Assets Comptroller), Iranian government wasn't really helpful in making sure they're not singled out.
One of the reasons why Iranians are singled out is that Iran government is accused as sponsoring terrorism overseas. While it may seems to be a heavy charge levied by US government on Iran (US and Iran have bad blood in history), unfortunately, Malaysia is and had been caught in between.
In 2012, a botched assassination attempt on Israeli diplomats had occurred in Bangkok. A bomb prepared by a group of Iranians had prematurely exploded in their rented apartment. While one of them, a man known as Moradi was trying to get medical attention, he had tried to bomb a taxi that refused to help him and one of the bomber tried to throw a grenade at police officers that were cornering him. He blew off his own legs.
It was later revealed that he was part of a group of Iranians that had targeted Israeli diplomats in Tblisi (Georgia) and New Delhi (India).
Malaysia was implicated as the group of 6 would-be assassins flew into Thailand via Malaysia. One of the suspects, Masoud Sedaghat Zadeh was eventually arrested by PDRM at KLIA.
In 2008, it was revealed tha RMAF had lost 2 units of General Electrics J8521 jet engines. The 2 units of engines were found to be stolen. While both engines were recovered, with one unit found in Uruguay, it was long suspected that the engines were targeted by Iran for their domestic needs. Years of sanctions had put a toll on Iranian F5E fleet which they had procured when they were buddies with US (during the days of Shah Pahlavi, US and Iran were best buddies and Iran even got to buy the venerable F14 Tomcat, and that was the days before Shah Pahlavi was deposed off in the Iranian Revolution).
More recently, Reuters revealed that China's import of petroleum from Malaysia had increased to an all-time high. Yet, according to their investigation, petroleum output from Malaysia had not increased significantly.
What they found out was Iran had been exporting petroleum via Malaysia which were later relabelled as from Malaysia. Another whammy on Malaysia.
Unfortunately, with all their past run ins with US had made them a convenient scapegoats in many issues. For example, at one point of time, Iranians were even made out as suspects behind the missing MH370. Two Iranian youths wishing to escape their country had somehow managed to board the ill-fated flight using forged passports. But in this case, the evidences are circumstantial at best.
Being convenient scapegoats, it makes it hard for innocent Iranians overseas, and this also impacts Iranians which had fled overseas, seeking asylum from the excesses of their nation's regime as banks' risk assessment regime do not usually make distinction between both.
How About North Korea?
While North Korea is not mentioned in this report, North Koreans by and large are already part of the sanctions list of most banks, not only in Malaysia but globally.
Their inclusion into this list is largely due to the belligerent nature of their Juche regime government. Not only they are known to be trying to procure nuclear weapons and other weapons of mass destruction, they are heavily involved in terrorism and illegal weapons import and export.
Terrorism
North Korean government is known to have frequently targeting their neighbour South Korea militarily. Not only they had sent their military in covert actions against South Korea, but had also tried to bomb a South Korean president in Myanmar.
Assassinations
North Korean government is also known to frequently targeting defectors from North Korea. The most famous victim would be the half-brother of the current president, Kim Jong-nam. Jong-nam, purported to be a CIA agent and under Chinese protection, was assassinated using VX, a very deadly chemical weapon, while he was waiting for his flight at Kuala Lumpur International Airport 2 (KLIA2). His assassination had led to a very heavy diplomatic showdown between Kuala Lumpur and Pyongyang.
His son is now believed to be on the run and under the protective cover of China.
Kidnapping
North Korean agents are also known to have kidnapped several individuals over the past 5 decades. At least 4 Malaysian women are suspected to have been kidnapped via Singapore in 1978. Charles Robert Jenkins, a former US soldier that had defected to North Korea and migrated to Japan had claimed he had met at least 1 of the women when he was in North Korea.
It was alleged that these women and individuals from other countries were kidnapped to help North Korea to set up spy schools to train their agents to be sleeper agents disguised as other nationals.
Weapons Smuggling
North Korea is known to have exported arms to other countries via black market. The one time they had tried to export it on open market, they had done it via Malaysia. Forming a company in Malaysia fronted by Malaysians as company directors, they had even managed to get a booth to display their products in Defence Services Asia.
Malaysia is not the only country where North Korea had utilised as their platform for arms export or purchases. North Korea had also illegally imported US-made MD500E, a derivative of US OH6 Little Bird light helicopters via Singapore. The import only came to light when the helicopters were paraded in North Korean national day.
Ransomware
There are rumours that Lazarus Group, a hacker group allegedly behind the wannacry ransomware attack is supported by North Korea. The group is believed to be linked to North Korean intelligence service known as Reconnaissance General Bureau (RGB).
Innocent North Koreans?
In the case of North Korean, unfortunately there are no innocent North Koreans. North Korean government only allows politically reliable North Koreans to leave their country. Thus, they are heavily indoctrinated with their Juche doctrine.
The only other North Koreans outside North Korea would be asylum seekers. In this case, it would be a rarity in Malaysia as their first choice would be the United States and South Korea. Getting asylum in Malaysia is totally out of the question as RGB is rumoured to be active in Malaysia; the death of Kim Jong-nam underscores this point.
How about the rest of the world?
How about other countries? Like Algeria, Iraq, Nigeria, Syria, Ukraine and Yemen? Are their inclusion into this list justifiable?
For the record, al Qaeda and their affiliates are found in Algeria, Iraq, and Syria. While in Nigeria, Boko Haram had declared allegiance to Daish. Ukraine is technically at war against Russia while Yemen is in a civil war with the presence of Houthi rebels which is suspected to be sponsored and trained by Iranian Revolutionary Guards Corp.
Citizens of these countries are facing the threat of terrorism, one way or another. But that doesn't mean that citizens of these countries themselves are the terrorists. In fact, at least half of the terrorists that are found in these countries are mostly foreign terrorist fighters, not locals.
That being said, if these countries are indeed listed by the respective banks, this is purely due to the risk appetite of the affected banks. Section 22 of Anti-Money Laundering, Anti-Terrorism Financing, Proceeds of Unlawful Activities Act 2001 (AMLATFPUAA) places the responsibility and oversight of AML / CFT on the Senior Management of the respective reporting institutions, which is inline with FATF Paragraph 9 on Risk Management and Mitigation.
Other Problems with Sanctions
US-influenced sanctions is beginning to to see resistance. Russia, China and India, all components of BRIC have agreed to cooperate to build their own alternative to the SWIFT system and to link their domestic system as an alternative to Belgium-based SWIFT (Society for Worldwide Interbank Financial Telecommunication). US-imposed sanctions are strongly enforced in SWIFT, with US once threatened to cut off Russia's banks from SWIFT, thus isolating the former communist nation from global financial sector.
And that itself is an article for another day.
How about the rest of the world?
How about other countries? Like Algeria, Iraq, Nigeria, Syria, Ukraine and Yemen? Are their inclusion into this list justifiable?
For the record, al Qaeda and their affiliates are found in Algeria, Iraq, and Syria. While in Nigeria, Boko Haram had declared allegiance to Daish. Ukraine is technically at war against Russia while Yemen is in a civil war with the presence of Houthi rebels which is suspected to be sponsored and trained by Iranian Revolutionary Guards Corp.
Citizens of these countries are facing the threat of terrorism, one way or another. But that doesn't mean that citizens of these countries themselves are the terrorists. In fact, at least half of the terrorists that are found in these countries are mostly foreign terrorist fighters, not locals.
That being said, if these countries are indeed listed by the respective banks, this is purely due to the risk appetite of the affected banks. Section 22 of Anti-Money Laundering, Anti-Terrorism Financing, Proceeds of Unlawful Activities Act 2001 (AMLATFPUAA) places the responsibility and oversight of AML / CFT on the Senior Management of the respective reporting institutions, which is inline with FATF Paragraph 9 on Risk Management and Mitigation.
Other Problems with Sanctions
US-influenced sanctions is beginning to to see resistance. Russia, China and India, all components of BRIC have agreed to cooperate to build their own alternative to the SWIFT system and to link their domestic system as an alternative to Belgium-based SWIFT (Society for Worldwide Interbank Financial Telecommunication). US-imposed sanctions are strongly enforced in SWIFT, with US once threatened to cut off Russia's banks from SWIFT, thus isolating the former communist nation from global financial sector.
And that itself is an article for another day.
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