Money Laundering: Factors Leading to Money Laundering in Gold Investment Company in Malaysia

Abstract

Money laundering has always been one of the biggest frauds in the world and it has also been a serious issue in Malaysia. Money laundering can destabilize the economy of a country by introducing large amounts of illicit funds into the financial system, which can distort markets, increase inflation and undermine the integrity of financial institutions. This activity can be defined simply as a process of cleaning ‘dirty’ money to make it seem like the funds come from legitimate transactions. It is classified as a criminal activity since it uses a legal business to conceal the sources of their illegal incomes. Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (AMLA) was established to discuss the issue of money laundering in Malaysia. Some of the famous cases regarding money laundering are 1MDB, Shafee’s case and Genneva Malaysia Sdn. Bhd. This study focuses on the case of Genneva Malaysia Sdn. Bhd. that uses the gold bullion investment to cover up their money laundering activity. The stages in money laundering are placement, layering and integration. These three stages are usually being used by all criminals involved in this fraud activity. There are several factors leading to money laundering discussed in this paper which are pressure, opportunity, rationalisation and capability. This study is using literature review matrix method to understand influences of money laundering in Malaysia. This paper proposed some recommendations on how money laundering can be reduced especially in Malaysia.