ARI-PBBM Integrated Training and Conference 2014

Day One

We arrived London in the early morning of 9th April 2014.  A total of thirty participants have registered for the Integrated Governance and Strategic Management Training Program 2014.  The first day included London City tour and two very interesting training events:  (i) A visit and talk on "Sharing How Institute of Education (IOE), University of London became a Leading Global Reference Centre in Education" and (ii) Leadership and Personal Development Talk by Ms Katrina A. Prentice, a leading business coach in the United Kingdom.  The visit to IOE was arranged by the Malaysian Higher Education Leadership Training Academy (AKEPT). The Institute of Education is a world-leading university specialising in education and the social sciences.

Founded in 1902, the Institute currently has more than 7,000 students and 800 staff. In January 2014, the Institute was recognised by Ofsted for its 'Outstanding' initial teacher training across primary, secondary and further education.  In the 2014 QS World University Rankings, the Institute was ranked number one for education worldwide.  In the most recent Research Assessment Exercise two-thirds of the publications that the IOE submitted were judged to be internationally significant and over a third were judged to be "world leading". In the evening, after dinner at the Malaysian Student Department, the delegates welcome Ms Katrina A. Prentice for her stunning talk on "Leadership Styles of Successful and Effective Leaders".  Katrina has been designing and delivering bespoke business solutions for a broad spectrum of clients within the UK, Ireland, Europe, Africa, South Africa and the Middle East for over 15 years.

 Her dynamic, powerful and charismatic style has enabled her to lend her skills and expertise as a Business Strategist, Trainer, Keynote Speaker and Executive Coach to a variety of clients including Vice Presidents,Ambassadors and key political figures to global public listed companies, SMEs and micro-businesses. Delegates were told that typically, an effective leader would motivate his or her subordinates to work on their strengths.  Such leader often "listen more" and "read more" as a way of continously improve his or her organisation.

ARI-APBM Training Program in UK

As a result of a very successful training program in New Zealand in 2013, the Accounting Research Institute (ARI) has again been invited by the Association of Malaysian Statutory Bodies (APBM) to organise training program and this time, it is in the United Kingdom.  APBM, was established in 1984 with the aim of encouraging collaborations among statutory bodies in Malaysia. Currently, there are a total 97 members. One of the programs offered by APBM is CPD training for top managers.  This year, the training program will involve members from statutory bodies such as the Inland Revenue Board, Lembaga Tabung Angkatan Tentera (LTAT), Tabung Haji, Perkeso, Bank Simpanan Nasional (BSN), MIDA, SME Corp, FINAS, Lembaga LADA, Malaysian Timber Industry Board, Majlis Agama Islam Wilayah, AKEPT, UMS, USM, UMT, UNIMAS and UiTM.   A memorandum of understanding between UiTM and APBM will also be signed in London.  Part of the training program will include attending an international conference co-organized by ARI, APBM, AKEPT, IPE (India), UiTM Council of Professors, University of Chullangkorn and Teesside University.  

Transdiciplinary Research Grant Scheme TRGS

Various Centres of Excellence (CoEs) at the university organised a one-day workshop to discuss possible collaboration for TRGS.  TRGS is a new research grant scheme offered by the Ministry of Education (MOE) Malaysia. Each research program under this grant scheme comprises three different research projects from three research clusters.  Essentially, the MOE has already identified eight research clusters namely: (i) Pure Science, (ii) Applied Science, (iii) Technology and Engineering, (iv) Clinical and Health Sciences, (v) Social Sciences, (vi) Arts and Applied Arts, (vii) National Sciences and National Heritage and (viii) Information and Communication Technology. Getting the CoEs to work collaboratively on TRGS was indeed a great idea. The researchers were able to discuss together on their proposed projects.  At the end of the workshops, the CoEs submitted their "Letter of Intents" to the secretariate.  The Accounting Research Institute (ARI) submitted letters of intent (LOIs) of two full TRGS programs and two sub-projects of  programs with other CoE groups.  Two ARI's full programs comprised researches related to "Detecting
Trade Mispricing as Money Laundering Tools" and "The Governance of Cooperatives as Money Laundering Mitigating Mechanisms of Cooperatives".

LRGS on Rural Transformation

Researchers from four institutions namely Universiti Kebangsaan Malaysia (UKM), Universiti Teknologi MARA (UiTM), Universiti Pendidikan Sultan Idris (UPSI) and Management and Science University (MSU) were today invited to a briefing session by the Ministry of Education (MoE).  Premised on their recent submissions of concept papers to the Long Term Research Grant Scheme (LRGS) related to niche research agenda "Rural Transformation", the researchers were given a briefing by one of the LRGS panels from the Social Science cluster - Prof Dr Normah Omar.  The researchers were basically tasked to realign their research programmes so that the research outcome could be used to facilitate government's initiatives such as the Government Transformation Programme (GTP), Economic Transformation Programme and the New Economic Model (NEM).  The group will need to present their concept papers on Rural Transformation on 15th April 2014.

Integrity Month and MOU Signing UiTM-IIM

On 1st April 2014, Universiti Teknologi MARA (UiTM) launched its Corporate Integrity Month.  Hosted by the Academy of Contemporary Islamic Studies (ACIS), one of the significant events included during the launching was the signing of the Memorandum of Understanding (MoU) between UiTM and the Malaysian Institute of Integrity (IIM).  Whilst UiTM was represented by Vice  Chancellor Tan Sri Prof Ir Dr Sahol Hamid Abu Bakar, IIM was represented by its President Dato' Dr Mohd Tap. UiTM and IIM had forged many collaborative efforts even prior to the signing of the MoU.  The Accounting Research Institute (ARI) is a collaborative partner to the Private Sector Department of IIM in developing the Corporate Integrity System Malaysia (CISM).  Through CISM, many corporate entities have participated in the Corporate Integrity program either by signing the Corporate Integrity Pledge (CIP) or taking part in the Corporate Integrity Questionnaire Assessment.

Money Laundering Typology through Trade Mispricing

"Trade Mispricing" is a common money laundering typology often used by merchandisers which aims to escape taxes of a home country through the formation of "subsidiaries" in other countries.  Tax evasion is a predicate offence, and the use of such evaded taxes constitutes money laundering.  Also known as transfer pricing manipulation or fraudulent transfer pricing, trade mispricing involves trade between related parties at prices meant to manipulate markets or to deceive tax authorities.  Typically, as an illustration, Company ABC manufactures/assembles its product in three different subsidiaries - Subsidiary 1 in the home country; Subsidiary 2 in an offshore location and Subsidiary 3 in a "final market destination" country.  Through related-party transactions, Subsidiary 1 sells its products to Subsidiary 2 (a tax haven) at a rediculously low price resulting in low profits being recognized by the company (hence much lower tax being paid to the home country).  In its effort to maximise profit within a tax-free location of Subsidiary 2, it sells it products to Subsidiary 3 at a much inflated price.  The end results being, the merchandisers "strategically" deflate profits to evade taxes in their home countries and to inflate profits in tax haven locations. It is nonetheless, a money laundering activity and should fall within the anti money laundering and counter financing of terrorism legislation.  It has been reported that such money laundering typology is quite common and should be stopped at all costs.  Merchandisers and manufacturers are potential players of transfer pricing manipulation. The introduction of the Goods Service Tax or GST would hopefully helps to reduce trade mispricing in the future.  A recent initiative by the Transparency International is the establishment of the "Financial Transparency Coalition"  where the parties (merchandisers) conducting a sale of goods or services in a cross-border transaction sign a statement in the commercial invoice certifying that no trade mispricing in an attempt to avoid duties or taxes has taken place and that the transaction is priced using the OECD arms-length principle. 

Money Laundering Typologies

The Accounting Research Institute thanks ASP Mohd Noor Firdaus from the Royal Malaysia Police for sharing his AMLA-related investigations and experiences with students from the Master in Forensic Accounting and Financial Criminology program of Universiti Teknologi MARA. The class was told that one of the most important competencies that investigating officers need to know is the ability to develop typologies. Typologies refer to the methods or trends used by criminals to launder proceeds of criminal activities and finance illicit activities. In most cases, the methodologies are in constant evolution.  ASP Firdaus shared two famous typologies.  Firstly, the use of the traditional "Hawala" system remains a popular tool used by money launderers for transfer and receipt of funds.  Without "actual movement" of cash, funds are transferred from one country to another. The use of  "Contra Transactions" often makes audit trail difficult to do. Sometimes, such cash movement is settled through trade exchange and "cash contra".  Premised on the concept of trust, some "net settlement" may cover a long period of time. What makes them distinct from other money transmitters is their use of non-bank settlement methods. Secondly, money launderer criminals seek the advice or services of legal and accounting professionals to help in laundering criminal assets. As reporting institutions, it is crucial that these professionals be aware of their responsibilities to mitigate money laundering activities by their clients. Three specific responsibilities are: (i) to know their clients by conducting due diligence, (ii) to maintain full record of their tasks for at least six years and (iii) to submit "Suspicious Transaction Report or STR" to the Central Bank in the event that they become suspicious that their clients might be involved in possible money laundering activities.

Exploring AMLATFA 2001

AMLATFA 2001 is an Act or legislative provision that came into force on 15 January 2002.  Three main important objectives of the Act are:(i) to provide for the offence of money laundering, (ii) to specify measures to be taken for the prevention of money laundering and (iii) to provide for forfeiture of property derived from, or involved in, money laundering.  Today, the new cohort of the Master in Forensic Accounting and Financial Criminology made their first in-class presentation by discussing legislative provisions related to anti money laundering and anti terrorism financing in Malaysia. In essence, example of predicate offences in money laundering include the following: corruption, bribery, child pornography, CBT, forgery, human trafficking, theft, extortion, frauds, fraudulent manipulation of stock exchange transactions, possession of counterfeit money, tax evasion and money incremental scheme. The group had also highlighted different categories of reporting institutions which include all financial institutions (conventional and Islamic banks), insurance companies (including takaful operators), money changer, real estate agents, casinos, precious metal dealers and professional lawyers and professional accountants.

Islamic Financial Criminology - Research Outcome for 2014

In its recent strategic meeting, researchers at the Accounting Research Institute (ARI) discussed on publication strategy for 2014.  Premised on ARI's niche research agenda in Islamic Financial Criminology, ARI publications  for 2014 will focus on four research clusters: (i) Shariah Governance , (ii) Corporate Integrity & Ethics, (iii) AML/CFT and (iv) Fraud Risk Indicators and Methodologies.  ARI researchers will specifically target Q1 and Q2 journals for their publications.  Apart from impact journal publications, researchers had also discussed on publishing cluster-based research books with renowned international publishers.  Another strategic discussion was on producing innovative products that could possibly be used by stakeholders.  As such, ARI researchers will be participating in the forthcoming IDEX 2014 and ITEX 2014 innovation and Invention competition 

A Day at Brahim's Airline Catering

At an effort to enhance corporate integrity at workplace, Brahim's Airline Catering recently launched its corporate's Code of Ethics document.The company signed the Corporate Integrity Pledge (CIP), an integrated initiative with PEMANDU, the Malaysian Anti-Corruption Commission (MACC) and the Malaysian Institute of Integrity (IIM).  CIP is a document that allows a company to make a commitment to uphold the Anti-Corruption Principles for Corporations in Malaysia. By signing the pledge, a company is making a unilateral declaration that it will not commit corrupt acts, will work toward creating a business environment that is free from corruption and will uphold the Anti-Corruption Principles for Corporations in Malaysia in the conduct of its business and in its interactions with its business partners and the Government. Three researchers from the Accounting Research Institute (ARI) have been invited to share various research instruments that have been developed at the Institute to measure corporate integrity practices at workplaces.  Prof Normah explained the concepts of corporate integrity and how to effectively used an instrument known as Corporate Integrity Assessment  Questionnaire  (CIAQ) for the company.  Associate Professors Dr Zuraidah and Dr Jamaliah developed case study typologies for "gifts giving" and "ethical decisions".