Zafrul: Anyone can open offshore accounts, subject to due process by Bank Negara

KUALA LUMPUR: Individuals are allowed to open accounts with any licensed banks including offshore accounts under the purview of Bank Negara Malaysia, says Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz.

However, he said anyone who wants to open up such accounts must go through the due diligence process under the Anti-Money Laundering, Terrorism Financing and Proceeds of Unlawful Activities Act (Amla) and related legislation.

He noted that the so-called Pandora Papers investigation by the International Consortium of Investigative Journalists (ICIJ) was based on a leak of the confidential records of 14 offshore service providers.

He said these providers gave professional services to individuals or companies in setting up shell companies, foundations or other entities and involved countries that have weaknesses in financial services laws.

"However, Malaysia is not one of the countries with such weaknesses," he said in reply to a supplementary question from Lim Guan Eng (PH-Bagan) during Question Time in Parliament on Tuesday (Oct 5).

Lim had asked about government efforts to retrieve money deposited in offshore accounts following the Pandora Papers leak.

The ICIJ reportedly obtained a trove of more than 11.9 million confidential files and led a team of more than 600 journalists from 150 news outlets worldwide that spent two years sifting through them, tracking down sources and examining court records and other public documents from dozens of countries.

The expose also linked a number of prominent Malaysians to offshore dealings.

Tengku Zafrul pointed out that the financial sector in Malaysia was regulated under the purview of Bank Negara under the Financial Services Act 2013 and Islamic Financial Services.

Offshore activities are regulated by the Labuan Financial Services Authority under the Labuan Security and Financial Services 2010 Act and Labuan Islamic Security and Financial Services 2010 Act, he added.

To the initial question on the budget deficit, Tengku Zafrul said that based on Budget 2021, the deficit is expected to be 5.4%.

However, he added, the government has taken an expansionary fiscal policy in dealing with the Covid-19 pandemic, so the deficit is currently expected to be around 6.5% to 7%.

As of Sept 15, an estimated RM216bil or more than 66% has been spent as planned under the allocation of RM322.5bil under Budget 2021, he said.

Aside from that, he added that the government also announced eight stimulus packages totalling an estimated RM530bil, inclusive of fiscal and non-fiscal measures.

As of Sept 24, more than RM330bil or 62% has been used from a total of RM530bil, benefitting 20 million people and 2.4 million businesses.

To help support the fiscal injection, spending under the Kumpulan Wang Covid-19 (KWC) fund has reached RM60bil or over 90% of the fund, Tengku Zafrul noted.

Taking into account the additional needs, he said the government will also propose to increase the debt limit for KWC to RM110bil from RM65bil, to support the spending for this year as well as future needs.

He also pointed out that the government allocated RM33bil in direct cash aid to the people, while RM30bil was allocated to businesses, especially small and medium enterprises.

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