Bank Negara efforts to curb funds outflow futile, says DAP

The latest figures on illicit capital flight shows that the Bank Negara Malaysia taskforce set up to tackle the problem has been a futile effort, says DAP Perak economic development bureau chief Chong Zhemin.

According to an annual report of the watchdog, Global Financial Integrity (GFI), released yesterday, the illicit outflow had vaulted from US$34.51 billion (RM93 billion) in 2009 to US$64.51 billion (RM196.8 billion) in 2010, before dropping to US$54.18 billion (RM173.84 billion) in 2011.

However, Chong argued that the figure for 2011 could still be higher than the estimate for 2010.

"In this year's annual report GFI has addressed the re-exports from Hong Kong in estimating trade misinvoicing by Malaysian traders making this year's report more accurate and reliable.

"This would mean that Malaysia's illicit capital outflow in 2011 could potentially be a larger sum than in 2010.

"The GFI report proves that the Bank Negara move to set up a task force in 2010 to stop illicit funds leaving the country yielded futile results," he said in a statement today.

According to Bernama yesterday, Bank Negara governor Zeti Akhtar Aziz (left) had dismissed the figure as ‘overstated', saying the situation has improved and will continue to improve due to the central bank's stricter surveillance.

She reportedly said that one channel for illicit outflows to take place was through money changers, and the Money Services Business Act was established to address this.

Meanwhile, Chong points out that another popular technique was to siphon out the funds with multi-layered transactions though a network of shell companies.

He calls on Finance Minister Najib Abdul Razak to redress this by following Britain's footsteps in establishing a central public registry of corporate beneficial ownership information.

"Under this move, all firms registered in the country have a legal obligation to hold accurate and current information on the ultimate owner who benefits from the company, which will be placed in a central register maintained by the Companies House.

"By creating a register of beneficial owner, the true owner of these anonymous shell companies will be made public ,hence making the cracking down of these ultimate beneficiary and tracking of funds transfer easier," he said.

He said Malaysia cannot afford to lose the large sums of money to illicit capital flight especially at a time when the government is trying to cut back on subsidies.