DIRECTOR OF A TERRORISM FUND, DRUGS OR SMUGGLING SYNDICATE? LEND YOUR NAME TO COMPANIES AT YOUR PERIL, SSM WARNS

PETALING JAYA – For some, “lending” their names to register companies, while playing no role in the day-to-day affairs of the organisation, is just an act of putting pen to paper to make a quick buck. Little do they realise, however, the risks associated with it.

A Companies Commission of Malaysia (SSM) spokesman told SunBiz that such acts will make Malaysians more vulnerable particularly to criminal activities such as money laundering or terrorism financing, drugs, smuggling or human trafficking.

“People opting for such services must be aware that they will be at risk of being implicated or investigated if the companies are involved in any unlawful activities,” he added.

Such a “director” could be prosecuted under the Anti-Money Laundering and Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 [Act 613] (AMLA), which includes the freezing and seizure of properties that are involved or suspected to be involved in money laundering or terrorism financing offences.

“The enforcement of the AMLA is undertaken by various ministries and agencies, including SSM, based on the predicate offences under their respective purview, which are listed under the Second Schedule of the AMLA. There are more than 356 offences under 42 pieces of legislation (including the Companies Act 1965) listed under the Second Schedule of the AMLA,” the spokesman said.

SunBiz learnt that offering names for directorships are a full-fledged business for some, with websites doing the rounds promoting the services, as well as ready-made shelf companies which promotes time saving on the incorporation process with SSM and middlemen registration services.

Checks by SunBiz revealed that some of these ready-made companies are quoting as much as RM2,500 when SSM charges only RM1,000 for a company limited by shares and RM3,000 for a company limited by guarantee.

According to SSM, it does not recognise any services involving the lending of names either as shareholders or directors of a company and deems such arrangements as private with no legal recognition.

“From the perspective of the Companies Act 2016, anyone whose name is recorded in the register of members is deemed to be a shareholder of the company. Similarly, anyone who is appointed as director will be responsible for the affairs and operations of the company including any compliance requirements or penalties under any written laws,” the spokesman told SunBiz.

With the Companies Act 2016 in place, under which the appointment of a company secretary is no longer compulsory for incorporation, the commission is hopeful that online services of such nature will be adversely affected.

“Company secretaries or any persons offering services to incorporate a company have legal obligations under the Anti-Money Laundering and Anti-Terrorism Financing and Proceeds of Unlawful Activities 2011 to conduct appropriate due diligence,” he said.

SSM said although there is no specific law prohibiting such services, enough measures are in place to ensure that the real identities of shareholders (beneficial owners) are known.

“SSM is not discounting the fact that people would still opt for such services mainly due to unawareness of the change in policy or some other reasons known only to them,” he added.

– Sundaily

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