.:ANTI-MONEY LAUNDERING ACT 2001:.

The Anti-Money Laundering Act 2001 (AMLA) was gazetted on 5 July 2001. AMLA provides comprehensive new laws for the prevention, detection and prosecution of money laundering, the forfeiture of property derived from or involvement in money laundering and the requirements for record keeping and reporting of suspicious transaction for reporting institutions. AMLA addresses the following board issues: 

1. Money laundering offences 

2. Financial Intelligence Unit 

3. Reporting obligations 

4. Power of investigation, search and seizure. 

5. Power of freezing, seizure and forfeiture of property

.: BAFIA 1989:.

The BAFIA has effectively replaced the Banking Act 1973 and Finance Companies Act 1969. The BAFIA is a comprehensive act and extends comprehensive powers to Bank Negara Malaysia to supervise a larger spectrum of financial institutions, with the direct responsibilities to regulate and supervise all licensed institution (commercial banks, finance companies, merchant banks, discount houses and money brokers) and also regulate scheduled and non scheduled institutions. BAFIA 1989 is divided into 16 part and covers a wide spectrum of subject matters related to the banking industry in Malaysia. The act provided the framework that enables the BNM to supervise and regulate the three broad groups of financial institutions: 

• Licensed institutions:Comprising the commercial banks, merchant banks, finance companies, discount houses, money brokers and foreign exchange broker.
• Scheduled institutions :Comprising non-bank sources of credit and finance, which include issuers of credit card and traveller’s cheques, operation of cash dispensing machines, development finance institutions, building societies and housing credit institutions, factoring companies and leasing companies. Also included under this group are representative officer of foreign bank or foreign institution which carried out the business or activities similar to scheduled institutions. 
• Non-scheduled institutions  :Comprising all other statutory bodies and institutions involved in the provision of finance and credits. 

BAFIA also provided BNM the regulatory power to regulate the following : 

1. Control of establishment or acquisition of subsidiaries or opening of offices in Malaysia by a local or foreign licensed institutions. 

2. Maintenance of reverse fund, capital, net working funds, liquid asset by the financial institutions 

3. Appointment of auditors, submission of financial statements, exhibition of financial statements, submission of statistic to BNM

.:role of BNM:.

Bank Negara Malaysia is the central bank for Malaysia. The objective of BNM in essence encapsulate the importance of promoting economic growth with the price stability and maintaining monetary and financial stability. It was established with the following objective :

• To issue currency and to keep reverse safeguarding the value of the currency. 
• To act as a banker and financial adviser to the government. 
• To promote monetary stability and a sound financial structure 
• To influence the credit situation to the advantage of the Malaysia. 
• To promote the reliable, efficient and smooth operation of national payment and settlement system and to ensure that national payment and settlement system and to ensure that national payment and settlement system policy is directed to the advantage of Malaysia

As a central bank in an emerging economy, Bank Negara Malaysia has an important developmental role. This role ranges from developing the necessary institutions and market infrastructure for the development of a modern and strong financial system to contributing to the strengthening of the foundation of the economy. In strengthening the financial market infrastructure, Bank Negara Malaysia has built a strong payment systems.

These systems are regularly "upgraded" to address the impact of technology on the banking system. To promote a good credit culture among banking institutions, Bank Negara Malaysia also operates the Central Credit Reference Information System. The first of its kind in this region, this system collects and disseminates credit information on all borrowers. This allows banking institutions to make informed decisions on loan applications.

.:function of central bank :.

The central bank has been described as "the lender of last resort", which means that it is responsible for providing its economy with funds when commercial banks cannot cover a supply shortage. In other words, the central bank prevents the country's banking system from failing.

However, the primary goal of central banks is to provide their countries' currencies with price stability by controlling inflation. A central bank also acts as the regulatory authority of a country's monetary policy and is the sole provider and printer of notes and coins in circulation. Time has proved that the central bank can best function in these capacities by remaining independent from government fiscal policy and therefore uninfluenced by the political concerns of any regime. The central bank should also be completely divested of any commercial banking interests. 

Central banks are responsible for overseeing the monetary system for a nation (or group of nations), along with a wide range of other responsibilities, from overseeing monetary policy to implementing specific goals such as currency stability, low inflation and full employment. The role of the central bank has grown in importance over time

The important functions of Central Banks are as follows:-

1-Sole right of note issue
The Central Bank in every country, now, has the monopoly note issue. The issue of notes is governed by certain regulation which is enforced by the state.

2-Banker to the state
A Central Bank acts as a banker to the government. It holds cash balances of the government free of interest.

3-Banker's bank.
The central bank acts as a banker to the commercial banks.

4-Banker's clearing house
The Central Bank acts as a clearing house for the settlement of mutual obligations of different commercial banks. If a difference exists, it is paid by a cheque drawn on the banks accounts carried at the Central Bank.

5-Lendor to the last resort
The Central Bank helps the member banks in times of crisis.

6-Financial agent
The Central Banks act as financial agents for the government. It is an agent for the government in purchasing and selling of gold and foreign exchange.

7-Effective monetary policy
The aim of the government is to create employment in the country, resist undue inflation and achieve a favorable balance of payment.

8-External functions
The Central Bank also performs a number of external functions.

ref: investopedia & blurtit