Financial Crime World

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Compliance Challenges in Fintech in Malaysia

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The fintech industry has experienced rapid growth in Malaysia since the onset of the Covid-19 pandemic. With contactless transactions becoming the norm, fintech has become increasingly convenient and accessible to people of all ages. However, without proper regulation, this ease of use can quickly spiral out of control.

The Regulatory Landscape for Fintech in Asia Pacific

In this series, we will explore the regulatory landscape for fintech in several countries across Asia Pacific, including Malaysia, Philippines, Taiwan, Vietnam, Singapore, Thailand, and Korea.

Malaysia’s Fintech Regulatory Framework

Malaysia’s fintech industry is still considered a niche area, despite the High Court ruling in 2020 that cryptocurrencies can constitute ’things’ under the Contracts Act 1950. This recognition of value attached to cryptocurrencies has led to increased regulatory attention in the country.

Key Regulators and Acts

The main regulators for fintech in Malaysia are:

  • Bank Negara Malaysia: The central bank of Malaysia, responsible for regulating conventional banking, investment banking, insurance, payment systems, and payment instruments.
  • Securities Commission Malaysia: The regulator for the securities industry, including stockbroking, financial corporate, and asset/fund management.

Several key acts govern different areas of the industry:

  • Financial Service Act 2013: Regulates conventional banking, investment banking, insurance, payment systems, and payment instruments.
  • Islamic Financial Service Act 2013: Regulates Islamic banking and takaful operators.
  • Money Services Business Act 2011: Governs money changing and remittance businesses.
  • Capital Markets and Services Act 2007: Regulates stockbroking, financial corporate, and asset/fund management.

Other related acts include:

  • Anti-Money Laundering And Anti-Terrorism Financing Act 2001
  • Malaysian Anti-Corruption Commission Act 2009
  • Personal Data Protection Act 2010
  • Personal Data Protection (Registration of Data Users) Regulations 2013

Conclusion

Malaysia’s fintech industry continues to evolve, with the availability of services such as Apple Pay for merchants, Shopee’s SLoan, CIMB and Maybank’s SecureTAC/Secure2u approval, and ASNB Unit Trusts through Touch ’n Go eWallet. As the industry grows, it is essential that regulatory frameworks are put in place to ensure compliance and protect consumers.

Contact Information

Richard Wee, Managing Partner of Richard Wee Chambers, can be contacted for further information on justright@richardweechambers.com.