Financial Crime World

Macau Introduces Revamped Financial System Act to Boost Competitiveness and Innovation

New Legislation Aims to Enhance Efficiency and Promote Growth in Macau’s Financial Sector

The Legislative Assembly of Macau has passed a comprehensive overhaul of the Financial System Act, marking a significant milestone in the development of the territory’s financial sector. The revised Act, set to come into force on November 1, 2023, introduces key changes aimed at increasing competitiveness, promoting innovation, and enhancing efficiency.

Key Areas Addressed by the Revised Act

  • Keeping Pace with Sector Development: The new legislation ensures that Macau’s financial regulations remain relevant and effective in a rapidly evolving global market.
  • Improving Supervision Requirements: Strengthened oversight measures will help maintain stability and transparency within the sector.
  • Simplifying Bureaucratic Procedures: Streamlined administrative processes will reduce regulatory burdens on financial institutions.
  • Strengthening Penalties for Illegal Activities: Enhanced penalties will deter illicit financial practices and maintain public trust.

Key Changes Introduced by the Revamped Act

Increased Flexibility in Licensing Financial Institutions

  • The new legislation allows for greater flexibility in licensing financial institutions, enabling them to adapt quickly to changing market conditions.
  • A new type of license, called “restricted license bank,” is introduced for banks focusing on specialty business with a simplified licensing procedure.

Simplified Bond Issuance Process

  • The requirement of chief executive authorization for publicly issuing bonds is replaced with a registration system, making the process more efficient and streamlined.
  • A new title dedicated to the legal framework of “sandboxes” encourages innovation in financial products and systems by providing a testing ground for new ideas.

Additional Key Aspects of the Revised Act

  • Increased Minimum Registered Capital: The minimum registered capital for banks is increased from 100 million patacas to 300 million (approximately £9 to £27 million).
  • Strengthened Requirements for Corporate Bodies: Enhanced suitability requirements and an increase in the minimum number of directors from three to five are implemented.
  • Granting New Powers to the Monetary Authority: The AMCM is granted new powers to supervise accountants and obtain urgent information upon request.
  • Tightening Prudential Parameters: A reduction in the threshold for “large exposure” risk assessment is introduced.

Conclusion

The revised Financial System Act marks a significant step forward for Macau’s financial sector, aiming to enhance competitiveness, innovation, and efficiency while maintaining stability and transparency. Financial institutions operating in Macau should utilize this time to thoroughly understand the changes and make necessary preparations to ensure a smooth transition.