Financial Crime World

Malaysia Tightens Grip on Financial Institutions with Robust Regulatory Framework

======================================================

Malaysia’s banking and financial services sector is governed by a robust regulatory framework designed to foster innovation while ensuring financial stability. The Central Bank of Malaysia (BNM) and the Securities Commission Malaysia (SC) are the key regulatory bodies overseeing this sector.

Focus on Payment and Fintech Regulations

The Malaysian government recognizes the importance of fintech innovation in driving economic growth. Both conventional and Islamic financial activities related to banking, investment banking, insurance, money changing, remittance, and payment systems are regulated by BNM under the Financial Services Act (FSA) and the Islamic Financial Services Act 2013 (IFSA).

  • Fintech ventures must obtain necessary licenses from BNM to operate in this sector.
  • Licensing process involves compliance with BNM guidelines covering capital requirements, governance standards, and consumer protection measures.

Who are the Regulators?

Central Bank of Malaysia (BNM)

  • Principal regulator overseeing banking, payment systems, and digital currency activities
  • Issues guidelines, circulars, and standards to ensure compliance with regulatory requirements

Securities Commission Malaysia (SC)

  • Regulates capital market activities and intermediaries
  • Issues guidelines, circulars, and standards to promote market integrity

Key Laws and Activities Covered

The main laws governing banking and financial services in Malaysia are:

  • Financial Services Act 2013
  • Islamic Financial Services Act 2013
  • Capital Markets and Services Act 2007
  • Money Services Business Act 2011
  • Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (Act 613)

These laws cover a wide range of activities, including:

  • Banking operations
  • Investment activities
  • Insurance
  • Payment systems
  • Digital currency transactions

Malaysia’s Money Services Business Act

The Money Services Business Act 2011 governs the licensing, regulation, and supervision of the money services business industry in Malaysia. This industry encompasses:

  • Money changing
  • Remittance
  • Wholesale currency businesses
  • Related activities

Objectives

  • Modernize and enhance the money-changing and remittance business
  • Bolster measures against money laundering, terrorist financing, and other illicit activities

Anti-Money Laundering and Anti-Terrorism Financing Measures

Anti-money laundering and counter-financing of terrorism (AML/CFT) measures are stringent in Malaysia. The Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 serves as the primary legislation addressing:

  • Money laundering
  • Terrorism financing
  • Related offences

Malaysia’s Conducive Environment for Fintech Growth

Malaysia’s banking and financial services regulations prioritize innovation, financial stability, and consumer protection. With a clear regulatory framework, comprehensive licensing requirements, and robust AML/CFT measures, Malaysia offers a conducive environment for fintech growth while ensuring the integrity and security of its financial system.