Financial Crime World

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Malaysia Introduces Beneficial Ownership Disclosure Requirements

The Malaysian government has introduced new provisions to enhance transparency and accountability by requiring companies to disclose beneficial ownership information. These changes aim to improve corporate governance and prevent illicit activities such as money laundering and terrorist financing.

Key Changes

  • Expanded Criteria for Defining Beneficial Owners: The revised Companies Act 2016 broadens the definition of a beneficial owner to include nominees and other entities that may be used to disguise ownership.
  • Mandatory Registration of Beneficial Owners: Companies will be required to maintain a Register of Beneficial Owners (RBO) and notify the Companies Commission of Malaysia (CCM) of the particulars of beneficial owners listed in the RBO.
  • Self-Disclosure Obligations for Individuals Holding Beneficial Ownership: Individuals holding beneficial ownership will be required to notify the company and update any changes to their status or particulars.

Penalties for Non-Compliance

  • Fines not exceeding RM20,000
  • Daily fines of up to RM500 for each day the offense continues after conviction

Implementation Timeline

The amended Companies Act is expected to undergo its second reading by November 2023. The exact date when the new provisions will come into force remains unclear. It is anticipated that the CCM will issue additional guidelines on implementation and provide a transition period for companies and relevant persons to comply with the new requirements.

What’s Next?

Companies and individuals holding beneficial ownership are advised to prepare for these changes by:

  • Reviewing their existing ownership structures
  • Identifying and verifying beneficial owners
  • Maintaining accurate records of beneficial ownership information
  • Complying with the new disclosure requirements

By introducing these beneficial ownership disclosure requirements, Malaysia aims to strengthen its corporate governance framework and ensure greater transparency in business transactions.