28 March 2018
On 27 February 2018, Bank Negara Malaysia (“BNM”) issued a policy document entitled “Anti-Money Laundering and Counter Financing of Terrorism Policy (AML/CTF) - Digital Currencies (Sector 6)” (“Policy”), which has taken into account feedback received during the public consultation period on the exposure draft released on 14 December 2017. The Policy aims to ensure that effective measures are in place against money laundering and terrorism financing risks associated with the use of digital currencies and to increase the transparency of digital currency activities in Malaysia.
Any person offering services to exchange digital currencies either from or to fiat money, or from or to another digital currency, whether in the course of carrying on a digital currency exchange business or otherwise, is subject to obligations under the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (“AMLA”) as a reporting institution pursuant to the First Schedule of the AMLA.
The Policy sets out the minimum requirements and standards that a reporting institution must observe to increase the transparency of activities relating to digital currencies and ensure effective and robust AML/CFT control measures are put in place to mitigate risks that reporting institutions may be used as conduits for illegal activities.
Digital currencies are not legal tender in Malaysia. Accordingly, digital currency businesses are generally not covered by current prudential and market conduct standards or arrangements that are applicable to financial institutions regulated by BNM. As envisaged in the Policy, BNM will continue to monitor developments in this area through data submitted to it, and BNM may publish information that is relevant to inform the public on risks associated with digital currency activities.