KUALA LUMPUR: The Money Services Business Act 2011 came into force yesterday, announced Bank Negara Malaysia (BNM), along with the repeal of the Money Changing Act 1998.
According to the statement by BNM, the new Act will comprise a single, uniform regulatory framework for current licensees, who were governed under three laws — Money Changing Act 1998, the Payment Systems Act 2003 and the Exchange Control Act 1953.
These licensees are in the business of money changing, remittance and wholesale currency.
“The new Act supports the development of a more dynamic, competitive and professional money services business industry, while strengthening safeguards against money laundering, terrorist financing and illegal activities,” said BNM.
Although the exact details of the Act were not up yet on BNM’s website at the time of writing, the main thrusts include stronger prudential requirements, greater transparency and protection for customers and a wider scope of activities for those that meet the necessary requirements.
In terms of the prudential requirements, BNM said, “This will focus in particular on ensuring the effective oversight and control of the conduct and operations of licensed entities to safeguard the integrity of, and confidence in the money services industry.”
As for the increased transparency, BNM said it would be supported by wider enforcement powers provided for the central bank to take action against non-compliance or breaches of regulatory requirements.
“Also in line with the efforts to further develop and modernise the industry, licensed entities that can demonstrate the financial and operational capacity to effectively manage and control risks in the business with high professional standards of conduct, will be able to expand their current scope of activities to provide a wider range of services that can include money changing, remittance and wholesale currency services under a single licence,” said BNM.
The central bank said those entities would also be allowed to enjoy greater operational flexibilities and a broader outlook, which would then allow them to appoint existing smaller licensees as agents.
“The new landscape thus provides opportunities for greater synergies to be reaped through business arrangements that are more efficient, while evolving a more advanced and viable industry that will complement the banking sector in delivering convenient and high quality financial services to individuals and businesses,” said BNM.
According to information from BNM, the number of non-bank remittance service providers had increased to 39 as at end-2010 from three as at end-2005.
“Consequently, total outward remittance through the formal channels has grown significantly by 119.7% to RM13.4 billion in 2010 from RM6.1 billion in 2005,” said the central bank. As for those who offer money changing services, there are over 800 licensees operating at more than 1,000 premises. “As at end-August 2011, the total turnover of the industry stood at RM17.7 billion, an increase of 49% from 2005,” said BNM.
The central bank initiated the review of the legal and regulatory framework for the industry in 2009, which culminated with the new Act being passed in July this year.
This article appeared in The Edge Financial Daily, December 2, 2011.
According to the statement by BNM, the new Act will comprise a single, uniform regulatory framework for current licensees, who were governed under three laws — Money Changing Act 1998, the Payment Systems Act 2003 and the Exchange Control Act 1953.
These licensees are in the business of money changing, remittance and wholesale currency.
“The new Act supports the development of a more dynamic, competitive and professional money services business industry, while strengthening safeguards against money laundering, terrorist financing and illegal activities,” said BNM.
Although the exact details of the Act were not up yet on BNM’s website at the time of writing, the main thrusts include stronger prudential requirements, greater transparency and protection for customers and a wider scope of activities for those that meet the necessary requirements.
In terms of the prudential requirements, BNM said, “This will focus in particular on ensuring the effective oversight and control of the conduct and operations of licensed entities to safeguard the integrity of, and confidence in the money services industry.”
As for the increased transparency, BNM said it would be supported by wider enforcement powers provided for the central bank to take action against non-compliance or breaches of regulatory requirements.
“Also in line with the efforts to further develop and modernise the industry, licensed entities that can demonstrate the financial and operational capacity to effectively manage and control risks in the business with high professional standards of conduct, will be able to expand their current scope of activities to provide a wider range of services that can include money changing, remittance and wholesale currency services under a single licence,” said BNM.
The central bank said those entities would also be allowed to enjoy greater operational flexibilities and a broader outlook, which would then allow them to appoint existing smaller licensees as agents.
“The new landscape thus provides opportunities for greater synergies to be reaped through business arrangements that are more efficient, while evolving a more advanced and viable industry that will complement the banking sector in delivering convenient and high quality financial services to individuals and businesses,” said BNM.
According to information from BNM, the number of non-bank remittance service providers had increased to 39 as at end-2010 from three as at end-2005.
“Consequently, total outward remittance through the formal channels has grown significantly by 119.7% to RM13.4 billion in 2010 from RM6.1 billion in 2005,” said the central bank. As for those who offer money changing services, there are over 800 licensees operating at more than 1,000 premises. “As at end-August 2011, the total turnover of the industry stood at RM17.7 billion, an increase of 49% from 2005,” said BNM.
The central bank initiated the review of the legal and regulatory framework for the industry in 2009, which culminated with the new Act being passed in July this year.
This article appeared in The Edge Financial Daily, December 2, 2011.
