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| (From left) Bank Negara Governor Muhammad Ibrahim, Deputy Prime Minister Datuk Seri Dr Ahmad Zahid Hamidi, Minister of Justice and Minister assisting prime minister for counter-terrorism Australia Michael Keenan and General Wiranto coordinating minister for political, legal and security affairs of Indonesia at the opening of the 3rd Counter Terrorism Financing Summit 2017 in Kuala Lumpur, Wednesday, November 22, 2017. - RAJA FAISAL HISHAN/The Star |
PETALING JAYA: In the first notable move to regulate the world of
cryptocurrencies in Malaysia, Bank Negara has said it will deem all
parties acting as exchanges as “reporting institutions”, requiring them
to provide detailed information on buyers and sellers of such
currencies.
Central bank governor Tan Sri Muhammad Ibrahim also noted the
possibility of digital currencies becoming the “new norm” and that the
central bank “cannot be oblivious to these developments.”
The measure is to come into effect next year.
Going by some websites, there are up to 11 cryptocurrency exchanges
in Malaysia, the most notable of which are Luno and CoinHako.
It isn’t clear what the total value of their transactions are. There
are more than a hundred exchanges worldwide. Led by bitcoin, there are
billions worth of cryptocurrencies traded everyday.
Cryptocurrency exchanges are websites where you can buy, sell or
exchange cryptocurrencies for other digital currency or traditional
currencies like the US dollar or the ringgit.
While there is no conclusive proof that money laundering and
terrorism financing goes through the trading of cryptocurrencies, some
reports indicate that these rogue parties are showing an increasing
interest in cryptocurrencies.
“Beginning 2018, Bank Negara will designate persons converting
cryptocurrencies into fiat-money currencies as reporting institutions
under the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds
of Unlawful Activities Act (Amla) 2001,” Muhammad said.
“This is to prevent the abuse of the system for criminal and unlawful
activities and ensuring the stability and integrity of the financial
system,” he noted in his welcoming remarks at the Third
Counter-Terrorism Financing Summit 2017 in Kuala Lumpur yesterday.
Malaysia’s move is in step with what Australia, China and Japan had
recently done although countries like Japan are issuing licences for
exchanges as well.
Under Amla, all reporting institutions will be required to undertake
preventive measures to prevent their institutions from being used as a
conduit for money laundering and terrorism financing activities.
These preventive measures would include conducting risk assessment;
application of customer due diligence; submission of suspicious
transaction report (STR) and cash threshold report; and maintenance and
retention of records of transactions.
According to Muhammad, the role of the financial sector as a bulwark
against terrorists financing has become even more critical, given the
rise of fintech, which posted global investments totalling US$25bil
(RM102.8bil) last year, compared with US$9bil in 2010.
“If this trend is anything to go by, then the financial industry will
be hard-pressed to mitigate, identify and prevent cases of abuse in the
system,” he said.
He added: “We need to prepare ourselves, as according to many
pundits, digital currencies will become the new norm. The advent of
digital currencies as some have forecast, will mark the beginning of a
new era in the financial sector. As authorities, we cannot be oblivious
to these developments.”
Industry players in fintech welcome the move as a means to ensure
that the technological developments in cryptocurrencies and its
underlying blockchain technology are not hampered.
“Like all new technological innovations, the fear is that the bad
guys use it. Regulating exchanges ensures it is a good step to nip that
in the bud and facilitate the growth of blockchain technologies that
require the use of their own tokens,” said Paul Khoo, the founder and
CEO of GetCover, an insurtech firm operating within Bank Negara’s
fintech sandbox.
In Malaysia, cryptocurrency transactions are currently tax-free, as
digital currencies are not considered assets or legal tender by the
authorities. However, Muhammad had in recent months indicated that Bank
Negara would introduce guidelines by the end of this year if it decides
to recognise cryptocurrencies.
But an experienced crytocurrency trader added that while exchanges
can be regulated, it is going to be difficult to monitor all forms of
trading.
[ Source: The Star Online ]
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