Malaysia Guidelines on Conduct of Money Services Business– Overview and Summary of Governance and Operational Requirements

• By: Staff Editor
• Date: April 19, 2013

• A director or CEO should meet the minimum “fit and proper” criteria. This means that the person should not be guilty of any criminal offence and is of probity, personal integrity and good reputation.
• A director and CEO should have adequate knowledge of the licensed money services business and applicable laws and regulations.
• A director and the CEO should devote adequate time and commitment to the business.
• A director and the CEO should avoid any actions that would expose the licensee to legal and reputational risks.

• Directing the strategy of the licensee.
• Overseeing the performance of management.
• Monitoring compliance with applicable laws and regulations.
• Proper and professional conduct of money services business operations.

• The Board should have a sufficient number of members that reflect the size and scope of the licensees’ business.
• The Board should include an appropriate mix of individuals with relevant knowledge and experience.
• For larger licensees, the Board should be sufficiently independent from the day-to-day management of the business.
• For the smaller licensees, the bank requires independent assurance of compliance with regulatory requirements from the external auditor.
• The cost of audit should be borne by the licensee.

• The Board should meet at least once every quarter to review the licensees’ performance.
• A licensee should document minutes of all Board meetings.

• The Board should ensure the integrity of money services business operations
• The Board should ensure that the licensee has the capacity and ability to operate the expanded business in full compliance with regulatory requirements.
• The Board should approve internal policies and controls for the day-to-day operations of the business.
• The Board should appoint a competent CEO.

• Managing the day-to-day business operations of the licensee.
• Implementing the internal policies, controls and corrective actions.
• Informing the Board of any material lapses in controls.
• Ensuring employees are competent and provided with appropriate training in the money services business regulatory requirements, AML/CFT requirements and other relevant laws in managing the daily business operations.
• Developing appropriate AML/CFT policies and procedures for the operations of the licensee.

• Every licensee should prominently display
  • The original copy of its license at its head office.
  • A duly certified copy of its license and the list of its respective branches at each of its other approved offices.
• Every licensee should display a signage outside its office, stating:
  • Its name
  • The words “Perniagaan Perkhidmatan Wang Berlesen” together with the display of the approved money services business activity.
• Licensees cannot effect any change in its name without the prior written approval of the Bank Negara Malaysia (BNM).
• A licensee should operate for a minimum of eight continuous hours in a day.
• A licensee should obtain the written approval of the bank before opening or relocating an office.
• In case of temporary closure or suspension of services exceeding 7 days, a licensee should:
  • Notify the BNM
  • Affix a written notification on the outside of its premises informing customers of the period of closure.
• Licensees should inform the Bank if it is sharing premises with other businesses.
• A licensee that shares premises with other businesses must ensure complete segregation of its business, funds and property.
• A licensee can outsource the administrative and operational functions like accounting, training, marketing and promotional activities, maintenance of IT infrastructure; customer call centre; and security services.
• All licensees should open and maintain a bank account in the name of the licensee.
• No personal bank account of the directors, employees or any other persons should be used for the purpose of money services business activities.
• All transactions should be carried at the prevailing market rate of exchange.
• Licensees should issue serialized receipts to its customers upon completing any transaction.
• A licensee should not disclose customer information to third parties in any form.
• A licensee should pay to the Bank an annual fee for each of its offices and other fees.
• Licensee should submit an application to the bank for renewal of its license not later than 2 months before the expiry of its license.
• A licensee cannot sell, dispose, lease, assign or transfer the whole or any part of its money services business to any person without prior approval from the BNM.
• A licensee proposing to surrender its license should give a prior notice to the Bank mentioning the reasons for the surrender and the date on which the surrender is to take effect.
• A licensee, who wishes to carry on any business activity other than the licensed money services business activity, must obtain prior written approval of the BNM.
• Only a licensee or money services business agent is allowed to issue or publish an advertisement.
• All advertisements should be fair and clear; contains accurate and relevant information; and should not be misleading or deceptive to the customer and the public.
• A licensee should provide adequate disclosure to customers on its products and services prior to the execution of money services business.

• A licensee should maintain a designated account at a licensed onshore bank to ensure that funds received from customers are kept separate from the funds of the licensee.
• A licensee can withdraw:

1. Amount paid by the licensee into the account for the purpose of opening or maintaining the account.
2. Interest accruing in the account derived from funds kept in the designated account
3. Foreign exchange gains recognized upon settlement with the correspondent agent.

• For a business-to-business remittance transaction, the daily outward transaction limit for a customer should not exceed an aggregate amount of two hundred thousand ringgit.
• For all others, the maximum limit is an aggregate amount of fifty thousand ringgit.
• For outward remittance transactions, the remittance instructions to correspondent agent should be issued within two business days from the receipt of funds from the customers.
• For inward remittance transactions, the licensee should make available the funds for collection by the beneficiary immediately upon receipt of the remittance instructions from its correspondent agent.

• A licensee should obtain prior approval from the Bank for the use of a remittance system.
• A licensee should have a robust remittance system.
• A licensee should aggregate all remittance transactions related to the same customer conducted across different systems and locations.

• A licensee should remain fully responsible to its customers for any remittance services provided through a third party system.
• A licensee should ensure compliance with regulatory requirements in respect of such remittance services.
• A written contract should clearly specify the responsibilities and expectations of the remittance system service provider.

• The licensee should perform appropriate due diligence on potential correspondent agents.
• Remittance instructions should be transmitted through the remittance system used instead of email, facsimile or telephone calls.
• There should be clearly defined mechanisms for handling any disputes on remittance services

• A licensee should ensure that settlement arrangements with its remittance system service providers and correspondent agents are properly documented and legally enforceable.
• All settlements between a licensee and its local remittance system service providers should be in ringgit.
• Settlements outside Malaysia should be in foreign currency.

• A licensee should ensure that the originator and recipient of an exchange transaction is the same person.
• A licensee can deal with a representative of a customer who is authorized by the customer to either send or collect funds on behalf of the customer.
• For any exchange transaction exceeding RM20, 000 equivalents, the licensee should deal directly with the customer.
• All exchange transactions should be performed at the prevailing market rate of exchange.
• A licensee should not engage in forward exchange transactions.
• A licensee should source and clear its foreign currency notes only from licensed currency wholesalers, licensed money changers, licensed banks and licensed Islamic banks in Malaysia.

Additional Resources

Read the Malaysia Guidelines on Conduct of Money Services Business - Operation and Governance - in full here.