Bank Negara invokes reporting obligations on digit
 15 Dec 2017 17:49
The central bank will focus on collecting data from digital currency exchanges before taking a position, says Abdul Rasheed
Bank Negara Malaysia is not regulating digital currency exchanges (DCEs) as of yet, despite having issued a proposed policy to necessitate reporting obligations for these entities.

Bank Negara deputy governor Abdul Rasheed Ghaffour says that there is a need to collect sufficient data from DCEs before the central bank can decide its position.

At the moment, it is continuing to monitor and assess the risks posed to the financial system by such activities, in order to ensure that the integrity of the financial system is not compromised.

Digital currencies are currently not recognised as legal tender in Malaysia, which means such businesses and transactions are not covered by standards and arrangements applicable to financial institutions regulated by the central bank. This includes the existing, established disputed resolutions arrangements for regulated financial institutions.

The exposure draft, released on Dec 14 for public consultation, is on the invocation of reporting obligations on DCE business as reporting institutions, under the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (AMLA).

It is inviting written feedback on the specific requirements set out in the exposure draft, which must be submitted by Jan 14.

The proposed policy is meant to ensure that effective measures are in place against money laundering/terrorism financing risks associated with the use of digital currencies and to increase the transparency of digital currency activities in the country.

It sets out the legal obligations, requirements and standards that DCEs – defined under AMLA’s First Schedule – must carry out as reporting institutions and also declare its details to the bank as a reporting institution, similar to other entities not regulated by Bank Negara such as legal and accounting firms as well as casinos.

This includes transparency obligations, which are intended to provide relevant information for the public to better understand and evaluate the risks associated with the use of digital currencies.

The data collection is targeted to begin in January 2018.

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