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Malaysia: Modernising money changing and remittance industry

Thursday, 24 March 2011 10:05

Source: The Star Online

Bank Negara Malaysia report 2010

Aided by rapid technological advancements, the money changing and remittance industry globally has seen significant growth over the last decade in terms of size, sophistication and number of players with global linkages and advanced operations.

Domestically, the volume of money changing and remittance transactions has similarly increased significantly in tandem with the expansion in economic activity.

This, in turn, has driven demand for and access to money changing and remittance services while increasing the need for operators to ensure safety, security and integrity of these activities.

In line with these developments, Bank Negara has initiated a comprehensive review of the legal and regulatory framework for the money changing and remittance services business in Malaysia, with the view to modernising and elevating the current status.

The review is also aimed at ensuring that the necessary safeguards are in place and operating effectively to protect the integrity of the industry from the risk of money laundering, terrorist financing and illegal activities.

In line with the objective of fostering greater effectiveness and efficiency in the money changing and remittance business as well as to facilitate their orderly expansion, qualified players will be given greater flexibility to provide both money changing and remittance services within a single entity.

This recognises the synergies between the money changing and remittance businesses and is expected to not only broaden the revenue base of operators, but also to encourage the use of formal channels for remittances by allowing existing money changers to also provide remittance services.

Consideration is also being given to allow qualified wholesalers to conduct retail operations, thus enabling them to derive greater synergies from upstream and downstream activities.

Central to an effective and dynamic industry will be enhanced oversight arrangements that are underpinned by effective governance, operational and control requirements for the sound conduct of the business.

This is essential to provide a strong foundation for the modernised and more vibrant landscape for the money changing and remittance businesses.

Consistent with other regulated industries within the financial sector, rigorous fit and proper requirements and assessments will be introduced for shareholders, directors and managers, to ensure that only people of high integrity, competency and experience are allowed to operate in the industry.

The new landscape for the money changing and remittance industry will provide a stronger foundation for the orderly growth and further development of the industry.

Importantly, this will be supported by a more robust and responsive regulatory and supervisory framework that will safeguard the integrity of Malaysia's financial system from money laundering and terrorist financing threats, while improving the efficiency and quality of services provided to the public at large.

The enabling legislation which will pave the way for these changes is expected to be put in place in 2011.

For Bank Negara statements click here