Malaysia's first binding regulatory instrument aimed specifically at the crypto sector is now in force. Bank Negara Malaysia's policy document "Anti-Money Laundering and Counter Financing of Terrorism (AML/CFT) – Digital Currencies (Sector 6)" took effect on 27 February 2018.
What the policy does
Invoking the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (AMLA), the policy designates any person converting digital currency to or from fiat money — or to or from another digital currency — as a "reporting institution" under the First Schedule of AMLA.
That designation carries real obligations. Exchangers must:
- conduct customer due diligence, identifying customers by name, address and identification number;
- assess money-laundering and terrorism-financing risks in their business;
- keep records of transactions; and
- file suspicious transaction reports with Bank Negara.
Digital currency exchangers must also declare themselves to BNM, and the central bank will publish the list of declared exchangers on its website for public transparency.
What it does not do
BNM has been explicit that the policy does not amount to authorising or licensing crypto businesses, and it reiterated its long-standing position that digital currencies are not legal tender in Malaysia. The message to the industry is narrower and more practical: if you exchange digital currency, you are now inside the anti-money-laundering perimeter, and the compliance obligations that apply to banks now apply to you.
For Malaysia's young crypto scene, transparency requirements of this kind are a first step toward legitimacy — and a signal that more comprehensive regulation is on the way.