Crypto-funded debit card in Malaysia

SC Malaysia — Digital asset exchange registration, IEO oversight, cease-and-desist enforcement

BNM — AML/CFT standards

VASP: Recognized Market Operator (RMO) — DAX registration with SC. Only 5 operators registered (Luno, Tokenize, MX Global, Sinegy, Hata). SC strict and slow on registrations. 6-12 months.

EXCHANGE: DAX registration with SC — MYR 5M (~$1.1M USD) minimum shareholders' funds. SC issued cease-and-desist orders against unregistered operators (incl. Binance 2021). IEO framework requires separate SC approval.

CUSTODY: Included under DAX registration; customer asset segregation required

As E-Money/Payment Token (Regulated by Bank Negara Malaysia - BNM):

Payment Systems Act 2003: https://www.bnm.gov.my/documents/20124/960537/Payment+Systems+Act+2003.pdf

Financial Services Act 2013: https://www.bnm.gov.my/documents/20124/960537/Financial+Services+Act+2013.pdf

Guidelines on E-Money (updated 2021): https://www.bnm.gov.my/documents/20124/938096/Guidelines+on+E-Money.pdf

Capital Adequacy: E-money issuers must meet minimum capital funds requirements, usually RM 5 million (for non-bank entities).

Segregation of Funds: Funds received for the issuance of e-money must be safeguarded and clearly separated from the issuer's own funds.

Placement in Trust Accounts: These funds typically need to be placed in trust accounts with licensed financial institutions, ensuring their availability for redemption.

Any entity wishing to issue a stablecoin classified as e-money must obtain an e-money issuer license from Bank Negara Malaysia under the PSA. This process involves thorough due diligence, assessment of financial soundness, risk management capabilities, and compliance with all relevant guidelines.

As Securities/Digital Token (Regulated by Securities Commission Malaysia - SC):

Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (AMLATFPUAA 2001)

AML/CFT and Targeted Financial Sanctions for Financial Institutions (AML/CFT TFS for FIs) Policy Document (BNM Policy Document): Issued by Bank Negara Malaysia, this comprehensive policy document provides detailed guidance and requirements for reporting institutions to comply with AMLATFPUAA 2001. This document has specific sections/appendices applicable to "Digital Currencies" or "Virtual Assets."

Capital Markets and Services Act 2007 (CMSA): For digital assets that are deemed "securities," the Securities Commission Malaysia (SC) regulates entities like Digital Asset Exchanges (DAX) under this Act and its accompanying guidelines. These entities are also subject to specific AML/CFT requirements imposed by the SC.

Bank Negara Malaysia (BNM):

Securities Commission Malaysia (SC):

Customer Identification and Verification:

Beneficial Ownership: Identify and verify the ultimate beneficial owner (UBO) for all corporate and legal arrangements. This involves looking through layers of ownership to identify the natural person(s) who ultimately own or control the customer, or on whose behalf a transaction is being conducted.

Non-Face-to-Face (NFF) Customers: Given the online nature of many VASPs, robust measures for NFF CDD are crucial, including multi-factor authentication, video verification, and cross-referencing with reliable independent sources.

Politically Exposed Persons (PEPs): Implement Enhanced Due Diligence (EDD) measures for PEPs, their family members, and close associates, including obtaining senior management approval to establish or continue the relationship and taking reasonable measures to establish the source of wealth and funds.

High-Risk Customers: PEPs, customers from high-risk jurisdictions (e.g., those identified by FATF), customers involved in cash-intensive businesses.

Ongoing Monitoring: Continuously monitor the business relationship and transactions to ensure consistency with the VASP's knowledge of the customer, their business, risk profile, and source of funds. Update customer information regularly.

Source of Funds/Wealth: For higher-risk customers or transactions, obtain information on the source of funds or source of wealth.

Entity Targeted: Binance Holdings Limited and its CEO, Changpeng Zhao (CZ). Violation Type: Operating a Digital Asset Exchange (DAX) without registration/license, which is a violation under the Capital Markets and Services Act 2007. The SC considers digital assets as securities, and operating a platform for trading them requires authorization. Penalty Amount: No explicit monetary fine was announced at the time of the public reprimand. The penalties were operational: a public reprimand, an order to cease all operations in Malaysia, disable access to its website and mobile applications, and cease all media and marketing activities targeting Malaysian investors. Outcome: Binance was forced to shut down its direct operations in Malaysia. Malaysian users were advised to withdraw their funds. The action led Binance to later pursue a compliant pathway to re-enter the Malaysian market by acquiring a stake in and partnering with a licensed local Digital Asset Exchange (DAX), MX Global, demonstrating the effectiveness of the SC's enforcement in driving regulatory compliance.

Entity Targeted: Various unauthorized digital asset platforms, investment schemes involving crypto, and individuals promoting them. (Specific names are too numerous to list here, but are updated frequently). Violation Type: Operating or promoting unauthorized investment schemes, digital asset exchanges, or services without the necessary licenses or approvals from the SC Malaysia. Penalty Amount: Typically no specific monetary penalty is announced publicly for being added to the alert list. The "penalty" is a public warning, which often leads to the platform being unable to operate effectively in Malaysia and subsequent cessation of operations or blocking of access. Outcome: Public awareness is raised, and investors are warned against dealing with these entities. This often leads to reduced or ceased operations for the targeted entities within Malaysia.

Evidence fact my.tax not found (may have been renamed).