How to Apply for An MSB Licence in Malaysia

In Malaysia, Money Service Businesses (MSBs) play a crucial role in facilitating financial transactions, including currency exchange and remittance services. Regulated by the Money Services Business Act 2011 (MSBA), these entities operate under a unified regulatory framework enforced by the Central Bank of Malaysia (BNM).

Classification of MSBs

MSBs in Malaysia encompass various financial activities, primarily revolving around money changing, remittance, and wholesale currency exchange. These services cater to individuals and businesses seeking efficient and reliable means of transferring funds domestically and internationally.

Covered Activities Under MSB License

Under the MSBA, MSBs are authorized to engage in the following activities:

• Money Changing: Facilitating currency exchange transactions and the sale of travellers' cheques. Key activities include:
  • Exchange of currencies at competitive rates.
  • Buying or selling travelers' cheques.
  • Additional services prescribed by BNM.
• Remittance: Transferring funds domestically and internationally on behalf of customers. Key activities include:
  • Domestic fund transfers.
  • International money transfers.
  • Outward and inward remittances for individuals and businesses.
• Wholesale Currency: Importing and exporting foreign currencies for supply to retail money changers. Key activities include:
  • importing and exporting foreign currencies.
  • Supplying foreign currency to retail money changers.

General Requirements for MSB License Application

To obtain an MSB license in Malaysia, applicants must meet certain criteria outlined by the MSBA and related regulations. Key requirements include:

• Demonstration of a sound business plan, governance structure, and internal controls to manage MSB operations and mitigate financial risks.
• Compliance with minimum capital fund requirements specified by the MSB regulations.
• Approval of key responsible persons (KRPs), ensuring they meet the criteria of being "fit and proper" individuals.

Eligibility

Only companies registered under the Companies Act 2016 are eligible to apply for an MSB license. Individual applicants or partnerships are not considered for licensing.

How to Apply for an MSB License?

Before submitting a license application, prospective MSBs must engage in consultation with the Payment Services Oversight Department of BNM. This involves outlining the business model, value proposition, and feasibility studies to address market needs and industry modernization.

Upon completing the consultation phase and receiving preliminary assessment feedback from BNM, applicants can proceed to submit the official Application Form for license consideration.

The application process involves several steps:

• Engage in consultation with the Payment Services Oversight Department of BNM to discuss the proposed business model, value proposition, and feasibility studies.
• Submit the Consultation Form to BNM via email.
• Await preliminary assessment feedback from BNM to determine if expectations for a new license have been met.
• If the preliminary assessment is favourable, proceed to submit the official Application Form for license consideration.
• Complete and submit the Application Form along with all required documentation to BNM.
• BNM will process the license application and communicate the decision to the applicant.

AML and Fraud Considerations

MSBs are mandated to implement robust measures to prevent money laundering and terrorism financing activities. This includes:

• Conducting comprehensive risk assessments to identify and mitigate potential risks.
• Implementing customer due diligence procedures to verify the identity of customers and assess the nature of their transactions.
• Submitting suspicious transaction reports and cash threshold reports as required by law.
• Maintaining detailed records of transactions and implementing stringent internal controls.
• Developing and maintaining an effective anti-money laundering and countering financing of terrorism (AML/CFT) compliance program tailored to the institution's risk exposure and operational complexity.

By adhering to the regulatory guidelines and fulfilling the necessary requirements, MSBs in Malaysia can obtain a licence from BNM and contribute to the efficient functioning of the financial services industry while safeguarding against illicit activities.