In 2013, Bank Negara Malaysia (‘BNM’) had issued Notices (“2013 Notices”) on Foreign Exchange Policy Rules (“FEP Rules”) to continue to support and enhance the competitiveness of the economy, through the creation of a more supportive and facilitative environment for trade, business and investment activities.
FEP Notices were issued pursuant to the Financial Services Act 2013 (FSA 2013) and Islamic Financial Services Act 2013 (IFSA 2013). Meanwhile, EXIM Bank is governed under the Development Financial Institution Act 2002 (DFIA 2002) and is not defined as a Licensed Onshore Bank (“LOB”), as per BNM’s website.
Given the Bank’s unique business proposition involving dealing with residents and non-residents and the exchange of currency, both in ringgit or foreign currencies, which is of similar nature with other LOBs, the regulatory expectations on EXIM Bank is not only to ensure compliance with FEP Rules in its day-to-day operations, but also to ensure that all customers are appropriately advised on the relevant FEP requirements.
What is the FEP Rules?
What is the FEP Rules?
Who are required to comply with FEP Rules?
Who are required to comply with FEP Rules?
- “Residents” who are dealing in foreign currencies.
- “Non-Residents” who are dealing in Malaysian Ringgit, in Malaysia.
Who are “Residents” and “Non-Residents”?
Who are “Residents” and “Non-Residents”?
- A citizen of Malaysia, excluding a citizen who has obtained permanent resident status in a country or a territory outside Malaysia and is residing outside Malaysia;
- A non-citizen of Malaysia who has obtained permanent residency status in Malaysia and is ordinarily residing in Malaysia;
- A body corporate incorporated or established, or registered with or approved by any authority, in Malaysia;
- An unincorporated body registered with or approved by any authority in Malaysia; or
- The Government or any State Government.
- Any person other than resident;
- An overseas branch, a subsidiary, regional office, sales office or representative office of a resident company;
- Embassies, Consulates, High Commissions, supranational or international organisations; or
- A Malaysian citizen who has obtained permanent resident status of a country or territory outside Malaysia and is residing outside Malaysia.
When is it required to comply with FEP Rules?
When is it required to comply with FEP Rules?
- All EXIM Bank customers have to comply with FEA Rules when performing a transaction.
- If the transaction does not meet the allowable purposes, the source of funds or allowable limits under FEA Rules, customers are required to obtain approval from BNM.
Why is it required to comply with FEP Rules?
Why is it required to comply with FEP Rules?
- It is in compliance to the BNM’s requirements on FEA to safeguard the value of the currency of Malaysia and balance of payment.
- Penalties are imposed, if customers and financial institutions are charged against any non-compliance with FEA Rules, such as fines not exceeding RM50 million and/or imprisonment for a term not exceeding ten years depending on the type of offence committed.
Where can you find these requirements?
Where can you find these requirements?
https://www.bnm.gov.my/fep
For further information, please contact us at +603-2601 2000.
