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Bank Negara Malaysia (i.e. the Central Bank of Malaysia) ("BNM") has issued a revised prudential framework for financial institutions that practice outsourcing (the "Framework"). According to a statement by BNM, the Framework aims to "ensure that risk management practices for outsourcing arrangements remain effective moving forward amid intensification of technological advances in a more globalised and digitised environment", taking into account the increasing risks to outsourcing arrangements, in particular cyber-attacks and data security breaches.
Among the significant revisions introduced by the Framework are that all outsourcing arrangements must first be approved by the board, and thereafter written approval must be obtained from BNM before a financial institution may enter into a new outsourcing arrangement or prior to renegotiating or renewing an existing outsourcing arrangement. Financial institutions must also ensure all existing arrangements entered into before 31 December 2017 are time bound to cease before 31 December 2022, and to that end the financial institution must submit a complete list of existing outsourcing arrangements to BNM no later than 30 June 2018 to allow BNM to instruct individual financial institutions on the appropriate transitioning measures for each existing outsourcing arrangement.
The Framework further sets out comprehensive lists of matters required to be addressed, as a minimum, for: (i) assessments of the effectiveness of a financial institutions management of outsourcing risks; (ii) measures that must be covered in the due diligence process; (iii) the form and salient terms of outsourcing agreements; (iv) and controls for protection of data confidentiality. BNM is currently inviting responses to the Framework until 27 October 2017, and the policy document is scheduled to come into effect on 1 January 2018.
Bank Negara Malaysia (i.e. the Central Bank of Malaysia) ("BNM") hopes to issue guidelines on cryptocurrency by year-end, particularly to address concerns related to money laundering and terrorist financing activities, said BNM's Governor, Tan Sri Muhammad Ibrahim. The guidelines are intended to ensure the regulation of cryptocurrency, which exist almost wholly in the digital realm and has no asset backing (of which Bitcoins are by far the most popular), and for those who want to participate in this particular sector.
This follows shortly after the Securities Commission Malaysia, the regulator overseeing capital market services and the licensing regime of debt and equity markets in Malaysia, issued an official statement in early September cautioning investors on the emergence of fundraising activities/ investment schemes based on digital tokens, whether in Malaysia or elsewhere, including "initial coin offerings" (where the scheme operators typically raise funds through the issuance and sale of digital tokens, in exchange for investors paying for these tokens through cryptocurrencies, such as Bitcoin or Ethereum). The investment schemes may be structured in many forms, and as the terms and features of such schemes may differ in each case, investors are reminded to seek legal or other professional advice if there are doubts on the legitimacy of these schemes.
The Merchant Shipping (Amendment) Bill 2017 promises to make sweeping changes to ship registration in Malaysia.
The key changes introduced by the Bill are:
- the introduction of a bareboat charter registry (as distinct to a mere ownership registry) at both the domestic Malaysia Ship Registry ("MSR") and Malaysia International Ship Registry ("MISR");
- the relaxation of requirements to register ships at both the MSR and MISR;
- the introduction of new powers that allow ship mortgagees to sell ships the moment mortgage money is due (as distinct to the present law which only allows mortgagees to sell ships in the event of a foreclosure);
- the recognition of equitable mortgages (and not merely registered mortgages); and
- new provisions making the MSR a true mirror of title ownership (regardless of whether the registered owner has knowledge of a trust).
On the whole, the changes – the first in over 10 years - attempt to modernise Malaysian ship registration laws. They also attempt to ease the procurement of Malaysian-flagged ships for operations in the Exclusive Economic Zone.
The enactment of the Bill will result in a more competitive Malaysian shipping industry. It should also provide a welcome boost to the country's oil and gas industry.
The Bill has been passed by Parliament. It will come into force once Gazetted.
The Land Public Transport (Amendment) Bill 2017 and the Commercial Vehicles Licensing Board (Amendment) Bill 2017 ("Bills") were passed at the Dewan Rakyat and Dewan Negara on 27 July 2017 and 15 August 2017, respectively. The Bills are still waiting to be given the Royal Assent before being gazetted and enforced.
The Bills define "intermediation business" as the business of facilitating arrangements, bookings or transactions for the provision of land public transport services as specified in the Third Schedule whether for any valuable consideration or money’s worth or otherwise.
Once the Bills come into force, any person that operates an intermediation business is required to obtain a licence. Drivers of e-hailing vehicles will also be regulated and are required to comply with stringent requirements under the law. In addition to other requirements, self-employed drivers of e-hailing service providers are now also required to contribute to the Social Security Organisation of Malaysia at the rates prescribed in accordance with the Self-Employment Social Security (Rates of Contribution for Taxi Driver) Regulations 2017.
Please note that whilst the information in this Update is correct to the best of our knowledge and belief at the time of writing, it is only
intended to provide a general guide to the subject matter and should not be treated as a substitute for specific professional advice.
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Christopher & Lee Ong
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Contacts: Lee Hock ChyeManaging PartnerD +603 2273 1919F +603 2273 8310hock.chye.lee@christopherleeong.comYon See TingPartnerD +603 2278 8311F +603 2278 8322see.ting.yon@christopherleeong.comFiona SequerahPartnerD +603 7958 8310F +603 7958 8311fiona.sequerah@christopherleeong.comLim Wee HannPartnerD +65 62320606wee.hann.lim@rajahtann.comYau Yee MingPartnerD +603 2278 8311F +603 2273 8322yee.ming.yau@christopherleeong.comKuok Yew ChenPartnerD +603 7958 8310F +603 7958 8311yew.chen.kuok@christopherleeong.com| Rajah & Tann Asia is a network of legal practices based in Asia. |
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