On 24 December 2021, the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities (Invocation of Part IV) Order 2021 and the Anti-Money Laundering, Anti-Terrorism Financing And Proceeds of Unlawful Activities (Amendment of First and Second Schedules) Order 2021 came into effect. These extend the application of Part IV of the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 ("AMLA") to various fintech players.
Part IV of the AMLA deals with reporting obligations of reporting institutions, including the duties of record-keeping, customer due diligence, having a compliance programme, and other requirements related to disclosure, tip-off, and investigation or protection of reporting persons and institutions.
For digital asset players (i.e. digital asset exchanges (DAX) and initial exchange operators ("IEOs"), the language has been widened to include intermediaries and those involved in the provision of advisory services relating to the offer or sale of digital currencies or digital tokens. There is now explicit clarity that digital tokens are also included – previously reference was only made to digital currencies – meaning that digital asset custodians are also now bound by Part IV of the AMLA.
The amendments also affect the definition of a "reporting institution" bringing other fintech players such as equity crowdfunding (ECF), peer-to-peer (P2P), property crowdfunding and e-services platforms into the fold. IEOs which facilitate the issuance of digital tokens are now also included. The amendments are unlikely to cause much operational concern for these players as they already have to comply with AMLA requirements via guidelines imposed by the Securities Commission of Malaysia and Bank Negara Malaysia. However, this is now more clearly grounded in primary legislation.
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