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Malaysia Follows South Korean lead, Makes Customer ID Compulsory for Crypto Transactions

Malaysia Follows South Korean lead, Makes Customer ID Compulsory for Crypto Transactions

Malaysian Central Bank, Bank Negara Malaysia, announced the new anti-money laundering laws on Tuesday, making customer ID compulsory for all crypto transactions.

The bank has developed new ‘Anti-Money Laundering and Counter Financing of Terrorism Policy for Digital Currencies’ which went into effect immediately. All exchanges operating in Malaysia that offer fiat currency to cryptocurrency transactions or even crypto-to-crypto transactions will come under the purview of the new rules.

The exchanges will now have to double down on due diligence about their customers. It will be essential to check and collect information about the customers that are trading on a platform. The full name, date of birth, address and even the purpose of the customer’s transaction could be asked by the platform now.

The central bank clearly mentions that it does not endorse cryptocurrency trading in any form. It also stated that this move is not to make cryptocurrency trading legal in any form. Digital currencies will not be accepted as legal tender in Malaysia, states the bank. It also said, “Members of the public are advised to carefully evaluate the risks associated with dealings in digital currencies.”

These new rules come as a result of months of public consultation. As early as November, officials began talking about introducing a new framework for crypto transactions. Draft rules were published by central bank officials in December. Industry stakeholders were asked to give their views on the topic, after which the final policy was decided.

The policy document states, “Reporting institutions are required to conduct customer due diligence on all customers and the persons conducting the transaction when the reporting institution establishes business relationship with customer and when the reporting institutions have any suspicion of money laundering or terrorism financing.”

Malaysian authorities are also very strict on combating financial crime related to cryptocurrencies. Their authorities are honing their cybercrime skill, especially in relation to these digital currencies. Mohamad Fuzi Harun, Inspector-General of Malaysian police didn’t divulge the details of their efforts but mentioned that the Commercial Crime Department is working to “enhance their skills in investigation of cybercrimes.”

The department is working closely with the central bank to understand the nature of these crimes and help curb their occurrence. Malaysia is considered one of the most crypto-friendly Asian countries. Even by conservative measures, the digital asset trading could be valued at $20 million. Though the central bank says it does not endorse these coins, the deputy finance minister had different views.

In January, Datuk Seri Johari Abdul Ghani said that the government does not wish to ban digital currency trading in Malaysia. He even said that such a ban will not be “in best interests of Malaysia” as it would hamper the development of fintech in the country. He also said, “It is not the intention of the authorities to ban or put a stop to any innovation that is perceived to be beneficial to the public.”

It will be safe to assume that there will be no outright ban on crypto trading in Malaysia. However, rules will become stricter and it is highly likely that anonymous trading will become a thing of the past, at least in this country.

About the author

John Creech

John is a Tech Journalist. He has been passionate for the cryptocurrencies for over 4 years now. He loves writing about technological advancements and always seeks to analyse what future will bring to us.

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