Bank Negara sheds light on funds

Central bank says inaccurate to assume that it would be notified of any inward transfer of money

PETALING JAYA: The central bank has quashed the notion that it would be notified on the inward transfer of funds into the accounts of individuals.

Bank Negara said that it was misleading and inaccurate to state that the central bank gave approvals for the inward transfer of funds.

It said that under the prevailing foreign exchange administration rules, approvals were only required if the funds received were in the form of a loan or financing from a non-resident above the permissible threshold limit.

“No approvals are required from Bank Negara for any resident to receive inward fund transfers from non-residents into any bank account in Malaysia,” it told The Star in response to questions.

A resident is a Malaysian citizen or company. Generally, Bank Negara has rules to monitor Malaysian companies from taking loans from overseas financial institutions to avoid systemic risk.

Apart from that, it does not monitor the inward transfer of funds into accounts of companies or individuals unless the local bank handling the transaction suspects something amiss.

This comes under the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001.

The law states that financial institutions are required to have their customers fill in a form as part of their due diligence and for record-keeping purposes.

“If a financial institution suspects any irregularity in a transaction, a Suspicious Transaction Report (STR) should immediately be submitted to Bank Negara,” the central bank said.

The central bank said that only after an STR had been filed that it would have the powers to investigate the transaction.

“Only under these circumstances will Bank Negara have the grounds to enquire into and investigate or disclose specific transactions involving funds transfers into individual accounts to the respective law enforcement agencies to conduct its investigation,” it said.

The central said that under normal circumstances, the law did not allow the central bank to enquire into a bank account.

It said that Section 132 (1) of the Financial Services Act 2013 and section 144 (1) of the Islamic Financial Services Act 2013 contained strict client confidentiality provisions that expressly prohibit the central bank from enquiring into a bank account without an STR.

The central bank has come under scrutiny in light of funds transferred into accounts of individuals in and outside the country. There have been reports stating that Bank Negara would be aware if there were any inward transfer of funds into the accounts of individuals or companies.

So far, most financial institutions have complied with the STR requirement, especially when it involves individuals for fear of money going towards terrorist movements.

However, last year, Bank Negara slapped a fine on a local bank for not adhering to the requirements of the STR. The bank subsequently has seen a change in the top management.

Bank Negara’s role in the transfer of funds comes amidst speculation as to who would replace the long-serving governor Tan Sri Dr Zeti Akhtar Aziz, who is due to leave next month after 16 years at the helm.

Speculation on her successor include the secretary-general of Treasury Tan Sri Dr Mohd Irwan Serigar Abdullah, Minister in the Prime Minister’s Department Datuk Seri Abdul Wahid Omar and the Malaysian ambassador to the United States Datuk Dr Awang Adek Husin.

The other candidate is central bank deputy governor Datuk Muhammad Ibrahim.