When cash is no longer king

The move to introduce the CTL was to safeguard and strengthen the integrity of the country’s financial system. The central bank noted that it was imperative to have a safeguard in place in the form of the CTL in view of the risks of money laundering and financial crime.

PETALING JAYA: Malaysia is exploring the implementation of a cash transaction limit (CTL) by next year as one of the measures to combat the rising cases of money laundering and financial crime.

During the annual report and the financial stability and payments system report briefing in March, the governor of the central bank announced that it would continue to look at measures to safeguard the integrity of the financial system against threats posed by money laundering and terrorism financing.

One of the measures was the study of the CTL.

The move to introduce the CTL was to safeguard and strengthen the integrity of the country’s financial system.

The central bank noted that it was imperative to have a safeguard in place in the form of the CTL in view of the risks of money laundering and financial crime.

This is because cash remains extensively used by criminals as the medium to facilitate financial crime, it added.

The bank said it would be gathering feedback from the relevant stakeholders, ie, the public and businesses, to ensure the CTL meets its objectives. It hopes to have this measure implemented by next year.

The CTL is defined as a maximum limit per transaction that can be paid by cash.

Any aggregate amount above the limit needs to be paid electronically or by cheque through the banking system.

It is not a new measure as such a limit on cash has been implemented in Europe and Asia.

In Indonesia, the proposed draft bill on the CTL in 2018 was to limit cash payments to a maximum of 100 million rupiah. In Australia, the limit is capped at A$10,000.

The untraceable and anonymous nature of cash makes it an ideal vehicle to facilitate illicit activities such as corruption, money laundering, smuggling, organised crime and illicit drug trafficking. In light of this, the limit is meant to mitigate the abuse of cash for illicit activities.

As such, this measure typically targets high-value transactions.

Analysts agreed with the central bank, adding that although cash is important for individuals and businesses, it is open to abuse as it is extensively used by criminals to store, move and disburse illegal proceeds.

The untraceable and anonymous nature of cash makes it vulnerable to abuse as a medium of exchange for criminals to enjoy illegal proceeds, especially via the purchase of luxury or high-value items.

In the keynote address made by the Bank Negara governor at the 10th International Conference on Financial Crime and Terrorism Financing, it was said that the cash threshold report was introduced effective Jan 1 this year to mitigate financial crime.

The threshold of RM50,000 was reduced to RM25,000, which would enhance the monitoring and better visibility on suspicious transaction patterns.

Any transaction above RM25,000 would need to be reported as a requirement imposed on banking institutions and other relevant reporting institutions as a source of information used for financial crime surveillance, intelligence and investigations by law enforcement agencies in Malaysia.