KUALA LUMPUR (Bernama): Malaysia is planning to impose a cash transaction limit (CTL) of RM25,000 starting next year to further strengthen the country’s financial integrity and curb illicit activities.
"This is to address the abuse of physical cash used for illicit activities,” Bank Negara (BNM) deputy governor and chairman of the National Coordination Committee to Counter Money Laundering (NCC), Datuk Abdul Rasheed Ghaffour said.
The measures will apply to all transactions involving physical cash payments including payments of goods and services and donations and transfers between parties, which are applicable to individuals, businesses and other entities.
Industries with large cash transactions that may be impacted by the CTL are high-value dealers, medical tourism, hotels, and wholesale, he said at a media briefing here, today.
"However, there are two important exemptions to note.
Firstly, any cash transactions to or with financial institutions are exempted. As regulated entities, these institutions are already subjected to stringent anti-money laundering or counter-terrorism financing requirements.
"Secondly, cash transactions under circumstances such as for humanitarian aid also (will be) exempted for the approval of the Ministry of Finance on the recommendation of Bank Negara Malaysia,” said Abdul Rasheed.
He said the move would not affect households as NCC’s engagement with over 1,000 individuals across the country revealed that large single cash transactions on average among the Bottom 40 household income group (B40) were RM2,284, Middle 40 income group, M40 (RM4,104) and Top 20 income group, T20 (RM7,843).
The central bank had also conducted bilateral engagements with various business associations.
"Our engagements with individuals suggested that a single transaction over RM25,000 by cash is really (unprecedented).
This can also be seen with the average total expenditure of households across various income brackets.
"The average total money spending of the T20 household is around RM8,000 a month, which is really below the limit.
There is no reason why these people will be affected by this proposal,” said Abdul Rasheed.
He said the objective of this CTL measures were two-fold, that is, to complement the Anti-Money Laundering and Counter Financing of Terrorism framework in Malaysia and send a strong signal that hiding behind the anonymity of cash to benefit from illicit activities would not be tolerated.
In January, BNM lowered the daily cash threshold report (CTR) from RM50,000 to RM25,000.
Up to September, over five million CTR reports were received, representing about RM483bil in cash transactions.
Abdul Rasheed said any intention of committing an offence related to the proposed measures would be liable to a fine not exceeding three times the aggregate sum or value of the transaction at the time the offence was committed.
He noted that the CTL proposal is not new nor unique to Malaysia as many European countries such as France, Italy and the United Kingdom have implemented the measures for many years.
"In fact, our neighbouring country Indonesia is also proposing similar measures too," he noted.
He said that the CTL would fall under the Currency Bill, which has been tabled for first reading in Parliament in July this year and would go for a second reading in December.
The Bill is to ensure that BNM remains the sole authority over the Malaysian currency.
"The bill will provide us the provisions of having cash transaction limit," he added. Abdul Rasheed said the central bank will commence public consultation for CTL next week.
The central bank will share the public consultations, depending on the feedback it received through various means including annual reports.
"We want to hear from the public first. In the past, if you look at public policy, it normally (takes) about six months to implement this. It can be earlier, depending on the public feedback,” said Abdul Rasheed.