The Inland Revenue Board’s (IRB) investigation into London based cryptocurrency exchanger Luno is not a phishing exercise for information on cryptocurrency traders, says its chief executive officer Datuk Seri Sabin Samitah.
Responding to a query on why the Luno bank account in Malaysia was frozen by IRB, he said the audit was to determine whether the cryptocurrency company has complied with the statutory requirement under the Income Tax Act 1967 and to ascertain if the business is involved in money laundering activities.
He said though the cryptocurrency business was an unregulated industry in Malaysia, it was subject to Malaysian income tax by virtue of the Section 3 of the Act, whereby tax shall be charged upon the income of any person accruing in or derived from Malaysia.
“The IRB is adopting the standard investigation procedure in dealing with cryptocurrency traders by inspecting their source documents and accounting records,” he said, in an e-mail reply to The Star on Friday.
He added that since source documents may be in the form of e-wallet and blockchain-based record keeping which were kept in Cloud servers, IRB needed to ascertain that cryptocurrency company was complying with stipulated laws on record keeping.
This meant the company would need to keep proper books of accounting and business records in Malaysia for the purpose of auditing by the relevant law enforcement agencies.
“Consequently, the request of information under Section 81 of the Act and Section 37 of the AMLATFPUAA 2001 is truly to assist the investigation or audit and not for the purpose of phishing for information on the cryptocurrency traders per se,” he said.
AMLATFPUAA was the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001.
He said current provisions of the Income Tax Act was applicable to all cryptocurrency traders.
“All traders should adhere to the Malaysian tax requirement by keeping proper records for audit purposes and disclose any transactions from the cryptocurrency trading when requested by IRB,” he said.
On Jan 13, Luno issued a statement that its bank account in Malaysia – held under the name of its local entity BitX Malaysia – was frozen by the IRB pending an investigation relating to tax matters.
As such, it has not been able to process deposits or withdrawals in the country over the past few weeks.
It said IRB requested to be furnished with information on all their Malaysian customers: identification, deposits/withdrawals, and transactions.
Luno said all other services remain unaffected, with customers still able to buy, sell, send and receive digital currencies like ETH (ethereum) and BTC (bitcoin) with their local currency balance.