Requirements for the Conduct of Money Services Business by Banking Institutions

The Money Services Business Act 2011 (MSBA) requires licensees conducting money services business activities (comprising money changing, remittance and wholesale currency businesses) to institute and maintain sound governance and operational arrangements to ensure the proper conduct of money services business.

This policy document provides for consistent requirements and standards as that applied to licensees under the MSBA, to be extended to banking institutions that provide money changing and/or remittance services. Compliance with these requirements and standards is expected to strengthen banking institutions’ operational arrangements, in particular their agent oversight frameworks, to protect consumers and safeguard the integrity of the banking institution’s money services business operations by preventing its use for illicit purposes. Given the critical role of banking institutions in the financial system, this also has important reputational implications for banking institutions’ correspondent banking relationships and overall confidence in the financial system.

Section I of this document outlines the following key operational requirements and the minimum standards to be observed by a banking institution in conducting money services business:
(a) General requirements for operating money services business;
(b) Specific requirements for the conduct of money changing business; and
(c) Specific requirements for the conduct of remittance business.

Section II of this document outlines the following requirements on the oversight of remittance agents by a banking institution:
(a) Policies and procedures on the appointment of an agent by a banking institution to conduct remittance on its behalf;
(b) Specific requirements for the conduct of remittance by an agent;
(c) Review by the banking institution on the conduct of an agent;
(d) Reporting by an agent to the banking institution; and
(e) Other requirements for agent arrangements.

This document belongs to Bank Negara Malaysia (BNM). Full access to the original source is available here: https://www.bnm.gov.my/banking-islamic-banking