KUALA LUMPUR: Bank Negara Malaysia (BNM) is proposing the implementation of a cash transaction limit (CTL) of RM25,000 in 2020, as part of its efforts to tackle and reduce money laundering and terrorism financing.
A CTL is a cap on the amount that can be paid by physical cash per transaction and will be the latest in a series of measures to further strengthen the Anti-Money Laundering/Counter Financing of Terrorism (AML/CFT) framework. It is meant to complement existing integrity measures such as the suspicious transaction report (STR) and cash threshold report (CTR). Currently, there is no limit on physical cash transactions.
In January, BNM lowered the daily CTR from RM50,000 to RM25,000.
Up to September 2019, over five million CTR reports were received, representing about RM483 billion in cash transactions.
Speaking to the media during an engagement session today, BNM deputy governor Datuk Abdul Rasheed Ghaffour explained that the CTL would cover all types of cash payment transactions for payment of goods and services by B2B (business-to-business), B2C (business-to-consumer) and C2C (consumer-to-consumer), as well as any transfer of physical cash.
“There is an exclusion made for cash transactions with or through licensed banks, licensed Islamic banks or prescribed institutions as these are already subject to stringent AML/CFT measures,” he said.
Transactions that have been approved by the Finance Ministry on recommendations by BNM under exigent circumstances, such as humanitarian aid or disaster relief, will also be exempted from the CTL.
Abdul Rasheed also said that the proposed threshold of RM25,000 is meant to take into consideration the genuine needs of industries that used large cash transactions such as high-value dealers, medical tourism and hotels, but would not prove to be too restrictive.
Households are not expected to be affected by the CTL as previous engagement efforts by the National Coordination Committee to Counter Money Laundering (NCC) showed that even in T20 households, the average done in cash transactions came to RM7,843 – well below the limit.
The CTL is an initiative under the NCC, and will come under the Currency Bill, which is due to go through a second reading in Parliament next month.
Abdul Rasheed, who is also NCC chairman, said the concept of a CTL was not new or unique to Malaysia, as other countries have undertaken similar measures.
However, he stressed that implementing the CTL as a way to promote financial integrity was a shared responsibility with everyone having a role to play.
“To tackle financial crime, we as the central bank, cannot do it alone. We all play a role here to ensure that this becomes effective. Secondly, this will not be used to specifically pick up on people’s individual transactions, but rather be a part of the wider enforcement that we do,” Abdul Rasheed said.
He added that while the reports would be assessed on a case-by-case basis, those who seek to circumvent the CTL by breaking up transaction amounts, or by any other means, would face a penalty.
The proposed penalty is a fine not exceeding three times the aggregate sum or value of the transaction at the time the offence was committed.
Public consultation on the CTL will begin on Monday, with all questions and written feedback to be submitted by Dec 31.