Revised policy on granting of credit facilities

Bank Negara Malaysia (“BNM”) has revised its policy document on granting of credit facilities which are applicable to licensed insurer under the Financial Services Act 2013 and licensed takaful operator under the Islamic Financial Services Act 2013 (each a licensed person).

The policy document sets out, including without limitation:

it is deemed to have come into effect on 1 December 2015 and supersedes the earlier policy document dated 20 November 2015.
a licensed person is required to obtain the prior written approval of BNM to:

1. act, or arrange with any person to act, as a guarantor for a credit facility granted to any person; and
2. grant a credit facility to any person specified in paragraph 7.2 thereof.

the prior written approval of BNM is not required for the granting of a credit facility to a licensed person’s insurance or takaful agent.
the purchase of corporate bonds and/or sukuk by a licensed person is not deemed as the granting of a credit facility.

Revised foreign exchange policy notices

On 1 June 2022, BNM issued revised Foreign Exchange Policy Notices (“FEP Notices”) which came into effect on the same date. The Foreign Exchange Notices which have been in effect since 15 April 2021 have been revoked and superseded. The key amendments introduced by BNM under the FEP Notices are as follows (which are not exhaustive):

Notice 1: Dealings in Currency, Gold and other Precious Metals

A non-resident is allowed to buy or sell foreign currency against ringgit on spot basis and forward basis with an appointed overseas office (“AOO”) of the licensed onshore bank’s banking group for the purpose as set out in paragraph 6(1)(b) of Notice 1. Previously, a nonresident can only buy and sell foreign currency against ringgit on forward basis with AOO for (i) settlement of international trade of goods or services with a resident on a firm commitment or anticipatory basis; or (ii) other purpose of firm commitment basis.

Notice 2: Borrowing, Lending and Guarantee

A non-bank resident guarantor is also permitted to provide financial guarantee in any amount to secure a borrowing obtained by a non-resident from a nonresident financial institution.
A non-bank resident guarantor cannot give financial guarantee to secure foreign currency borrowing obtained by non-resident borrower from a nonresident financial institution if the underlying borrowing is or will be utilised by the resident guarantor.
A non-bank resident guarantor cannot give financial guarantee to secure foreign currency borrowing obtained by non-resident borrower where the resident guarantor has entered a formal or informal arrangement to make repayment of the foreign currency borrowing other than under a call-upon¹ by the lender in the event of default².

^{1 “}Call-upon” of financial guarantee shall be initiated by the lender in writing to the resident guarantor. Resident guarantor may not initiate a “call-upon” of a financial guarantee.

2 Event of default prior to a call-upon of a financial guarantee by the lender shall be treated by the lender in accordance with the requirements under IFRS 9 or any equivalent accounting standards adopted by the lender.

Notice 4: Payment and Receipt

A resident is free to pay or receive foreign currency to or from another resident for settlement of a miscellaneous expense (that is a current account transaction of a reasonable amount of an infrequent nature, including holiday or medical expenses incurred abroad and payments for purchase of goods and services abroad) incurred outside Malaysia between a resident individual residing in Malaysia and a resident individual residing outside Malaysia.
A resident individual is allowed to open a foreign currency account jointly with a non-resident individual. Previously, this permission is only limited to where the non-resident individual is an immediate family member.
A non-resident is allowed to open a foreign currency account jointly with a resident individual. Previously, this permission is only limited to where the resident individual is an immediate family member.

Notice 7: Export of Goods

A resident exporter with annual gross export of goods exceeding RM250 million is now only required to submit a report as and when required by BNM. Previously, the requirement is to submit a quarterly report to BNM.
A resident exporter under paragraph 5 of Notice 7 that does not receive any proceeds from export of goods as referred to under paragraph 1(c) of Part A of Notice within 24 months from the date of shipment, shall notify BNM on the outstanding export of goods proceeds within 21 days after the end of each calendar year.

BNM issues exposure draft on Cloud Technology Risk Assessment Guideline (“CTRAG”)

On 3 June 2022, BNM issued an exposure draft setting out its proposed guidance to assess common key risks and consideration of control measures when cloud services are adopted by financial institutions. The guideline, when in force, will complement the Risk Management in Technology (“RMiT”) policy document.

The exposure draft, when issued, will apply to:

banks, investment banks, insurers licensed under the Financial Services Act 2013;
Islamic banks and takaful operators licensed under the Islamic Financial Services Act 2013;
operators of designated payment systems and issuers of electronic money approved under the Financial Services Act 2013 or the Islamic Financial Services Act 2013.

Any feedback to the exposure draft must be provided to BNM by 15 July 2022.

Revision to Guidelines on Unlisted Capital Market Products under the Lodge and Launch Framework

The Securities Commission Malaysia (“SC”) has made certain amendments to Part 3 Corporate Bonds and Sukuk, Part 4 Asset Backed Securities and Part 5 Convertible Notes and Islamic Convertible Notes to Specific Registered Persons on 30 May 2022.

The revisions made relate to post-issuance submissions to the SC as well as editorial amendments.

Amended Labuan Laws

The Labuan Companies (Amendment) Act 2022 came into force on 10 June 2022 save for the removal of the following:

removal of the prohibition on dealings by a Labuan company in ringgit; and
the notification requirement by a Labuan company to notify the Labuan Financial Services Authority on its transactions with residents,

which are deemed to have come into operation on 1 January 2019.

The Labuan Financial Services And Securities (Amendment) Act 2022 and Labuan Islamic Financial Services And Securities (Amendment) Act 2022 are deemed to have come into force on 1 January 2019.