More insight into the plans of Malaysia’s central bank, Bank Negara Malaysia (BNM), to come up with a regulatory framework to ward off the potential illicit uses of cryptocurrencies, has been revealed.
According to BNM governor, Muhammad Ibrahim, they are formulating rules to fight the subsidization of money-laundering and terrorism in the country. He made the statements during a counter-terrorism financing summit.
A report said that under the said framework, people who exchange digital currencies into real-time money will be branded as "reporting institutions", under the country's anti-money laundering and anti-terrorism financing act.
Reporting institutions are then mandated by law to take preventive steps, such as forwarding sketchy transaction reports, to avoid acting as a channel for illicit money transmission.
"This is to prevent the abuse of the system for criminal and unlawful activities and ensuring the stability and integrity of the financial system," said Ibrahim.
The BNM governor however, did not say when the new regulations will be put in place but the drafting of the plan has been underway since September.
Muhammad said that they are on the alert as they have noticed a spike in suspicious transaction reports (STR) from financial institutions.
In the first half of 2017, Malaysian officials received 346 STRs related to terrorism financing which led to 34 disclosures to law enforcement agencies, compared to 93 reports in 2015.
Malaysia has apprehended hundreds of people over the past few years for their alleged involvement to militant groups.
The Southeast Asian country has been on their guard since suicide bombers and gunmen linked to Islamic State sprung multiple attacks in Jakarta, the capital of neighboring Indonesia, in January 2016.
A grenade attack on a bar on the outskirts of Kuala Lumpur in June last year wounded eight people. Islamic State claimed responsibility for the attacks, the first such attacks on Malaysian soil.
Earlier this month, Malaysia's securities regulator, Securities Commission Malaysia, also announced plans for a regulatory framework for cryptocurrencies. Aimed at "market integrity and investor projection," the agency said that it is collaborating with the central bank during the process.
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