PENALTY

The penalty for offences commited under the Exchange Control Act, 1953

Upon conviction:
o FINE - Up to RM10,000;
o JAIL TERM - Not exceeding 3 years; or
o BOTH

Definition of resident:

Definition of non-resident:

Definition of External Account

Definition of ringgit asset in Malaysia

(a) Malaysian citizen; or

(b) Malaysian citizen with PR status of another country but resides in Malaysia; or

(c) Non- Malaysian citizen with PR status in Malaysia and resides in Malaysia; or

(d) Business enterprises / societies established / operating in Malaysia

(a) Non- Malaysian citizen; or

(b) Malaysian citizen with PR status abroad and resides abroad; or

(c) Foreign embassies, high commissions, supranationals, central banks; or

(d) Business entities established abroad

A ringgit account with a financial institution in Malaysia which is maintained by a non-resident or where the beneficial owner of the ringgit funds is a non-resident

• Any form of bank deposits

• Land & building

• Malaysian securities (whether listed or unlisted)

EXCHANGE CONTROL RULES

Allowed

Needs Approval

Not Allowed

1. Open foreign currency accounts in Malaysia or overseas

X

2. Open External Accounts in Malaysia to:-

• defray statutory and administrative expenses

X

• grant loans to staff

X

• pay for goods and services in Malaysia

X

• place fixed deposits with commercial banks in Malaysia

X

• invest in ringgit assets in Malaysia

X

3. External Accounts may be funded from:-

• sale of foreign currency

X

• credit facilities up to RM200,000 in total from banking institutions in Malaysia

X

• dividends, interest, rental, profits, fees and commission

X

• repatriation of ringgit from overseas banks

X

4. Convert funds in the External Account into foreign currency arising from receipt of dividends, interest, rental, profits, fees and commission

X

5. Borrow in foreign currency or lend in foreign currency, with commercial banks or Tier-1 merchant banks in Malaysia, or any non-resident

X

6. Borrow in ringgit (except credit facilities up to RM200,000 in total from banking institutions in Malaysia)

X

7. Lend in ringgit

X

8. Undertake any foreign exchange transactions in two foreign currencies with an authorised dealer or a Tier-1 merchant bank or any non-resident

X

9. All transactions with Specified Persons or Restricted Currencies (Israel, Serbia and Montenegro)

X

B. OFFSHORE INSURANCE ENTITIES

1. Open foreign currency accounts in Malaysia or overseas

X

2. Open External Accounts in Malaysia to:-

• defray statutory and administrative expenses

X

• grant loans to staff

X

• pay for goods and services in Malaysia

X

• place fixed deposits with commercial banks in Malaysia

X

• pay insurance premiums and claims for re-insurance of Malaysian risks and direct insurance of permitted Malaysian risks

X

• invest in ringgit assets in Malaysia

X

3. External Accounts may be funded from:-

• sale of foreign currency

X

• credit facilities up to RM200,000 in total from banking institutions in Malaysia

X

• dividends, interest, rental, profits, fees and commission

X

• receipt of insurance premiums and claims for re-insurance of Malaysian risks and direct insurance of permitted Malaysian risks

X

• repatriation of ringgit from overseas banks

X

4. Convert funds in the External Account into foreign currency arising from receipt of dividends, interest, rental, profits, fees and commission

X

5. Borrow in foreign currency or lend in foreign currency, with commercial banks or Tier-1 merchant banks in Malaysia, or any non-resident

X

6. Borrow in ringgit (except credit facilities up to RM200,000 in total from banking institutions in Malaysia)

X

7. Lend in ringgit

X

8. Undertake any foreign exchange transactions in two foreign currencies with an authorised dealer or a Tier-1 merchant bank or any non-resident

X

9. All transactions with Specified Persons or Restricted Currencies (Israel, Serbia and Montenegro)

X

C. OFFSHORE BANKS

1. Open foreign currency accounts in Malaysia or overseas

X

2. Open External Accounts in Malaysia to:-

• defray statutory and administrative expenses

X

• grant loans to staff

X

• pay for goods and services in Malaysia

X

• place fixed deposits with commercial banks in Malaysia

X

• invest in ringgit assets in Malaysia

X

3. External Accounts may be funded from:-

• sale of foreign currency

X

• credit facilities up to RM200,000 in total from banking institutions in Malaysia

X

• dividends, interest, rental, profits, fees and commission

X

4. Convert funds in the External Account into foreign currency arising from receipt of dividends, interest, rental, profits, fees and commission

X

5. Trade in ringgit instruments

X

6. Borrow in foreign currency or lend in foreign currency, with commercial banks or Tier-1 merchant banks in Malaysia, or any non-resident

X

7. Borrow in ringgit (except credit facilities up to RM200,000 in total from banking institutions in Malaysia)

X

8. Lend in ringgit

X

9. Issue guarantees in ringgit

X

10. Issue guarantees in foreign currency

X

11. Receive payment under guarantees in ringgit

X

12. Receive payment for guarantee fees in ringgit

X

13. Receive payment for guarantees in foreign currency (fees and claims)

X

14. Accept ringgit deposits from residents or non-residents

X

15. Undertake any foreign exchange transactions, including remittances, forward and spot purchases and sales with or on behalf of residents (other than an authorised dealer or a Tier-1 merchant bank)

X

16. Undertake any foreign exchange transactions in two foreign currencies with an authorised dealer or a Tier-1 merchant bank or any non-resident

X

17. All transactions with Specified Persons or Restricted Currencies (Israel, Serbia and Montenegro)

X

FURTHER CLARIFICATION