Malaysia: Laws Related to Token Sales, Blockchain, and Digital Proof

In February 2018, Malaysia’s laws on Anti-Money Laundering/Counter Financing of Terrorism (AML/CFT) came into effect, requiring all organizations involved with trading cryptocurrency for fiat, fiat for cryptocurrency, or crypto for crypto (especially cryptocurrency exchanges) to conduct various customer due diligence measures. This includes appointing a compliance officer to manage oversee the due diligence process, having risk assessment processes which is documented and up-to-date, have risk management processes to mitigate risk, and to conduct risk profiling on customers. All suspicious transactions must be reported.

Customer due diligence requires collecting at least the full name, address, date of birth, nationality, and National Registry ID number or passport number of all customers, as well as the purpose of the customer’s transaction, and the organization is to conduct a background search if the identity of the customer in question is in doubt. If the risks are assessed to be higher than normal, enhanced customer due diligence is required, requiring additional information including the volume of assets and source of wealth. The due diligence process may be outsourced to a third party. It is enforced by the Financial Intelligence and Enforcement Department of the Central Bank of Malaysia. (Source)

There are no regulations yet pertaining specifically to the legality of blockchain as of July 6, 2018. Currently the Malaysian Inland Revenue Board is studying the cryptocurrency market and will come up with taxation legislation in due course, however, no timeline was given. (Source)


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