Recent Developments in the Regulatory Framework for Electronic Money and Payment Instruments
07 January 2025
Two pieces of subsidiary legislation were recently issued under each of the Financial Services Act 2013 (“
FSA”) and the Islamic Financial Services Act 2013 (“
IFSA”). They are as follows:
All the above-referred Orders came into operation on
2 January 2025.
P.U.(A) 463/2024
This Order exempts any person who issues the category and criteria of electronic money listed in the Schedule to this Order (“
limited purpose e-money”) from the requirement to obtain a licence under section 8(1) of the FSA to carry on an approved business under the FSA. The Schedule to P.U.(A) 463/2024 sets out the following four categories of limited purpose e-money and the criteria applicable to each such category:
| 1. |
Category 1 – limited purpose e-money for the purpose of purchasing goods or services; |
| 2. |
Category 2 – limited purpose e-money for the purpose of storing rewards; |
| 3. |
Category 3 – limited purpose e-money for the purpose of refunding the user; and |
| 4. |
Category 4 - limited purpose e-money issued by a telecommunication service provider. |
To be eligible for the exemption, the issuer of a category of limited purpose e-money must comply with the conditions set out in the applicable sub-paragraph of paragraph 4 of the Order. The Minister of Finance (“
Minister”) may disapply the Order to any person who:
| 1. |
fails to comply with any applicable condition in paragraph 4; |
| 2. |
has been convicted of a criminal offence relating to fraud; or |
| 3. |
is suspected by Bank Negara Malaysia (“BNM”) of having committed a criminal offence relating to fraud, |
Where a proposed disapplication is grounded on item 1 or item 3 of the preceding paragraph, the person concerned must be given a right to respond in writing to a notice to show cause. If the person fails to respond within 30 days of receiving the notice, or the Minister is dissatisfied with the response, the Order may be disapplied to such person.
P.U.(A) 464/2024
This Order amends Part 1 of Schedule 2 of the FSA by excluding from the definition of “
deposit”
1, money paid by any person to:
| 1. |
an issuer of limited purpose e-money exempted under P.U.(A) 463/2024;
|
| 2. |
an issuer of a payment instrument, of which the payment instrument:
- stores funds electronically in exchange of funds paid to the issuer; and
- is able to be used as a means of making payment to the issuer only,
in the course of carrying on its business of issuing the payment instrument. |
P.U.(A) 461/2024
This Order exempts any person who issues the category and criteria of electronic money listed in the Schedule to the Order (“
limited purpose e-money”) from the requirement to obtain a licence under section 8(1) of the IFSA to carry on an approved business under the IFSA. The four categories of limited purpose e-money and the criteria applicable to each such category as set out in the Schedule P.U.(A) 461/2024 are identical to the four categories listed in the Schedule to P.U.(A) 463/2024.
To be eligible for the exemption, the issuer of the relevant category of limited purpose e-money must comply with the conditions set out in the applicable sub-paragraph of paragraph 4 of the Order. The Minister may disapply the Order to any person who:
| 1. |
fails to comply with any applicable condition in paragraph 4; |
| 2. |
has been convicted of a criminal offence relating to fraud; or |
| 3. |
is suspected by BNM of having committed a criminal offence relating to fraud, |
Where a proposed disapplication is grounded on item 1 or item 3 of the preceding paragraph, the person concerned must be given a right to respond in writing to a notice to show cause. If the person fails to respond within 30 days of receiving the notice, or the Minister is dissatisfied with the response, the Order may be disapplied to such person.
P.U.(A) 462/2024
This Order amends Part 1 of Schedule 2 of the IFSA by excluding from the definition of “
Islamic deposit”
2, money paid by any person to:
| 1. |
an issuer of limited purpose e-money exempted under P.U.(A) 461/2024;
|
| 2. |
an issuer of an Islamic payment instrument, of which the payment instrument:
- stores funds electronically in exchange of funds paid to the issuer; and
- is able to be used as a means of making payment to the issuer only,
in the course of carrying on its business of issuing the Islamic payment instrument. |
Alert by Hafidah Aman Hashim (Partner) of the Islamic Finance Practice and Lee Ai Hsian (Partner) of the Banking and Finance Practice of Skrine.
1 A “deposit” is defined in section 2(1) of the FSA.
2 An “Islamic deposit” is defined in section 2(1) of the IFSA.
This alert contains general information only. It does not constitute legal advice nor an expression of legal opinion and should not be relied upon as such. For further information, kindly contact skrine@skrine.com.