C7. The Acts Flashcards
should BNM supervise financial holding companies (FHCs) that hold more than 50% of a financial institution and financial entity previously not under its supervision?
BNM is authorised to supervise financial holding companies (FHCs) that hold more than 50% of a financial institution and financial entity previously not under its supervision, but which is now deemed to pose a systemic risk to the overall financial stability by the Ministry of Finance.
companies that own more than 50% of a financial institution have to be registered as an FHC, bringing all FHCs under the purview of BNM.
what does FSA/IFSA provide legal framework for?
Thus, FSA/IFSA provides the necessary legal framework for BNM to:
a) License and regulate the financial institutions
b) License and regulate deposit-taking business
c) Ensure protection of confidential information pursuant to the banking secrecy provisions
d) Issue guidelines on and initiate investigation and prosecution of banking offences
what does FSA/IFSA provide legal framework for?
Thus, FSA/IFSA provides the necessary legal framework for BNM to:
a) License and regulate the financial institutions
b) License and regulate deposit-taking business
c) Ensure protection of confidential information pursuant to the banking secrecy provisions
d) Issue guidelines on and initiate investigation and prosecution of banking offences
FSA/IFSA also prohibits any acceptance of deposits by any person unless that party is a licensed entity. True or False?
True
The main objectives of the FSA/IFSA are:
a) To foster the safety and soundness of financial institutions
b) To promote the integrity and orderly functioning of the money market and foreign exchange market
c) To nurture safe, efficient and reliable payment systems and payment instruments
d) To cultivate fair, responsible and professional business conduct of financial institutions
e) To protect the rights and interests of consumers of financial services and products,
and develop clear regulations on Shari’ah compliance and governance in the Islamic
financial sector
The new Act serves to further strengthen the Malaysian financial system, in particular strengthening the following areas:
a) Promote financial stability
b) Strengthen regulation of financial institutions and other financial groups
c) Support more effective supervisory and enforcement framework
The FSA consolidates and repeals the following acts:
a) Banking and Financial Institutions Act 1989 (BAFIA)
b) Exchange Control Act 1953
c) Insurance Act 1996
d) Payment Systems Act 2003
The IFSA consolidates and replaces the following acts:
a) Islamic Banking Act 1983
b) Takaful Act 1984
what is are the steps of performing secrecy obligations?
- Restriction: financial institutions are restricted from disclosing customer information. This restriction applies to any person who has access to such information.
- permitted disclosure: Under certain circumstances, the information may be disclosed, for example to law enforcement agencies for purposes of investigation or prosecution of an offence
- intended outcome: the main objective is to safeguard the customer account information against wrongful disclosure. All information permitted to be disclosed is only for legitimate purposes, and only to authorised persons or parties for the performance of their respective functions.
Under FSA/IFSA, law enforcement agencies are allowed to request for customer information directly from FIs and DFIs subject to the conditions outlined below:
a) The order or request must be made in writing using specified forms provided.
b) The request must state:
i. Name of customer
ii. Account number and type with the FI or the reference information of the specific document required (e.g. cheque number)
iii. Provision under the relevant law under which the offence is believed to have been committed
iv. Name, identity and contact information of the investigating officer to whom the customer information is to be released
c) In the case of an order or request made by the police, a high-ranking officer who shall be at least an Inspector must sign the order or request. In the case of an order or request made by other law enforcement agencies, the order or request must be signed by an officer who is in the list of authorised signatories of the respective law enforcement agency; and
d) In the event that the law enforcement agency requests to take possession of, to make copies of, or to remove from the premises any customer information, the agency shall assure the FI that the agency and its officers are empowered by the respective written law to do so.
if a person has resigned from an FI or other related entities governed under the FSA/IFSA, are they still bound by FSA/IFSA?
Yes, even if a person has resigned from an FI or other related entities governed under the FSA/IFSA and are still in possession of customer information in whatever form, that person is still bound by the above sections.
what are the penalties for non-compliance of secrecy obligations?
The penalties for non-compliance of the above are:
a) Fine not exceeding RM10 million, or
b) Imprisonment for a term not exceeding 5 years, or
c) Both fine and imprisonment
what are the circumstances in which customers’ information can be disclosed?
a) Customer gives his permission in writing, or
b) As approved by BNM in writing, or
c) The customer is declared bankrupt, or
d) For the purpose of criminal or civil proceedings, or
e) In compliance with a court order, or
f) Disclosure of information to PIDM
Additional permitted disclosures
a) if required by Inland Revenue Board
b) when a financial institution has reason to suspect that an offence under any written law has been, is being or may be committed
The CMSA accords greater protection to investors by:
a) Enhancing the SC’s power to take civil and administrative actions
b) Allowing the SC to recover three times the amount of losses through civil action for a wider range of market misconduct including market manipulation
c) Requiring application monies of sophisticated investors to be held on trust in fund-raising exercises
d) Enhancing the standards of trustees for debenture holders
e) Extending investor protection provisions to clients of financial institutions
what is the key CMSA measure benefitting capital market intermediaries
A key CMSA measure benefitting capital market intermediaries is the introduction of the single licensing regime.
Under this measure, intermediaries hold a Capital Markets and Services Licence as opposed to multiple separate licences, which effectively reduces administrative and compliance costs, and ultimately saves time.
Section 92 (recommendations by licensed person)
A licensed person must have a reasonable basis for making recommendations. Eg, a licensed person shall not recommend an investment product that does not meet the client’s needs just to meet his/her sales targets.
Penalty for non-compliance:
- Fine of up to MYR 3 million, or
- Imprisonment of up to 10 years, or
- Both fine and imprisonment
Section 93 (priority given to client’s order)
a license holder must accord priority to client’s orders.
Any licensed person who wilfully ‘front runs’ a customer in order to benefit from him/her will
be committing an offence under this section. Front run is a term used to describe an action
by a licensed person who has knowledge about a customer’s order, and executes a position
for himself/herself before executing the customer’s order.
Penalty for non-compliance:
Fine not exceeding MYR 1 million, or
Imprisonment for a term not exceeding 5 years, or
Both fine and imprisonment
