Understanding Foreign Exchange Policy And Its Application In Banking Transactions

Foreign Exchange (FE) Policy is part of broad prudential toolkits that generally aim to preserve Malaysia’s monetary and financial stability. The policy has become a ‘compliance-focused area’ among financial institutions in Malaysia and bank officers are to have comprehensive understanding of the policy to ensure reasonable compliance and are able to adopt market standards in the due diligence process.

This two-day programme will explain the rules within the FE Policy and how they are being applied in banking transactions. All 7 Notices in the policy will be covered including the Directions to Financial Institutions and Minimum Due Diligence. Quizzes and case studies will also be incorporated to reinforce the learning.

Learning Objectives:

• Interpret key rules of the FE policy
• Apply respective rules in banking transactions
• Undertake appropriate due diligence measures to ensure compliance

Outline:

• Overview of Foreign Exchange (FE) Policy
• FE Rules by Balance of Payment components
• Balancing between the benefits and costs of capital flows
• FE Rules by Legal Notices
• Laws applicable to the FEA Rules
• FE rules of neighboring countries
• Directions to Financial Institutions
• General operational requirements
• Requirements for submission of report on breaches and non-compliances
• Understanding the Structure and Rules of FE Policy
• 4Ws Approach
• Activity / Discussion
• Key terminologies in FE Policy
• Resident & non-resident, Labuan entities, group of entities, parent-subsidiary relationships etc
• Hedging of currency and dealings in gold and precious metal (Notice 1)
• Key pointers
• Related definitions
• Dealings in currency by Resident: buying & selling of foreign currency against the Ringgit
• Own account transaction
• Dynamic hedging framework for institutional investors
• Transaction on behalf of related entities or clients
• Dealings in currency by non-resident: buying & selling of foreign currency against the Ringgit
• Own account transaction
• Dynamic hedging framework for institutional investors
• Transactions on behalf of related entities or clients
• Appointed overseas office framework
• Buying and selling of foreign currency against another foreign currency by residents and non-residents
• Dealings in gold and other precious metals
• Foreign Currency Trading
• Case Scenarios
• Obtaining and Extending of Borrowing and Guarantee (Notice 2)
• Key pointers
• Related definitions
• Borrowing by resident individual, sole proprietor, partnership and entity in :
• Ringgit from non-resident
• Foreign currency from resident and non-resident
• Borrowings by non-residents in Ringgit and foreign currency
• Exchange of debts
• Financial & non-financial guarantee
• Case Scenarios
• Investment in Foreign Currency Assets (Notice 3)
• Key pointers
• Classifications of investment transactions
• Investment in foreign currency asset by
• resident individual, sole proprietor and partnership
• resident entity
• resident intermediaries
• Case Scenarios
• Payments, Receipts and Account Operations (Notice 4)
• Key pointers
• Related definitions
• Payment and receipts for approved transactions
• Payment involving Specified Persons and Restricted Currency
• Payment/receipts in Ringgit between:
• a non-resident and resident
• non-residents
• Opening and maintaining of Ringgit account by non-resident
• Management of Ringgit Assets by NR Financial Institution or NR Intermediary
• Payment/receipts in Foreign Currency between:
• residents
• resident & non-resident
• Opening and maintaining of foreign currency accounts
• Case Scenarios
• Issuance of Securities and Financial Instruments (Notice 5)
• Issuance of Security and Islamic Security by resident & non-resident
• Issuance of financial instruments and Islamic financial instruments by licensed financial institutions and Bursa Malaysia
• Subscription or transfer of security or financial instrument
• Case Scenarios
• Import and export of Currency (Notice 6)
• Export of goods and retention of its proceeds (Notice 7)
• Key pointers
• Related definitions
• Scope of exports of goods
• Repatriation required of proceeds of export of goods
• Payment of proceeds of export of goods in Ringgit
• Case Scenarios