Banking and Financial Institutions Act, 1989 (BAFIA) is one of the financial regulation
The Banking and Financial Institutions Act, 1989 (BAFIA) was passed in Parliament and came into force on October 1, 1989. The BAFIA has effectively replaced the Banking Act 1973 and the Finance Companies Act 1969. The Islamic Banking Act 1983, however, is not affected. The BAFIA is a comprehensive act and extends comprehensive powers to Bank Negara Malaysia (BNM) to supervise a larger spectrum of financial institutions, with the direct responsibilities to regulate and supervise all licensed institutions (commercial banks, finance companies, merchant banks, discount houses and money ...view middle of the document...
AMLA addresses the following broad issues:-
• Money laundering offences
• Financial Intelligence Unit
• Reporting obligations
• Powers of investigation, search and seizure
• Powers of freezing, seizure and forfeiture of property
The banking system consists of Bank Negara Malaysia (Central Bank of Malaysia), banking institutions (commercial banks, finance companies, merchant banks and Islamic banks) and a miscellaneous group (discount houses and representative offices of foreign banks). The banking system is the largest component of the financial system, accounting for about 67% of the total assets of the financial system.
Bank Negara Malaysia (BNM)
Bank Negara Malaysia (the Central Bank of Malaysia) was established on 26 January 1959, under the Central Bank of Malaya Ordinance 1958. The objectives of BNM are as follows
•To issue currency and keep reserves to safeguard the value of the currency;
• To act as a banker and financial adviser to the Government;
• To promote monetary stability and a sound financial structure; and
• To influence the credit situation to the advantage of Malaysia.
The commercial banks are the largest and most significant providers of funds in the banking system. There are currently 24 commercial banks (excluding Islamic banks) of which 13 are locally incorporated foreign banks. The main functions of commercial banks are to provide:
• Retail banking services such as the acceptance of deposit, granting of loans and advances, and financial guarantees;
• Trade financing facilities such as letters of credit, discounting of trade bills, shipping guarantees, trust receipts and Banker’s Acceptances;
• Treasury services;
• Cross border payment services; and
• Custody services such as safe deposits and share custody.
Finance companies form the second largest group of deposit-taking institutions in Malaysia. Finance companies were initially governed by BNM through the Finance Companies Act 1969. This was replaced in 1989 with the Banking and Financial Institutions Act 1989. There are currently 12 finance companies. Finance company business is defined as
• The business of receiving deposits on...