FSA (Financial Services Act)

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Banking law, statute 2013

Text of FSA (Financial Services Act)

  • LAWS OF MALAYSIA Act 758

    Financial Services Act 2013

    Date of Royal Assent 18 Mar 2013

    Date of publication in the Gazette 22 Mar 2013

    An Act to provide for the regulation and supervision of financial institutions, payment systems and other relevant entities and the oversight of the money market and foreign exchange market to promote financial stability and for related, consequential or incidental matters.

    [30 June 2013, except s.129 and Schedule 9.]

    PU(B) 276/2013.

    ARRANGEMENT OF SECTIONS

    PART I

    PRELIMINARY

    1. Short title and commencement 2. Interpretation

    3. Prescription by Minister of additional business or activity

    4. Prescription by Bank of additional agreement, dealing, transaction or person

    5. Classification of, and construction of references to, insurance business

    PART II

    REGULATORY OBJECTIVES AND POWERS AND FUNCTIONS OF BANK

    6. Regulatory objectives 7. Powers and functions of Bank

    PART III

    AUTHORIZATION AND REGISTRATION

    Division 1

    Page 1 of 180

  • Authorized business 8. Authorized business to be carried on by authorized person 9. Application for authorization

    10. Grant of licence by Minister 11. Approval by Bank 12. Requirements on minimum capital funds or surplus of assets over

    liabilities 13. Additional conditions of licence or approval

    Division 2

    Restriction on dealings of authorized persons 14. Authorized person to carry on authorized business only 15. Authorized person and operator of designated payment system

    permitted to carry on certain Islamic financial business 16. Licensed insurer to carry on life or general business

    Division 3

    Registered business 17. Registered business to be carried on by registered person 18. Registered person to comply with standards

    Division 4

    Representative office 19. Requirements for representative office

    Division 5

    Revocation, deregistration, surrender or cessation of business or operations

    20. Grounds for revocation of authorization 21. Grounds for deregistration 22. Surrender of licence or notification on cessation of business or

    operations

    23. Effect of revocation, deregistration, surrender, notification on cessation of business or operations, and expiry

    Division 6

    General matters

    24. Form of establishment 25. Establishment or relocation of office of authorized persons 26. Fees 27. Publication of names of authorized persons and registered persons

    28. Holding out as authorized person or registered person 29. Acting on behalf of unlicensed person

    PART IV

    Page 2 of 180

  • PAYMENT SYSTEMS

    Division 1

    Designation of payment systems and payment instruments 30. Designation and revocation of designation of payment systems 31. Designation of payment instruments

    Division 2

    Requirements for operation of payment systems and issuance of designated payment instruments

    32. Application of this Act on payment systems

    33. Power of Bank to specify standards for payment systems 34. Direction to participants of designated payment system

    35. Operational arrangements 36. Power of Bank to inspect

    Division 3

    Finality of payment and netting arrangement 37. Interpretation

    38. Power of Bank to issue certificate of finality

    39. Revocation of certificate of finality 40. Application of this Division

    41. Transfer order made after appointment of insolvency administrator 42. Finality of payment and netting arrangement 43. Preservation of rights

    44. Non-recognition of insolvency order by foreign court 45. Requirement to notify in event of insolvency, etc.

    PART V

    PRUDENTIAL REQUIREMENTS 46. Interpretation

    Division 1

    Standards on prudential matters 47. Power of Bank to specify standards on prudential matters 48. Institution, director and officer to comply with standards 49. Registered operator of payment system to comply with standards 50. Single counterparty exposure limit for licensed person 51. Restriction on payment of dividend by licensed person 52. Maintenance of assets in Malaysia by licensed person

    Division 2

    Corporate governance

    Page 3 of 180

  • 53. Interpretation 54. Chairman, directors and chief executive officer of institution 55. Requirements to be chairman, director, chief executive officer or

    senior officer

    56. Functions and duties of board of directors 57. Duties of directors 58. Duty to disclose interests in material transaction or material

    arrangement

    59. Disqualifications 60. Fit and proper requirements 61. Cessation from office 62. Notice of cessation from office

    Division 3

    Transparency requirements

    63. Interpretation 64. Maintenance of accounting records and information 65. Compliance with approved accounting standards 66. Publication of financial statements

    Division 4

    Auditors 67. Appointment of auditor by institution 68. Appointment of auditor by Bank 69. Duties of auditor 70. Notice of cessation as auditor 71. Information to be provided to auditor 72. Reporting obligations of auditor 73. Qualified privilege and duty of confidentiality

    Division 5

    Appointed actuaries 74. Appointment of actuary by licensed insurer 75. Appointment of actuary by Bank 76. Duties of appointed actuary 77. Cessation as appointed actuary 78. Notice of cessation as appointed actuary 79. Information to be provided to appointed actuary 80. Qualified privilege and duty of confidentiality

    Division 6

    Insurance funds

    Page 4 of 180

  • 81. Establishment and maintenance of insurance funds

    82. Requirements relating to insurance funds 83. Withdrawal from insurance funds 84. Assumption of risk

    Division 7

    Subsidiaries 85. Establishment or acquisition of subsidiaries and acquisition or

    holding of material interest in corporation PART VI

    OWNERSHIP, CONTROL AND TRANSFER OF BUSINESS

    86. Application and non-application Division 1

    Interest in shares of licensed person 87. Acquisition of interest in shares requiring approval

    88. Control over licensed person prohibited in some cases

    89. Disposal of interest in shares requiring approval 90. Application procedures for section 87, 88 or 89 91. Power of Bank to specify standards on shareholder suitability 92. Maximum permissible holdings 93. Notification on acquisition or disposal of interest in shares of

    licensed person Division 2

    Action by Bank in event of breach 94. Order against defaulting persons 95. Additional provisions relating to order under subparagraph 94(2)(a)

    (v) Division 3

    Interest in shares of approved person 96. Interpretation 97. Acquisition of interest in shares of approved person

    Division 4

    Transfer of business, reconstruction or amalgamation of licensed person

    98. Interpretation 99. Approval required for reconstruction or amalgamation of licensed

    person

    100. Approval required for business transfer scheme 101. Notification of business transfer scheme

    Page 5 of 180

  • 102. Application to High court for confirmation of business transfer scheme

    103. Bank to be party to proceedings 104. Orders sought by transferor and transferee

    105. Publication of court order under section 102 106. Reimbursement of Banks expenses 107. Prohibition of payment out of insurance fund

    PART VII

    FINANCIAL GROUPS

    108. Purpose of this part

    109. Disapplication of sections 110 and 111 to licensed persons 110. Application to be financial holding company

    111. Power of Bank to require submission of application 112. Approval of application as financial holding company under section

    110 or 111

    113. Bank may approve more than one financial holding company 114. Business of financial holding company 115. Prudential requirements on financial holding company and

    subsidiaries 116. Power to issue directions to financial holding company and

    subsidiaries 117. General provisions dealing with directions 118. Consequences for failing to comply with directions

    119. Additional provisions relating to paragraph 116(3)(e) 120. Power to remove director or chief executive officer of financial

    holding company PART VIII

    BUSINESS CONDUCT AND CONSUMER PROTECTION

    Division 1

    Interpretation

    121. Interpretation

    Division 2

    Business conduct, complaints, disputes, etc. 122. Application

    123. Standards on business conduct 124. Prohibited business conduct 125. Approved insurance broker, approved financial adviser and approved

    issuer of designated payment instrument to establish customer account

    126. Financial ombudsman scheme

    Page 6 of 180

  • Division 3

    Insurance issues

    127. Obtaining insurance outside Malaysia 128. Provisions relating to policies

    129. Pre-contractual disclosure and representations, and remedies for misrepresentations

    130. Payment of policy moneys under life policy and personal accident policy

    Division 4

    Information and secrecy 131. Interpretation

    132. Restriction on inquiring specifically into affairs of particular customer

    133. Secrecy

    134. Permitted disclosures Division 5

    Restrictions relating to consumer protection 135. Application of this Division 136. Deposit 137. Restriction on accepting deposits 138. Advertisements for deposits 139. Restriction on use of certain words

    PART IX

    MONEY MARKET AND FOREIGN EXCHANGE MARKET

    140. Power of Bank to specify standards or issue codes 141. Prohibited conduct in money m

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