There will be a further reduction in the number of money changers in the country, a move towards consolidating and regulating the money services business.
The banking regulator, Bank Negara Malaysia (BNM), had kicked off the process to reduce the number of money changers from 839 in 2011, following reports of illicit outflow of money from the country through many channels. The regulator put in place the Money Services Business Act 2011 the same year.
“There will be a further consolidation but we do not have a target for the final number. It will depend on the demand from the market and the review results of the agencies,” a BNM official told The Malaysian Reserve recently.
BNM has been whittling down the list of licensed money changers each year. The number was pruned to 515 in 2012 and the latest annual report from BNM puts the number at 474.
This, they say, is a result of consolidation of the industry and the surrender of licences by smaller entities.
However, despite many licences being revoked and merged, the number of premises that offer money- changing services to the public has increased.
“This is because the Class A licensees with more than 200 branches are also providing money-changing services. Moreover, money changers that have merged into one entity are allowed to continue to operate as branches of the new merged entity,” Malaysian Association of Money Services Business (MAMSB) president Ramasamy K Veeran told the paper in an email response.
He said some of the licensees have opted to merge with other licensees, while others have decided to surrender their licences and become money services business (MSB) agents to principal licensees.
The money changers that have merged into one entity emerged as a stronger entity to compete on a level playing field. Those that have become MSB agents now have the ready systems and standard operating procedures that will enable them to operate the business in compliance with the regulatory requirements without incurring costs, he added.
“In the long run, such healthy development is good for the industry and not only in term of cost effectiveness in doing business but also projecting a positive image of the industry,” he pointed out.
Further, MAMSB is also finalising the code of conduct for its members who are licensed money changers, remittance service providers and currency wholesalers. It will be implemented in the second-quarter of June.
The money changers’ business is big in the country. According the BNM’s annual report for 2013, money changing business turnover expanded by 22% to RM52 billion, compared to RM42.5 billion in 2012, largely due to improvements in record keeping systems.
Also, the outward remittances in 2013 grew by 27% to RM25.1 billion from RM19.7 billion recorded in 2012. Of this amount, remittance agents accounted for only RM1 billion involving 1.1 million transactions.