Bank Negara Malaysia has issued the following exposure drafts to the public for feedback:
(a) Climate Risk Management and Scenario Analysis
This exposure draft:
• is intended to complement the Climate Change and Principle-based Taxonomy, the Value-based Intermediation Financing and Investment Impact Assessment Framework (“VBIAF”) and the VBIAF Sectoral Guides;
• will apply to the following financial institutions:
− licensed businesses, and financial holding companies approved, under the Financial Services Act 2013;
− licensed Islamic banks, licensed takaful operator, licensed retakaful operator and financial holding companies approved, under the Islamic Financial Services Act 2013; and
− development financial institutions prescribed under the Development Financial Institutions Act 2002;
• sets out the proposed requirements and guidance on climate risk management and scenario analysis to ensure that financial institutions strengthen the management of financial risks stemming from climate change to enhance the resilience of the financial sector against climate-related risks and to facilitate an orderly transition to a low-carbon economy; and
• will come into effect on 1 June 2022 subject to the transitional arrangements as set out in paragraph 4.1 thereof.
Feedback to the exposure draft must be submitted to Bank Negara Malaysia by 31 March 2022.
(b) Management of Participating Life Business
This exposure draft:
• applies to life insurers licensed under the Financial Services Act 2013 carrying on participating life business. A “participating life policy” provides policy owners with the opportunity to participate in the profits of the insurance fund, in addition to receiving guaranteed benefits. The profits may be distributed by way of bonus determined by the licensed insurer;
• sets out the requirements for the effective management of participating life business to promote the sustainability of the business and the protection of policy owners’ interests;
• will also include clarity to the requirements governing the uses of estate, management of small and shrinking participating life fund, submission of bonus revision and independent review of the participating life business; and
• will supersede, among others, the policy document on Management of Participating Life Business issued on 15 July 2015.
Feedback to the exposure draft must be submitted to Bank Negara Malaysia by 31 March 2022.
(c) Management of Insurance Funds
This exposure draft:
• applies to insurers licensed under the Financial Services Act 2013;
• is intended to ensure protection of policy owners’ interests through appropriate segregation of insurance funds, proper attribution of assets and liabilities in insurance funds, robust controls over withdrawals from insurance funds, and maintenance of proper records of policies and claims;
• sets out, among others, requirements relating to the establishment, maintenance, composition and withdrawal of insurance funds;
• will supersede, among others, the policy document on Management of Insurance Funds issued on 17 December 2018.
Feedback to the exposure draft must be submitted to Bank Negara Malaysia by 31 March 2022.
(d) Governance, Risk Management, and Operations for Money Services Business
This exposure draft:
• applies to persons licensed under the Money Services Business Act 2011 (“MSB Licensees”);
• sets out, among others, the minimum standards that MSB Licensees must observe in implementing sound governance, appropriate risk management and robust internal control systems for their business. The standards will be put in place to strengthen consumer protection and safeguard the industry from being used as a conduit for illegal activities, money laundering and terrorism financing;
• will supersede the Guidelines on Governance and Operational Requirements on Conduct of Money Services Business issued on 15 October 2012, the Guidelines on Risk Management and Internal Controls for Conduct of Money Services Business issued on 6 December 2012 and the other guidelines/circulars/notices set out in Appendix I thereof.
Feedback to the exposure draft must be submitted to Bank Negara Malaysia by 28 February 2022.
(e) Payment Cards Framework
This exposure draft:
• will apply to the following financial institutions:
− issuers of credit card, debit card and international brand prepaid card which are approved under the Financial Services Act 2013 or the Islamic Financial Services Act 2013;
− merchant acquirers of merchant acquirers of credit card, debit card and international brand prepaid card registered under the Financial Services Act 2013 or the Islamic Financial Services Act 2013; and
− operators of payment systems approved under the Financial Services Act 2013 or the Islamic Financial Services Act 2013;
• is to ensure that the cost of accepting payment cards continues to remain fair and reasonable through revision of the interchange fee ceilings to reflect the latest underlying cost.
• outlines the measures which enable merchants to manage their payment acceptance cost and address other distortions and frictions in the payment card market to foster greater usage and acceptance of payment cards.
Feedback to the exposure draft must be submitted to Bank Negara Malaysia by 15 February 2022.
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