Trading In Foreign Currencies Legal In Malaysia?

I find many Malaysians are still equally confused over whether or not trading in foreign currencies legal in Malaysia. Or whether is it halal for the Muslims. There are many varied and often conflicting views over this issues on the Internet.

Forex Legal And Halal In Malaysia

According to Bank Negara Malaysia (BNM) or Central Bank Of Malaysia, the buying and selling of foreign currency is LEGAL and HALAL in this country. It was highlighted in The Star newspaper back in 2012.

BNM clarified that trading in Forex in Malaysia is only permitted with licensed commercial banks, Islamic banks, investment banks and international Islamic banks, as provided for under the Exchange Control Act 1953.

It is also allowed with licensed money services business providers (money changers) as provided for under the Money Services Business Act 2011.

trading in foreign currencies legal in malaysia

Is Forex Trading Haram?

Central Bank Of Malaysia  also mentioned that Shariah-compliant financial products, including foreign exchange related transactions, offered and transacted by licensed Islamic financial institutions are approved by the Shariah Committee of the respective financial institutions with endorsement from the Shariah Advisory Council of Bank Negara Malaysia.

What Is Considered As Illegal Foreign Exchange?

The buying or selling foreign currency by an individual or company in Malaysia with any person who is not a licensed onshore bank or any person who has not obtained the approval of Bank Negara Malaysia under the Financial Services Act 2013 or Islamic Financial Services Act 2013.

Illegal Deposit Taking

It is an act of receiving, taking or accepting of deposits (moneys, precious metals, precious stones, any other article etc.) from members of the public that promises a repayment with interest or returns in money or money’s worth without a valid license under the Banking and Financial Institutions Act 1989 (BAFIA).

Any person or company who contravene Section 25(1) of BAFIA 1989 are liable to a fine not exceeding RM10 million or to imprisonment for a term not exceeding 10 years, or both.

Modus Operandi Illegal Forex Trading

There are people operating this unlawful activity under the guise of free training, seminars or workshops on Forex trading.

They invite these gullible investors to set-up an online foreign currency trading account with their principal companies(claiming they have valid licence to trade foreign currency overseas).

These unsuspecting investors are required to deposit an amount of money into a bank account to begin trading foreign currency. Subsequently, they are told to top up on their initial investment, to avoid losing their capital.

They promise their participants of quick high rate returns with little risk, and with little skill, effort, or time. Yes, the so-called get-rich-quick scheme. In short, a SCAM!

You can find out more details how they run their fraudulent scheme from Bank Negara Malaysia site.

In short, buying or borrowing foreign currencies from or selling or lending currencies to an unauthorized dealer is illegal.

Unauthorized dealer refer to an individual/company that has not obtained the permission of the Controller of Foreign Exchange under the Exchange Control Act 1953 (ECA) to trade in Forex in Malaysia.

Unauthorized Companies And Websites

Here is the latest list of Malaysian companies and websites which are neither authorized nor approved under the relevant laws and regulations administered by BNM (31 December 2014).

This list is not exhaustive and BNM will update the list periodically from time to time. See the list here.

How To Start Forex Trading In Malaysia

If you want to learn how to trade in the foreign exchange market in Malaysia, you can begin with any one of the licensed financial institutions and authorized dealers.

According to the Central Bank Of Malaysia, the authorized dealers to conduct foreign currency trading in Malaysia are:

All commercial banks

All Islamic banks

Bank Islam Malaysia Berhad

Bank Muamalat Malaysia Berhad

These two clearing houses are authorized to conduct foreign currency trading with authorized dealers in Malaysia:

1. BIMB Foreign Currency Clearing Agency Sdn Bhd

2. RMEX Trading Sdn Bhd

Here are the seven local approved money brokers as listed in Bank Negara Malaysia website.

1. Affin Moneybrokers Sdn Bhd
2. Amanah Butler Malaysia Sdn Bhd
3. First TAZ Tradition Sdn. Bhd.
4. Forex Enterprise Sdn Bhd
5. Harlow’s & MGI Sdn. Bhd.
6. KAF-Astley & Pearce Sdn Bhd
7. Reuters Transaction Services Malaysia Sdn Bhd

How To Start Forex Trading In Malaysia

One easy and safe way to invest Forex in Malaysia is to open a Foreign Currency Fixed Deposit account from the local banks in Malaysia.

List of Authorized Dealers of Foreign Currency Pursuant to Section 2 of the Exchange Control Act 1953

Affin Bank Berhad

Affin Islamic Bank Berhad

Al Rajhi Banking & Investment Corporation (Malaysia) Berhad

Alliance Bank Malaysia Berhad

Alliance Islamic Bank Berhad

AmBank (M) Berhad

AmIslamic Bank Berhad

Asian Finance Bank Berhad

Bangkok Bank Berhad

Bank Islam Malaysia Berhad

Bank Muamalat Malaysia Berhad

Bank of America Malaysia Berhad

Bank of China (Malaysia) Berhad

Bank of Tokyo-Mitsubishi UFJ (Malaysia) Berhad

BNP Paribas Malaysia Berhad

CIMB Bank Berhad

CIMB Islamic Bank Berhad

Citibank Berhad

Deutsche Bank (Malaysia) Berhad

Hong Leong Bank Berhad

Hong Leong Islamic Bank Berhad

HSBC Amanah Malaysia Berhad

HSBC Bank Malaysia Berhad

Industrial & Commercial Bank of China (Malaysia) Berhad

J.P. Morgan Chase Bank Berhad

Kuwait Finance House (Malaysia) Berhad

Malayan Banking Berhad

Maybank Islamic Berhad

Mizuho Corporate Bank (Malaysia) Berhad

OCBC Al-Amin Bank Berhad

OCBC Bank (Malaysia) Berhad

Public Bank Berhad

Public Islamic Bank Berhad

RHB Bank Berhad

RHB Islamic Bank Berhad

Standard Chartered Bank Malaysia Berhad

Standard Chartered Saadiq Berhad

Sumitomo Mitsui Banking Corporation Malaysia Berhad

The Bank of Nova Scotia Berhad

The Royal Bank of Scotland Berhad

United Overseas Bank (Malaysia) Berhad

List of Financial Institutions Permitted by the Controller of Foreign Exchange to Buy or Sell Foreign Currency

Affin Investment Bank Berhad

Alkhair International Islamic Bank Bhd

Alliance Investment Bank Berhad

Al Rajhi Banking & Investment Corporation

AmInvestment Bank Berhad

CIMB Investment Bank Berhad

Deutsche Bank Aktiengesellschaft

ECM Libra Investment Bank

Elaf Bank B.S.C. (c)

Hong Leong Investment Bank Berhad

HwangDBS Investment Bank Berhad

KAF Investment Bank Berhad

Kenanga Investment Bank Berhad

Maybank Investment Bank Berhad

MIDF Amanah Investment Bank Berhad

MIMB Investment Bank Berhad

OSK Investment Bank Berhad

Public Investment Bank Berhad

PT. Bank Syariah Muamalat Indonesia, Tbk

RHB Investment Bank Berhad

If you want more detailed information, contact Bank Negara Malaysia at 1-300-88-5465 or e-mail it to: [email protected].

*Disclaimer: The information contained on this article is for the purpose of providing you with general information about foreign exchange trading. It is not a solicitation, invitation or offer to enter into any financial, investment or other transaction.

The Star

Bank Negara Malaysia