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Frequently Asked Questions (FAQs)Investment in Foreign Currency Asset (Notice 3)QuestionsAnswersInvestment in foreign currency asset by a resident individual1. Is a resident individual without No. A resident without domestic ringgitborrowing is free to invest any amount in FCdomestic ringgit borrowing subjectasset onshore and offshore.to the investment in foreigncurrency (FC) asset limit?2. If a resident individual has A resident individual with domestic ringgitborrowing can invest in FC asset onshore anddomestic ringgit borrowing, howoffshore up to RM1 million equivalent inmuch can the individual invest inaggregate per calendar year.FC asset onshore and offshore?Note: Domestic ringgit borrowing refers to anyborrowing in ringgit obtained by a resident fromanother resident excluding one (1) housingloan and one (1) vehicle loan. Please refer to the “Preamble andInterpretation” document on the definition of‘borrowing’, ‘domestic ringgit borrowing’, ‘FCasset onshore’ and ‘FC asset offshore’. Yes.3. If a resident individual has morethan one (1) housing loan orvehicle loan, is the residentindividual deemed as havingdomestic ringgit borrowing?4. How does a resident individual with The investment in FC asset limit is based onthe aggregate amount of investment in FCdomesticringgitborrowingasset onshore and offshore per calendar yearcompute his or her total investmentundertaken by the resident individual.in FC asset limit?Purchase of real estate abroad by a resident individual5. Can a resident individual with No. A resident individual can only purchase thedomestic ringgit borrowing freelyproperty abroad for their own account orpurchase a property abroad for aimmediate family members only under theclose friend who intends to obtainpermitted purposes i.e. education, employmentan education, employment or toor migration outside Malaysia.migrate outside Malaysia?6. What are the documents required A resident individual shall produce relevantfor a resident individual tosupporting documents that could confirm his orpurchase a property abroad forher citizenship or permanent resident statusmigration purposes?abroad, including conditional approval letters, aspart of the onshore bank’s due diligenceprocess.
Investment in Foreign Currency Asset (Notice 3)QuestionsAnswers7. Can a resident individual with No. A resident individual shall submitdomestic ringgit borrowing freelydocumentary evidence of committed educationpurchase a property abroad for hisplan (e.g. an enrolment letter from the foreignor her child as part of the child’sschool or institution) as part of the onshorelong-term education plan over abank’s due diligence tment in digital assets 1 by residents8. Will a resident be subject to an No, the resident is free to purchase digitalassets on a registered DAX in Malaysia as longinvestment limit when purchasingas it is settled in ringgit.digital assets traded on aregistered digital asset exchange(DAX) in Malaysia? (new)9. Will a resident be subject to an Yes, such transfer is subject to the applicableinvestment in FC asset limit as per Notice 3 forinvestment limit when transferringa resident with domestic ringgit borrowing.digital assets maintained with aregistered DAX in Malaysia to anoffshore wallet? (new)Resident individual’s investment in derivatives offered by non-residents10. Can a resident individual invest in Yes, a resident individual is allowed to invest innon-exchange rate related derivatives, such asderivatives such as options andequity options, commodity futures and otherswaps offered by a non-resident?similar products offered by a non-resident,subject to the permissible limit on investment inFC asset as per Notice 3, as long as it isconsistent with the resident individual’s risktolerance.11. Can a resident individual with A resident individual with domestic ringgitborrowing may invest up to the prudential limitdomestic ringgit borrowing investof RM1 million in aggregate per calendar yearin FC product embedded withif the investment is sourced from conversion ofderivatives offered by a nonringgit or transfer from Trade Foreign Currentresident?Account (FCA).12. Can a resident individual purchase Yes. A resident individual may do so subject tothe permissible limit on investment in FC assetderivatives directly from a nonas per Notice 3 and as long as the derivative isresident futures broker or a nonnot an exchange rate derivative.resident bank?1For the purpose of this FAQ:- ‘Digital assets’ refer collectively to digital tokens and digital currency prescribed as securities under the CapitalMarkets and Services (Prescription of Securities) (Digital Currency and Digital Token) Order 2019 [P.U. (A)12/2019], as may be amended from time to time.- ‘A registered digital asset exchange (DAX)’ is an electronic platform that facilitates the trading of digital assetsapproved by the Securities Commission Malaysia. Please refer to the list of registered DAXs approved by theSC here.- Digital assets are not recognised as legal tender in Malaysia and are not a payment instrument that is regulatedby BNM. Members of the public are advised to carefully evaluate the risks when dealing in digital assets.
Investment in Foreign Currency Asset (Notice 3)Questions13. How does a resident individualcompute the amount of investmentfor non-exchange rate relatedderivatives? Is it based on notionalamount or margin?Answers The amount of investment for derivatives shallbe computed based on the total remittancemade to the resident individual’s margin accountmaintained with the non-resident broker or thenon-resident bank to facilitate the derivativetransactions. If the resident individual’s investment is toexceed the RM1 million annual aggregate limitarising from a potential margin call, priorapproval from BNM is required. Any such application will typically take up to 14business days from the date of full informationreceived. Thus, a resident individual is advisedto factor this in his or her risk assessment wheninvesting in derivatives.Investment in foreign currency asset by a resident entity14. Is a resident entity without No. A resident entity without domestic ringgitborrowing is free to invest any amount in FCdomestic ringgit borrowing subjectasset onshore and offshore.to the investment in FC asset limit?15. How does a resident entity Domestic ringgit borrowing is any borrowing inringgit obtained by a resident from anotherdetermine whether it has domesticresident.ringgit borrowing? For a resident entity, it is deemed to havedomestic ringgit borrowing when anotherresident entity with which it has a parentsubsidiary relationship has a domestic ringgitborrowing.Note:The following shall not be considered as domesticringgit borrowing:(a) A borrowing obtained from its resident directshareholder or another resident entity withwhich it has a parent-subsidiary relationship.(b) Any facility including credit facility or financingfacility which is used for sundry expenses oremployees’ expenses only. Sundry expenses refer to small andinfrequent expenses for office supplies(e.g. stationery), ancillary services (e.g.software and online subscription) and otherminor expenses to facilitate daily businessoperations. Employees’ expenses refer to businessrelated expenses which may include, butare not limited to, travel (e.g. lodging andtransportation), entertainment, health,insurance, takaful and other employees’expenses, excluding investment.
Investment in Foreign Currency Asset (Notice 3)QuestionsAnswers16. How does a resident entity withdomesticringgitborrowingcompute its total investment limit? The investment limit for a resident entity shalltake into account the aggregate amount ofinvestment in FC asset onshore and offshore percalendar year undertaken by the resident entityand its resident group of entities withparent-subsidiary relationship. Yes, only the amount exceeding the RM50million annual aggregate limit would requireprior approval from BNM.17. Is a resident entity required to seekprior approval from BNM to investin FC assets if its intendedinvestment is to exceed the RM50million annual aggregate limit?18. Will a resident exporter be subjectto a limit on investment in FC assetby placing foreign currency fundsfrom its Trade FCA into short-termFC deposit with an onshore bank?19. Where can a resident entity placeits proceeds from investmentabroad such as investment incomeor dividends?20. Can a resident entity use incomefrom investment abroad for otherinvestment activities abroad?21. Can a resident entity with domesticringgitborrowingpurchaseproperty outside Malaysia from anon-resident for its staff postedabroad? The exporter is not subject to an investment limitprovided that the short-term FC deposit is akinto a Trade FCA and the placed funds shallstrictly be credited back into its Trade FCA uponmaturity of the placement.A resident entity may place its investmentincome into either its Trade FCA or InvestmentFCA. Yes, a resident entity can use the investmentincome received into its Investment FCA forfurther reinvestment in FC asset. Any investment in FC asset sourced from TradeFCA by a resident entity with domestic ringgitborrowing is subject to the RM50 million annualaggregate limit. Yes, subject to the RM50 million annualaggregate limit on investment in FC asset forpurchase of property abroad. Property outside Malaysia owned by a nonresident is deemed as ‘FC asset offshore’.
Investment by resident intermediary22. Computation of threshold for investment on behalf of a resident client with domesticringgit borrowing:Scenario 1Resident IntermediaryInvestment in conventionalForeign Currency Asset OffshoreFund 1Fund 2Up to 50% of NAV of total fundscombinedInvestment in ForeignCurrency Asset OnshoreInvestment in Shariahcompliant Foreign CurrencyAsset OffshoreFund 3Fund 4Up to 100% of NAV oftotal fundsUp to 100% of NAV of totalfundsScenario 2Resident IntermediaryInvestment in Shariah-compliant Foreign Currency AssetOffshoreInvestment in ForeignCurrency Asset OnshoreFund 2Fund 4Fund 1Up to 100% of NAV of total fundsBank Negara MalaysiaUpdated as at 27 January 2022Fund 3Up to 100% of NAV of totalfunds
- 'Digital assets' refer collectively to digital tokens and digital currency prescribed as securities under the Capital Markets and Services (Prescription of Securities) (Digital Currency and Digital Token) Order 2019 [P.U. (A) 12/2019], as may be amended from time to time.
