Introduction To Cash Transaction Limit

What is ‘cash transaction limit’?

Cash transaction limit is a form of security measure (including the likes of AMLA) to combat money laundering and illicit activities. It forms an additional level of deterrent against cash abuse and it also complements existing measures such as the suspicious transaction report and the cash threshold report that aids and facilitates monitoring, investigations, and enforcement actions by law enforcement agencies against money laundering and illicit activities.

What does it do?

It limits how much physical cash one individual can transact with another per day. As of now, the general practice is that any transaction between two individuals is capped at RM25,000.00 and anything above that value will be flagged and monitored by the relevant authorities, and the parties to the transaction could be hauled up for it.

Why?

The physical transaction, especially between individuals, can be highly untraceable without proper monitor and regulation- such transaction is an ideal vehicle to facilitate illicit activities, especially (concerning this topic) money laundering and terrorism financing. The above sentiment was echoed by Bank Negara Malaysia’s (BNM) report, titled “Malaysia’s 2017 National Risk Assessment on Money Laundering and Terrorism Financing”. In the report, BNM noted that physical cash remains widely exposed to abuse by individuals in instances of corruption, fraud, smuggling, drug trafficking, and organized crimes. 

Therefore, a measure was put in place (or rather, mooted by BNM and tabled by the parliament) to combat the risk mentioned above. 

What are the laws and regulations governing cash transaction limit?

Dewan Rakyat passed 2 bills in 2019, namely the Currency Bill and the Central Bank of Malaysia (Amendment) Bill(“Amendment Bill”) to tackle the issues arising from this topic.

However, the bill has not been officially gazetted, because the Dewan Negara has not passed it and submitted it to Yang di-Pertuan Agong for His Majesty’s assent. Having said that, we manage to have a glimpse of what the bill (specifically the Currency Bill) provides in this aspect. 

In particular, section 21 of the Bill states that no person shall, in a single transaction, is to make or receive any payment using currency note, currency coin, or their combination which exceeds the maximum aggregate value as specified in the Second Schedule of the Bill. In this regard: 

1. A different maximum aggregate value may be provided for different purposes, classes of persons, activities, businesses, or professions; 
2. A series of transactions shall be considered as a single transaction if the transactions were made with the same person, for the same purpose, and within the same day; and
3. No person shall undertake or structure, or assist or participate in structuring any transaction to bypass the transaction limit.

Section 21 also makes it very clear that any person who contravenes the above commits an offense and if convicted, can be liable to a fine not exceeding three times the aggregate sum or value of the transaction at the time the offense was committed.

Are there exceptions to the above?

TLDR, yes.

In short, the above scenario will not apply if the transaction is: 

1. Made by a person with or through the bank or a financial institution; or
2. Approved by the Minister of Finance, on the recommendation of the Bank, in any circumstances including:
   1. Humanitarian aid; or
   2. Disaster relief.

However, do note that the Bill:

1. Does not (or rather, has not) provide a limit as to the amount permissible for physical transaction in Malaysia; and
2. Has yet to be passed by Dewan Negara. 

*This article will be updated if there is any update on this matter*

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