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PUBLISHED: May 19, 2017 3:34pm

238 banks accounts closed due to links to illegal financial schemes


Source: Bernama Source:

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KUALA LUMPUR, 19 May 2017: 

Bank Negara Malaysia (BNM) is taking aggressive measures to combat illegal financial schemes as part of the central bank’s zero tolerance policy on operators and investors knowingly participating in illegal financial activities.

Governor Datuk Seri Muhammad Ibrahim said, as at 2 May 2017, 238 suspicious accounts were closed by financial institutions.

“Of the number, 108 accounts were listed under Bank Negara’s financial customer alert due to public complaints,” he said at a press conference after announcing Malaysia’s first quarter gross domestic product (GDP) growth here today.

Under the Financial Services Act 2013, individuals or businesses involved in illegal financial activities can be fined up to RM50 million and imprisoned for 10 years.

The Act provides for the regulation and supervision of financial institutions, payment systems and other relevant entities and the oversight of the money market and foreign exchange market to promote financial stability and for related, consequential or incidental matters.

“Any return on investment that offered beyond 20 per cent is unrealistic,” Muhammad said, adding that unit trust was the best portfolio manager as it offered returns of around 6-7%.

He explained that accounts with a high level of suspicion would be closed and the money returned to the account owner. “The funds will only be seized or frozen if ordered by the court.”

BNM has also conducted coordinated measures which included the Attorney-General’s Chamber which would lead the inter-agency committee for joint enforcement against illegal financial activities.

Malaysia’s economy grew at a better-than-expected 5.6% in the first quarter, easily beating expectations, as buoyant exports and solid domestic demand produced the fastest growth in two years.

January-March growth, announced by the central bank today, was well above a Reuters poll forecast of 4.8% and the previous quarter’s 4.5% expansion.

“We expect growth to be sustained.” Muhammad Ibrahim said the central bank is keeping its full-year growth forecast at 4.3-4.8%. In the first quarter, he said, it saw “strong growth in private investments and exports”.

March exports surged 24.1% from a year earlier in ringgit terms, and those in February 26.5%.

But the current account surplus, which has generally been decreasing, narrowed in the first quarter to RM5.3 billion from RM12.5 billion in 2016’s last period, due to lower goods surplus and larger services deficit.

“A recovery in commodity prices should help bolster the current account surplus in the coming quarters, though the surplus is still likely to remain low by past standards,” Capital Economics said in a note.

Portfolio investments saw a big net outflow of RM31.9 billion compared to a RM19.1 billion outflow in the fourth quarter.

Capital outflows hit a record in November-January, when foreign investors divested holdings of government bonds to the tune of RM27.9 billion.

In early 2016, tepid demand for Malaysia’s oil and other commodity exports pulled full-year growth down to 4.2%, the lowest since contraction in 2009, from 5% in 2015.

The ringgit, one of the region’s worst performing currencies, in 2016, hit a 19-year low of 4.9880 on Jan 4 but so far this year has strengthened about 3.7% against the US dollar.

The BNM governor said that stability measures have reduced volatility in the ringgit and the domestic forex market. “We think the ringgit will further reflect the strength of the Malaysian economy.”

The central bank has said inflation averaged at 4.3% in the first quarter.

Annual consumer price inflation hit an eight-year high in March at 5.1%, though it slowed to 4.4% in April.

“The spike (in inflation) was largely due to higher oil prices. We still expect inflation to come in at 3-4%. Again, there is some uncertainty in global markets, but what is important is its cost driven and not due to demand.”



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