Luno scrutiny could be due to heavy transaction value

PETALING JAYA: PinkExc, one of the active digital currency exchangers in Malaysia, believes heavy transaction value was the reason behind the Inland Revenue Board’s (IRB) move to freeze the bank account of its peer Luno on money-laundering concerns.
PinkExc co-founder Fitry Daud said the IRB has no issue with the company as its customers are not encouraged to deposit a huge amount of money into its bank account to curb any suspicious trading.
“We always control our trading volume whereas you can see the transaction value at Luno is higher than the normal business transactions,” he told SunBiz today.
Deposits into PinkExc’s bank account are limited to RM5,000 per person per day, compared with Luno’s RM10,000, depending on “Know Your Customer” procedures.
Meanwhile, PinkExc’s daily transaction value is only RM20,000 to RM30,000 based on its relatively small customer base of about 300 people.
The Ipoh-based company has been been in operation for close to two years.
UK-based Luno, however, serves a much bigger digital currency community with presence in about 40 countries. It predominantly trades the two largest digital currencies, bitcoin and ethereum.
In an email sent to its customers last Friday, Luno said it had not been able to process deposits or withdrawals in Malaysia over the past few weeks due to the freezing of its bank account by the IRB pending a probe.
The IRB requested Luno to provide information on all its Malaysian customers, including identification, deposits/withdrawals and transactions.The IRB had not responded to SunBiz queries at press time.
Meanwhile, PinkExc said no invitation had been extended for a "meet-up" with Bank Negara Malaysia (BNM) representatives on the reporting institution for digital currencies. Besides Luno and PinkExc, the other two active digital currency exchangers in Malaysia are Coinhako and XBit Asia.
BNM was supposed to meet the exchangers on Dec 18 with regard to the reporting obligations under the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (AMLA).
However, Fitry said PinkExc is not aware of any meeting with the central bank. He said the company was only required to send a form to BNM indicating the list of digital currencies traded on its platform.
Digital currency exchangers are to be designated as reporting institutions under AMLA, according to BNM, which requires them to update the central bank on the number of transactions, including conversion from digital currency to fiat money and vice versa as well as conversion from a digital currency to another; the value of transactions, net buy and sell positions, purpose of transactions, payment method and the number of customer accounts. This, however, is yet to come into practice.
Fitry said it will be a burden for the platform operators to report every single transaction to the regulator as digital currencies are decentralised.
Average monthly digital currency transactions in Malaysia amount to RM75 million, which is minimal compared with the total market capitalisation of US$420 billion (RM1.71 trillion) for digital currencies globally, according to BNM.