Malaysia to Limit Cash Transactions in 2020

[exstasie]

The country is set to implement an unprecedented restriction on the use of cash.^[1] This is doubtless the first time that a country is to implement such bizarre measure to counter the abuse of cash. Somehow, this national policy is implying that cash, at least within the country, is being abused for various illegal activities.

While some business communities are against such drastic measure as it would certainly affect their day to day operation, an idea pops out that they could actually circumvent this policy by adopting the use of Bitcoin and other cryptocurrencies.^[2] An ordinary household in Malaysia is said to spend around 8,000 Malaysian Ringgit (RM) per month, way below the 25,000 RM limit. But still, a lot are clamoring to increase the limit as the current proposed limit is way to low.

How is this supposed to be enforced, the honor system? Black markets won't be self-policing for limits on physical cash so this is very obviously an attack on free capital flow. They are forcing residents to depend on third party financial services.

The limit is for physical cash transactions. If you need to transfer make more than 25K RM, then you need to do it electronically.[1] I don't think that's a huge problem for the people.

That's how it starts. They'll make the threshold (in this case ~6,000 USD per month) high enough that most people won't care. Then they will probably add additional restrictions over time.

There's no logical reason for this law besides the introduction of capital controls.

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[Philipma1957cellphone]

It makes sense though, doesn't it?

If we lived in a world where cash didn't exist, and our world only had fiat transactions via online payment methods, there is going to be no government in the world that would invent and try to implement cash. Why?

Because cash is literally the best thing criminals can ever have, even better than cryptocurrencies and privacy coins since it's fiat-based and fairly easy to smuggle.

I don't think this limits bitcoin traders that much, more of a blow to the big whales that deal with cash a lot, and I respect this from the government, it'll make crime harder to do.

   smuggling  cash is not easy if it is 100,000 usd .  Yeah 3,4,5 even 10k is easy. But once you get to a lot of cash it is hard to smuggle. Btw this is why usa stopped 500 and 1000 dollar Bill's. As a stack of a hundred thousand  dollar Bill's is much easier to move then a stack of a thousand hundred dollar Bill's.  To me moving cash in 3 ,4,5 thousand amounts is small time crime use.

[abhiseshakana]

Instead of just criticizing Malaysia's policy, let's discuss what are the goals and interests behind the cash transaction value restriction policy.

With this policy indirectly encouraging people to switch from cash-based payment systems to non-cash, there are at least three fundamental reasons why the Malaysian government and other countries limit the number of cash transactions.

- Non-cash transaction activities can save costs and foreign exchange savings compared to cash transactions. What costs are saved? There are money printing costs, money distribution fees, and cash handling fees. In addition, reducing the opportunity for perpetrators to produce fake money.

- With non-cash transactions, greater liquidity, because non-cash transactions cause more money to be deposited in the bank than at home, then money circulation will be far greater. Such conditions can contribute to reducing interest rates, which may encourage economic development.

- Indirectly as a tax monitoring tool, with non-cash transactions, the possibility of tax avoidance will also be smaller. Why? Non-cash transactions make more money deposited in banks than elsewhere. Thus, tax avoidance is increasingly difficult. Thus, the number of taxpayers will increase. If the number of taxpayers is increasing, the tax rate is likely to decrease so it is not too burdensome to the community.

- The uses of non-cash transactions can be more efficient in terms of time, the faster velocity of money. The more efficient the economy, the faster its growth.

The advantage of non-cash transactions is that they produce financial records that are more accurate, precise, and well-documented. This facilitates and accelerates the tracking of each transaction if needed. In addition, it helps budgeting activities. Because every transaction is well documented, so it's easy and fast to track. This will facilitate the preparation of financial budgets. Cash transactions complicate efforts to trace the origin of money originating from criminal offenses. With large amounts of non-cash transactions, it can be tracked by the authorized official. This will minimize embezzlement or other corrupt practices that can harm the country's finances.

Are the people of Malaysia ready for a cashless society?
Cashless society can be realized with the attention of the government in the preparation of adequate and equitable digital infrastructure, digital literacy and financial literacy.

[ecnalubma]

This will definitely affect business operations in the country and the citizens will have to adjust. Maybe its one of their best options to deter money involvement in crimes however this is not an easy measure. But if only most malaysian's know how to utilise crypto It will be big help.

[error08]

It's true that cash being used for illegal transactions and so does other forms of means of payment including bitcoin. If a government stated to implement a rule to prevent cash abuse, that's their right to do, furthermore, it's more convenient to transact fiat currency through bank service, who today always carries so much cash in a suitcase with them?

[NathanJB]

Are the people of Malaysia ready for a cashless society?
Cashless society can be realized with the attention of the government in the preparation of adequate and equitable digital infrastructure, digital literacy and financial literacy.

A cashless society is for those countries that are already fully developed, which Malaysia is not yet unfortunately. But this will be done gradually and step by step of course. This will not be done at an instant. I believe Malaysia has a lot of rural areas which cannot cope with this advancement of cashless technologies and policies. The country has to take into consideration these areas as well.

[Sithara007]

A lot of countries have attempted to eradicate physical cash, but in none of the cases this move was successful. The problem with digital cash is that you need additional devices and services to transact the cash. The basic requirements are smartphone and internet connection. Without that you can't make digital cash payments. And you can't expect someone who doesn't have a smartphone to support such an initiative. If the government is so adamant about it, then they should distribute smartphones for free, along with internet connection.

[romero121]

More and more countries will follow the same way of financial planning. In the name of digital growth already more countries have been encouraging cashless transactions. This too has made people to look onto bitcoin and other cryptocurrency transactions. The initiative taken by Malaysia with some time target is really a positive thing. Right now Westerners contribute good to the cryptocurrency, now with more such progress from Asian Countries the growth and adoption gets diversified.

[yoseph]

Are the people of Malaysia ready for a cashless society?
Cashless society can be realized with the attention of the government in the preparation of adequate and equitable digital infrastructure, digital literacy and financial literacy.

A cashless society is for those countries that are already fully developed, which Malaysia is not yet unfortunately. But this will be done gradually and step by step of course. This will not be done at an instant. I believe Malaysia has a lot of rural areas which cannot cope with this advancement of cashless technologies and policies. The country has to take into consideration these areas as well.

First and foremost I wonder why they are now planning on limiting the so called Cash transactions in the first place and the first thing that comes to mind is that they have realised the obscene amount of money that they spend when it comes to printing FIAT and they are taking steps to reduce it and make most transactions digital.

[VanDeinsberg12]

Seriously though, this kind regulation of transaction limit specifically paper money is among the most ineffective regulation out there. What I mean is people will still do a transaction that exceed certain amount mentioned if they wanted to do so, some companies in business might refuse but then it will increase the chance of losing customer. I think people who already feel inconvenienced enough are already switching to bank transfer but people who just comfortable to pay using cash should have the right for that too. This regulation is basically giving solution to a nonexistent problem unless the corporation or companies demand the government to release such regulation I think it’s just waste of tax money from the people. They pay money to the government and what they get is crappy regulation that goes against them.

[Vishnu.Reang]

More and more countries will follow the same way of financial planning. In the name of digital growth already more countries have been encouraging cashless transactions. This too has made people to look onto bitcoin and other cryptocurrency transactions. The initiative taken by Malaysia with some time target is really a positive thing. Right now Westerners contribute good to the cryptocurrency, now with more such progress from Asian Countries the growth and adoption gets diversified.

China was one of the countries which used to encourage digital payments. But recently they reversed this policy and made it mandatory for all the stores and merchants to accept physical cash. Because they found that a lot of ordinary people are not comfortable with digital payments and there exists a sizable section which prefers using physical cash.

[cotton ball]

Seriously though, this kind regulation of transaction limit specifically paper money is among the most ineffective regulation out there. What I mean is people will still do a transaction that exceed certain amount mentioned if they wanted to do so, some companies in business might refuse but then it will increase the chance of losing customer. I think people who already feel inconvenienced enough are already switching to bank transfer but people who just comfortable to pay using cash should have the right for that too. This regulation is basically giving solution to a nonexistent problem unless the corporation or companies demand the government to release such regulation I think it’s just waste of tax money from the people. They pay money to the government and what they get is crappy regulation that goes against them.

Controversial to limit cash transaction 2020 by Malaysia government, maybe they want to keep higher value of their money by limited cash transaction id daily day with several amount, but for fiat currency like bitcoin can't to stop limit transaction because is digital currency payment where can manage by government.

[Murat]

That the real-time to push Bitcoin and crypto in this country, I think when your country is setting a limit of using cash then cryptocurrency could be the next window for the Malaysian people, so at this moment, Bitcoin and other cryptos should emphasis on this area because people need to spend their money, so when they discover another digital platform then they might use this system, One thing is that. In Malaysia there are a lot of immigrant working people, they send money their own country on a weekly or monthly basis, so this cryptocurrency should be used for those people, I think in this way, cryptocurrency will be spread out around the world.

[dimonstration]

Southeast asia is known for its potential in the eyes of investors as of now, maybe that is because the significant growth of singapore that could affect the neighbouring country to be more competitive and this approach made by malaysia to force their citizens into using cashless society is not a bad idea in my opinion. It is already predicted since long ago that our society will eventually become cashless and that could reduce logging for sole purpose of creating money I honestly cant see this as a bizzare thing.

Singapore can be a basis in these but they might also experimenting ways to forsee what may happen if they will implement the said limiting of cash to influence others to try crypto and see for themselves how their people will use it and if will affect their country. Since they've find cash really a medium of transaction of illegal activities in their area. It can or may benefit the illegal users still. We don't know yet, but let's hope Malaysia is prepared for it.

[lobat999]

Instead of just criticizing Malaysia's policy, let's discuss what are the goals and interests behind the cash transaction value restriction policy.

With this policy indirectly encouraging people to switch from cash-based payment systems to non-cash, there are at least three fundamental reasons why the Malaysian government and other countries limit the number of cash transactions.

- Non-cash transaction activities can save costs and foreign exchange savings compared to cash transactions. What costs are saved? There are money printing costs, money distribution fees, and cash handling fees. In addition, reducing the opportunity for perpetrators to produce fake money.

- With non-cash transactions, greater liquidity, because non-cash transactions cause more money to be deposited in the bank than at home, then money circulation will be far greater. Such conditions can contribute to reducing interest rates, which may encourage economic development.

- Indirectly as a tax monitoring tool, with non-cash transactions, the possibility of tax avoidance will also be smaller. Why? Non-cash transactions make more money deposited in banks than elsewhere. Thus, tax avoidance is increasingly difficult. Thus, the number of taxpayers will increase. If the number of taxpayers is increasing, the tax rate is likely to decrease so it is not too burdensome to the community.

- The uses of non-cash transactions can be more efficient in terms of time, the faster velocity of money. The more efficient the economy, the faster its growth.

The advantage of non-cash transactions is that they produce financial records that are more accurate, precise, and well-documented. This facilitates and accelerates the tracking of each transaction if needed. In addition, it helps budgeting activities. Because every transaction is well documented, so it's easy and fast to track. This will facilitate the preparation of financial budgets. Cash transactions complicate efforts to trace the origin of money originating from criminal offenses. With large amounts of non-cash transactions, it can be tracked by the authorized official. This will minimize embezzlement or other corrupt practices that can harm the country's finances.

Are the people of Malaysia ready for a cashless society?
Cashless society can be realized with the attention of the government in the preparation of adequate and equitable digital infrastructure, digital literacy and financial literacy.

I see you have a valid point yet I was wondering where did the Malaysian Government got this idea?

Is there a precedent about this policy which was previously implemented before by other Governments and proved to have been effective?

Or is this is just a test bed and experiment for the Malaysian policy makers which I assume they don't know yet what will be the consequences of it if ever it will be finally implemented?

[13abyknight]

The limit is for physical cash transactions. If you need to transfer make more than 25K RM, then you need to do it electronically.[1] I don't think that's a huge problem for the people.

It could be a big problem for people who go around doing their daily business with hard cash as there is the cap of 25k RM. The only upside for such people is that it becomes much easier to transact big sums of money after depositing it in a bank and then sending it through the online payment method.

I'm not sure how they will monitor it though, maybe need to read the full policy draft.

Its quite easy for the government to monitor ALL of the transactions happening online with the use of a unified payment system model which is undoubtedly being developed for this purpose.  

[alexsandria]

Limiting the use of cash just to prevent illegal activities are not even a close solution to the problem itself. Though the problem scopes little wide from that but I'd like to emphasize illegal activities as it stand as a major reason to limiting.

Illegal activities are planned with a various course of ideas, and paths in which to execute to attained a certain goal. I don't think limiting use of cash is close to pointing out such activities 'cause lots of method, and counter measurements have been declared towards the problem. I don't mean to disregard the problem I just cannot clearly think that such problem could be solve by shallow solutions.

[abhiseshakana]

I see you have a valid point yet I was wondering where did the Malaysian Government got this idea?

Is there a precedent about this policy which was previously implemented before by other Governments and proved to have been effective?

Or is this is just a test bed and experiment for the Malaysian policy makers which I assume they don't know yet what will be the consequences of it if ever it will be finally implemented?

smuggling  cash is not easy if it is 100,000 usd .  Yeah 3,4,5 even 10k is easy. But once you get to a lot of cash it is hard to smuggle. Btw this is why usa stopped 500 and 1000 dollar Bill's. As a stack of a hundred thousand  dollar Bill's is much easier to move then a stack of a thousand hundred dollar Bill's.  To me moving cash in 3 ,4,5 thousand amounts is small time crime use.

According to the experience that has occurred, especially in Indonesia close to Malaysia, smuggling USD 100,000 is very easy. The mode is as follows:

The Cross Border Cash Carrying (CBCC) rule requires everyone to report if they carry money equivalent to Rp 100 million if they cross a border area.

Through one of the ports close to Singapore, money launderers can go back and forth five times a day from Singapore to Indonesia, they usually come in groups of 8-15 people. Even so often the customs and immigration officers know them. They did not come for a vacation but to exchange money at a money changer.

Singapore utilizes the conditions of the surrounding countries which are rife with criminal acts of corruption to increase the country's foreign exchange. Singapore has large denominations of currencies (SGD 1000 = USD 735) and (SGD 10,000 = USD 7350). Due to complaints and requests from neighboring countries to stop the use of the SGD 1000 & SGD 10,000 fractions, Singapore stopped printing the SGD 10,000 fractions but refused to withdraw the fractions from circulation.

In Indonesia alone, the Singapore dollar is a prima donna for corruptors, every time there is a catch operation, a Singapore dollar is always found. The discovery and concern over this problem arose after corruption by one of the tax officers (lower level) in Indonesia worth USD 21 million. He was sentenced to 29 years in prison for 3 legal cases.

[Sithara007]

^^^ Well.. they started withdrawing the notes on 2016 and it is a very long process. It looks like the SGD 10,000 banknote will remain in circulation for at least the next 10-12 years, as the replacement is only done when the notes are damaged. If the banknotes are in good condition, they will remain in circulation. The only catch is that the central bank has stopped printing the SGD 10,000 banknote. Similar steps have been taken by the central banks of Canada (CAD 1,000 is being withdrawn) and European Union (the EUR 500 note is no longer being printed).

Once a bank receives the SGD 10,000 banknote, it is liable to exchange the banknote for lower denomination notes with the Monetary Authority of Singapore (MAS). This is how they are phasing out the larger denomination banknote. In theory, this banknote will remain in circulation for an indefinite period of time, but with every passing year the number of such notes are declining. BTW, if you are from Singapore then you would know how difficult it is to spend these notes. Forget about the 10K note... even the 1K is very difficult to get accepted in most of the stores.

[Mometaskers]

I'm sure the crime syndicates they say they are trying to stop would just find other ways to launder all that money. They can probably even spread out the transactions among several accomplices.

It's not going to affect the average household so I don't think people are going to complain much. Maybe they are planning to go the way of India and demonetize the larger denominations and then either replace them with newer ones or just straight up remove them and have most large transactions be electronic (which can be easier to keep track of).