Canada    FinTech Guide    Chapter 7    Malaysia

7. Loan Services / Factoring / Loan Broking / Finetrading
Malaysia  Malaysia

Licensed moneylenders have often been confused for loan sharks and inadvertently the public’s perception towards moneylenders is known to be generally poor.

Legal Affairs

Any person wishing to carry out the business of moneylending must obtain a moneylender’s license from the Ministry of Urban Wellbeing, Housing and Local Government prior to commencing operations and must have a minimum of RM2,000,000-00 in financial reserves . Thus, FinTechs within this segment are required to obtain the moneylending license.

Further to the above, FinTechs that offer P2P financing services in Malaysia (“P2P operator”) are required to register as Recognised Market Operators with Securities Commission Malaysia (“SC”) . P2P operators must be locally incorporated and have a minimum paid-up capital of RM5,000,000-00 .

SC also requires, amongst others, a P2P operator to establish and maintain with a licensed institution, one or more trust account(s) designated for: (i) the funds raised on its platform; and (ii) monies received as repayments to investors . Further, where an Islamic investment note is executed or offered, on or through a P2P platform, the P2P operator must establish and maintain a Shariah compliant trust account with a licensed financial institution that is approved to carry on Islamic banking business, for purpose of the fund raised .

Only locally registered sole proprietorships, partnerships, incorporated limited liability partnerships, private limited and unlisted public companies, will be allowed to be hosted on a P2P platform .

As a general rule, a P2P operator cannot charge an interest rate of more than 18% per annum. In the event a P2P operator wishes to impose an interest of more than 18% per annum, it must first consult SC of such proposal .

Economic Conditions

No data available.


The consensus in Malaysia is that, the traditional moneylending governed by the existing Moneylenders Act 1951 and the P2P financing services are different genre of financing services. Therefore, the moneylending law governing the traditional moneylending activities which was enacted with the aim to protect borrowers (who are often individuals) from unscrupulous moneylenders should not be applicable to FinTechs offering P2P financing services as these FinTechs operate with the primary objective of providing alternative means of fundraising for small businesses as opposed to catering to individuals seeking personal financing .

For the time being, applications to be registered as a P2P operator with the SC has been closed since 1 July 2016, and any reopening of the application for registration will be communicated to the public in the future . Since the introduction of the P2P framework by SC, there are currently 6 P2P operators which have been approved to carry out its P2P financing services .

Contributing Authors

Lee Hishammuddin Allen & Gledhill

Adlin Abdul Majid
Kuala Lumpur, Malaysia

Andrew Ean Vooi Chiew
Kuala Lumpur, Malaysia

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Chapter Index:

1. Payment Services / Mobile Payment

2. Asset and Portfolio Management

3. Consulting and Broking Services / Robo-advisory / Auto-trading

4. Trading Platforms / Social Trading Platforms / Signal Following

5. Crowdfunding / Crowdinvesting / Crowdlending

6. Virtual Currency - Bitcoin

7. Loan Services / Factoring / Loan Broking / Finetrading

8. Online Banking Services

9. Analytics and Research / Data Management / Risk Management

10. Accounting

11. Identification

12. Online-pawning

13. InsurTech

14. RegTech

15. Initial Coin Offerings (ICOs)

The information in this guide provides a general overview at the time of publication and is not intended to be a comprehensive review of all legal developments nor should it be taken as opinion or legal advice on the matters covered. It is for general information purposes only and readers should take legal advice from a Multilaw member firm.

Publication Date: 1 May 2018