Foundation For New Hires Day 2 Vs 6.4

For Retail Collection & Recovery(RCR) Internal Use Only
Regulatory and
Compliance
For RCR Internal Use Only
Content
1. Regulatory and Compliance
1) Financial Services Act 2013 (FSA 2013) and Islamic

Financial Services Act 2013 (IFSA 2013)
2) Personal Data Protection Act

2010 (PDPA 2010)
3) AMLATF/PUA 2001
4) Code of Conduct (CoC)
5) Fair Debt Collection Practices (FDCP)
6) Prohibited Business Conduct (PBC)

Learning Objectives For RCR Internal Use Only
The objective of the training is to ensure

that Debt Collection Agents with Group
Retail Banking’s Retail Collection and
Recovery RHB Bank under the
Outsourcing Policy are equipped and
aware of the knowledge and procedural
guidelines on regulatory and compliance
related matters, which must be adhered by
the agents when working on all types of
accounts that are assigned to them.
3
Regulatory and Compliance
WHAT IS REGULATORY?
Regulation is the management of complex systems
according to a set of rules and trends . Normally an “ACT”
WHAT IS COMPLIANCE?
To follow sets of guidelines or a rule or order
and conforming to a rule, such as a specification, policy, or
a standard
Regulatory and Compliance…cont.
Regulatory – Refers to Statutory laws : -
1. FSA 2013 and IFSA 2013 – Financial Services Act and Islamic
Financial Services Act 2001
2. “PDPA 2010” – Personal Data Protection Act “PDPA 2010”
3. AMLATF/PUA 2001 – Anti-Money Laundering, Anti-Terrorism

Financing and Proceeds of Unlawful Activities Act 2001
Compliance : BNM’s Guidelines for FSPs to Adhere to
1. BNM Fair Debt Collection Practices 2007
2. Prohibited Business Conduct
5
Secrecy Provision Awareness

Financial Services Act 2013
(FSA 2013) &
Islamic Financial Services Act 2013
(IFSA 2013)
FSA 2013 and IFSA 2013
Banking Repealed
Came into
and with FSA
force on
Financial
October 1, and IFSA
Institutions
1989 2013
Act (BAFIA)
Origin and Definition of FSA 2013 and IFSA 2013

Principal regulatory objectives of the FSA and IFSA :-
•Licensing and Regulation for Financial Institutions to carry out financial
businesses and promote financial stability.
•Protect the rights as well as interest of consumers of financial product and
services.
•IFSA objectives are similar to FSA except compliance with Shariah.
•Prohibits disclosure of customer information to a 3rd Party.
•Enforcement came on 30 June 2013 by consolidating the following acts :-
FSA IFSA
Banking and Financial Institutions Islamic Banking Act 1983
Act 1989
Insurance Act 1996 Takaful Act 1984
Payment Systems Act 2003
Exchange Control Act 1953
8
Do It Right : Protection of Customer Information

Secrecy Obligations
• All staff are restricted from disclosing customer information to any

person without prior consent of the customer in writing except for
relevant authorities as permitted by the relevant applicable laws.
• The restriction also applicable to any person who has access to such
information, who is or has been a director, officer or agent of the
bank, including:
► Vendors, consultants, insourced / outsourced service providers
► Ex-employee of a bank as the duty of secrecy continues even after
cessation of service engagement or employment.
9
Types of Information
Documents or information of customer includes the following:
► General information such as name, gender, age and date of birth,

marital status, citizenship, business and personal address, phone number.
► Customer related information such as account numbers, personal

financial information, credit score, deposits transaction, income, credit
information.
► Other information such as photographs or video recording of

customer performing transaction, actual/image of transaction
slips/cheques, screen capture of banking system which may contain some
customer’s information.
Third Party
Who Is 3rd Party ?

► Any individual(s) whom is not the party to the
loan/financing facilities.
► How about customer’s parent, spouse, siblings, relative, boss, secretary,

Person in Charge etc.?
They are all considered as 3rd party.
What is 3rd Party Authorization Letter?
► Collector can proceed with negotiation with 3rd party

if customers issue a 3rd Party Authorization Letter to the Bank to deal
with the individual nominated by the customer.
11
The relationship betweens Banks and it’s

clients are driven by
TRUST!
Zero Tolerance
towards any
breach of
banking secrecy
Sample Third Party Authorization Letter
The 3rd parties info:

 Name,
 IC No,
 Tel Number and
 a copy if IC
13
Financial Services Act ( FSA 2013)
Under the FSA 2013, provisions pertaining to Information and Secrecy
are provided under Section 131 until Section 134 under Arrangement of
Sections :
Section 133 (Banking Secrecy)

Section 133 (1) : No person who has access to any document or information relating to the
affairs or account of any customer of a financial institution, including—
(a) the financial institution; or
(b) any person who is or has been a director, officer or agent of the financial institution, shall
disclose to another person any document or information relating to the affairs or account of
any customer of the financial institution.
Section 134 (Other permitted disclosures)

Section 134 (1) : A financial institution or any of its directors or officers may—
(a) for such purpose or in such circumstances as set out in the first column of Schedule 11,
disclose any document or information relating to the affairs or account of its customer to
such persons specified in the second column of that Schedule; or
(b) disclose any document or information relating to the affairs or account of its customer to
any person where such disclosure is approved in writing by the Bank.
14
Islamic Financial Services Act (IFSA 2013)
Under the IFSA 2013 , provisions pertaining to Information and Secrecy
are provided under Section 143 until Section 146 :
Section 145 (Banking Secrecy)

Section 145 (1) : No person who has access to any document or information relating to the
affairs or account of any customer of an Islamic financial institution, including—
(a)the Islamic financial institution; or
(b) any person who is or has been a director, officer or agent of the Islamic financial
institution, shall disclose to another person any document or information relating to the
affairs or account of any customer of the Islamic financial institution.
Section 146 (Other permitted disclosures)

Section 146 (1) : (1) An Islamic financial institution or any of its directors or officers may—
(a)for such purpose or in such circumstances as set out in the first column of Schedule 11,
disclose any document or information relating to the affairs or account of its customer to
such persons specified in the second column of that Schedule; or
(b)disclose any document or information relating to the affairs or account of its customer to
any person where such disclosure is approved in writing by the Bank.
15
Permitted Disclosures of FSA and IFSA 2013
Exception for disclosure is only for relevant authorities as permitted by
the relevant applicable laws as per Schedule 11 of FSA/IFSA 2013.
Exempted by BNM under certain conditions :-

• Written consent of the customer
• Customer is bankrupt/wound up
• For purpose of criminal proceedings or civil proceedings against the

customer / guarantor
• For Interpleaded Proceedings, Garnishee Proceedings, Court Order,

Grant of Probate
• Disclosure is authorized under any Federal Law to the police (limited to

information relating to suspects of the offence)
• Exchange of information on taxation arrangement from IRB

16
Consequences of Breach of FSA 2013 and IFSA 2013

Bank Negara Malaysia will not hesitate to prosecute anyone found to
have breached Section 133 of FSA 2013 and Section 145 of IFSA 2013.
Action maybe taken even if customer did not suffer any financial
losses.
Both FSA 2013 & IFSA 2013 impose the following penalties-
 Any person who contravenes Section 133 of FSA 2013 and Section 145 of
IFSA 2013 commits an offence and shall, on conviction, be liable to :-
(a) imprisonment for a term not exceeding 5 years; or
(b) fine not exceeding RM10mil; or
(c) both item (a) and (b) above.
 Bank and staff maybe subject to legal proceedings by the customer.
 In addition to the penalties stipulated in the above acts , the banking

institutions themselves are also required to institute additional punitive
measures against employees who are found to have breached the secrecy
provision, including instant dismissal.
17
The SUN Newspaper Report on FSA 2013 and IFSA 2013 For RCR Internal Use Only
24
RCR
Sample Cases For RCR Internal Use Only
26
Sample Cases…con’t For RCR Internal Use Only
27
International Sample Cases For RCR Internal Use Only
28
Personal Data Protection

Act 2010
PDPA 2010
Definition of “Personal Data” in Malaysia –PDPA 2010
Information which can be used to distinguish or trace an individual’s

identity, such as their name, IC, biometric records, either alone or when
combined with other personal or identifying information which is linked or
linkable to a specific individual such as date and place of birth, mother’s
maiden name etc.
33
Personal Information Data Elements
34
Consequences of Breach of PDPA 2010
Under the Personal Data Protection Act 2010 (“PDPA 2010”), information
that relates directly to a person or consumer in a commercial transaction
(data subject) cannot be disclosed without the customer’s written consent/
permission.
Personal Data includes, but not limited to, name , address, MyKad
Number, Passport Number, health records, email address, photographs,
information in personal file, bank account details and credit card details.
Any violation to the above will render staff to be liable for the following
penalties:-
(a) imprisonment for a term not exceeding 3 years; or

(b) fine not exceeding RM500,000.00; or
(c) both item (a) and (b) above.
35
Verification Process
Verification Process Steps for Collectors
1) Greetings - 845 – 1159 am GM, 12 pm – 2 59 pm GA, GE 3-good evening
2) Ask for customer’s Name in Full
3) Introduce yourself – How?
4) Verification Q – 4 digit IC no, DOB, MMN, address , tel no,
5) TQ for verification & Call is being recorded.
6) State the reason for the call
7) Negotiation ( DO NOT ASK “ When can u pay”? Or “Bila boleh bayar”)
37
Anti-Money Laundering/Anti
Terrorism Financing and
Proceeds Of Unlawful
Activities
AMLATF/PUA 2001
Introduction AMLATF/PUA 2001 For Internal Use Only
The Act
was gazetted
as law on 5 July
2001 and came into
force on 15 January
Implementation of
The Anti Money
Laundering Act
2001 ( AMLA) in
Malaysia
US Federal Bureau of Investigation (FBI) announced that Malaysia was "a primary operational launch pad
for the September 11 attacks", the statement offended then serving prime minister Mahathir.
FBI director Robert Mueller, apparently looking to salvage cooperation with Malaysian law enforcement agents in the nascent "war on
terror", attempted to diffuse tensions by saying in March 2002, "There are a number of countries where the terrorists have met and
planned, and to use the word 'launch pad' is certainly inaccurate in Malaysia's case.
40
For Internal Use Only
Introduction AMLATF/PUA 2001..con’t
Further amended in November 2003 to include Terrorist
Financing
Revised to Anti-Money Laundering and Anti-Terrorism

Financing (AML/ATF) Act 2001 effective 6 March 2007
1 September 2014 : Changed to Anti-Money Laundering,
Anti-Terrorism Financing and Proceeds of Unlawful
Activities Act 2001
The act prohibits any persons from engaging in, or attempting to

engage in, or abetting the commission of money laundering, financing
of terrorism and proceeds from unlawful activities.
41
Who and what law governs the Financial Institutions in For Internal Use Only
relation to combating money laundering and terrorism
financing in Malaysia?
To deter money laundering and financing of terrorism, Bank Negara
Malaysia (BNM) has established the Financial Intelligence Unit (FIU)
who enforces the Anti-Money Laundering & Anti-Terrorism
Financing Act 2001 (AML/ ATF Act) and co-operates with other
countries in the global fight against money laundering, financing of
terrorism and other serious crimes.
BNM has also issued on 8 November 2006, the Guidelines on Anti-

Money Laundering and Combating the Financing of Terrorism
which provides the requirements that must be complied with by the
reporting institutions under the AML/ ATF Act to effectively combat
money laundering and financing of terrorism activities.
42
Understanding Money Laundering
What is Money Laundering?
 Money laundering in general terms is
defined as the process of converting money/
property, which is derived from illegal
activities to give it a legitimate appearance.
 Proceeds from criminal activities are

converted to legitimate funds and assets. It
is the “turning of dirty money into clean
money”.
 Money is moved around the financial system

again and again in such manner that its
origin gets hidden.
43
Understanding Terrorist Financing
What is Terrorist Financing?
 Collection of funds from
legitimate sources, with the
intention to use the funds to
carry out terrorists act.
 Financing of terrorism generally

refers to carrying out
transactions involving funds that
may or may not be owned by
terrorist, or that have been, or
are intended to be, used to
assist the commission of
terrorism.
44
Main Objectives of Money Laundering and For Internal Use Only
Terrorism Financing
Money Laundering
•To acquire wealth.
•To fund other criminal businesses.
• Provide legitimacy to businesses
• To Hide or Disguise source of wealth
• Evade taxes
Terrorist Financing
•To seek political or social change through
intimidation via terrorism acts.
• Disguise the source of funds.
• Fund the target.
45
Similarities and Differences between For Internal Use Only
Money Laundering and Terrorist Financing
SIMILARITIES
 Laundering of Illicit Funds
 Camouflages or breaks the ties with the actual source of the funds
DIFFERENCES
Motivation if PROFIT Motivation is IDEOLOGY
Funds from illegal activities Funds from legitimate sources.
46
Examples of Illegal Activities That Involve For Internal Use Only
Money Laundering
Illegal Embezzlement
Drug Sale
Booking/ Secret
Betting Societies/
Activities Gangsterism
Criminal
Breach of
Along
Trust
(CBT)
Human Funding to
Trafficking Terrorism
Source : https://charts.reliancemoney.com ( www.google.com)
48
Why Money Launderers Place Funds in Banks
Banks provide 3 major advantages:
 Accessibility – Easy fund transfers.
 Convenience – Accounts easily opened and

deposits easily placed via a variety of
financial products and services
 Security – Funds are safely invested.
If illicit funds are channeled through banking

systems, the bank becomes part of the criminal
network itself and leads to DAMAGE TO
REPUTATION
49
Stages of Money Laundering
In the 3rd stage of

money laundering, if the
In the 2nd stage of money
In the 1st stage of previous stages have
laundering, illegal funds
money laundering, been undertaken
are hidden in the financial
illegal funds and assets correctly, the money
system through a web of
are first brought into now is successfully
complicated transactions
the financial system. mixed with legitimate
from the origin to confuse
funds in the financial
the audit trail back to the
The physical deposit of system. The funds will
original deposit making it
cash proceeds derived now be used for
difficult to link the funds
from illegal activities. whatever purpose
to criminal activity.
chosen with minimal risk
of detection.
50
Stages of Money Laundering in A Glance!!
Source : people.exeter.ac.uk ( www.google.com)
54
What are the responsibilities of the reporting
institutions?
Customer Identification
Know Your Customer
Customer Due Diligence (CDD)
Risk Rating of Customer
Reporting of Suspicious Transactions
Record Keeping and System
Tipping Off- Do not disclose suspicions to customer & Staff Training
56
institutions?..con’t
When establishing a relationship with any potential customer, particularly in the

opening of an account, reasonable effort should be taken to determine the true
identity of the customer from reliable and authenticated documents.
Reporting institutions are to familiarise themselves with the customer’s profile/

background and general behaviour pattern to be able to identify transactions which
are inconsistent with their business or personal status, or which do not match the
normal transaction profile of a customer.
Customer Due Diligence (CDD)- the CDD is the process where information
provided by individuals or corporate entities are verified via reliable third party
sources to determine its authenticity.
57
institutions?...con’t
Customers are to be risk-rated based on, for example, the type of occupation, type
of businesses they are involved in or from which country they are from; i.e. high risk
countries etc; types of products used by customers, the anticipated volume of
transactions, destination of remittances, relationship between sender and receiver
of funds or any other information suggesting that the customer is of higher risk.
To immediately report to BNM all cases of suspicious transactions.
To maintain and safe-keep customer’s records for a period of 6 years from the date
the account has been closed or the transaction has been completed or terminated.
In situations where the records are subject to on-going investigations or prosecution in court, the
records shall be retained beyond the stipulated retention period until it is confirmed by the Financial
Intelligence Unit (FIU) in Bank Negara Malaysia (BNM) that such records are no longer needed.
58
Do not disclose suspicions to customers- do not advise or disclose in any way to

customers that they are under suspicion for money laundering.
Reporting institutions are also required to conduct training for all its staff to ensure
that they know their responsibilities and all staff training records must be kept.
The identification/ verification and record keeping requirements are also invoked for:
Licensed money changers
Pool betting license holders
Racing clubs
Licensed casinos
Bank Pertanian Malaysia
Licensed company secretaries
Notaries public
Accountants ; and
Advocates & Solicitors
What is a suspicious transaction?
A suspicious transaction is frequently a transaction which is inconsistent with a

customer’s known, legitimate business, or personal activities, or the normal activity
associated with the type of account or business.
To whom should I report a suspicious transaction?
All staff are to report to the Anti-Money Laundering Compliance Officer in the
event a suspicious transaction is detected. ( check whether there is Anti-Money
Laundering Procedure Manual for the full reporting procedure at your
company).
Penalties under AML/ATFAPUA 2001
Section Description Significant Changes
4 Offence of Money • Expanded the offence of money
Laundering laundering/terrorism financing to cover
proceeds of unlawful activities or
Any person who instrumentalities of an offence.
engages in or attempts • The penalty has been revised.
to engage in or abets
the commission of
money laundering. From… To…
Fine not Fine not less than 5
exceeding RM5 times the sum or
mil or 5 years value of proceeds of
imprisonment unlawful activity or
or both. instrumentalities of an
offence or RM5 mil
and 15 years
imprisonment
(whichever is higher)
61
Penalties under AML/ATFAPUA 2001…con’t
17 Retention of records • Obligation to keep records on CDD,
Reporting institutions to EDD and results of any CDD analysis
retain records for 6 years undertaken.
or more from date account From… To…
was closed or transaction
Fine not exceeding Fine not exceeding
completed/terminated
RM1mil or 1 year RM3mil or 5 years
imprisonment or imprisonment or both
both
35 Tipping-Off • Increase in the penalty.

It is an offence to inform or
tip off any person, to avoid From… To…
investigation or Fine not exceeding Fine not exceeding
prosecution for being a RM1mil or 1 year RM3mil or 5 years
suspect or a failure to imprisonment or imprisonment or both
report possible money both
laundering
62
Penalties under AML/ATFAPUA 2001…con’t

79 Preservation of No changes
Secrecy
Remain the same
Fine not exceeding RM1mil or 1
year imprisonment or both
63
Other Sections Under AML/ATFAPUA 2001
13 Record Keeping -
Reporting institutions shall

keep a record of any
transaction involving
domestic currency or any
foreign currency exceeding
such amount as the
competent authority may
specify.
64
Other Sections Under AML/ATFAPUA 2001
Failure to report Money
Laundering Activity
86 Contravening any provisions Will be fined …

in AMLATF/PUA 2001
Fine not exceeding RM1mil
If obstruct investigation and
cause a failure to report of a
criminal activity associated
with money laundering.
Will be fined …
22 Failure to report/take Fine not exceeding RM1mil or
necessary steps to ensure imprisonment not exceeding 3 years or
compliance both
If an officer of a reporting
For continuing offence, will be in liable to
institution fails to take
an additional fine of not exceeding
necessary steps to ensure RM3000.00 for each day or part thereof
compliance of the Act during which the offence continues to be
committed.
65
Money Laundering Has Negative Consequences
Expands Crime and Social Costs:
It allows drug traffickers, smugglers, and other criminals to expand their
operations. This drives up the cost of government due to the need for increased law
enforcement and health care expenditures (for example, for treatment of drug addicts) to
combat the serious consequences that result.
Finances Terrorism:
Money laundering provides terrorists with funds to carry out their activities.
Reputational Risks of Country:

Nations cannot afford to have their reputations and financial institutions tarnished by an
association with money laundering, especially in today’s
global economy.
Undermines the integrity of the financial system:

Financial system advancing criminal purposes undermines the
function and integrity of the financial system.
Black Money will be expanded.
Reduces Revenue and Control:

Money laundering diminishes government tax revenue and weakens
government control over the economy.
66
Code of Conduct
Bank’s Code of Conduct
BNM GENERAL GUIDELINES FOR

FINANCIAL INSTITUTIONS
Bank Negara Malaysia issues “Garis Panduan-Garis Panduan
Untuk Institusi-Institusi Kewangan” or General Guidelines (GPs)
for Financial Institutions from time to time.
BNM/GP1 to BNM/GP11
BNM/GP7: Issued in 1998.

Guidelines on the Code of Conduct of Directors,
Officers and Employees in the Banking Industry
As the custodian of public funds, the management of financial

institutions should exhibit impeccable integrity and a high level of
professionalism in their conduct to promote public confidence in
the safety of the public’s deposits.
Bank’s Code of Conduct
This integrity and credibility of financial institutions must be

safeguarded by the following six principles:
1)To avoid conflict of interest
2)To avoid misuse of position
3)To prevent misuse of information gained through the financial

institution operations, either for personal gain or for any purpose or
other than that intended by the financial institutions
4)To ensure completeness and accuracy of relevant records
5)To ensure confidentiality of communication and transaction between

the financial institution and its customers; and
6)To ensure fair and equitable treatment of all customers and others
who rely on or who are associated with the financial institution.
Bank’s Code of Conduct – con’t
1) Conflict of Interest;
Staff must not engage directly or indirectly in any business activity that competes or
conflicts with our Bank's interests.
a) Outside Financial Interest

Staff must disclose immediately to the supervisor if one has any financial interest
in a customer.
b) Other Business Interest

A conflict of interest if a staff conducts business other than the Bank's business
during office hours.
c) Other Employment
Staff to discuss and obtained written approval from the manager or HOD when
engaging on part-time employment or business outside the Bank.
Conflict of Interest; (Con’t)
d) Entertainment and Gifts

Staff must not accept costly entertainment from customers, potential
customers or suppliers unless he is able to reciprocate, either personally or by
obtaining reimbursement from the Bank through a proper expense voucher.
e) Corporate Directorship
Staff must not solicit corporate directorships and should not serve as a director
of another corporation without prior written approval from Management.
f) Trusteeships
Staff must not solicit appointments as executors, administrators or trustees of
estates of deceased customers.
2) Misuse of Position
a) Staff must not use the Bank's name or facilities for personal
advantage in political, investment or retail purchasing transactions,
or in similar types of activities.
b) Staff must not use the Bank's facilities and influence for speculating
in commodities, gold, silver, foreign exchange or securities, whether
acting personally or on behalf of friends or relatives.
3) Misuse of Information
a) Staff shall not deal in the securities of any company listed or

pending listing on a stock exchange listed or pending listing on
a stock exchange at any time when he is in possession of
information, obtained as a result of his employment by, or his
connection with the Bank which information is not generally
available to shareholders of the company.
b) A member of staff who possesses "insider" information is also

prohibited from influencing any other person to deal in the
securities concerned or communicating such information to
any other person.
4) Integrity of Records And Transactions

a) Accounting records and reports must be complete and accurate.
Staff should never make entries or allow entries to be made for
any account, record or document of the Bank that are false or
would obscure the true nature of the transaction, as well as to
mislead the true authorization limits or approval by the relevant
authority of such transactions.
b) All records and computer files / programs of the Bank, including

personnel files, financial statements and customer information,
must be accessed and used only for the management -
approved purposes for which they were originally intended.
5) Confidentiality
a) Take every precaution to protect the confidentiality of customer's

information, transactions and any Bank’s materials.
a) Business and financial information about any customer may be used

or made available to third parties only with prior written consent of
the customer.
6) Fair And Equitable Treatment
a) Business dealings on behalf of the Bank with existing and potential

customers, with other members of the staff and with all those who
may have cause to rely upon the Bank, should be conducted fairly
and equitably.
KNOWLEDGE CHECK!!!
78
Collector’s Code of Conduct
• Collectors should always remain professional during the telephone conversations

and visits. No written or verbal threats, abuse or rudeness is permitted. Collectors
should use only acceptable business language, even if the other party does not.
• Collectors must use the language with which the borrower is comfortable.
• When a borrower becomes abusive or threatening, the collector may

terminate the discussion. All discussions where the borrower becomes abusive or
threatening should be appropriately documented.
• Collectors must be appropriately dressed when meeting the borrowers in person.
• Collectors must always carry appropriate identification and explain the purpose
of their call or visit.
• Collectors must accurately explain the impact of non-payment to the borrowers,

whether communicating verbally or in writing.
• Collectors must protect the privacy of the borrowers by ensuring their obligations
are not shared with a third party unless specifically authorized by the borrowers or
required by law.
Collector’s Code of Conduct – con’t
• All collection activities should be consistent with the guidelines provided in this
document. All letters and other communication must be in the format that has been
approved.
• Collectors must record all contacts with the borrower. Notes on the collection
system should be clear, concise and accurate. All attempts, contacts, conversation
and actions are to be updated on the system.
• Collectors should not accept gifts from the borrowers.
• Collectors conducting transfer payments on the borrowers’ borrowing accounts

must be legitimately conducted with proper approvals.
• Collectors raising waivers on interest, late charges or any other charges must be
in accordance of the approval obtained from the respective approving authorities.
 Collectors should not have discussions of a personal nature with

the borrower:-
 Maintain a professional distance;
 Restrict conversation to the debt owed and the borrower’s proposed
repayment plan.
KNOWLEDGE CHECK!!!
81
BNM FAIR DEBT

COLLECTION PRACTICES
(FDCP)
82
Fair Debt Collection Practices
Introduced by Bank Negara Malaysia

• on 28 September 2007
Primary Objective
• To set out a fair debt collection practices that every financial service
provider is required to observe:-
83
FDCP - Who is affected ?
External agencies and all debt collections are governed by Fair Debt
Collection Practice and strict adherence is mandatory.
Those affected :
•Bank’s Internal In-house Collectors
•Bank’s Field Collector (FVT)
•Bank’s External Collection Agencies

(ECA)
84
FDCP – Key Requirements
85
Guidance On Fair Debt Collection Practices
1 - Authorization of Debt Collectors
►Authorization document for external debt collection agency:
•Bank will issue an authorization document to each of the ECA when they are
engaged to collect on behalf;
•To ensure that ECA do not sub-contract the collection of debts to any other 3rd
parties.
► Authorization card to each debt collectors:

•ECA is to issue an authorization card to each of its debt collector in a format
approved by the financial service provider.
•The authorization card should have the following:
 ECA’s name and contact details;
FI’s name and contact details; and
Name and ID no of the debt collector.
► Identification of debt collector:

Every debt collector must show the authorization card to identify himself
•Show authorization card; and
•Identify himself/herself to customer.
86
Sample of Authorization of Debt Collectors
87
2 - Customer Information and Banking Secrecy
When you are contacting any debtor either by telephone, via face-to-face
contact or other forms of communication, you MUST do the following:
► Give clear and accurate information:

• Confirm that the person you are dealing with is the borrower before divulging the
details of the debt.
• Upon confirmation you must make clear the purpose of the contact and which
financial service provider you are representing.
► Adherence to secrecy provisions:

•The must always be a strict observation to relevant information and secrecy
provisions stipulated in the (FSA 2013 and IFSA 2013) which must be complied by
the collectors from ECA. Restriction from disclosing customer information to any
person without prior consent of the customer in writing except for relevant
authorities as permitted by the relevant applicable laws.
•The restrictions on disclosing information to any third parties applies to the
customer’s spouse, family members or any 3rd party unless permitted by the
relevant legislations.
•The restriction also applies to any person who has access to such information
(ECA and debt collectors).
•Confirm the customer and make clear of the purpose of contact.
88
2 - Customer Information and Banking Secrecy…con’t
► Information collected from 3rd party:

•When collecting information on any customer from a 3rd party, you must not
collect more information than is necessary to recover the debt.
•Only on need basis to facilitate the collection/recovery.
89
3 – Notices to Customers
► Provide written notice at least 7 days in advance:

•Detail of recovery effort, name of ECA, changes of ECA can be incorporated
within the reminder notices
•At least disclose the outstanding amount, payment due date, contact no. of
Collection and Recovery Departmentt.
•Should customer is not contactable, FSP is considered have fulfilled its obligation
if notice sent to the last known address of the borrower at least 7 days in
advanced.
► Calling off recovery action:

•Prompt communication to ECA/debt collectors if account has been regularized,
fully settled, deceased, dispute or fraud, Bankrupted or customer has been
accepted by AKPK Debt Management Program (DMP).
90
4 – Collection of Payments
► Customers should be advised on debt repayment platform:

•Debt repayment to be made at branches .
•If payment are made to debt collector, receipt must be issued.
•Cheque payments must be made payable to the FSP.
► Payment records:
•FSP/ ECA to ensure internal controls are in place to ensure accurate record
keeping of payments.
•Only receipts approved by FSP are issued for payment received.
•Receipt books are in the custody of authorized personnel of the ECA, secured
against loss and unauthorized use.
91
5 - Conduct of Debt Collectors
• Violence or harassment
• Intrusion of privacy
• Misleading debtor
92
5 (i) - Violence or Harassment
► Must not resort to violence or harassment:
•No intimidation or violence either verbal OR physical, against any
customer or person known to a customer;
•No threatening, foul or intimidating language or remarks;
•No causing bodily injury;
•No entering into a property uninvited or by force or not leaving when

asked to;
•No destroying or forcibly remove any personal property;
•No threatening to publish any customer’s failure to pay or disclose any

customer’s debt details to any third party; and
•No putting up posters or writing at any customer’s residence to publicly

humiliate the customer.
93
5 (ii) - Intrusion of Privacy
► Avoid intrusion of privacy:
•No contacting the customer or the customer’s family, relative, neighbour,

friend or employer either by telephone, via face-to-face contact or through
other forms of communication at unreasonable hours.
**** The appropriate contact times : between 8am and 9pm.
( take note of different time zones as well)
•Do not contact the borrower/customer by telephone or SMS more than

3 times per week or 12 times per month if the borrower/ customer has
responded to the contacts.
•Debt collectors should observe these contact times unless the
borrower/customer specifically asks to be contacted outside of these
hours or if the borrower/ customer is not contactable during these hours.
94
5 (ii) Intrusion of Privacy… con’t
• No staying in the vicinity of the customer’s home or workplace for
longer than necessary or not leaving when asked to;
• Cannot visit the customer at his workplace unless:

 the customer has failed to respond to other means of communication,
for example, by telephone or written letters/notices;
 is not contactable at other locations;
 has agreed to the visit; and
 the customer is the proprietor or director of a business to which the
debt relates.
• No harrassing the customer’s family, relative, neighbour, friend or

employer either by telephone or via other forms of communication for
information about the customer’s whereabouts.
95
5 (iii) - Misleading Debtor
► Mislead the customer:
• When contacting any customer whether through telephone or written

notice or via face-to-face contact, debt collectors should not mislead
the customer in terms of:
 Amount owed by customer - FSP is responsible to provide the correct

amount repayable. The customer should be provided with accurate
information about the amount owing.
• Should not collect or attempt to collect money that exceeds the
overdue amount stated on the statement provided by the bank;
 Intention to deceive - Debt collectors should not falsely imply that they
represent a legal authority or claiming that they are collecting the debt
based on the court’s instruction, with the intention to deceive /induce
the customer into making payments.
96
5 (iii) - Misleading Debtor… con’t
► Recovering of debt from 3rd parties:

• Debt collectors from ECAs should not attempt to recover debts,
directly or indirectly, from third parties including family members,
friends, relatives or the employer of any customer.
97
6 - Debt Collection Charges
► Imposing debt collection charges:

• External agencies are NOT allowed pass on charges in relation to recovery
efforts to the customers.
• Principal 1 Guidelines on the Imposition of Fees and Charges on Financial

Products and Services (BNM/RH/GL 016-2) – FSP are not allowed to impose
debt collection charges on customers.
98
7 – Monitoring Mechanisms
► Establish monitoring mechanisms:

• To establish monitoring mechanisms, including regular review, to
ensure that their debt collectors adhere to the debt collection practices.
99
8 – Complaint Against Debt Collectors
► Accountable for any complaints:
• Should not disclaim responsibility for any misconduct
 Accountable of complaint against external debt collectors.

 Ensure all customer complaints are properly investigated.
 Take appropriate remedial actions for any misconduct or unacceptable
practices.
 Unrectified complaints on conduct of debt collectors:
 Penalty and fine.

 Prohibit the FSP to further outsourcing the debt collection functions.
10
Other Miscl Fair Debt Collection Practices
Other Misc FDCP stuffs

►1. Any breach
Cannot of the above Fair Debt Collection Practice would result in
Threaten
2. immediate
Breaking and entering customer’s
termination of contract.home
3. Stalking
4. Being physical
5. Provide wrong info
► Additionally, ECAs must be strictly take note that they are responsible
6. Manipulate information
for
7. ensuring
Cant sharetheir collection
personal staffs
info ( code are briefed on the details of the Fair
of ethics)
Debt Collection Practice and the compliance form properly signed off and
8. Flirting
filed for record. customers/degrade
9. Underestimate
10. Cyber Bully
10
Guidelines for
Collectors
Guidelines on Staff Attendance
 Staff must come early to work - before 8.45 am.

 Staff must sign the attendance sheet personally ( if any).
 Staff must sign the attendance sheet legibly or can be easily

identified.
 Staff should sign-in in chronological sequence.
 Staff who reports to work late should indicate the reasons why he /
she is late in the attendance register or text the immediate supervisor
should they be late.
 Staff who are absent on a particular day, such as annual leave, sick
leave, attending courses, performing out-station duty etc should be
indicated at the bottom of the attendance sheet.
 Since we are using the Time Management System to record the

attendance, the Staff must use their access card to tap on the device
as and when they enter and exit the building.
Tardiness
Definition – Normally termed as “major misconduct” as it is

related to bad time keeping and the failure on the part of
the employee to observe basic timeliness and punctuality,
thus affecting productivity as a whole.
Examples:-
i) Late coming to work
ii) Missing in action from workplace
iii)Sleeping while on duty
iv)Leaving work station early without prior permission
v) Taking meal/break more than the appropriate time
vi)Malingering
Staff Discipline and Personal Etiquette
• Staff should be well mannered and dress decently. Tie must be worn during
working hours and during visits.
• Long sleeve shirts must pressed and to be tucked in neatly at all times. Pants
must not be decorated with flaps or other decorative ornaments . Attire made of
denim and corduroy materials are prohibited at all times.
• Clean Shaven and long hair prohibited for men.
• Proper work shoes other than rubber/ canvas, track shoes or moccasins are to
be worn at all times. No slippers or flip flops as they are strictly prohibited.
• They should ensure the practice of professionalism and dignity in carrying out
their work.
• Non revealing clothing for women.
RULE of THUMB :
If the dressing is questionable , it is certainly NOT APPROPRIATE!!!
Prohibited Business Conduct

The Financial Services Act 2013 (FSA), Islamic Financial Services Act 2013 (IFSA)
and the Development Financial Institutions Act 2002 (DFIA) prohibit financial
service providers (FSPs) from engaging in conduct which is deemed to be
inherently unfair to financial consumers.
Such prohibited business conduct is set out in Schedule 7 of the FSA and IFSA and
the Second Schedule of the DFIA.
 BNM’s Guideline on Prohibited Business Conduct

• Provide guidance on descriptions of prohibited business conduct.
• Legal provisions:
 Financial Services Act (FSA) 2013/ IFSA 2013
• Section 123 (FSA) / 135 (IFSA) - Standards on Business Conduct
• Section 124 (FSA) / 136 (IFSA) - Prohibited Business Conduct &
Schedule 7
10
Consequences of non-compliances: For Internal Use Only
 Any person who commits an offence and shall,

Bank Negara on conviction, be liable to imprisonment for a
Malaysia term not exceeding 5 years or to a fine not
exceeding RM10 million or both.
 Action may be taken even if customer did not suffer

any financial losses
RHB Bank  Financial and Reputational risk
Employee  Disciplinary action
**Section 124 (FSA) and Section136 (IFSA) - Prohibited Business Conduct
110
Key Requirements > Prohibited Business Conduct
1. Engaging in misleading or deceptive conduct
Inducing or
Likely to mislead or Action or
attempting to
deceive (tendency or statement
induce (to do or to
capacity (written or oral)
omit)
Examples:
1. Accepting payments or consideration without intending to or being able to
supply the services or products.
2. Misrepresenting the benefits, advantages, conditions or terms of service

or product.
3. Falsely stating services or products are only available for a limited time or
is in limited supply, to elicit an immediate decision.
4. Luring customers with attractive promises, when the person is aware that it
is not able to reasonably fulfill such promises.
117
1. Engaging in misleading or deceptive conduct …..con’t
More examples:
5. Misrepresenting conventional insurance products linked to Shariah

compliant funds as Takaful products.
6. Omitting material facts that are relevant for the customer to make an
informed decision, including using small print to obscure such facts.
7. Using the term “zero entry cost” or “zero moving cost” in property
financing if the costs are ultimately passed on to the customers during the
tenure of the loan.
8. Giving prominence to the returns on a financial service or product without
giving adequate or equal prominence to significant terms and
conditions, risk warnings, or making such terms or conditions obscure, as
this may mislead customers to form unrealistic expectations on the returns
that will be earned.
118
2. Exerting undue pressure or influence
Harassing by making Using/threatening

Exploiting a
unnecessary or to use
position of power
excessive physical/forceful
or control
contact actions
Examples:
1. Making repeated solicitations to promote services or products when
customer have communicated their disinterest.
2. Conducting personal visits to customer’s home or workplace and ignoring
the customer’s request to leave or not to return.
3. Creating impediments to deter or prevent the customer from leaving the

bank’s premises until a contract is signed.
4. Exploiting a consumer’s obvious emotional state to sell services or products

unnecessary/ unsuitable to the needs and circumstances of the customer.
119
3. Demanding payments for unsolicited services or products
Sending
Charging Placing
document
Threatening (threatening)/causing
the cost to stating the
legal customer’s name on a
account or amount of the
proceeding list of defaulters or
credit card unsolicited
debtors
service/product
Examples:
1. Demanding payments for services/products provided under automatic
enrolment schemes where customers are automatically signed-on to
receive new/additional services/products without their consent, and are
deemed to have accepted unless they expressly decline the offer.
2. Confusing a customer during sales presentation into closing a deal and
subsequently demanding payment.
3. Demanding premium payments for insurance or Takaful riders without the

policyholder’s or participant’s express agreement to purchase such riders.
120
4. Coercing customer to acquire service as condition to acquiring
another service
Combination of Customer
Purchase fire
services/products recognises the
insurance/ Takaful or
with option to utility of
mortgage reducing
purchase purchasing the
term assurance/Takaful
separately combined product
Acquire another Purchase basic insurance/Takaful plan before

service/product to purchasing a rider that expands the policy’s
mitigate credit benefits and cannot be sold on a standalone
risks basis.
Examples:
1. Purchase of non-motor insurance/ Takaful as condition to obtaining a motor
Insurance/Takaful cover.
2. Purchase of insurance/Takaful as condition for approving a new personal
financing facility.
3. Purchase of credit shield as a condition for approving new credit card facility.
121
5. Colluding to fix features or terms to the detriment of customers
Negative Contract, arrangement or Features or terms of

impacts to understanding (whether or not service/product
customer legally enforceable) between include
(financially or bank and any other interest/financing rates
non- person/association/another or premium/
financially) bank/any individual contribution rates.
Tariff or premium/Takaful contribution rates or policy/Takaful certificate

terms which have been approved by the Bank
Examples:
1. Agreement between FSPs to restrict the payment of interest on current
accounts for individual financial consumers.
2. Collusion among FSPs to discriminate against drivers of older vehicles
by imposing a minimum premium or contribution loading for the purchase of
motor insurance or Takaful.
122
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For Retail Collection & Recovery(RCR) Internal Use Only

1) Financial Services Act 2013 (FSA 2013) and Islamic

2) Personal Data Protection Act

4) Code of Conduct (CoC)

5) Fair Debt Collection Practices (FDCP)

6) Prohibited Business Conduct (PBC)

The objective of the training is to ensure

Regulatory – Refers to Statutory laws : -

2. “PDPA 2010” – Personal Data Protection Act “PDPA 2010”

3. AMLATF/PUA 2001 – Anti-Money Laundering, Anti-Terrorism

Compliance : BNM’s Guidelines for FSPs to Adhere to

1. BNM Fair Debt Collection Practices 2007

2. Prohibited Business Conduct

Secrecy Provision Awareness

Origin and Definition of FSA 2013 and IFSA 2013

Do It Right : Protection of Customer Information

• All staff are restricted from disclosing customer information to any

► General information such as name, gender, age and date of birth,

► Customer related information such as account numbers, personal

► Other information such as photographs or video recording of

Who Is 3rd Party ?

► How about customer’s parent, spouse, siblings, relative, boss, secretary,

What is 3rd Party Authorization Letter?

► Collector can proceed with negotiation with 3rd party

The relationship betweens Banks and it’s

The 3rd parties info:

Section 133 (Banking Secrecy)

Section 134 (Other permitted disclosures)

Section 145 (Banking Secrecy)

Section 146 (Other permitted disclosures)

Exempted by BNM under certain conditions :-

• For purpose of criminal proceedings or civil proceedings against the

• For Interpleaded Proceedings, Garnishee Proceedings, Court Order,

• Disclosure is authorized under any Federal Law to the police (limited to

• Exchange of information on taxation arrangement from IRB

Consequences of Breach of FSA 2013 and IFSA 2013

 Bank and staff maybe subject to legal proceedings by the customer.

 In addition to the penalties stipulated in the above acts , the banking

Personal Data Protection

Definition of “Personal Data” in Malaysia –PDPA 2010

Information which can be used to distinguish or trace an individual’s

(a) imprisonment for a term not exceeding 3 years; or

1) Greetings - 845 – 1159 am GM, 12 pm – 2 59 pm GA, GE 3-good evening

2) Ask for customer’s Name in Full

3) Introduce yourself – How?

4) Verification Q – 4 digit IC no, DOB, MMN, address , tel no,

5) TQ for verification & Call is being recorded.

6) State the reason for the call

7) Negotiation ( DO NOT ASK “ When can u pay”? Or “Bila boleh bayar”)

Revised to Anti-Money Laundering and Anti-Terrorism

The act prohibits any persons from engaging in, or attempting to

BNM has also issued on 8 November 2006, the Guidelines on Anti-

 Proceeds from criminal activities are

 Money is moved around the financial system

 Financing of terrorism generally

Money Laundering and Terrorist Financing

Source : https://charts.reliancemoney.com ( www.google.com)

 Accessibility – Easy fund transfers.

 Convenience – Accounts easily opened and

 Security – Funds are safely invested.

If illicit funds are channeled through banking

In the 3rd stage of