Guidelines on Exchange of Defaced Currency Notes, Tampered

Guidelines on Exchange of Defaced Currency Notes,
Tampered Currency Coins and Demonetised Currency at Financial Institutions

Applicable to: 1. Licensed banks 2. Licensed Islamic banks 3. Prescribed development financial institutions
Issued on: 15 December 2020

BNM/RH/PD 028-115

Guidelines on Exchange of Defaced Currency Notes, Tampered Currency Coins

and Demonetised Currency at Financial Institutions

0

1. Introduction.................................................................................................... 1 2. Scope ............................................................................................................ 1 3. Legal Provisions ............................................................................................ 1 4. Applicability.................................................................................................... 2 5. Effective date................................................................................................. 2 6. Interpretation ................................................................................................. 2 7. Related Instrument ........................................................................................ 3 8. Guidelines Superseded ................................................................................. 3 9. Enquiry and Correspondence ........................................................................ 3 10. Exchange of Defaced Currency Notes, Tampered Currency Coins and
Demonetised Currency .................................................................................. 4 11. Procedures for FI to Claim Reimbursement for Straight Forward Case......... 4 12. Procedures for FI to Refer Doubtful Cases to Bank Negara Malaysia ........... 5 13. Procedures for FI to Refer Tampered Currency Coins to Bank Negara
Malaysia ........................................................................................................ 5 14. Procedures for FI to Refer Demonetised Currency to Bank Negara Malaysia .
...................................................................................................................... 6 15. Submission of Defaced Currency Note, Tampered Currency Coin and
Demonetised Currency to Bank Negara Malaysia ......................................... 7 16. Assessment and Reimbursement by Bank Negara Malaysia ........................ 7 Appendix 1.............................................................................................................. 8 Appendix 2............................................................................................................ 10 Appendix 3............................................................................................................ 12 Appendix 4............................................................................................................ 14 Appendix 5............................................................................................................ 15 Appendix 6............................................................................................................ 16

Issued on: 15 December 2020

Guidelines on Exchange of Defaced Currency Notes, Tampered Currency Coins

and Demonetised Currency at Financial Institutions

1

PART A OVERVIEW
1. Introduction
1.1. Section 5(2)(b) of the Central Bank of Malaysia Act 2009 (CBA 2009) gives Bank Negara Malaysia (BNM) the legal mandate to issue currency (notes and coins) in Malaysia and section 5 of the Currency Act 2020 (CA 2020) states that BNM is the sole authority to issue currency in Malaysia.
1.2. Section 14 of the CA 2020 gives BNM the legal mandate to withdraw currency notes which are defaced or unfit for circulation, currency coins which are worn or tampered with, and currency notes or currency coins which have ceased to be legal tender (demonetised) in Malaysia.
1.3. In line with the said mandates, BNM is responsible to maintain the integrity and quality of the Malaysian currency notes and currency coins in circulation. In achieving the above, it is critical that the condition of Malaysian currency notes and currency coins is maintained at the desired level. Currency notes and currency coins which are in good condition can be easily and reliably checked for genuineness and accepted for transactions. Defaced currency notes, tampered currency coins and demonetised currency shall not be recirculated to members of the public or used for transaction.
1.4. Section 7 of the CA 2020 provides, among others, that BNM may exchange currency notes and currency coins at BNM’s offices or at such agencies as BNM may from time to time establish or appoint. Pursuant to this provision, financial institutions (FI) are appointed as BNM’s agencies to withdraw and exchange defaced currency notes, tampered currency coins and demonetised currency tendered by members of the public or customers of the FI.
1.5. Section 16 of the CA 2020 gives discretion to BNM to refund the value of any imperfect currency note or currency coin, defaced currency note or tampered currency coin.
1.6. All of the operational cost related to the exchange of defaced currency notes, tampered currency coins and demonetised currency will be borne by the FI.
2. Scope
2.1 These Guidelines set out the procedures for FI to exchange defaced currency notes, tampered currency coins and demonetised currency tendered by members of the public or customers of the FI.
3. Legal Provisions
3.1 These Guidelines are issued pursuant to section 62 of the CA 2020 and section 95 of the CBA 2009.

Issued on: 15 December 2020

Guidelines on Exchange of Defaced Currency Notes, Tampered Currency Coins

and Demonetised Currency at Financial Institutions

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4. Applicability
4.1 These Guidelines are applicable to-
(a) licensed banks under the Financial Services Act 2013;
(b) licensed Islamic banks under the Islamic Financial Services Act 2013; and
(c) prescribed institutions under the Development Financial Institutions Act 2002.
5. Effective date
5.1 These Guidelines come into effect on 15 December 2020.
6. Interpretation
6.1 The terms and expressions in these Guidelines shall have the same meaning assigned to them in the CA 2020 and the CBA 2009 unless otherwise stated.
6.2 For the purposes of these Guidelines-
“defaced currency note” includes-
(a) currency note that has any word, sign, symbol, drawing, caricature or other thing written, inscribed or shown on its surface;
(b) currency note which has been damaged or which appearance has changed, due to contact with water, oil, paint, ink, chemical or other substance;
(c) currency note with a hole, which is torn or has a missing portion;
(d) currency note which is burnt, faded or crumpled, or with excessive folding; or
(e) currency note which is constituted by joining two or more portions of a single currency note provided that all such portions may be established beyond all reasonable doubt to have been originally part of a single currency note.
“demonetised currency” means a currency note or currency coin which has ceased to be legal tender pursuant to section 13 of the CA 2020.
“financial institution” or “FI” means a licensed bank under the Financial Services Act 2013, a licensed Islamic bank under the Islamic Financial Services Act 2013 or a prescribed institution under the Development Financial Institutions Act 2002.
Issued on: 15 December 2020

Guidelines on Exchange of Defaced Currency Notes, Tampered Currency Coins

and Demonetised Currency at Financial Institutions

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“tampered currency coin” includes-
(a) currency coin which is impaired, diminished or lightened otherwise than by fair wear and tear; or
(b) currency coin which has been stamped, engraved or pierced, regardless whether the coin has been diminished or lightened.
7. Related Instrument
7.1 These Guidelines shall be read together with-
(a) Guidelines on Quality Standards for Malaysian Currency issued by BNM on 1 September 2006; and
(b) Guidelines on Handling of Suspected Counterfeit Malaysian Currency Notes issued by BNM on 2 September 2014.
8. Guidelines Superseded
8.1 These Guidelines shall supersede the Guidelines on the Treatment of Unfit, Mutilated, Defaced and Fraudulently Tampered Genuine Banknotes by Commercial Banks issued by BNM on 15 September 2009.
9. Enquiry and Correspondence
9.1 Enquiries and correspondences on these Guidelines shall be directed to-
Director Currency Management and Operations Department Bank Negara Malaysia Jalan Dato’ Onn 50480 Kuala Lumpur. Contact No: 03-26988044 (ext. 7417/7416/7414) Email Address: [email protected]

Issued on: 15 December 2020

Guidelines on Exchange of Defaced Currency Notes, Tampered Currency Coins

and Demonetised Currency at Financial Institutions

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PART B PROCEDURES
10. Exchange of Defaced Currency Notes, Tampered Currency Coins and Demonetised Currency
10.1 Exchange of Defaced Currency Note
Upon receipt of a defaced currency note from a customer, FI shall undertake the following:
(a) where the defaced currency note fulfils all the following conditions (referred to as “Straight Forward Case”), the FI shall exchange the defaced currency note at full value on the same day:
(i) the size of the defaced currency note is two third (2/3) or more of the original size;
(ii) the defaced currency note does not contain any marking on the portrait of DYMM Yang di-Pertuan Agong or writings depicting political slogans; and
(iii) the currency note is not defaced due to markings or writings of words, figures and others; or
(b) where the defaced currency note does not fulfil all conditions stated in subparagraph (a) (referred to as “Doubtful Cases”), the FI shall refer the matter to BNM for assessment in accordance with paragraph 12.
10.2 Exchange of Tampered Currency Coin
Upon receipt of a tampered currency coin from a customer, FI shall refer the matter to BNM for assessment in accordance with paragraph 13.
10.3 Exchange of Demonetised Currency
Upon receipt of a demonetised currency from a customer, FI shall refer the matter to BNM for assessment in accordance with paragraph 14.
11. Procedures for FI to Claim Reimbursement for Straight Forward Case
11.1 Where FI has exchanged defaced currency note in accordance with subparagraph 10.1(a), FI shall-
(a) ensure all proofs of exchange with the customer are properly documented;
(b) fill up a form attached in Appendix 6 in (1) original copy and one (1) duplicate copy; and
Issued on: 15 December 2020

Guidelines on Exchange of Defaced Currency Notes, Tampered Currency Coins

and Demonetised Currency at Financial Institutions

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(c) submit to BNM the defaced currency notes in a sealed polythene bag together with the original form (Appendix 6) placed inside it in accordance with paragraph 15.
11.2 The FI will be reimbursed in accordance with paragraph 16.
12. Procedures for FI to Refer Doubtful Cases to Bank Negara Malaysia
12.1 FI shall-
(a) advise the customer that for Doubtful Cases, the defaced currency note needs to be sent to BNM for further assessment and that any value will be refunded into the customer’s bank account after BNM has completed its assessment;
(b) obtain the customer’s consent to submit the defaced currency note to BNM by requesting the customer to fill up a form attached in Appendix 1 in one (1) original copy and two (2) duplicate copies, and place the defaced currency notes in a polythene bag based on the design attached in Appendix 4. Where the customer refuses to give consent, FI shall immediately return the defaced currency note to the customer;
(c) verify the details filled up by the customer on the form;
(d) sign on the form to acknowledge receipt and give one (1) duplicate copy of the form to the customer;
(e) keep one (1) duplicate copy of the form for record keeping and tracking purpose;
(f) place the original form in the polythene bag and seal the polythene bag in front of the customer;
(g) write reference number of the form on the polythene bag together with the relevant details; and
(h) submit to BNM the defaced currency notes in sealed polythene bags accompanied with the list of customer details using the form attached in Appendix 5 in accordance with paragraph 15.
13. Procedures for FI to Refer Tampered Currency Coins to Bank Negara Malaysia
13.1 FI shall-
(a) advise the customer that the tampered currency coins need to be sent to BNM for further assessment and that any value will be refunded into the customer’s bank account after BNM has completed its assessment;
(b) limit the deposit of tampered coins to 1,000 pieces per polythene bag;
Issued on: 15 December 2020

Guidelines on Exchange of Defaced Currency Notes, Tampered Currency Coins

and Demonetised Currency at Financial Institutions

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(c) obtain the customer’s consent to submit the tampered currency coins to BNM by requesting the customer to fill up a form attached in Appendix 2 in one (1) original copy and two (2) duplicate copies, and place the tampered currency coin in a polythene bag based on the design attached in Appendix 4. Where the customer refuses to give consent, FI shall immediately return the tampered coin to the customer;
(d) verify the details filled up by the customer on the form;
(e) sign on the form to acknowledge receipt and give one (1) duplicate copy of the form to the customer;
(f) keep one (1) duplicate copy of the form for record keeping and tracking purpose;
(g) place the original form in the polythene bag and seal the polythene bag in front of the customer;
(h) write reference number of the form on the polythene bag together with the relevant details; and
(i) submit to BNM the tampered currency coins in sealed polythene bags together with the list of customer details using the form attached in Appendix 5 in accordance with paragraph 15.
14. Procedures for FI to Refer Demonetised Currency to Bank Negara Malaysia
14.1 FI shall-
(a) advise the customer that the demonetised currency needs to be sent to BNM for further assessment and that any value will be refunded into the customer’s bank account after BNM has completed its assessment;
(b) obtain the customer’s consent to submit the demonetised currency to BNM by requesting the customer to fill up a form attached in Appendix 3 in one (1) original copy and two (2) duplicate copies, and place the demonetised currency in a polythene bag based on the design attached in Appendix 4. Where the customer refuses to give consent, FI shall immediately return the demonetised currency to the customer;
(c) verify the details filled up by the customer on the form;
(d) sign on the form to acknowledge receipt and give one (1) duplicate copy of the form to the customer;
(e) keep one (1) duplicate copy of the form for record keeping and tracking purpose;
Issued on: 15 December 2020

Guidelines on Exchange of Defaced Currency Notes, Tampered Currency Coins

and Demonetised Currency at Financial Institutions

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(f) place the original form in the polythene bag and seal the polythene bag in front of the customer;
(g) write reference number of the form on the polythene bag together with the relevant details; and
(h) submit to BNM the demonetised currency in sealed polythene bags accompanied with the list of customer details using the form attached in Appendix 5 in accordance with paragraph 15.
15. Submission of Defaced Currency Note, Tampered Currency Coin and Demonetised Currency to Bank Negara Malaysia
15.1 FI shall comply with the following procedures:
(a) where possible, consolidate defaced currency note, tampered currency coin and demonetised currency from its branches in their respective region and submit them to BNM at a reasonable interval e.g. weekly, fortnightly;
(b) make an appointment with BNM prior to submitting the defaced currency notes, tampered currency coins and demonetised currency;
(c) submit the defaced currency notes, tampered currency coins and demonetised currency in a sealed polythene bag to BNM; and
(d) obtain acknowledgement of receipt from the cashier at the counter upon submission.
15.2 FI shall not send the defaced currency notes, tampered currency coins and demonetised currency to BNM through mail or post. BNM shall not entertain any claim for missing or insufficient amount of defaced currency notes, tampered currency coins and demonetised currency sent to BNM through mail or post.
16. Assessment and Reimbursement by Bank Negara Malaysia
16.1 Where a defaced currency note, tampered currency coin or demonetise currency is referred to BNM for assessment, BNM shall notify the customer and the FI in writing on the result of the assessment and make payment (if any) directly into the customer’s account through RENTAS within twenty-one (21) working days from the date of receipt of the defaced currency notes, tampered currency coins or demonetised currency by BNM provided that the information given by the customer in the form is complete and accurate.
16.2 Where FI has exchanged defaced currency note in accordance with paragraphs 10.1(a) and 11.1, BNM will reimburse the FI through RENTAS within five (5) working days from the date of receipt of the defaced currency notes by BNM.

Issued on: 15 December 2020

Guidelines on Exchange of Defaced Currency Notes, Tampered Currency Coins

and Demonetised Currency at Financial Institutions

8

APPENDICES

Appendix 1

MATA WANG KERTAS ROSAK UNTUK PENILAIAN BANK NEGARA MALAYSIA DEFACED CURRENCY NOTES FOR BANK NEGARA MALAYSIA’S ASSESSMENT
No. Rujukan: (Bank Code/ br code/
ddmmyy/001) Eg: 271401/140820/001
Reference No.:

Nama pelanggan*: Customer’s name*: Nombor kad pengenalan*: NRIC number*: Pasport number*: Alamat*: Address*: Nombor telefon rumah: Home Telephone number: Nombor telefon bimbit*: Handphone number*: Alamat emel: Email address: Butiran akaun Bank (untuk pemulangan nilai mata wang kertas rosak yang ditukar): Bank account details (for refund of the value of exchanged defaced currency note):
* Wajib diisi
* Mandatory to fill

Nama pemilik akaun*: Name of account owner*: Nombor akaun*: Account number*: Nama Bank*: Bank’s name*:

Butiran mata wang kertas rosak Details of the defaced currency notes
Denominasi Denomination

Keping Pieces

RM1

RM2

RM5

RM10

RM20

RM50

RM100

Jumlah Total

Issued on: 15 December 2020