The Legislative Assembly (AL) yesterday passed a government-initiated bill regulating the city’s financial system, which will introduce the concept of the licensing of limited-scope banks, aka restricted licence banks, to Macau.
According to specialist websites, a limited-scope bank means a bank or financial institution that is only permitted to carry out a restricted range of banking businesses and services.
The new law will take effect on November 1, when it will replace the current decree law regulating the city’s financial system, which was promulgated in 1993 when Macau was still under temporary Portuguese administration.
The new type of licence, limited-scope banks, listed by the new law aims to increase the flexibility of Macau’s banking licensing system.
The bill’s outline was passed during a plenary session of the legislature in November last year. The legislature’s 2nd Standing Committee held a raft of meetings to review the bill.
Secretary for Economy and Finance Lei Wai Nong attended yesterday’s plenary session when the bill was voted on article-by-article in its second and final reading.
Fintech projects
Moreover, the new law will also enable the government to issue temporary permits for trial operations of financial technology (aka fintech) projects, with the aim of promoting the application of new technology to the city’s financial businesses.
The government has pointed out that the operation of a newly developed fintech project would normally have to be tested in a live business environment with the aim of verifying its practicality, but fintech projects can also be developed by technology companies, academic or research institutions, in addition to banks or other financial institutions.
The government has noted that the other non-financial entities that develop fintech projects do not have a licence of operating financial businesses, because of which a system for issuing temporary permits would be needed to enable certain eligible entities to carry out the trial operations of fintech projects without having to obtain a financial licence, provided that the respective risks are manageable.
According to the new law, the Macau Monetary Authority (AMCM) will issue technology companies, academic or research institutions that meet certain official criteria with temporary permits for trial operations of fintech projects or other innovative financial products.
According to the new law, a temporary permit will be valid for one year. The temporary permit can be renewed up to twice, and every renewal will last up to one year.
In addition, the new law will also simplify officially required procedures for the public issuance of bonds.
Furthermore, the new law will also increase penalties on those who receive deposits or other repayable funds from the public without official authorisation, with the aim of strengthening the government’s ability to combat illegal financial activities.
According to the new law, violators will face a prison term of between two and five years.
Secretary for Economy and Finance Lei Wai Nong (left) speaks during yesterday’s plenary session in the Legislative Assembly’s (AL) hemicycle, as Macau Monetary Authority (AMCM) President Benjamin Chan Sau San looks on.
– Photo courtesy of TDM
