Kuala Lumpur, 27 February 2007: Trust account holders and new joint account holders at commercial banks and Islamic banks now need to disclose relevant information to enjoy separate deposit insurance coverage under a new regulation by Perbadanan Insurans Deposit Malaysia (PIDM).
This means that all trust account beneficiaries and joint account holders enjoy a separate coverage of up to RM60,000 from other accounts held by them individually, provided the required information has been submitted to the branch of the PIDM member institution where the account is opened or held. All commercial banks and Islamic banks in Malaysia are member institutions of PIDM.
The procedure for information disclosure by the trustees (of the trust accounts) and new joint account holders was first issued early last year in the form of guidelines but have now been formalized pursuant to the gazetting of the Malaysia Deposit Insurance Corporation (Disclosure Requirements for Trust Accounts and Joint Accounts) Regulations 2007, according to Jean Pierre Sabourin, the Chief Executive Officer of PIDM.
With the coming into force of the Regulations on 15 February 2007, PIDM requires trustees and depositors opening new joint accounts to make the required information disclosure to PIDM’s member institutions.
“This is one of our initiatives to operationalise certain subsections under the Malaysia Deposit Insurance Corporation Act 2005 (MDIC Act). It facilitates the process of providing necessary relevant information about the ownership and beneficiaries of trust accounts and of joint account holders,” said Mr Sabourin.
Upon the opening of a trust account, a trustee must submit to the branch of the member institution where the account is held information statement that the deposit is held in trust, the account number, name and address of each beneficiary as well as the amount or percentage of each beneficiary’s interest in the trust account.
Thereafter, the trustee is only required to provide information annually based on the balances held in deposits in the trust account and the interest of each beneficiary as at 31 December. This information must be filed with the branch of the member institution by 31 March of the following year.
In cases where trustees are unable to disclose names of beneficiaries, arising from legal provisions or client confidentiality, they may submit the information in the form of an alphanumeric code or any other identifier which corresponds to each beneficiary on their records.
“The good news is that beneficiaries don’t have to come forth to disclose their account information but they may wish to ensure that their trustee has made appropriate disclosure to the member institution to enjoy separate deposit insurance coverage,” Sabourin said.
“Earlier last year, we issued the guidelines on these disclosures and called for trustees to organise their systems and administrative practices to facilitate compliance with these requirements. Now that the Regulations have come into force, we expect such procedures to be in place to ensure accuracy of the information submitted, “added Sabourin.
If a trustee fails to comply with the Regulations, the deposit held in the trust account is deemed to be a single insured account and there will be no separate deposit insurance coverage for each beneficiary in respect of the trust account.
A trustee holds an account in trust for the benefit of another party, who is the beneficiary. Types of trust accounts referred to in these Regulations include deposit accounts maintained by an adult on behalf of minors and client accounts operated by lawyers and stockbrokers.
In the case of joint accounts, new joint account holders are required to disclose to the branch of a member institution where the account is held that the deposit is owned jointly and the particulars of each joint account holder. Unlike trust accounts, joint account holders are not required to submit such information on a yearly basis.
Existing joint account holders are not required to disclose information as the banks would already have the necessary information in their records when they opened the joint account, according to Mr Sabourin.
These Regulations, drafted following an extensive public consultation last year, is among the first subsidiary legislation pursuant to the MDIC Act. It is publicly available for reference at PIDM’s website at http://www.pidm.gov.my. Click here to download
For more information about this press release, kindly contact :
S.Loganathan, General Manager, Communications and Public Affairs Division
(Tel : 03-2274 2615)
Zeti Zahariah Zainul, Manager, Communications and Public Affairs Division
(Tel : 03-2260 7436 ext 112)
PIDM administers the Government-backed deposit insurance in Malaysia. We protect depositors – automatically – up to RM60,000 per depositor per member institution. For further information:
PIDM protects your deposits in the bank as well as your takaful and insurance benefits in the unlikely event of a failure of a member bank or a takaful operator / insurance company.