'Strictest' Financial Advertising Guidelines by Malaysia SC: Finfluencers Held Accountable, Risk 10-Year Sentence

On March 27, 2025, the Securities Commission of Malaysia (SC) published an amended version of its Guidelines on Advertising for Capital Market Products and Related Services (the Guidelines), and scheduled the Guidelines to come into effect on November 1 this year.

The new regulations, described by industry insiders as the “strictest ever,” tighten oversight of financial advertising and broaden regulatory reach to include Finfluencers on social media, as well as unlicensed brokers and their representatives.

The core of the Guidelines: Related individuals will be held accountable, and penalties will be uncompromising

The most significant highlight of the new rules lies in their highly deterrent penalty mechanism. Any individual or institution found guilty of promoting capital market services in Malaysia (including forex, contracts for difference (CFDs), and stock brokerage, etc) without authorization from the SC shall be subject to the following penalties:

• A fine of up to RM10 million
• Imprisonment for a term of up to 10 years
• Or both penalties concurrently

The provision elevates the criminal severity of unauthorized promotion to unprecedented levels.

Key Affected Groups and Compliance Highlights:

Finfluencers under regulatory scope: The Guidelines explicitly classify independently operating finfluencers as “advertisers” for the first time. Even if not formally employed by licensed institutions, they bear the same legal responsibilities as licensed entities when promoting investment products on social media. They must ensure content is truthful, balanced, and includes risk disclosures.

Licensed institutions bear joint liability: The new rules confirm that advertisers are accountable to their representative. Licensed brokers and fund managers are required to assume responsibility for any non-compliant promotional activities conducted by their introduced brokers (IBs), affiliates, or third-party marketing partners. This will enforce licensed institutions to implement more rigorous scrutiny and oversight across their collaborative networks.

Ban on all unauthorized ads: The ban applies across all communication channels, including websites, emails, social media posts, etc. No entity is permitted to promote capital market services within Malaysia without authorization from the SC.

Impact on brokers and the industry:

This new regulation poses significant challenges for international brokers not licensed in Malaysia and their partners (IBs, affiliate marketers). For foreign brokers, obtaining a license from the SC entails meeting stringent compliance and capital requirements, demanding substantial investment. Unlicensed brokers will lose the opportunity to openly promote their services in the Malaysian market.

Therefore, relevant participants must make strategic adjustments before the November 1 deadline.

Introduced brokers (IBs), key opinion leaders (KOLs), analysts, and individual promoters who rely on referral commissions will become regulatory targets. The high cost of non-compliance is expected to compel them to either transition to compliant services or exit the Malaysian market.

The new regulations will eliminate unlicensed competitors, creating opportunities for locally licensed brokers and fund management companies to expand their market share.

Business transformation: Potential shifts include partnering with locally licensed brokers, transitioning to solely proprietary trading firms, or providing financial education services without promoting specific financial instruments.

Global regulatory trend:

Regulations on financial promotion and Finfluencers are tightening not only in Malaysia but around the world.

United Arab Emirates: The Securities and Commodities Authority (SCA) has pioneered the world’s first 'Finfluencer License,' requiring financial content creators to obtain a license if they offer investment analysis or advice through social media, seminars, or public speaking engagements. To encourage compliance, fees for license registration, renewal, and legal consultation will be waived for the next three years.

Australia: The country has previously tightened regulations on financial promotions, prohibiting unlicensed individuals from offering investment advice on social media platforms.

Multiple regulators have launched joint enforcement against social media investment ads, cracking down on false endorsements and misleading promotions. In June 2025, the UK Financial Conduct Authority (FCA) spearheaded the global week of action against unlawful finfluencers, collaborating with regulators including Canada (BCSC, OSC, AMF), Australia (ASIC), Hong Kong (SFC), Italy (CONSOB), and the UAE (SCA).

Summary

Malaysia’s stringent penalties, the UAE’s pioneering Finfluencer licensing framework, and enhanced cross-border enforcement among regulatory authorities signal a new wave of strategic measures aimed at curbing the illusion of 'false prosperity' in the financial sector.

For brokers and financial influencers, the gray areas are disappearing. Institutions and individuals who rely on them face elimination, while those who operate in full compliance will survive. For investors, this marks the emergence of a more transparent and secure market environment.

As Malaysia tightens its financial regulations, forex trading platforms such as GMI and WeTrade have begun limiting access for local users, including suspending new client onboarding. At the same time, a growing number of Malaysian introducing brokers have announced their withdrawal from the market.

Recently, the Malaysian branch of a well-known trading brand was raided by police, leading to the arrest of 400+ employees.