Malaysia’s central bank has levied penalties amounting to nearly RM5 million against four financial institutions for breaching regulations under the country’s financial services legislation.

HSBC and its Islamic division together faced fines totalling RM3.26 million, while Maybank Islamic, a unit of Malayan Banking Bhd, incurred a penalty of RM1.2 million. Bank Negara Malaysia (BNM) also sanctioned Bank Pembangunan Malaysia Bhd with a fine of RM493,500.

The penalties followed findings from BNM’s investigations, which highlighted failures primarily in customer due diligence and sanctions screening. HSBC was cited for not adhering to requirements concerning the identification of beneficial ownership. This lapse, identified during an on-site inspection, reflected a broader lack of clarity within the bank regarding its obligations.

Financial institutions are required to identify and take reasonable steps to verify beneficial owners in order to manage risks related to money laundering and terrorism financing, and to prevent the abuse of corporate entities as fronts for illicit financial activities.

Additionally, BNM discovered that HSBC failed to carry out proper sanctions screening during a 2013 review. Clients had been onboarded without the necessary screening, which the central bank attributed to human error, ineffective internal checks, and insufficient system capabilities.

Bank Pembangunan was also found to have neglected both customer due diligence and sanctions screening responsibilities. The central bank pointed to inadequate staff knowledge of specific obligations, particularly around beneficial ownership, and weaknesses in the bank’s screening processes. These deficiencies resulted in delays in applying sanctions screening to existing clients.

Maybank Islamic was penalised for a separate offence involving the Central Credit Reference Information System (CCRIS). The bank had submitted incomplete or inaccurate data concerning three customers, affecting those individuals’ credit profiles. Financial institutions are legally required to ensure that information submitted to CCRIS is timely, accurate, and comprehensive, as this data forms a critical basis for fair credit evaluations by lenders.

(Source: The Edge)

• TAGS:
• Bank Negara Malaysia
• Bank Pembangunan Malaysia Bhd
• BNM
• Breaches
• Central Credit Reference Information System (CCRIS)
• Fine
• HSBC
• HSBC Islamic
• Maybank Islamic