Bank Negara Malaysia (BNM) had imposed an Administrative Monetary Penalty (AMP) amounting to a total of RM493,500 on Bank Pembangunan Malaysia Berhad (BPMB) for the following non-compliances in relation to customer due diligence (CDD) and sanctions screening requirements.

A. Non-compliance in relation to the customer due diligence requirements

On 14 February 2025, Bank Negara Malaysia (BNM) imposed an AMP^[1] of RM229,500 on BPMB for non-compliances with paragraph 41(4)(a) of the Development Financial Institutions Act 2002 (DFIA), read together with paragraphs 14A.3(c) and 14A.9.6 of the Anti-Money Laundering, Countering Financing of Terrorism and Targeted Financial Sanctions for Financial Institutions Policy Document (AML/CFT and TFS for FIs PD).^[2]

Under the AML/CFT and TFS for FIs PD, reporting institutions (RIs) are required to identify and take reasonable measures to verify the identities of natural persons who are beneficial owners (BOs) of their customers. This allows RIs to assess their exposure to money laundering/terrorism financing risks and take appropriate mitigation measures. In addition, these measures aim to prevent individuals from misusing corporate vehicles to conceal illegal assets by maintaining a legitimate front in the financial system.

BNM identified the non-compliance during an on-site examination of BPMB. It was caused by the staff’s inadequate understanding of the specific requirements related to BOs. BPMB has since strengthened its compliance with the CDD requirements by enhancing its standard operating procedures for BOs. BPMB has also put in place training programmes to enhance employees’ understanding of identifying and verifying BOs, as well as other regulatory requirements relating to CDD measures.

In determining the imposition of the AMP, BNM considered the relevant aggravating and mitigating factors, including:

1. BPMB’s failure to take reasonable steps to ensure staff’s sufficient understanding of the requirements;
2. BPMB’s remedial actions taken to rectify the gaps; and
3. this is BPMB’s first AML/CFT non-compliance.

More information on CDD requirements for RIs is available at the AML/CFT microsite.

B. Non-compliance in relation to the sanctions screening requirements

On 7 April 2025, BNM imposed an AMP^[3] of RM264,000 on BPMB for non-compliances with paragraph 41(4)(a) of the DFIA, read together with paragraphs 27.3.2, 27.3.5, 27.3.7 and 27.4.2 of the AML/CFT and TFS for FIs PD.^[4]

Under the AML/CFT and TFS for FIs PD, RIs are required to ensure that the information contained in the sanctions database is updated and effected without delay upon publication of the United Nations Security Council Resolutions (UNSCR) List^[5] in the UN website and publication of the Domestic List^[6] in the Gazette. Subsequently, RIs must screen their entire customer database to identify any positive name matches immediately after the relevant authorities publish the respective lists. This is essential to protect RIs and the broader financial system from being abused for terrorism financing.

The non-compliance, which was identified during an on-site examination conducted by BNM, was caused by gaps in BPMB’s sanctions screening process, which led to the failure to conduct sanctions screening on its existing customers without delay. BPMB has taken appropriate measures to strengthen its sanctions screening process and improve the effectiveness of its sanctions screening management, including conducting staff training. Nonetheless, there were no specified entities^[7] being onboarded and no transactions of specified entities being facilitated by BPMB.

In determining the imposition of the AMP, BNM considered the relevant aggravating and mitigating factors, including:

1. BPMB’s lack of reasonable care in ensuring compliance with the requirements for maintaining the sanctions list and ongoing sanctions screening due to gaps in BPMB’s internal policies, procedures and systems;
2. BPMB’s current controls, which require further improvements to meet industry standards;
3. BPMB’s remedial actions taken to rectify the gaps; and
4. this is BPMB’s first non-compliance of such nature.

BPMB paid a total of RM493,500 for the AMP imposed by BNM on 5 March (RM229,500) and 16 April 2025 (RM264,000).

The enforcement actions taken are in line with the approach and processes outlined in the Enforcement Approach.

^[1] BNM imposed the AMP pursuant to subparagraph 106A(3)(b)(i) of DFIA.

^[2] The AML/CFT and TFS for FIs PD was in effect from 1 January 2020 to 5 February 2024 and has since been superseded by the Anti-Money Laundering, Countering Financing of Terrorism, Countering Proliferation Financing and Targeted Financial Sanctions for Financial Institutions Policy Document (AML/CFT/CPF and TFS for FIs PD), which took effect on 6 February 2024. These requirements are preserved under paragraph 14A.3(c) and 14A.9.6 of the AML/CFT/CPF and TFS for FIs PD.

^[3] BNM imposed the AMP pursuant to subparagraph 106(3)(b)(i) of DFIA.

^[4] These requirements are preserved under paragraph 27.3.2, 27.3.5, 27.3.7 and 27.4.4 of the AML/CFT/CPF and TFS for FIs PD which took effect on 6 February 2024.

^[5] UNSCR List is a list of names and particulars of persons as designated by the United Nations Security Council (UNSC) or its relevant Sanctions Committee pursuant to the relevant UNSCR and are deemed as specified entities by virtue of section 66C(2) of the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (AMLA).

^[6] Domestic List is a list of names and particulars of specified entities declared by the Minister of Home Affairs under the relevant subsidiary legislation made under section 66B(1) of the AMLA.

^[7] Individuals or entities listed in the Domestic List and UNSCR List.