Enforcement Action Publication Notice 02/2023 (P.N. 02/2023)

Bank Negara Malaysia (the Bank) had on 27 September 2022, imposed an Administrative Monetary Penalty (AMP)[1] of RM828,000 on Koperasi Co-opbank Pertama Malaysia Berhad (CBP) for non-compliance with conditions imposed by the Bank under section 291(2) of the Islamic Financial Services Act 2013 (IFSA).

On 24 June 2014, the Bank granted conditional approval for CBP to continue accepting Islamic deposits from non-members under section 291(2) of IFSA. One condition was the requirement for CBP to maintain, at all times, a minimum loan loss coverage ratio (LLCR) of 100%, beginning 31 December 2014 (LLCR requirement). CBP’s failure to comply with the LLCR requirement from September 2019 until June 2021 is therefore in breach of section 291(2) of IFSA.

The AMP amount was determined by taking into account relevant aggravating and mitigating factors, which include the consideration of:

(i) CBP’s controls;

(ii) the period of recurring non-compliance by CBP with conditions imposed by the Bank;

(iii) profit gained as a result of the non-compliance; and

(iv) the adequacy of the remedial measures by CBP in addressing the noncompliance.

CBP paid RM828,000 for the AMP imposed by the Bank on 7 October 2022.

[1] The Bank imposed the AMP pursuant to section 245(3)(b)(i) of IFSA.