Enforcement Action Publication Notice 03/2023 (P.N. 03/2023)

Bank Negara Malaysia (the Bank) had on 7 October 2022, imposed an Administrative Monetary Penalty (AMP)[1] of RM612,000 on Takaful Ikhlas Family Berhad (TIFB) for noncompliances with the Islamic Financial Services Act 2013 (IFSA) read together with the AntiMoney Laundering and Counter Financing of Terrorism – Insurance and Takaful Sector 2[2] policy document (AML/CFT Sector 2 PD) where:

(i) TIFB had failed to conduct sanctions screening on domestic customers against the United Nations Security Council and Ministry of Home Affairs listings prior to onboarding new domestic customers; and

(ii) TIFB had not profiled and assessed the certificates issued to its high-risk customers, although such customers had met the ‘High Risk’ criteria set in TIFB’s internal policy on anti-money laundering and counter financing of terrorism.

TIFB’s failure to conduct sanctions screening and failure to assess risk profile of customers is in breach of section 58(1) of IFSA read together with AML/CFT Sector 2 PD.

The AMP amount was determined by taking into account relevant aggravating and mitigating factors, which include TIFB’s past compliance record and the actions taken to address the breaches.

TIFB is committed to strengthen its operational processes to prevent a recurrence of similar breaches.

TIFB paid RM612,000 for the AMP imposed by the Bank on 20 October 2022.

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

[2] The AML/CFT PD Sector 2 was in effect from 15 September 2013 to 31 December 2019 and has since 1 January 2020 been replaced with policy document on Anti-Money Laundering, Countering Financing of Terrorism and Targeted Financial Sanctions for Financial Institutions (AML/CFT and TFS for FIs).