On 6 January 2026, Bank Negara Malaysia (BNM) imposed a compound^[1] of RM1,025,000 on KAF Investment Bank Berhad (KAF IB).

This compound arose from KAF IB’s failure to comply with directions issued by BNM under section 214(6) of the Financial Services Act 2013 (FSA) requiring financial institutions to have in place and implement internal controls and procedures to ensure compliance with BNM’s Foreign Exchange Policy (FEP) Notices (FEP Notices).

KAF IB failed to sight BNM’s approvals before giving effect to transactions involving foreign currency assets by a resident individual with Domestic Ringgit Borrowing (DRB) exceeding the permissible limit^[2], which is a breach under section 214(9) of the FSA.

In deciding the compound to be imposed, relevant aggravating and mitigating factors were considered. This includes KAF IB’s:

1. absence of controls and procedures to ensure compliance with the FEP Notices;
2. past compliance record; and
3. post-misconduct behaviour and the effectiveness of the remedial actions taken by KAF IB to prevent the recurrence of non-compliances.

Upon discovery of the offence, KAF IB took remedial measures to put in place and implement internal policies and procedures to ensure compliance with FEP requirements.

On 29 January 2026, KAF IB paid the total compound amount of RM1,025,000.

The enforcement action taken is in line with the approach and processes outlined in the published Enforcement Approach document.

BNM wishes to emphasise that financial institutions and members of the public should ensure full compliance with relevant FEP requirements when undertaking foreign exchange transactions. This includes obtaining written approval from BNM, where required. Financial institutions are also reminded to appropriately guide and advise customers of these requirements. Further information on FEP requirements is available at the FEP website.

^[1] The compound was imposed pursuant to section 253 of the FSA with the written consent of the Public Prosecutor.

^[2] With regard to investments in foreign currency assets, BNM has approved for resident individuals with DRB to invest in foreign currency assets (sourced from the conversion of ringgit into foreign currency) up to RM1 million per calendar year. Any investments in foreign currency assets undertaken by a resident individual with DRB exceeding RM1 million per calendar year would require financial institutions to sight BNM’s approvals before giving effect to such transactions.