Bank Negara Malaysia (BNM) had, on 6 March 2025, imposed an Administrative Monetary Penalty (AMP)^[1] of RM29,000 on Merchantrade Asia Sdn. Bhd. (Merchantrade) for non-compliances with the sanctions screening requirements under subsection 74(3) of the Money Services Business Act 2011 (MSBA), read together with paragraphs 27.3.5, 27.3.7, 27.4.1, 27.4.5 and 27.4.6 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]

The non-compliances are due to Merchantrade’s oversight of sanctions screening procedures, and gaps in updating their sanctions database upon the publication of the Domestic List.^[3]

Merchantrade, as a reporting institution (RI), is required to conduct sanctions screening on existing, potential or new customers against the Domestic List and United Nations Security Council Resolutions (UNSCR) List^[4] as part of the customer due diligence and ongoing due diligence processes. It also has to ascertain that potential matches with the UNSCR List or Domestic List are true matches to avoid false positives. In response, Merchantrade has since strengthened its processes by subscribing to a commercial database service to ensure it receives updates on the sanctions list in a timely manner, and that staff and agents are provided with regular on-the-job training to improve compliance.

The AMP amount was determined by considering the relevant aggravating and mitigating factors, including:

1. severity of the non-compliances;
2. areas of improvement needed in Merchantrade’s processes and procedures to ensure compliance with the requirements;
3. Merchantrade’s past compliance record; and
4. assessment of Merchantrade’s post-misconduct behaviour and remedial actions to prevent the recurrence of non-compliances.

Merchantrade paid a total of RM29,000 for the AMP imposed by BNM on 6 March 2025.

BNM requires all RIs to maintain a high level of commitment in ensuring compliance with targeted financial sanctions requirements. BNM will not hesitate to take appropriate supervisory and enforcement actions should any RI fall short of meeting its regulatory requirements.

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

^[1] BNM imposed the AMP pursuant to paragraph 75(2)(b) of the MSBA.

^[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 paragraphs 27.3.5, 27.3.7, 27.4.1, 27.4.8 and 27.4.9 of the AML/CFT/CPF and TFS for FIs PD.

^[3] Domestic List is a list of names and particulars of specified entities as declared by the Ministry of Home Affairs under the relevant subsidiary legislation made under section 66B(1) of the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (AMLA), following the entities involvement in acts of terrorism.

^[4] 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 entity by virtue of section 66C(2) of the AMLA.