Bank Negara Malaysia (BNM) had, on 3 September 2024, imposed an Administrative Monetary Penalty (AMP)^[1] of RM660,000 on Bank Pertanian Malaysia Berhad (Agrobank) for non-compliance with subsection 41(4) of the Development Financial Institutions Act 2002 (DFIA) read together with paragraphs 27.4.1, 27.4.2, 28.3.1 and 28.3.2 of the Anti-Money Laundering, Countering Financing of Terrorism and Targeted Financial Sanctions for Financial Institutions (AML/CFT and TFS for FIs) Policy Document.^[2]

Under the AML/CFT and TFS for FIs Policy Document, reporting institutions (RIs) are required to conduct sanctions screening on existing, potential or new customers against the Domestic List^[3] and United Nations Security Council Resolutions (UNSCR) List^[4] as part of the customer due diligence and ongoing due diligence processes. RIs are also required to screen their entire customer databases for any positive name match upon publication of the respective lists by the relevant authorities without delay.

BNM identified the breach during an on-site examination, which revealed gaps in Agrobank’s internal policies and procedures and their implementation, leading to failure to conduct timely sanctions screening on its customers and beneficial owners. While no sanctioned entities were onboarded and no transactions of sanctioned entities were facilitated, the identified gaps exposed the bank to significant risks of being abused for terrorism financing and proliferation financing.

Agrobank has since taken remedial measures to revise its internal policies and improve its internal screening system to ensure prompt sanctions screening. BNM will continue to monitor and supervise Agrobank’s compliance with and effectiveness in implementing sanctions screening-related requirements.  

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

1. gaps in Agrobank’s internal policy and procedures and system to ensure compliance with laws and regulations at all times;
2. Agrobank’s current controls that require improvement to meet industry standards; and
3. Agrobank’s past compliance record.

Agrobank paid RM660,000 for the AMP imposed by BNM on 13 September 2024.

The enforcement action taken is in line with the approach and processes outlined in the published Enforcement Approach document. For more information, please visit Enforcement Approach.

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

^[2] The AML/CFT and TFS for FIs Policy Document was in effect from 1 January 2020 to 5 February 2024 and has since been superseded by 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), which took effect on 6 February 2024. These requirements are preserved under paragraphs 27.4.1, 27.4.4, 28.3.1 and 28.3.4 of the AML/CFT/CPF and TFS for FIs.

^[3] 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 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 United Nations Security Council Resolutions (UNSCR) and is deemed as a specified entity by virtue of section 66C(2) of the AMLA.