KUALA LUMPUR: Bank Negara Malaysia (BNM) had imposed an Administrative Monetary Penalty (AMP) of RM660,000 on Bank Pertanian Malaysia Berhad (Agrobank) for non-compliance with the Development Financial Institutions Act 2002 (DFIA).
In a statement today, the central bank said the AMP was imposed on Sept 3 this year for non-compliance with subsection 41(4) of the 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.
It said 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 and United Nations Security Council Resolutions (UNSCR) List as part of the customer due diligence and ongoing due diligence processes.
BNM also said 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.
The central bank 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.
It said that 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.
BNM added that Agrobank has since taken remedial measures to revise its internal policies and improve its internal screening system to ensure prompt sanctions screening.
The central bank also said it 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: gaps in Agrobank's internal policy and procedures and system to ensure compliance with laws and regulations at all times; Agrobank's current controls that require improvement to meet industry standards; and Agrobank's past compliance record," it said.
Agrobank paid the RM660,000 penalty on Sept 13 this year.