Bank Negara Malaysia imposed a RM660,000 penalty on Agrobank for lapses in its sanctions screening processes, exposing the bank to potential terrorism financing risks. Agrobank has since taken corrective actions, and BNM will continue to oversee its compliance efforts.
2 October 2024 – On 3 September 2024, Bank Negara Malaysia (BNM) imposed an Administrative Monetary Penalty (AMP) of RM660,000 on Bank Pertanian Malaysia Berhad (Agrobank) for failing to comply with subsection 41(4) of the Development Financial Institutions Act 2002 (DFIA). This non-compliance was linked to breaches of 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.
The AML/CFT and TFS for FIs Policy requires financial institutions to perform sanctions screening on all existing, potential, or new customers against the Domestic List and the United Nations Security Council Resolutions (UNSCR) List. This screening is part of both the customer due diligence and ongoing due diligence processes. Institutions must also promptly screen their entire customer databases against these lists upon their publication by relevant authorities.
During an on-site examination, BNM identified gaps in Agrobank’s internal policies and procedures, which led to delayed sanctions screening on customers and beneficial owners. Although no sanctioned entities were onboarded or transactions facilitated, these lapses exposed Agrobank to substantial risks of being exploited for terrorism and proliferation financing.
In response, Agrobank implemented corrective measures, including updating its internal policies and enhancing its screening systems to ensure compliance with the required sanctions screening processes. BNM has stated it will continue to monitor the bank’s adherence to these regulations.
When determining the penalty, BNM considered several factors, including the shortcomings in Agrobank’s compliance framework, the need for improvements in its control mechanisms to align with industry standards, and its past compliance record. Agrobank settled the RM660,000 penalty on 13 September 2024.
