BNM Slaps RM1.56 Million Penalty on Zurich Units Over Sanctions Compliance Failures
PETALING JAYA, April 30 — Bank Negara Malaysia has imposed a total of RM1.56 million in administrative penalties on two Zurich-linked insurance entities after identifying serious lapses in their compliance with targeted financial sanctions (TFS) requirements.
The action involved Zurich General Insurance Malaysia Bhd, which was fined RM1.04 million, and Zurich General Takaful Malaysia Bhd, which received a RM520,000 penalty.
Outdated Sanctions Screening Identified
BNM said both entities failed to promptly update their internal sanctions databases after the publication of the Domestic List, a key requirement for reporting institutions.
As a result, customer screening processes were carried out using outdated information, increasing the risk of non-compliance with sanctions regulations.
The central bank stressed that all reporting institutions are obligated to adhere strictly to TFS requirements and warned that enforcement action will be taken against those that fall short.
Failure to Detect and Act on Sanctioned Entities
Investigations revealed that both Zurich entities had onboarded customers listed under domestic sanctions without identifying potential matches during screening.
They were also found to have failed to conduct adequate follow-up checks to verify possible matches, reflecting significant gaps in their compliance processes.
In a more serious breach, ZGIMB did not freeze funds or report to authorities immediately after identifying assets linked to sanctioned entities, as required under regulatory rules.
Weak Controls and Oversight
BNM attributed the breaches to shortcomings in sanctions screening systems, inadequate standard operating procedures and insufficient staff awareness.
The regulator noted that weak internal controls and lack of effective oversight contributed to the failures, exposing the institutions to compliance risks.
Corrective Actions Taken by Zurich
Following the findings, Zurich has strengthened its internal controls, including upgrading procedures and conducting staff retraining programmes to improve compliance with TFS obligations.
While acknowledging these efforts, BNM emphasised that financial institutions must maintain robust systems to ensure ongoing compliance.
Penalty Reflects Seriousness of Violations
The central bank said the penalty amount was determined based on several factors, including the severity of the breaches, lack of due diligence, past compliance records and the effectiveness of remedial measures.
Both entities have since settled their respective fines, with payments completed on January 26.
Regulator Signals Tougher Enforcement
The enforcement action highlights BNM’s firm stance on compliance, particularly in the area of financial sanctions, which is critical to safeguarding the integrity of the financial system.
Institutions are expected to ensure timely updates, rigorous screening processes and immediate action when potential sanctions matches are identified.
-wilayah.com.my
