BNM to name rule-breaking financial institutions


Bank Negara Malaysia (BNM) will make known the names of the financial institutions and intermediaries that fail to adhere to compliance rulings as the central bank heightens punishments against infringers.

The move to shame parties that fail to uphold the central bank’s strict compliance regulations will be effective January next year. Presently, the central bank slaps hefty fines on banks for compliance infringements but does not make known to the public the name of the institutions and the types of breaches.

In what is seen as the strongest move yet, the name of the institutions, the types of breaches and the amount of fines imposed by the regulator will be published on the BNM’s website.

“Starting Jan 1 next year, all breaches of our rules, and all penalties and compounds that we impose will be made transparent, including the names of the financial institutions and the nature of the offences,” said BNM governor Tan Sri Muhammad Ibrahim (picture).

“This (the announcement) includes all parties on the receiving end of the imposed actions,” Muhammad said at the International Conference on Financial Crime and Terrorism Financing 2017 in Kuala Lumpur yesterday.

He said the central bank has given financial institutions ample time to prepare their systems and human resources need to improve their compliance.

The central bank will also work with other agencies including the Securities Commission Malaysia, Bursa Malaysia and other enforcement bodies.

“It is not solely the job of the regulator to ensure the integrity of the financial system. The industry needs to be an active and responsible partner.

“All parties have a stake to ensure the system is not only functional, but thriving.”

Between 2015 to June 2017, the central bank has slapped fines and penalties totalling RM115.8 million on financial institutions for various breaches.

“Over the last three months, 415 names of individuals involved in facilitating financial scams have been shared among financial institutions. This is a joint initiative by the Association of Banks in Malaysia, supported by the Royal Malaysian Police and BNM,” Muhammad said.

A taskforce led by the Attorney General’s Chambers has been established under the National Coordination Committee to Counter Money Laundering, to coordinate and expedite actions against financial scam operators.

Muhammad said that compliance is a means to an end, rather than a burdensome way of avoiding scrutiny from regulators.

“Compliance is a process that enables us to achieve certain outcomes. Having the right controls in place gets us to the starting line. The real race is in creating and sustaining an environment where everyone in the organisation is involved in preventing the systematic abuse of the financial system,” he said.

Muhammad said compliance is key in creating a productive and resilient financial system supports.

“Despite the huge amount of resources invested in compliance, we still uncover many banking, market manipulation and rigging scandals. In my mind, these cases illustrate again that rules, although necessary, are not sufficient to maintain the integrity of the financial system,” Muhammad said.

On cryptocurrencies and the possibility that Malaysia could ban its trade, the central bank head said: “This is something that we will be deciding by the end of the year.”

Last month, the central bank said that it would be issuing its guidelines on cryptocurrencies by year-end.

“These guidelines will address issues such as registering the players, collecting the data and ensuring that whatever is done is transparent,” Muhammad said.