KUALA LUMPUR (Feb 25): Bank Negara Malaysia (BNM) has imposed a compound of RM1.025 million on KAF Investment Bank Bhd for breaching requirements under the Financial Services Act 2013 (FSA).

Upon discovering the breach, KAF IB implemented remedial measures, including putting in place internal policies and procedures to ensure compliance with foreign exchange policy (FEP) requirements.

The bank paid the compound sum on Jan 29, 2026.

The penalty stemmed from KAF IB’s failure to comply with directions issued under Section 214(6) of the FSA, which requires financial institutions to establish and implement internal controls and procedures to ensure compliance with BNM’s FEP Notices.

According to BNM's statement, KAF IB failed to seek the central bank’s approval before giving effect to transactions involving foreign currency assets by a resident individual with domestic ringgit borrowing exceeding the permissible limit, constituting a breach under Section 214(9) of the FSA.

In deciding the compound to be imposed, BNM said relevant aggravating and mitigating factors were considered, including the absence of adequate controls and procedures to ensure compliance with the FEP Notices, the bank’s past compliance record, as well as its post-misconduct conduct and the effectiveness of remedial actions taken to prevent recurrence of non-compliances.

BNM said the enforcement action was taken in line with its published Enforcement Approach document, adding that financial institutions and members of the public must ensure full compliance with FEP requirements when undertaking foreign exchange transactions, including obtaining written approval from BNM, where required.