KUALA LUMPUR (April 29): Zurich Malaysia has been fined RM1.56 million over breaches in regulations over sanctions screening due to the use of an outdated database.

Zurich General Insurance Malaysia Bhd paid the administrative monetary penalty of RM1.04 million while its takaful counterpart Zurich General Takaful Malaysia Bhd was slapped with RM520,000 fines, Bank Negara Malaysia (BNM) said in a statement on Wednesday.

The two firms, locally-incorporated units of global multi-line insurer Zurich Insurance Group Ltd headquartered in Switzerland, paid up on Jan 26.

“BNM will not hesitate to take appropriate” supervisory, enforcement, or both actions over failures to meet legal and regulatory requirements, the central bank stressed.

BNM said the rules require sanctions databases to be updated without delay upon publication of the ‘Domestic List’, and to screen existing, potential and new customers against both the Domestic List and United Nations Security Council Resolutions list as part of due diligence on customers.

The Domestic List is a list of names and entities designated by the government under the law on anti-money laundering, anti-terrorism financing and proceeds of unlawful activities.

The central bank said Zurich’s breaches were uncovered based on the group’s own reports on the onboarding of several specified entities listed in the Domestic List as customers.

BNM, which regulates the insurance industry, said Zurich also failed to ascertain potential matches and make further inquiries to determine whether those matches were true matches.

In addition, Zurich General Insurance Malaysia failed to freeze the customer's funds and immediately submit a report to BNM after determining it was in possession of or in control of funds linked to one specified entity.

"These breaches were attributed to gaps in Zurich’s sanctions screening systems and standard operating procedures, as well as lack of staff oversight and awareness," it added. 

In response, Zurich Malaysia said it acknowledged BNM’s public notice relating to its sanctions screening processes in 2022.

“Zurich Malaysia has been working closely with BNM to address these self-identified gaps and has since taken the necessary actions to further strengthen oversight, ensuring that our processes are reliable and robust to meet our regulatory obligations,” it said in a separate statement.

The insurer added that it remains committed to upholding compliance standards and safeguarding the interests of its customers, partners and stakeholders.