KUALA LUMPUR (Aug 15): Bank Negara Malaysia (BNM) and the Labuan Financial Services Authority (LFSA) have imposed a total compound of RM10 million on UBB Investment Bank Ltd for breaches of anti-money laundering rules, including failures to promptly report suspicious transactions.

UBB Investment Bank, a Labuan-licensed investment bank, is part of UBB Amanah Group.

BNM, elaborating on the development, in a statement on Friday said that its joint on-site examination with the LFSA in August 2024 found "material non-compliances" at UBB Investment Bank, including failures to submit suspicious transaction reports (STRs) promptly and to conduct proper customer due diligence.

The investigation showed that UBB Investment Bank failed to promptly submit STRs for 53 suspicious transactions conducted between 2023 and 2024, in breach of Section 14(1)(b) of Malaysia's Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (AMLA).

A separate LFSA investigation found the bank failed in 2023 to properly identify and verify a customer's identity during its onboarding process, which constituted a serious breach under Section 98(2) of the Labuan Financial Services and Securities Act 2010 (LFSSA). This affected UBB Investment Bank’s ability to assess and detect the potential involvement of the customer in illicit overseas activities, BNM said.

The breaches led BNM and the LFSA to impose compounds on the bank, but the compounds were not paid within the stipulated period, prompting authorities to institute prosecution against the bank for offences under AMLA and the LFSSA.

UBB Investment Bank subsequently submitted written representations to the Attorney General's Chambers seeking reinstatement of the compounds.

With the written consent of the public prosecutor, BNM and the LFSA on March 13 this year imposed a RM9 million compound for the offences under AMLA and another RM1 million compound for the offence under the LFSSA.

UBB Investment Bank paid the full RM10 million on June 11, the central bank said.

Following the development, BNM and the LFSA urged financial institutions and other reporting institutions to institute strong controls and comply with reporting obligations under AMLA and other related requirements.

“Reporting institutions are cautioned against the risks of being exploited by criminals, whether through negligence or deliberate complicity on their part. Failure to fulfil these obligations may result in enforcement action, including prosecution,” BNM said.