The Bank Negara Malaysia (BNM) has imposed Administrative Monetary Penalties (AMP) of MYR1.04m ($218,400) on Zurich General Insurance Malaysia (ZGIM) and MYR520,000 on Zurich General Takaful Malaysia (ZGTM). The sanctions stem from the Zurich companies' failure to comply with requirements relating to targeted financial sanctions (TFS).
The breaches were identified by BNM through Zurich’s own reports on the onboarding of several specified entities listed in the Domestic List as its customers. The issue stemmed from Zurich’s failure to promptly update its sanctions database, resulting in sanctions screening being conducted using outdated information.
Zurich also failed to properly assess potential matches and conduct further inquiries to determine whether they were true matches. In addition, ZGIM did not freeze the customer’s funds or immediately report to BNM after determining that it was in possession or control of funds linked to one specified entity.
“These breaches were attributed to gaps in Zurich’s sanctions screening systems and standard operating procedures (SOPs), as well as a lack of staff oversight and awareness,” BNM said.
It added that “Zurich has since taken remedial measures by enhancing its SOPs and conducting refresher training for relevant staff to ensure compliance with TFS requirements.”
As reporting institutions (RIs), Zurich must update its sanctions database immediately after the Domestic List is published. It must also screen all existing, potential, and new customers against the Domestic List and the United Nations Security Council Resolutions (UNSCR) List as part of customer due diligence.
If there is a possible match, RIs must investigate further to confirm whether it is a true match. If confirmed, they must freeze the customer’s funds and immediately report the case to BNM and the Royal Malaysia Police. This process helps protect RIs and the financial system from being used for terrorism financing.