Bank Negara Malaysia Fines HSBC RM3.26 Million for AML and Sanctions Screening Violations

On May 28, 2025, Bank Negara Malaysia (BNM) imposed an Administrative Monetary Penalty (AMP) totaling RM3,264,000 on HSBC Bank Malaysia Berhad (HBMY) and HSBC Amanah Malaysia Berhad (HBMS) for non-compliance with the Financial Services Act 2013 (FSA), Islamic Financial Services Act 2013 (IFSA), and anti-money laundering, countering terrorism financing, countering proliferation financing, and targeted financial sanctions requirements.

Customer Due Diligence Non-Compliance (HBMY):
BNM fined HBMY RM324,000 for failing to comply with customer due diligence (CDD) requirements under the FSA and the Anti-Money Laundering, Countering Financing of Terrorism and Targeted Financial Sanctions for Financial Institutions Policy Document (AML/CFT and TFS for FIs 2019 PD). An examination revealed HBMY’s “lack of understanding regarding the requirements for beneficial owners (BOs),” leading to inadequate identification and verification of BOs. This is critical to prevent the misuse of corporate vehicles for hiding illegal assets. HBMY has since strengthened compliance monitoring and staff training.

Sanctions Screening Non-Compliance (HBMY and HBMS):

BNM imposed a RM2,940,000 penalty on both HBMY and HBMS for failing to conduct proper sanctions screening during customer onboarding, violating the FSA, IFSA, and both the 2019 and 2024 AML/CFT/CPF and TFS Policy Documents. The issue, identified in a 2023 review, stemmed from “staff oversight, ineffective maker-checker functions, and inadequate system capabilities.” Similar breaches recurred in 2024 despite remedial efforts. No specified entities were onboarded or facilitated. HSBC has since enhanced its systems to ensure sanctions screening is completed before account openings.

BNM considered HSBC’s “lack of reasonable care,” inadequate controls, and past compliance record in determining the penalties. The fines were paid on March 24, 2025, aligning with BNM’s enforcement approach.

Business News