BANK Negara Malaysia (BNM) has taken enforcement action against two Zurich subsidiaries for breaches involving targeted financial sanctions (TFS) compliance, underscoring regulatory expectations on financial institutions to maintain robust screening systems and prevent misuse of the financial sector for illicit purposes.
In a statement, the central bank said it imposed an administrative monetary penalty (AMP) of RM1.04 million on Zurich General Insurance Malaysia Bhd (ZGIMB) and RM520,000 on Zurich General Takaful Malaysia Bhd (ZGTMB) following non-compliance detected on 19 January.
As reporting institutions, the entities are required to update sanctions databases immediately upon the issuance of the Domestic List.
BNM said institutions must also comply fully with TFS requirements, with failure to do so potentially resulting in supervisory or enforcement action.
Reporting institutions are further required to conduct sanctions screening on existing, prospective and new customers in line with both the Domestic List and the United Nations Security Council Resolutions List as part of customer due diligence processes.
BNM said institutions must also identify and conduct further checks to determine whether a potential match constitutes a true match. Where confirmed, institutions are required to freeze customer funds and promptly report the matter to BNM and the Royal Malaysia Police.
“This process is critical to protect reporting institutions and the financial system as a whole from being misused for the financing of terrorist activities,” the central bank said.
BNM said the non-compliance was identified following Zurich’s own reporting of the registration of several designated entities listed under the Domestic List as its customers.
The issue stemmed from delays in updating sanctions databases, which resulted in screening being conducted using outdated information.
The central bank also found that Zurich failed to properly identify and carry out further verification to determine true matches. In addition, ZGIMB did not freeze customer funds or report promptly to BNM after determining it had possession or control of funds linked to a designated entity.
BNM said the breaches were driven by weaknesses in Zurich’s sanctions screening systems and standard operating procedures, as well as insufficient staff oversight and awareness.
Zurich has since undertaken remedial measures, including improvements to its SOPs and additional staff training to strengthen compliance with TFS requirements.
In deciding to impose the penalties, BNM said it took into account aggravating and mitigating factors, including the seriousness of the breaches, the level of due diligence exercised, prior compliance history, and the effectiveness of remedial actions taken.
On 26 January 2026, both entities paid the penalties in full, with ZGIMB settling RM1.04 million and ZGTMB RM520,000. - April 29, 2026
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