Why Can a Company Be Fined Even If It Did Not Break the Law?
Case:
- A company was not involved in illegal activities or money laundering
- It was fined RM46,000 by Bank Negara Malaysia (BNM) for poor compliance procedures
- The company detected unusual customer activities but failed to report or conduct further investigation
Why Was It Fined?
- BNM enforces compliance requirements
- To prevent money laundering, terrorism financing, and other crimes
- Purpose of STR and EDD:
- Prevent companies from becoming channels for illegal funds
- When suspicious activities occur, companies must:
- Submit Suspicious Transaction Reports (STR)
- Conduct Enhanced Due Diligence (EDD)
Reason for the Fine:
- The company was not fined for committing illegal activities
- It was fined for failing to fulfil its compliance obligations
- Regulators focus on:
- Not only whether a company breaks the law but whether the company performs its required duties
Key Point:
- Saying “there is no problem” is not enough
- Companies must prove they have proper risk management procedures
- When risks appear companies must have effective measures to respond