Bank Negara Malaysia (BNM) fines Zurich Malaysia’s insurance and takaful units a combined RM1.56 million for sanctions screening failures.
Zurich General Insurance Malaysia Berhad (ZGIMB) was fined RM1.04 million, while Zurich General Takaful Malaysia Berhad (ZGTMB) received a RM520,000 penalty.
BNM imposed both penalties on 19 January 2026, with both entities settling their fines on 26 January.
Outdated database at the root of the breach
As reporting institutions, both Zurich entities are required to screen existing, potential and new customers against the Domestic List and the United Nations Security Council Resolutions (UNSCR) List as part of their customer due diligence process.
The Domestic List contains specified entities declared by Malaysia’s Minister of Home Affairs under the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (AMLA).
BNM found that both entities failed to update Zurich’s sanctions database without delay following publication of the Domestic List.
As a result, customer screening was carried out against an outdated database, allowing several specified entities to be onboarded as customers.
Beyond the database lapse, both units failed to properly assess potential matches and conduct the follow-up checks required to determine whether flagged names were true matches.
This is a mandatory step under BNM’s AML/CFT and Targeted Financial Sanctions policy for financial institutions.
ZGIMB faced an additional breach. Upon identifying a true match, it failed to freeze the customer’s funds and submit an immediate report to BNM and the Royal Malaysia Police.
BNM attributed the failures to gaps in Zurich’s sanctions screening systems and standard operating procedures, as well as insufficient staff oversight and awareness.
In deciding the penalties, the regulator considered factors including the severity of the breaches, lack of reasonable care, past compliance record and post-misconduct behaviour.
Zurich has since enhanced its SOPs and conducted refresher training for relevant staff.
BNM said all reporting institutions are required to comply with targeted financial sanctions requirements and may face supervisory or enforcement action if they fall short of their legal and regulatory obligations.
Zurich Malaysia acknowledged BNM’s public notice relating to its sanctions screening processes in 2022.
The company noted that it had been working closely with BNM to address self-identified gaps and had since taken steps to strengthen oversight of its processes.
“Zurich Malaysia remains steadfast in its commitment to upholding the highest standards of compliance and safeguarding the interests of its customers, partners, and stakeholders.”
Editor’s note: This article was updated to include Zurich Malaysia’s statement.
Featured image: Edited by Fintech News Malaysia, based on image by somemeans via Magnific
