Kuala Lumpur, 25 February 2026 – Bank Negara Malaysia (BNM) has fined KAF Investment Bank Berhad RM1.02 million for failing to adhere to regulatory directions related to foreign exchange controls, the central bank said in a statement.
The compound was issued under the Financial Services Act 2013 (FSA) after BNM found that KAF IB did not obtain the necessary central bank approvals before executing foreign currency asset transactions involving a resident individual whose Domestic Ringgit Borrowing (DRB) exceeded the permissible limit, which violated Section 214(9) of the FSA.
BNM explained that in determining the penalty, it took into account both aggravating and mitigating factors, including the absence of robust internal controls and procedures to ensure compliance with the Foreign Exchange Policy (FEP) Notices, as well as the bank’s past compliance record. Additionally, the bank’s actions taken after detection, including remedial measures to strengthen internal policies and procedures, were weighed in assessing the compound.
KAF IB has since paid the full compound amount on 29 January 2026, and BNM reiterated that all financial institutions must fully comply with FEP requirements when conducting foreign exchange transactions. This includes obtaining prior written approval from the central bank where required, and ensuring customers are properly advised on these rules.
BNM’s enforcement follows its published Enforcement Approach framework, which guides how regulatory breaches are addressed, including the consideration of an institution’s response and efforts to prevent recurrence.
