Bank Negara to act against financial institution for breaching Act

KUALA LUMPUR: Bank Negara Malaysia (BNM) has initiated enforcement actions against a financial institution for failure to promptly notify the central bank of a significant audit finding in relation to its dealers’ misconduct involving the fixing of the US dollar/ringgit exchange rate.
The actions may include the imposition of monetary penalties, issuance of a written order to comply, making public reprimands and issuance of a written order to mitigate or remedy such breaches, as provided for under the Financial Services Act 2013 (FSA).
BNM said the audit finding indicated that there were communications with traders from other foreign financial institutions, which included inappropriate references to the fixing rate submission process. In this regard, BNM has commenced the due process as stipulated under the FSA.
“BNM views such reporting breaches seriously, especially on financial institutions’ involvement with offshore ringgit NDF (non-deliverable forward) market or any activities that relates towards market manipulation and hence, will not hesitate to take appropriate enforcement actions against any other financial institutions, which have breached provisions under the FSA,” BNM said in a statement yesterday. It did not disclose further information when prompted.
Regulators across the globe have been making inquiries into rate-rigging activities and have issued fines to banks for colluding to fix benchmark rates.
Two weeks ago, the Australian Federal Court fined ANZ Bank A$9 million (RM29 million) and Macquarie Group A$6 million (RM19.3 million) over attempts by traders to rig a key benchmark rate in Malaysia’s foreign exchange markets. Switzerland handed out about US$100 million (RM447 million) in anti-trust fines last week against seven US and European banks for participating in cartels to manipulate widely used financial benchmarks.
BNM yesterday reminded all financial institutions to observe reporting obligations imposed under the FSA, in particular the requirement to promptly notify the central bank of any significant findings. Last month, BNM prohibited the facilitation of NDF-related transactions, saying the ringgit remains a non-internationalised currency, and any offshore trading of it is not recognised.