In August 2024, Bank Negara Malaysia (BNM) and the Labuan Financial Services Authority (LFSA) conducted a joint on-site examination of UBB Investment Bank Limited (UBBIB), a Labuan investment bank licensed by the LFSA under the Labuan Financial Services and Securities Act 2010 (LFSSA).

The examination identified material non-compliances by UBBIB, which include failures to promptly submit suspicious transaction reports (STRs) and to conduct proper customer due diligence (CDD).

Investigations confirmed that UBBIB failed to promptly submit STRs in relation to 53 suspicious transactions conducted between 2023 and 2024. This contravenes section 14(1)(b) of the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (AMLA), which requires reporting institutions^[1] to promptly report suspicious transactions to BNM as the designated competent authority appointed under section 7(1) of the AMLA. These reporting obligations are critical to protect financial/reporting institutions from the misuse of funds for money laundering, terrorism financing and other serious criminal activities.

A separate investigation by LFSA further revealed that in 2023, UBBIB failed to properly identify and verify the customer’s identity during its onboarding process. This constitutes a serious breach under section 98(2) of the LFSSA, which affected UBBIB’s ability to assess and detect potential involvement of its customer in illicit overseas activities.

As a result of those breaches, BNM and LFSA imposed compounds^[2] on UBBIB. The compounds on UBBIB were not settled within the stipulated time. As such, prosecution was instituted against UBBIB for the offences under the AMLA and the LFSSA.

Following the institution of prosecution, UBBIB then submitted written representations to the Attorney General’s Chambers seeking the reinstatement of the compounds previously offered. On 13 March 2026, with the written consent of the Public Prosecutor, BNM and LFSA imposed a compound of RM9,000,000 for the offences under the AMLA and another RM1,000,000 for the offence under the LFSSA. On 11 June 2026, UBBIB paid the total compound of RM10,000,000.

BNM and LFSA would like to emphasise the importance for all reporting institutions to institute strong controls and compliance with reporting obligations under the AMLA, as well as other applicable legal and/or regulatory requirements. Reporting institutions are cautioned against the risks of being exploited by criminals, whether through negligence or deliberate complicity on their part. Failure to fulfil these obligations may result in enforcement action, including prosecution.

^[1] Reporting institution refers to any person who carries on any activity listed in the First Schedule of the AMLA.

^[2] The compounds were offered pursuant to section 92(1) of the AMLA and section 194(1) of the LFSSA with the written consent of the Public Prosecutor, arising from the investigation conducted.