KUALA LUMPUR: Bank Negara Malaysia (BNM) is committed to ensure that Malaysia’s financial system is resilient and well-positioned to support economic activity in the face of an evolving financial landscape.
BNM emphasised that it is mandated to promote financial stability conducive to the sustainable growth of the economy and that it would continue to promote financial stability even as the financial landscape continues to evolve, driven by greater digitalisation of financial services, climate change and demographic shifts.
"Thus, we will continue to maintain a strong focus on financial institutions’ governance, shariah and risk management practices, while further strengthening our domestic regulatory framework in line with international standards,” BNM said in its Annual Report 2023 released today.
BNM would also intensify efforts to protect the integrity of the financial system and prevent its abuse, including through strong enforcement actions and collaborations with other enforcement agencies to combat fraud risks and financial scams.
"We will work to preserve strong incentives for financial institutions to ensure fair treatment of consumers through timely and proportionate conduct policy and supervisory interventions.
"We will continue to advance efforts to enhance the industry’s capacity and preparedness to manage climate-related risks, and to support an orderly transition towards a greener and more sustainable economy,” the report said.
BNM emphasised that this will include better integration of climate risk considerations into the country’s regulatory and supervisory frameworks.
"We will strive to promote a regulatory environment that is responsive to technological innovation, including developments in artificial intelligence (AI), while ensuring the related financial, strategic and operational risks are well-understood and managed,” it added.
To recap, BNM focused on regulatory priorities, supervisory priorities and approach as well as supervisory and enforcement actions in 2023 in its efforts to promote financial stability.
"As part of our effort in strengthening governance, risk management and conduct during the year, we have finalised a policy on responsibility mapping which establishes requirements for financial institutions to strengthen individual accountability at the senior level,” it said.
As for Islamic finance, BNM also pioneered the development of a policy for Islamic financial institutions on the application of hajah and darurah in navigating situations of hardship where exceptions from shariah principles are permitted.
For supervisory priorities and approach, BNM’s approach to supervision is risk-based and forward-looking and the central bank has conducted on-site reviews and off-site information analysis to assess the risk profiles of financial institutions, and their ability to manage and respond to risk events from a continuously evolving operating environment.
Lastly, for supervisory and enforcement actions, BNM continues to take strong enforcement actions against illegal deposit-taking and remittance activities that can pose significant financial risks to the public and facilitate criminal activity.
"We issued nine cease and desist orders against illegal money services business operators and opened three investigation papers and also forfeited assets from illegal activities, amounting to RM11 million,” it added. - Bernama
