KENANGA INVESTMENT BANK BERHAD 132 INTEGRATED ANNUAL REPORT 2025 ETHICS AND COMPLIANCE STATEMENT FINANCIAL CRIME RISK MANAGEMENT AND RESILIENCE The Group places strong emphasis on the prevention, detection and management of financial crime risks as a core component of its ethics and compliance framework. The Group maintains a risk-based and structured approach to managing money laundering, terrorism financing and proliferation financing risks across its operations. 1. Fortifying Financial Crime Governance Frameworks During 2025, GFCC focused on strengthening the Group’s financial crime governance architecture through the development and enhancement of key frameworks and methodologies. This included the establishment of tailored Anti‑Money Laundering (“AML”)/ Counter‑Financing of Terrorism (“CFT”)/ Counter Proliferation Financing (“CPF”)/ Targeted Financial Sanctions (“TFS”) frameworks for selected subsidiaries, aligned with Group standards while taking into account differences in business models and organisational structures. These frameworks clarified roles and responsibilities, standardised controls and strengthened escalation and reporting mechanisms to Senior Management and the Board, thereby improving oversight and accountability across the Group. In parallel, enhancements were made to the Group’s Enterprise-Wide Risk Assessment, AML/ CFT Risk Rating for Branches, and Risk Scoring Methodology. These efforts improved alignment with national and international risk priorities, refined geographic and sanctions risk assessments, and enhanced the management of politically exposed person risks. 2. Enhancing Detection, Monitoring, as well as Control Effectiveness The Group further enhanced its transaction monitoring and surveillance capabilities throughout 2025. Key initiatives included annual reviews of monitoring rules and parameters, the introduction of quality assurance reviews over alert closures and the establishment of an Internal Watchlist Framework. These measures were complemented by enhanced onboarding controls, including improved beneficial ownership identification and verification mechanisms, supported by targeted training across the Group. Together, these initiatives improved early detection of financial crime risks, strengthened risk-based decision-making and reduced the likelihood of misuse of accounts or structures for illicit purposes. The Group also advanced its digitalisation agenda within financial crime compliance. Data analytics initiatives were undertaken to support a strategic digitalisation agenda. These efforts focused on integrating Robotic Process Automation into critical workflows, enhancing transaction monitoring capabilities through advanced analytical tools, strengthening country risk assessment methodologies and improving party linkage identification capabilities. These tools further strengthened visibility over risks and supported timely escalation and intervention. 3. Supporting Law Enforcement and Regulatory Confidence The Group continues to play a key role in supporting law enforcement agencies and regulators through timely and effective cooperation. This included responding to regulatory and law enforcement requests, facilitating investigations, and ensuring accurate and prompt submission of suspicious transaction reports and related information. Notably, the Group actively contributed to Malaysia’s Financial Action Task Force (“FATF”) Mutual Evaluation Exercise by representing the capital markets industry and supporting regulatory engagements. These efforts, undertaken in close coordination with GFCC, demonstrated the maturity of the Group’s AML/ CFT/ CPF framework and its alignment with international standards, contributing to Malaysia achieving a “Regular Follow-Up” outcome under the FATF evaluation process.
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