The Royal Monetary Authority fined the Bank of Bhutan Limited, BoBL, more than Nu 228 M for serious failures in governance, oversight, and internal controls. The bank has also been asked to fix accountability and put in place corrective measures.
The monetary penalty is for failing to maintain a proper anti-money laundering system and delays in filing required Suspicious Transaction Reports. According to the Central Bank, BoB also failed to report system problems, including unauthorised deductions from customer accounts.
On top of the fines, BoB must set aside Nu 149 M to cover the unrecovered funds. It is also banned from paying dividends to shareholders for 2025.
The penalties are following a recent incident at BoB where a client’s account was credited with funds and transactions were allowed even after the balance went into negative. The total amount involved amounted to around Nu 1.5bn. The bank stated a technical glitch during its system migration for the erroneous credit.
However, as per the RMA’s news release, “the matter cannot be construed as an isolated incident arising from a technology overhaul or as a system failure. It the result of fundamental gaps in governance, risk oversight, internal controls, and management practices.”
The Central Bank has ordered BoB to identify and discipline individuals responsible for the failures, fix weaknesses in transaction controls and account reconciliation, and review all affected customers accounts, restore access to those frozen, and compensate them accordingly.
Besides, the bank will have to conduct an independent assessment of its governance, IT systems, and vendor management frameworks. It is also prohibited from making any changes to its critical IT systems until the RMA is satisfied that the bank has sound and proper technical governance and risk controls in place.
The RMA also formally wrote the Druk Holding and Investments Limited, BoB’s majority shareholder, directing it to ensure the bank’s Board fully complies with all directives. The DHI is also asked to conduct a rigorous assessment of the Board’s competency and fitness.
Meanwhile, the client is still under detention.
Sonam Yuden
