The press release from Bank Negara Malaysia (BNM) regarding 1MDB on Monday Oct 19 has serious perception repercussions, legally and by way of investors' confidence.

BNM insisted that it has jurisdiction to take ‘administrative punitive action’, separately or together with criminal proceeding of the Attorney-General’s Chambers (AGC), on those that have breached the provisions of the Financial Services Act 2013 and the Islamic Financial Services Act 2013 both under purview.

This would include the imposition of monetary penalties, issuance of an order to comply, making restitution to any person aggrieved by a breach, public and private reprimands and an order to take steps to mitigate or remedy a breach.

The governor has stated previously (on Oct 12) that the action on 1MDB is vital to maintain the integrity of BNM and confidence in the financial system.

For the public, PetroSaudi International (PSI) has been implicated with the controversy of transferring US$700 million to the account of Good Star Limited, which belongs to Low Teik Jho or Jho Low.

The Malaysian Economic Association (MEA) on Oct 19 issued a strong statement reminding everyone of the importance of maintaining the independence of Bank Negara Malaysia and its governor.

Najib Abdul Razak has clearly failed to revive and inject confidence of investors by not addressing the controversies surrounding 1MDB, especially on the RM2.6 billion donation.

To add salt to injury, the verdict of no further action (NFA) handed down by the attorney-general (AG) himself didn’t help at all. If anything it has.eroded further BNM’s integrity.

BNM’s statement on insisting to take actions on 1MDB is arguably seen by many has a challenge, nay a coup on the AGC which is the sole prosecutor in the legal sysyem.

BNM’s insistence (on Oct 12) that action on 1MDB is vital for the country, fell on deaf ears of the AG. BNM has perhaps little choice.

Very evidently both Najib and his AG have failed the country again. We are now left with only BNM as the sole or unitary institution capable of mounting checks and balances on the too-powerful executive, ie the PM. The legislative branch of the government, in the person of the speaker, has also been made dysfunctional by the executive.

In the final analysis, who suffers with the verdict of NFA by the AGC? Undoubtedly the BNM and finally the rakyat. Sigh!

DR DZULKEFLY AHMAD is strategic director, Parti Amanah Negara.