Board from a survey of banking professionals last year, he said the results were sobering.
Twenty-three per cent of respondents observed that supervisors rewarded unethical behaviours.
Another 15 per cent stated they would act unethically when not being watched or monitored.
“Our journey is far from over and more needs to be done to further strengthen character in banking community.”
The economic consequences related to ethical choices could be dire and expensive, he warned.
Misconduct costs incurred by banks globally exceeded US$320 billion since 2008, with US$42 billion (RM182.2 billion) in 2016 alone.
Muhammad said there should be a clear tone from the top that unethical behaviour would not be tolerated.
“As a community, we cannot possibly expect ethical behaviour to be burnished if we persist in retaining, hiring or rewarding people who had acted otherwise.”
BNM has enhanced standards for corporate governance, strengthened requirements for Kuala Lumpur Interbank Offered Rate setting and introduced code of conduct for the Malaysian wholesale financial markets.
The event was participated by 1062 AICB members.
Datuk Seri Muhammad Ibrahim