BNM, banks, agencies commit to fight rising online fraud

KUALA LUMPUR – Bank Negara Malaysia (BNM) and financial institutions are committed to combating online financial fraud. Thus, all major banks in Malaysia have implemented the countermeasures announced by the central bank in September 2022. 

In an exclusive interview with Bernama and Sin Chew Daily, deputy governor Datuk Marzunisham Omar said that the central bank and industry players are always on guard to protect the consumers due to the increase in reported online financial fraud cases in recent years. 

“From the BNM perspective, which is shared by the banking industry, we view the security of financial services very seriously – and this is why financial institutions including banking institutions are subject to very stringent cybersecurity standards and IT requirements imposed by BNM,” he said, noting that all major banks in Malaysia have implemented all these measures as required by BNM. 

The five countermeasures announced in September 2022 include a requirement for banks to migrate from SMS one-time passwords (OTP) to more secure authentication methods. 

These measures include tightening banks’ fraud detection rules and triggers to detect and block suspicious transactions, verification and cooling-off period for first-time enrolment of online banking services or secure devices, limiting the number of registered devices to a single device, and establishing dedicated scam hotlines for victims to contact the banks to report scam incidents promptly. 

Other measures, including kill-switch and no hyperlinks in SMS, were also mandated as additional measures to be undertaken by the banking industry to combat financial scams. 

Collectively, these measures have shown signs of reducing the number of unauthorised online payments. 

NSRC receives 15,723 calls from Oct 2022 until June 2023  

Marzunisham said the risk of financial scams and cybersecurity threats was inevitable in line with evolving technology due to high digitalisation adoption in internet banking. 

He revealed that the National Scam Response Centre (NSRC) has handled 15,723 cases with total losses valued at RM141.47 million from October 2022 until June 2023. 

According to NSRC’s data, during this period, the centre received the most reports involving e-commerce scams amounting to 4,603 cases, with total losses amounting to RM13 million, followed by job scams (3,000 cases amounting RM44 million), phishing or application packaging kit (APK) scams (2,573 cases amounting RM19 million), telecommunication scams (1,782 cases amounting RM34 million) and loan scams (1,432 cases amounting RM6.9 million). 

The NSRC is a joint effort among the National Anti-Financial Crime Centre (NFCC), the Polis Diraja Malaysia (PDRM), BNM, Malaysian Communications and Multimedia Commission (MCMC), financial institutions, and telecommunications companies. 

Mule account scams also worrying 

According to BNM, a mule account is when others use an individual’s bank to either collect or transfer funds that could have been stolen or laundered from illegal activities. 

If caught, the person’s bank account might be closed, and the individual could face difficulties in opening a bank account in the future as well as a risk of being charged with facilitating criminal activities. 

As such, Marzunisham said the central bank is working closely with Payments Network Malaysia Sdn Bhd (PayNet) in dealing with mule accounts. 

“PayNet is in the position to see all the online payments, even online bank transfers. So we’re working with PayNet and the banking industry, in what we call an industry fraud portal, where banks should report all the accounts or transactions that they suspect as fraudulent,” he said. 

He said the cooperation aimed to achieve two main objectives: automating and increasing the ability to trace the fund and enhancing the portal with more comprehensive data to identify the money mules. 

Report to bank’s 24-hour hotline or 997 

Marzunisham advised the victims to call their bank’s 24-hour hotline or NSRC at 977 to report online financial scams on the spot. 

He said immediate action is important to ensure the bank could intercept any stolen funds and allow the police to take action immediately. 

“The faster you call, the higher possibility that we will be able to trace and hold the money so that the funds will not be gone or withdrawn from the banking or financial system. The funds actually might move from one account to another, and, sometimes, it goes within a space of less than one hour. 

“Then, the police further investigate the case. We have successful cases where the court agrees for the money to be returned to the victims. That is why it is so critical for the victim to call immediately,” he said. 

Marzunisham also advises individuals to practise the “3S – soal, sekat dan sebar” (question, block and share) concept to protect themselves from the threat of financial fraud and cybercrime. 

Awareness waves to kick start by end of Q3

In the wake of rising fraud activities, Marzunisham said the central bank, together with the financial industry and government agencies, has been very active in creating awareness regarding what consumers should do to guard themselves against becoming victims of scammers. 

“We are working with the banking industry to further the awareness campaign, or I can call it another awareness wave by the financial industry by the end of the third quarter this year. 

“We believe that via awareness campaigns, we just have to keep repeating the same message and keep reminding the customers to be more careful,” he said. 

Marzunisham believed that awareness would be the key to minimising the likelihood of becoming a victim of financial scams. 

However, he admitted that despite various awareness campaigns, some individuals are still deceived by online fraud. – Bernama, July 31, 2023