BANK Negara Malaysia (BNM) has set regulations and standards for financial institutions to prevent misuse for financial crimes, including fraud and mule accounts.
“These regulations, which align with global best practices, include the obligation for banks to perform customer due diligence (CDD), ongoing customer due diligence (OCDD), transaction monitoring, fraud detection, and cybersecurity,” Deputy Finance Minister Lim Hui Ying said in the Dewan Rakyat today.
She said this in reply to a question raised by Chong Chieng Jen (Stampin) on whether the Government will make it mandatory for banks that allow the opening and use of mule accounts in scams and frauds to pay compensation to the victims of such frauds and scams.
Lim said, if there is any non-compliance with these regulations, particularly resulting in fraud cases, regulatory and enforcement actions can be taken against the bank, including prosecution, fines, administrative penalties, or warning letters.
“BNM continuously monitors the compliance levels of financial institutions with these regulations as part of its supervision of the financial sector in Malaysia.”
Lim explained, the authority to issue these regulations and take actions is provided under relevant laws such as the Anti-Money Laundering, Anti-Terrorism Financing, and Proceeds from Unlawful Activities Act 2001 [Act 613], the Financial Services Act 2013 [Act 758], and the Islamic Financial Services Act 2013 [Act 759].
Additionally, she added the banking industry has issued industry standards regarding the reporting and handling of mule accounts to ensure more effective detection of mule accounts.
“These standards ensure a more consistent approach across the industry in listing, delisting, and providing financial access to mule account holders. The process of analysing mule accounts and performing CDD has also been improved, supported by more comprehensive data,” Lim said.
At the same time, statistics from the Royal Malaysia Police (PDRM) show that 95 per cent of financial fraud cases in Malaysia occur because victims voluntarily carry out and approve payment transactions (e.g., love scams and non-existent investment scams). In cases of 'authorised fraud' like these, compensation payments made recklessly can lead to moral hazard, she said.
“Efforts by various parties are also important to ensure the public remains vigilant and aware of financial scams,” she added.
The public is advised to refer to Bank Negara Malaysia’s Financial Consumer Alert List, the Securities Commission Malaysia’s Investor Alert List, and the "Semak Mule" portal by the Royal Malaysia Police (PDRM) before making any money transfers or investments, Lim said, adding, the public can also use the “Whoscall” app promoted by PDRM to prevent receiving scam calls. – February 17, 2025
