KUALA LUMPUR – Is it even remotely possible for priority banking managers to siphon funds without accomplices?
This is the question on the minds of many in the financial sector, following yesterday’s revelation of a lawyer losing RM1 million from fixed deposit accounts at a renowned international banking institution.
The story has also raised questions on possible loopholes or lapses in banking security, despite the industry being tightly regulated by monetary authorities.
However, an insider from the financial industry believes it is virtually impossible for a “rogue” priority banking customer relations officer to operate alone when swindling funds.
The insider, who is also a senior executive from a foreign bank operating in Kuala Lumpur’s golden triangle, notes that all modern-day banks have a common “maker checker” system, in which transactions need to be conducted and verified by more than one individual.
“This means that one banking officer, the ‘maker’, is the one who receives the instructions for the transaction (from the customer), while the ‘checker’ – who is usually a higher ranking manager – will be the one to confirm and approve the transaction,” the insider, who spoke on the condition of anonymity, said.
Yesterday’s report by The Vibes also raised fears over the security of large funds handled by priority banking services for high-net-worth individuals.
The lawyer, in the police report, claimed funds in his fixed deposit accounts were transferred to an unknown individual’s account without his knowledge or consent.
Met by The Vibes recently, the lawyer, who is in his 30s, said he visited the bank’s Bangsar branch with his mother on April 7 to open the fixed deposit accounts.
The RM1 million in funds was entrusted to a relationship manager from the branch who would handle all banking matters related to him and his mother.
The bank had also subsequently issued two fixed deposit account certificates amounting to RM500,000 each.
Less than six months later, on October 1, the lawyer returned to the bank to check on the balance of both accounts.
It was discovered that the funds were transferred out from both accounts on June 11 and June 25 amounting to RM500,000 per transaction, while much of the country was facing movement restrictions.
The lawyer said he was prompted to check the account balances after reading a story about a customer relationship manager with a similar name who had been charged with a criminal breach of trust a week before the discovery.
The lawyer told The Vibes that the bank has responded to his complaint and promised to reimburse the funds along with due interest, but this depends on its internal investigation.
“The bank is not seen to be taking an active step in addressing this issue. That is frustrating as the only thing it tells us is that investigations are under way,” the lawyer said.
Police have told The Vibes that investigations are under way and that the authorities are working with the bank on the case.
The lawyer also revealed to The Vibes yesterday that he had served the bank with a letter of demand to retrieve the “missing” funds.
Meanwhile, the insider said such an incident will send shockwaves in the banking industry, as Bank Negara Malaysia heavily regulates the sector.
“You do not hear of cases like these happening very often. In the 1980s or 1990s yes, but not in this day and age, and it does raise some pertinent questions,” the insider said.
The insider also said large stashes of funds cannot simply be transferred through verbal instructions via phone, as one will be required to be present at the branch and register their thumbprints on biometric systems, in a process further verified with identity cards.
Furthermore, he said it is “impossible” for customers to make over-the-counter transactions without being physically present at the bank branch, the insider said.
“Even if you want to withdraw a sum of RM50,000, for example, a bank manager will be compelled to seek the reasons for doing so and the reasons given will be recorded.
This is the standard procedure across all banks, let alone for single transactions of RM500,000 each.”
“Does this mean that the bank involved (in the case) still uses a ‘manual’ system of transactions?
“And has that bank not developed an interest in digitising its processes and security protocols?” he said.
“This also raises the question of the bank’s interest in keeping its business operating in the country.
“As it is, there are too many (local and foreign) banks registered in Malaysia, which is a relatively small market. There needs to be another round of mergers soon.
“Finally, are our funds and hard-earned money really safe in the hands of banks? It does not hurt to check on our balances every once in a while.”
The Vibes has reached out to the bank in question for a response since last Wednesday but has yet to receive a response. Bank Negara has also been reached for comment and prospective action on the case. – The Vibes, October 25, 2021
