PETALING JAYA: With heightened competition for deposits and the various alternative savings and investment plans available in the market today, scams add another dimension to the challenge faced by banks and the financial industry at large.
These scams involve losses to individuals and companies amounting to billions of ringgit. Most of these illegally gained proceeds are likely to have been quickly siphoned out of the country, making them difficult to trace.
All these lost funds could otherwise have been put to productive use in the economy – generating jobs and benefiting the local financial services industry at large.
Some RM3.18bil was lost to online scams in the country involving more than 95,800 victims between 2021 and April 2024.
In the first half of 2024 alone, the country recorded 14,490 online fraud cases with losses exceeding RM581mil.
These figures represent only the cases reported to enforcement agencies and the government and do not include those that have not been reported, which would make the actual figures even higher.
A recent Bloomberg article reported a case in the United States where major banks watched as scammers carried out a long-term scheme over more than nine months on an elderly widow in her 80s, wiping out her life savings.
The bank employees eventually took notice and became concerned as the con artists continued their scheme, but they did not contact law enforcement.
In a long-term scam, scammers often have near-total control over a victim’s mind, akin to hypnotic powers, as they emotionally manipulate the victim’s thoughts and actions to the extent that victims may assure others – including loved ones, banks or enforcement authorities –that they are not being scammed.
This is not an isolated case; there were also two recently reported separate cases in Singapore where a man in his 70s and a woman in her late 70s narrowly avoided losing their life savings amounting to millions, thanks to the timely intervention of banking officials and Singapore Police’s Anti-Scam Centre.
These recent global cases suggest that scammers are targeting the elderly and retired population.
There are the honest bank employees who help stop their customers from being scammed, but there are also the bad apples in the industry.
In Malaysia, a case came to light last month where millions were illegally withdrawn from a person’s bank account without the account holder’s knowledge, with the help of banking insiders.
Meanwhile, at a Bank Negara briefing last month following the official unveiling of the National Fraud Portal and Anti-Scam Initiatives, the central bank’s assistant governor Norhana Endut said they are aware of the existence of cases where victims are emotionally manipulated into depositing money into scammers’ accounts.
“In some of these cases, victims are emotionally manipulated through love scams or may be depressed and emotionally controlled. This is considered a willing, authorised financial transaction.
“The other one is an unauthorised transaction, where the customer is not willing but becomes aware after the fact. For unauthorised transactions, the fair treatment policy document will come into play. But for authorised transactions, education and awareness are also key to prevention,” Norhana said.
Bank Negara also noted that with the existence of the National Scam Response Centre or NSRC, cases where victims are coerced and emotionally manipulated by scammers can still be reported to the 997 hotline by the victim’s loved ones.
As a financial authority, Bank Negara is also taking further pre-emptive measures by introducing directives to ensure that banking institutions treat victims of fraud fairly.
Among the key principles of the policy, which will take effect on Oct 1, includes an emphasis on joint responsibility to ensure fairer consumer outcomes in cases where evidence shows negligence on the part of both the institution and the victim.
This serves as a foundation for greater industry consistency on the assignment of fraud losses, Bank Negara said. The policy also ensures a more robust and timely investigation process. If any investigation takes longer than expected, the banking institution must take appropriate measures to mitigate the financial burden on victims.
This also fosters greater transparency on obligations of financial institutions and consumers, particularly for cases where the outcome of the investigation is unfavourable to the victims, it noted.
Should they disagree with the decision or compensation offered by the banks, Bank Negara said victims would continue to have the right to submit a dispute to the Ombudsman of Financial Services or OFS.
It appears that banks and the financial services industry at large will need to continue to adapt to the changing financial landscape, as scammers will keep finding ways to exploit loopholes in the system.
These scams, which are primarily conducted through online banking using smartphones, also highlight the continued importance of the human touch in deploying banking services. A bank’s counter staff are likely to be the most effective and often the only line of defence to help a customer stop financial losses from scam transfers.
Apart from that, Bank Negara said continued investment into cybersecurity and technology by banks is also important.
“At the end of the day, banking is about trust. With regards to online banking and e-payments, financial institutions must assure that their systems are safe and secure so that people will have confidence in using them.
“Investments in information technology are essential, and we also have clear expectations for the banks in this regard,” Bank Negara deputy governor Marzunisham Omar said.
