PETALING JAYA: While criminalising the use of mule accounts to facilitate scams is laudable, more can be done to help victims who have already lost money, says a cybersecurity and law expert.
Malaysian Communications and Multimedia Commission (MCMC) member Derek Fernandez said financial institutions should introduce a mandatory 48-hour buffer period for new fund transfers for a certain amount and a “digital insurance” in place to compensate victims of fraud.
He said a mandatory cooling-off period for certain fund transfers can be “highly effective”.
“When someone transfers a certain amount of money to an account they’ve never used before, that transaction should be suspended for 48 hours.
“This will give the sender time to notice any irregularities in the transaction or (information of the) recipient before the funds are released.
“If it’s confirmed to be a scam within that 48-hour window, the transfer could be cancelled,” he said in an interview yesterday.
Fernandez said even a mandatory 24-hour buffer period would be more effective than the current 12-hour time frame, which is too short for overnight transactions.“At least give consumers the option to activate this type of anti-fraud protection when opening a new account.
“It could be a powerful tool, as it gives people the choice to have an extra layer of security without adding significant cost.
“Combining this buffer period rule with the crackdown on mule accounts could make the overall legislative package much more impactful,” he said.
Fernandez noted that Bank Negara Malaysia should also make it mandatory for banks to have a “digital insurance” system in place to shield consumers from online financial fraud.“This is where a small fraction of money, say one sen or five sen, is contributed with each transaction to a central fund managed by Bank Negara,” he said.
“This insurance pool could then be used to compensate victims of fraud, rather than leaving them to bear the full losses.”
He said the responsibility to provide this insurance protection should fall on the payment platforms and financial institutions profiting from digital payments as they have the highest obligation to safeguard their customers.
“There are four key elements involved in online financial fraud, which are anonymity, access to telecommunication networks, access to accounts and payment systems, and the targeting of victim information.
“The 48-hour buffer period and insurance mechanism, combined with the crackdown on mule accounts, would create a more robust and balanced approach to protecting the people.
“It’s a good start to penalising wrongdoers but it must go with measures that ensure financial institutions bear the primary responsibility and risk.”To effectively combat online crime, Fernandez also said there must be a radical change in eliminating the anonymity that enables online fraud by placing strict identity verification responsibilities on digital service providers.
