Hui Yin: Most fraudulent online transactions using mule accounts ‘voluntarily’ authorised by victims

The Star

About 95% of fraudulent online banking transactions involving mule accounts were "voluntarily" authorised by victims, making them harder for banks to detect and prevent, Deputy Finance Minister Lim Hui Yin said.  Responding to a supplementary question from Datuk Awang Hashim (PN-Pendang) in Dewan Rakyat on Monday (Feb 17), Lim explained that this type of “authorised fraud” complicates efforts to block suspicious transactions linked to mule accounts.  Lim also highlighted a new policy holding banks accountable for fraud victims, requiring them to compensate clients if they fail to comply with banking regulations.  Read more at https://tinyurl.com/2mmrxpne  WATCH MORE: https://thestartv.com/c/news SUBSCRIBE: https://cutt.ly/TheStar LIKE: https://fb.com/TheStarOnline

Transcript

00:00The Bank of Malaysia has imposed regulations and regulations on financial institutions

00:08to prevent them from being misused for financial crimes, including fraud and fraudulent accounts.

00:16These regulations, in line with the best global practice,

00:20include the Bank's obligation to carry out customer due diligence,

00:25or customer due diligence, CDD, face-to-face transactions,

00:30ongoing customer due diligence, OCDD, transaction monitoring,

00:36fraud detection, and cyber security.

00:41If there is any violation of these regulations,

00:46especially those resulting from fraud cases,

00:50supervisory measures and enforcement measures can be taken against the bank,

00:55including compensation, compound, admin penalty, and warrant letter.

01:00Efforts to monitor the level of compliance of financial institutions

01:05regarding these regulations are being carried out by the Bank of Malaysia

01:09as part of the process of assessing the financial sector in Malaysia.

01:15The power to issue regulations and take action is guaranteed

01:20under relevant laws such as the Charter on the Prevention of Illegal Monetary Transactions,

01:25the Prevention of Violent Investments and the Results of Illegal Activities 2001,

01:30the Charter on Financial Services 2013, and the Charter on Financial Services Islam 2013.

01:36In addition, the banking industry has also issued an industry certificate

01:41on the reporting and management of fraud accounts

01:45to ensure more effective fraud detection.

01:49This certificate ensures a more consistent approach

01:53to the industry in identifying,

01:56identifying and providing financial access to fraud holders.

02:03The process of analyzing fraud accounts as well as the CDD process

02:08has also been improved and supported by more comprehensive data.

02:12At the same time, police statistics in the Kingdom of Malaysia, PDRM,

02:16show that 95% of financial fraud cases in Malaysia

02:23occurred as a result of victims willingly making and processing payment transactions.

02:30In cases of authorized fraud,

02:33such as this one, the payment of damages with good intentions can lead to moral harm.

02:39Efforts by various parties are also important

02:42to ensure that people are always alert and aware of financial fraud.

02:48People are advised to refer to the list of user warnings,

02:54the Bank of Malaysia,

02:56the list of security insurance investors,

03:00and the SemakMew portal by the Police Department of the Kingdom of Malaysia

03:05before making any money transfers or investments.

03:09In addition, many people can also use the WhoScore application

03:14that is developed by the PDRM to prevent from accepting fraud calls.

03:20That's all. Thank you.

03:23Thank you, Mr. Speaker.

03:26Thank you, Mr. Prime Minister.

03:29The KEDAI account is a tool used to facilitate fraud scams.

03:38Without the KEDAI account, it is impossible for anyone to commit fraud.

03:47According to what was said by the Honorable Prime Minister,

03:52at that time, there were regulations set by the Bank of Malaysia

03:58regarding customer due diligence and transaction monitoring

04:03that the Bank of Malaysia required to monitor.

04:06My question is,

04:09why is it that the KEDAI account is still valid

04:17and bank scam fraud is still not detected?

04:21We can see that the KEDAI account is not prevented.

04:29After the bank scam fraud is detected,

04:35the action is taken.

04:37Even if the action is taken, the loss cannot be avoided.

04:45For your information,

04:48throughout 2024 alone,

04:51transactions worth RM399 million have been stopped by banking institutions.

04:59Fraud cases involving phishing and malware reported to the Bank of Malaysia

05:05also decreased by 60% in the first nine months of last year.

05:11This shows that the existing regulations and policies on financial institutions,

05:17including for fraud detection,

05:20are effective in reducing fraud cases

05:23and improving the safety of the bank.

05:27However, for fraud cases involving genuine or authorized fraud,

05:33the number of cases is still very high.

05:35That is, 95% of fraud cases are authorized.

05:43So, given the pattern of fraud with genuine

05:47that is a fraud transaction,

05:50financial institutions face severe challenges

05:53to identify and detect fraud transactions

05:57without posing a risk that can disrupt the smooth functioning of the payment system.

06:02In addition, fraud often exploits genuine customers,

06:06such as students,

06:08to open a bank account,

06:10which is more likely to be detected by a bank account.

06:13The pattern of using this account is similar to a genuine account,

06:17while the purpose of opening the account is also genuine.

06:21During the opening of the account,

06:23this customer has always met all the requirements for evaluating the genuine face of the customer or CDD.

06:30I can go on for a long time,

06:36but for your information,

06:40from the aspect of strengthening power,

06:42efforts to track and freeze funds have been strengthened

06:46through the implementation of the National Fraud Portal or NFP,

06:50through the efforts to automate the entire or end-to-end

06:54to manage fraud reports,

06:56as well as to identify and track stolen funds

06:59so that the appropriate action can be taken

07:01in financial institutions has been strengthened.

07:05Since the use of NFP in April 2024

07:09until September 2024,

07:12NFP has managed to freeze 34% of funds

07:16compared to the average of the month before the implementation of NFP.

07:20This is a situation that we must continue to look for a proactive step.

07:31For the two cases mentioned by Mr. Stampin,

07:36one of them has been solved,

07:40while the other is in the PDRM investigation.

07:44So, we will provide more detailed information

07:49to Mr. Stampin.

07:51That's all. Thank you.

07:52Thank you, Madam Speaker.

07:55My question is this.

07:58Please listen carefully to my answer.

08:02That's why I don't want the Ministry of Finance

08:07to be the center of camera.

08:09In December 2024,

08:11the Prime Minister announced that the Bank is required to pay compensation

08:15within five days

08:16to the victim if the theft occurs from the bank.

08:19The question is, how does the government ensure

08:22a win-win solution in the case of

08:24paying compensation due to bank theft

08:29so that users are more aware of their rights?

08:33At the same time,

08:34increasing the obligation of banking institutions to now

08:37improve the security system

08:39and implement verification protocols.

08:42What steps does the government take to implement

08:45a transparent compensation mechanism

08:47so that incidents do not occur where the parties are not responsible?

08:50Try to exploit it for personal gain.

08:54And we are also exposed to the risk of data leakage

08:58leading to scams.

09:00Finally,

09:02what are the government guarantees so that

09:04banks will not impose higher fees

09:07for services such as

09:09account management fees,

09:11transaction fees or other costs

09:14on the pretext of balancing the losses

09:17they bear from the payment of compensation

09:20and causing the customer to be burdened with additional costs?

09:24That's all. Thank you.

09:25Thank you, Minister.

09:26Thank you, Speaker.

09:28Thank you, Honourable Speaker.

09:31To strengthen the protection of users,

09:34the Bank of Malaysia has established the need

09:37for financial institutions to conduct

09:39an in-depth investigation

09:41on every financial fraud case.

09:44For cases involving financial crimes,

09:47the Bank of Malaysia has added

09:49an existing fund in 2024

09:52to ensure that the banks are fair to the victims of fraud.

09:56In this regard,

09:57the banks need to be responsible

09:59for the loss of fraud

10:01if it is caused by a bank's weakness.

10:04This fund also emphasizes

10:06the principle of mutual responsibility

10:08for clear cases

10:10involving the weaknesses of both banks

10:13and customers.

10:14This is a safe way to cover up

10:16the cases resulting from

10:18the failure of the banks

10:20to stop suspicious transactions.

10:23At the same time,

10:26the trust of both customers

10:30with the implementation of this fund,

10:32the burden of loss for such a case

10:34should not be fully borne by the victim.

10:38The victim has the right

10:39to get the usual compensation.

10:42At the same time,

10:43a non-customer investigation

10:46must be subject to a free or independent review

10:50with permission

10:51to ensure an objective bank assessment.

10:54This improvement is not only fairer

10:56to both parties,

10:58but also forms a more fair

11:00and reasonable balance.

11:02If the victim still does not agree

11:04with the decision or settlement

11:06offered by the bank,

11:08the victim has the right

11:10to face the decision

11:12in an alternative settlement,

11:15i.e. the financial market

11:18ombudsman.

11:20For your information,

11:21banking institutions

11:22cannot easily

11:24impose additional charges

11:26on users,

11:27especially for the mechanism

11:29to further improve

11:30the impact of the financial system

11:32in detecting and preventing fraud.

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