Banks Equally Liable for Enabling Scams — Growing Calls for Shared Responsibility in Malaysia

Banks in Malaysia are facing growing calls to share liability for enabling online scams, according to a report by Daily Express Malaysia. As scam losses continue to mount, victims and advocacy groups are questioning whether financial institutions are doing enough to prevent fraudulent transactions flowing through their systems.

The Khazanah Research Institute (KRI) has previously recommended that banks, telecommunications companies, and digital platforms should share responsibility for scam losses. With Malaysia recording billions in fraud losses annually, the debate over who bears the cost when scammers exploit the banking system has intensified.

When scam victims transfer money, the funds typically move through a chain of mule accounts — bank accounts opened or sold specifically to facilitate fraud. Critics argue that banks should be better equipped to detect and block these suspicious transactions in real time.

Several gaps in the current banking system contribute to the problem. Rapid fund transfers allow scammers to move stolen money across multiple accounts within minutes. Delayed detection of mule accounts means fraudulent accounts can operate for weeks before being flagged. Insufficient real-time transaction monitoring allows large, unusual transfers to pass through without triggering alerts.

Bank Negara Malaysia has issued guidelines requiring financial institutions to implement stronger fraud prevention measures, including enhanced customer verification, real-time transaction monitoring, and faster response to scam reports through the National Scam Response Centre.

Are banks in Malaysia liable for scam losses?

The debate is ongoing. KRI has recommended shared responsibility among banks, telcos, and digital platforms. BNM guidelines require banks to implement fraud prevention measures, but full liability frameworks are still being developed.

How quickly should I report a scam to my bank?

Report immediately. Funds can be moved through mule accounts within minutes. The NSRC at 997 operates around the clock to help freeze suspicious transactions before money is withdrawn.