BNM Introduces 5 Measures For Banks To Tackle Financial Scams

Bank Negara Governor in her address at the launching of the Financial Crime Exhibition at the Central Bank said scams and cybercrimes have been on the rise of late, not just in Malaysia but all around the world. Noting that it is a concerning development, she said BNM will continue to step up efforts to combat financial scams including rolling out preventive measures and raising public awareness.

As such, she said BNM requires banks in Malaysia to adopt high standards of security, especially for Internet and mobile banking services. From time to time, BNM also issues security advisories to the financial industry highlighting the latest modus operandi (tactics) of scammers and additional security measures that banks need to implement to protect their customers’ savings.

The Central Bank Governor announced 5 measures that will be instructed for financial institutions to take, to further strengthen safeguards against financial scams.

First, financial institutions are required to migrate from SMS One Time Passwords (OTP) to more secure forms of authentication for online activities or transactions relating to account opening, fund transfers, and payments, as well as changes to personal information and account settings. The major banks have already started this process of migrating to more secure forms of authentication;

Second, financial institutions will further tighten fraud detection rules and triggers for blocking suspected scam transactions. Customers will be immediately alerted when any such activity involving their banking accounts is detected. As an additional measure, financial institutions will block such transactions, and customers will be asked to confirm that such transactions are genuine before they are unblocked;

Third, a cooling-off period will be observed for the first-time enrolment of online banking services or secure devices. During this time, no online banking activity is allowed to be conducted;

Fourth, customers will be restricted to one mobile or secure device for the authentication of online banking transactions; and

Fifth, financial institutions will be required to set up dedicated hotlines for customers to report financial scam incidents. Financial institutions have been directed to be more responsive to scam reports lodged by customers. Financial institutions have also been directed to facilitate efforts to recover and protect stolen funds, including to work with relevant agencies to prevent further losses.

In addition, financial institutions are required to provide convenient ways for customers to suspend their bank accounts if they suspect that their accounts have been compromised as a result of a scam. Customers will also be able to subsequently reactivate their accounts after a reasonable period to ensure that their accounts are secure.

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