In efforts to accelerate the integration of Environmental, Social, Governance (ESG) aspects into its operations, Kenanga Investment Bank Berhad (Kenanga) will be launching its 6th annual Fraud Awareness Week (FAW), the highlight of a month-long virtual Fraud Awareness campaign which has united many internal and industrial participants in a move to promote the fight against fraud, bribery, and corruption.
The FAW Games are part of the activities of Kenanga’s 6th FAW, which will be held from 14 November 2022 to 18 November 2022 in conjunction with the International FAW of the Association of Certified Fraud Examiners (ACFE). As part of Kenanga’s efforts to engage with parties in the network of persons and entities it works with, the FAW Games is an opportunity for such parties to raise awareness on fraud detection and prevention. Participation in the FAW Games also reflects Kenanga’s vendors commitment to the anti-fraud agenda.
Held under the theme of ‘Reaffirming Ethical, Morale Resilience For Good Governance’, the event will engage in interactive anti-fraud games, quizzes and seminars designed to enhance awareness on trends and practices surrounding fraud prevention and detection.
The FAW Games, will also be held virtually by leveraging on technology. Nevertheless, be assured that the FAW Games will still feature fun filled activities containing educational elements, which emphasises on the importance of anti-fraud, compliance, ethics and integrity, says Kenanga.
Financial fraud can be broadly defined as an intentional act of deception involving financial transactions for purpose of personal gain. Fraud is a crime, and is also a civil law violation. Many fraud cases involve complicated financial transactions conducted by ‘white collar criminals’ such as business professionals with specialised knowledge and criminal intent.
Investment scams occur when scammers trick people to invest in fraudulent schemes which generally involve promise of big payouts, quick money or guaranteed returns. The scammers would present the scheme as valid investment in stocks, bonds, notes, commodities, currency or even real estate when they actually lie or give fake information about the real investment. In the end, the monies invested would go to the scammers and not towards any real investment, said Group Chief Regulatory and Compliance Officer of Kenanga Investment Bank Bhd Maheswari Kanniah.
Speaking to BusinessToday exclusively on the topic of fraud and the event, Maheswari added in today’s digital world, and particularly since the COVID-19 pandemic, scammers are using more sophisticated ways to target investors such as operating through professional-looking websites and even impersonating legitimate companies. Most scams are spread through messaging applications and platforms like WhatsApp and Facebook and recently, scammers have started using Telegram as well. Many of the scams also claimed to be “syariah compliant”.
“With the sophisticated techniques and modus operandi, every scam is different, and anyone can be scammed, in this regard, the Securities Commission Malaysia (SC) revealed that Malaysia has seen a significant rise in online scams since 2020 with almost 72,000 scams and RM5.2 billion in losses.
“Investment scams accounted for close to 12,000 of the overall number of scams. The SC also shared that as of September 2022, more than 1,800 complaints and enquiries related to investment scams and unlicensed activities have been lodged with them.
The trend is indeed worrying and collective efforts from the authorities and public are required to prevent and detect and put a stop to fraud, she said.
On proactive measures needed to drastically reduce fraud cases, Maheswari said it’s hard to predict what exactly would be the next fraud scheme or technique. Scammers are always a step ahead in keeping up with technology and coming up with new creative ways to deceive people, and at times circumvent the controls in place at banks.
This same concern was raised by the Police DiRaja Malaysia (PDRM) where it was highlighted that as people embrace new digital payment systems, they are faced with other fast-growing fraud threats including impersonation scams, e-commerce crime, and phishing which could lead to account takeovers and unauthorised transactions. The complexity of such scams makes it easier for people to be deceived and particularly difficult to detect and prevent.
It is therefore crucial that banks conduct ongoing monitoring and study of transactions occurring in the banks and always stay updated of the trends of fraud to be able to identify potential threats and stop any fraudulent activities. Banks have to strategically innovate with advanced scam detection systems and analyse clients and transactions data to improve detection and effectively combat fraud.
“Another important tool which we at Kenanga believe is important to combat fraud is–awareness and education.
“We have various targeted campaigns for our clients to highlight the steps they should take to protect themselves from fraud when investing with Kenanga and constantly remind them to be alert of fraudulent schemes through emails and online trading portals. As for the larger public audience, through social media pages, we issue out immediate alert if there is any attempt to defraud using Kenanga’s name and advise them to only contact the authorised personnel in Kenanga for correct information.”
In general, people are easily duped by scammers due to the promise of high returns or other benefits but it is also important to understand the circumstances causing people to fall for fraudulent investment schemes. In this respect, I feel that while fraudulent techniques are continually evolving, what has endured the test of time is the psychological aspects deployed by the fraudsters.
Scammers would use tactics which give rise to emotions like fear and greed, and people would tend to omit reason and act or decide based on their emotions. The strategy is to get the victims feeling very emotionally aroused so that they would not think too much and agree with the scammers. The victims’ “optimism bias” could also lead them to think that, unlike others, they are less likely to experience negative events.
For instance, we could hear nowadays people keep getting calls purportedly from the authorities such as the Inland Revenue Board and Customs Department claiming that there are outstanding payments or fines. In such situation, the scammers are actually banking on people’s fear of the authorities which would lead them making quick decision to comply with instructions they thought were from the authorities.
In the end, they fall into malicious tactics of the scammers, she said, adding, scammers would at times create sense of urgency so that victims make quicker and poorer decisions. Scammers will claim that the offer is only valid now and as soon as they put the phone down or end the communication, the offer will be gone. Many people will feel that they simply cannot miss out on such good opportunities and eventually suffer losses.
On the proliferation of these scams, Maheswari said Bank Negara Malaysia, the Securities Commission and the Royal Malaysian Police have been vigilant to put a stop to scams. In fact, BNM, SC and PDRM have established dedicated websites to update and warn the public on individuals and companies involved in actual or suspected fraud as well as on their modus operandi.
The problem is that the underground connection of the fraudsters works much faster, and they change their modus operandi once they find out that the authorities are already onto them. It is even more difficult to trace when the scammers are operating cross-border.
“I believe that fraud cases will continue to increase especially with the advancement of technologies which would enable creation of new fraudulent techniques. The fact of the matter is, Malaysians are still easily influenced by promises of irresponsible parties. We must not let ourselves be fooled by promises of high returns or “too good to be true” benefits as there are no such businesses or investment opportunities to begin with.”
Some say that scams are now prevalent due to the rise of connectivity like the internet. On this Maheswari said with or without internet and applications, investment scams are inevitable. It is up to all of us to take precautionary measures to avoid falling victims to the scams. Scams have already been happening previously but yes, in this digital space, creativity of the scammers has enhanced and that makes scams even more difficult to spot. It takes a few occurrences before the loopholes can be plugged.
While banks are required by laws to protect information of their clients and transactions, public should play their part by being cautious when sharing their information online. There are a lot of information stored online that are in need of protection, from personal emails and residential addresses to phone numbers, birthdays and beyond. Furthermore, with new types of malware and cyberattacks popping up every day, knowing how to protect personal information stored online is more important than ever.
In this regard, people should adopt security measures when going online and this include using reliable passwords, enabling two-factor authentication, avoid replying to spam messages and avoid using public Wi-Fi. Additionally, people should always be wary of phishing tactics to avoid from being tricked into exposing personal information. In the end, it is the people who can really protect themselves from falling victim to scams.
It is hard for anyone to admit that they have fallen prey to scams. It can feel surreal and sometimes embarrassing, and that shameful feeling could prevent people from reporting the crime. In addition to that, due to the increasing trend of scam cases, some may be thinking that reporting would not make any different as it may seem that no action has been taken to address the situation.
However, people should realise that not all scams are the same. Scammers would deploy various tactics to defraud people and the tactics will keep on changing as we catch up with them. If you are scammed and be silent about it, the fraudsters will continue to thrive because they know people are hesitant to report that they are victims.
“In this respect, I urge people to contact the bank directly, or they can even lodge report to the relevant authorities if they encounter any suspicious transactions. By alerting the authorities, proactive counter measures can be taken to avoid other people from becoming victims. You may not be able to save yourself or the money you have lost, but you will definitely help protect other people from becoming victim. It is the public that could help put a stop to another scam,” she added.
Aside from being ‘scammed’, Maheswari said that another concern when it comes to investment schemes is the tendency of people investing with unlicensed persons. The public should be aware that any individual or entity who wants to provide capital market products and services to the investors in Malaysia must be licensed or registered with BNM and SC and fulfil stringent regulatory requirements designed to protect investors. Investors who choose to trade on unlicensed platforms would risk not being protected in the event of any dispute.
In addition to that, there is also an increasing use of ‘celebrities or influencers’ to promote retail investment offerings on social media. The unlicensed celebrity may give endorsements to investment advice, or talk about or promote successful investments. The public should also be wary of self-proclaimed investment gurus who offer questionable advice or use social media to spread false or misleading information.
