Financial Crime World

Malaysians Lose Over RM415 Million to Scammers in First Seven Months of 2022: Bank Negara Takes Action

Financial Fraud on the Rise in Malaysia

A staggering revelation has emerged, revealing that Malaysians have lost a whopping RM415 million to fraudulent activities from January to July this year. In response to this alarming trend, Bank Negara Malaysia has issued a directive to all local banks to abandon SMS-based authentication methods for online banking services.

The Risks of SMS-Based OTP Systems

Experts have long been warning about the vulnerabilities of SMS-based one-time password (OTP) systems, which can be easily compromised by sophisticated scammers. According to Ubaid Mustafa Qadiri, Head of Technology Risk & Cyber Security at KPMG in Malaysia:

  • “FIDO - or Fast Identity Online - is a more secure approach that restricts customers to using only one registered device for authentication and online transactions.”
  • SMS-based OTP systems are an attractive target for cybercriminals, particularly as fraudsters increasingly target unsuspecting victims through phishing scams.

A Significant Step Towards Bolstering Cybersecurity Defenses

The move by Bank Negara is seen as a significant step towards bolstering the country’s cybersecurity defenses, particularly in the financial sector. With SMS-based OTP systems no longer an option for online banking services, local banks are expected to upgrade their security protocols and protect customers from financial losses.

What You Can Do to Stay Safe

Experts urge Malaysians to remain vigilant and take proactive steps to safeguard their online transactions:

  • Use two-factor authentication whenever possible
  • Verify the authenticity of all online banking communications
  • Be cautious of suspicious links, emails, and texts

By taking these simple precautions, individuals can reduce their risk of falling victim to financial fraud and scams. As the scourge of fraudulent activities continues to plague Malaysia, Bank Negara’s directive is expected to send a strong signal to local banks to prioritize customer security and protect against financial losses.