An expert in cybersecurity and law has proposed additional measures to aid victims of financial scams, emphasising that criminalising mule accounts is only one step in addressing the issue.
According to a report by The Star, Derek Fernandez, a member of the Malaysian Communications and Multimedia Commission (MCMC), suggested that financial institutions should enforce a mandatory 48-hour buffer period for new fund transfers above a certain threshold. He also recommended taking out digital insurance to compensate fraud victims.
Fernandez (pictured) said a cooling-off period for certain fund transfers could be significantly effective.
“When someone transfers a certain amount of money to an account they’ve never used before, that transaction should be suspended for 48 hours,” he said, as reported by The Star. “This will give the sender time to notice any irregularities in the transaction or (information of the) recipient before the funds are released. If it’s confirmed to be a scam within that 48-hour window, the transfer could be cancelled.”
He noted that a 24-hour buffer period would be more effective than the current 12-hour timeframe, which he believes is too short for overnight transactions.
“It could be a powerful tool, as it gives people the choice to have an extra layer of security without adding significant cost,” he said. “Combining this buffer period rule with the crackdown on mule accounts could make the overall legislative package much more impactful.”
Fernandez also recommended that Bank Negara Malaysia require banks to implement a digital insurance system to protect consumers from online financial fraud. This system would involve a small fraction of each transaction, such as one sen or five sen, being contributed to a central fund managed by Bank Negara.
“This insurance pool could then be used to compensate victims of fraud, rather than leaving them to bear the full losses,” he said.
Fernandez further emphasised that payment platforms and financial institutions, which profit from digital payments, should bear the responsibility for providing this insurance protection, as they have the highest obligation to safeguard their customers.
Fernandez identified four key elements in online financial fraud:
Fernandez argued that combining a 48-hour buffer period with an insurance mechanism and efforts to combat mule accounts would create a more balanced and robust approach to consumer protection.
“It’s a good start to penalising wrongdoers, but it must go with measures that ensure financial institutions bear the primary responsibility and risk,” he said.
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