Addressing rising online scams through international collaboration

Digitalisation facilitates commerce and promotes trade. At the same time, the advancement of technology has led to a surge in online fraud cases. In Malaysia, online scams are frequently making headlines. Almost every few days, we see news reports about citizens falling victim to these scams. According to the Royal Malaysia Police (RMP), between 2020 and May 2022, the department received more than 48,000 reports of online scams.

In response to this, the Malaysian government, enforcement bodies, and industry players have come together to combat online scams. Among which, the National Anti-Financial Crime Centre (NFCC), police, Bank Negara Malaysia (BNM), Malaysian Communications and Multimedia Commission (MCMC), financial institutions as well as telecommunications players, have jointly established the National Scam Response Centre (NSRC).

The NSRC manages a 997 hotline, serving as an emergency response centre that focuses on online financial scams involving unauthorised transactions from a victim’s bank account. Its main aim is to prevent further financial losses for the victim. Nevertheless, the NSRC primarily provides remedial measures and only gets involved after a fraud incident has occurred.

Even though policy makers such as Bank Negara have required financial institutions in Malaysia to implement more stringent safeguards against online financial crimes, such as migrating from the usage of SMS One Time Passwords (OTP) to a registered secure device or mobile and implementing deactivation functions on online bank accounts and ATM cards, these measures may only provide temporary relief and only work against specific types of online financial scams.

At the same time, social media platforms such as Facebook, Instagram, TikTok and Telegram are often exploited by fraudsters to find and connect with their victims, due to their convenience. Earlier in the year, social media platforms turned out to be the digital hotbed for online human trafficking operations and raised the concern of Asean leaders. This phenomenon is primarily due to social media platforms not requiring real-name authentication, thus allowing users to register accounts without disclosing their real names. The implication is that fraudsters can easily hide behind fake accounts as well as migrate to a new one while closing the old one after successfully scamming victims, making detection and tracing by the enforcement bodies difficult. In Malaysia, Rule 3 of the Consumer Protection (Electronic Trade Transactions) Regulations 2012 (the Rules) requires any person who operates a business for the supply of goods or services through a website or an online marketplace to disclose information such as the name of the person, business or company operating the business and the registration number of the business or company. However, this rule is often disregarded by sellers on social media marketplaces. Further, it only regulates businesses conducting business activities online and does not address other forms of online fraud, such as buy-sell between individual users or recruitment agents.

One possible solution is to introduce a law requiring social media platforms to ensure users register for an account using authenticated real names. Imposing a real-name authentication requirement on internet and social media users who intend to use their social media accounts for transactions, including recruitment activities for business or one-off buy-sell, advertising or recruitment, could deter fraudsters from using social media as a platform to commit online scams and human trafficking. At the same time, this approach would enable authorities to trace the individuals responsible for a particular user account if it is used to commit online crimes.

Many countries, including China and Malaysia, implemented mobile phone identity registration years ago, and such measures have successfully reduced various related crimes. With the continuous advancement of technology, the landscape of communication has evolved. Therefore, it is now time for Malaysian law drafters to intensify their efforts in formulating more effective laws governing cyberspace. These laws are crucial for combating online scam activities within the country.

Considering China has been the leading country in curbing telecommunications and online fraud through the introduction of a few laws, Malaysia could refer to the laws and policies implemented in China that have contributed to China’s success in reducing online fraud within its nation, particularly the requirements of the online real-name policy. Learning from China’s experience, Malaysia could craft laws mandating social media platforms to allow only users authenticated by real names to sell on their marketplaces or publish any form of advertisement or recruitment activity. This would complement the existing laws that the country already has.

Malaysia and China have maintained a strong relationship in terms of communication and cooperation in bringing down cybercriminals for a long period of time. A notable instance occurred in December 2017 when Malaysian and Chinese law enforcement agencies collaborated to crack down on a syndicate involved in the Macau scam through a joint operation. This operation led to the apprehension of over 100 suspects in both Malaysia and China, according to a news report. Given the history of accomplishment and the deepening bilateral relationship between Malaysia and China, a comprehensive action plan can be formulated and executed between Malaysia, and China to tackle online fraud.

Having said that, the internet knows no borders. Both the fraudsters and the victims could be anywhere and are not confined to a particular nation. Therefore, international collaboration is vital and should not be restricted to Malaysia and China. Earlier this year, in February, Business Today reported that Communications and Digital Minister, Fahmi Fadzil, had called for Asean countries to join efforts at the regional level to fight online fraud. On May 10, 2023, Asean member countries pledged to strengthen cooperation and coordination to eradicate online human trafficking activities during the regional summit held in Indonesia. On this premise, leaders from Asean, Malaysia and China can engage in discussions and collaborative efforts, aimed at implementing effective legislation and joint operations to prevent online fraud. With that, it is hoped that cross border online fraud can be reduced, making the internet a safer place.

Lai Chooi Ling is a Lecturer at Tunku Abdul Rahman University of Management and Technology (TAR UMT). The views expressed here are entirely the writer’s own.

The SEARCH Scholar Series is a social responsibility programme jointly organised by the Southeast Asia Research Centre for Humanities (SEARCH) and Tunku Abdul Rahman University of Management and Technology (TAR UMT), in conjunction with the 10-year anniversary of the Belt and Road Initiative.