MARCH 2 — Online scams have moved from being an occasional consumer risk into a structural drain on Malaysia’s households, businesses, and confidence in the digital economy. Police have recently said that around 90 per cent of commercial crime is now online, and that non-existent investment schemes are a major contributor to losses.
The scale is no longer anecdotal. In a parliamentary written reply reported in January 2026, the Home Ministry indicated that Malaysia suffered RM2.77 billion in losses from financial scams in 2025, and total losses linked to online and financial fraud across 2023-2025 were RM5.62 billion. This is not only a crime story, but also a competitiveness story, because it erodes trust in online transactions, discourages digital adoption, and diverts savings away from productive use.
What makes the situation more serious is not only the scale of losses, but the weakness of recovery outcomes. Another parliamentary briefing reported that only a small fraction of certain scam-related losses could be “saved”, and separate official updates reported RM34 million recovered in 2025, with RM6.7 million returned to victims, even after significant operational improvements. The exact figures vary by category and reporting channel, but the overall direction is consistent. Malaysia is improving response mechanisms, yet recovery remains low relative to the harm.
In a parliamentary written reply reported in January 2026, the Home Ministry indicated that Malaysia suffered RM2.77 billion in losses from financial scams in 2025, and total losses linked to online and financial fraud across 2023-2025 were RM5.62 billion. ― iStock pic
When a problem repeatedly produces outcomes like this, it is no longer accurate to describe it mainly as “people must be more careful”. Public education matters, but it does not explain why scams continue to scale even when awareness is higher than before. The more precise framing is that Malaysia has developed a scam supply chain that exploits frictionless digital systems, and the current countermeasures still leave too many weak links.
A critical response, therefore, needs to focus on the design of the ecosystem, not only the behaviour of individual victims.
1) Treat the first hour as critical infrastructure, with clear performance standards
Most scam losses become irreversible because responses are slow, fragmented, and inconsistent across institutions. Victims are often forced to navigate multiple steps, including contacting the bank, making a police report, and reaching the National Scam Response Centre (NSRC). Government agencies have been expanding response capacity, and officials have highlighted how increased NSRC operations improved outcomes compared to earlier years.
However, “more capacity” is not the same as “system reliability”. For a response to work at scale, it needs service-level standards similar to emergency infrastructure. The public should not need to guess which hotline matters, what information to provide, or which institution should act first. The system should aim for rapid freezes, faster tracing, and fewer handoffs.
Malaysia has already built parts of the machinery. Bank Negara Malaysia and PayNet launched the National Fraud Portal, designed to improve coordination, scam reporting, and the speed of tracing stolen funds. The Ministry of Finance has also referenced protective measures such as “kill switch” mechanisms that allow users to freeze accounts when suspicious activity occurs.
The next step is to convert these initiatives into an accountable operating model with published targets, such as time-to-freeze, time-to-contact, and time-to-trace. Without those targets, improvements remain invisible, and enforcement remains reactive.
2) Disrupt mule accounts as an industry, not as isolated offenders
Many scams succeed because stolen funds can be moved quickly through mule accounts, which are bank accounts used to receive or transfer illicit proceeds, often opened by individuals recruited through cash offers or coerced arrangements. The problem is not only criminal intent, but also the ease with which mules are recruited, activated, and reused.
Parliament has heard that new legal provisions were introduced to curb mule account abuse, yet recoveries remain limited relative to losses. That gap signals that Malaysia needs a stronger operational focus on mule-account prevention and containment. Banks already conduct risk controls, but the scam environment is industrialised, and controls must operate at a comparable speed.
This is where system design matters more than slogans. Malaysia needs to make mule accounts expensive to operate by increasing early detection, strengthening account-opening controls for high-risk patterns, and tightening real-time transaction monitoring for suspicious inbound transfers. The National Fraud Portal provides an architecture for faster information sharing across institutions, but the ecosystem also needs aligned incentives.
The central weakness in many scam economies is that the cost of failure is too often externalised onto victims. If losses sit mainly with victims, then some institutions have limited commercial incentive to move beyond baseline compliance. Bank Negara Malaysia’s policy direction on ensuring fair treatment for victims of unauthorised digital banking transactions is a signal that this burden-sharing conversation is already active. A credible scam response system must continue moving toward more transparent accountability, consistent victim handling, and more substantial operational consequences for preventable breakdowns.
3) Assign platform and telco accountability, because scams depend on distribution
Scams are not merely “banking problems”. They depend on distribution channels, including social media advertising, messaging apps, spoofed calls, and convincing digital interfaces. Police have highlighted that non-existent investment schemes are the most significant contributor to certain losses, indicating that scams are not only about theft, but also about persuasion and reach.
A system that only focuses on downstream money movement is reacting too late. Malaysia needs upstream controls that reduce scam risk and improve traceability. This includes stronger advertiser verification, faster takedown protocols for fraudulent campaigns, and tighter controls on call and SMS spoofing. It also includes more precise requirements for marketplaces and platforms that host high-risk financial promotions.
This is not a call for blanket censorship but a call for practical accountability at scale, in the same way that financial institutions are expected to manage fraud risks within their rails. The Ministry of Digital has itself signalled a stronger policy and capability focus on combating online scams, including guidance and training initiatives, which indicates that the government recognises the need to move beyond ad hoc warnings.
Malaysia will not solve this problem through scattered campaigns and periodic crackdowns alone. The scam economy adapts faster than public messaging cycles, and it exploits predictable gaps. The response has to become more measurable, integrated, and performance-driven.
A practical improvement would be a quarterly public scoreboard that consolidates key metrics across agencies and financial institutions, such as total reported losses, funds intercepted, funds returned, average time-to-freeze, mule-account interdictions, and platform takedown performance. The goal is not public shaming. The goal is continuous improvement through transparency, because a system that cannot measure its response cannot optimise it.
If Malaysia intends to grow its digital economy, raise productivity, and build credible consumer confidence, scam prevention must be treated like shared national infrastructure. The country has already laid essential building blocks, such as the National Fraud Portal and stronger victim protection policies. Still, the next leap requires consistent standards, aligned incentives, and accountability across the complete supply chain.
* Galvin Lee Kuan Sian is a PhD Researcher in Marketing at the Asia-Europe Institute, Universiti Malaya, and serves as Lecturer of Marketing and Economics & Programme Coordinator in Business at a Private College in Malaysia, specialising in the scholarship of teaching and learning via educational technology.
** This is the personal opinion of the writer or publication and does not necessarily represent the views of Malay Mail
