In the first quarter of 2025, over 12,000 online fraud cases were reported in Malaysia, with losses exceeding RM573 million. Scams ranging from fake investments and AI-generated love scams to deepfake CEO impersonations are becoming alarmingly common.
Criminals now use AI tools to
create fake identities, clone voices, and even generate synthetic video calls
to trick even the most tech-savvy Malaysians.
Despite this digital crime wave and
even as RM53.88 billion was lost to investment scams in 2024 alone, Malaysia
still lacks a comprehensive, modern fraud law.
The country’s existing legal
framework is fragmented, reactive, and grossly inadequate for the digital age.
The refusal to enact robust anti-fraud legislation is not due to legal
limitations.
It is a political choice i.e. one
designed to protect the elite, not the public.
What Malaysia Is Missing
The UK Fraud Act 2006 is often
regarded as the gold standard in modern fraud legislation. It replaced a
fragmented and outdated collection of statutes with a streamlined, cohesive
framework that emphasizes intent and dishonesty, rather than just completed
fraudulent acts.
This legal shift allows
authorities to pursue perpetrators before actual financial harm is done i.e. a
crucial advantage in an age where cyber and economic crimes evolve rapidly.
The Act outlines three primary
offences: fraud by false representation, fraud by failing to disclose
information, and fraud by abuse of position.
These provisions enable
prosecutors to tackle a wide range of deceptive behaviours, particularly those
that rely on breaches of trust or manipulation of information.
Importantly, the Act also
criminalizes the tools of fraud such as fake websites, cloned bank accounts,
and other instruments used to deceive victims. This pre-emptive approach
empowers UK authorities to intervene early, disrupting fraudulent schemes before
they can cause large-scale damage.
In stark contrast, Malaysia
continues to rely on archaic and disjointed legislation, including sections of
the Penal Code, the Malaysian Anti-Corruption Commission (MACC) Act 2009, and
the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful
Activities Act (AMLATFPUAA).
While these laws cover some
aspects of fraud, they are largely reactive and insufficient for addressing the
complex and fast-evolving nature of today’s digital scams.
Malaysia’s current legal
framework is ill-equipped to deal with modern fraud typologies, especially
those involving cryptocurrency transactions, AI-generated content, and social
engineering tactics.
These scams often exploit
emerging technologies and psychological manipulation, allowing fraudsters to
deceive victims with alarming precision.
Without a modern and proactive
law like the UK Fraud Act, Malaysia is left battling sophisticated 21st-century
crimes with outdated 20th-century legislation.
Why the Government Resists
The question isn’t why Malaysia
needs a better fraud law. The evidence is overwhelming. The real question is:
Why won’t it happen?
A law modelled on the UK Fraud
Act would criminalise a wide range of conduct that is routine in Malaysian
politics and business including conflicts of interest, asset concealment, and
abuse of position. In other words, it would expose the very people in charge.
This is not hypothetical. The
1MDB scandal, procurement fraud in GLCs, and numerous state-linked corruption
cases reveal a clear pattern: powerful individuals exploiting their roles for
personal gain with minimal accountability.
In the UK, fraud cases are
handled by independent agencies like the Serious Fraud Office (SFO). In
Malaysia, prosecutorial decisions are heavily politicised.
The Attorney General also serves
as the government’s legal advisor, creating a built-in conflict of interest. A
new law would be ineffective without institutional reform and that’s a
conversation Malaysia’s leadership seems unwilling to have.
Some critics claim that the UK
law is too broad and could be misused. But this is a red herring. Legal
safeguards, judicial oversight, and proper training can mitigate abuse.
What lawmakers really fear is not
misuse but loss of impunity. Under a strong fraud law, dishonest conduct whether
it causes direct loss or not would become prosecutable. That’s exactly what the
political class wants to avoid.
Parliament is often gridlocked by
political drama and shifting alliances. Comprehensive reform needs bipartisan
support and political courage two things currently in short supply.
Unless a major scandal sparks
widespread outrage, there’s little incentive for lawmakers to pass legislation
that could eventually turn against them.
Scams Are Evolving but the Law
Isn’t
Today’s scammers don’t just send
phishing emails. They create deepfake video calls from fake CEOs, clone voices
to impersonate family members, and use AI-generated websites to steal
identities.
In one case, a corporate
executive in Kuala Lumpur nearly lost RM250,000 after a video call from a “CEO”
who was actually an AI-generated imposter. In Johor, an elderly man lost
RM10,000 after sending emergency funds to someone using a cloned voice of his
grandson.
Criminals are also exploiting new
channels like QR code traps, fake job offers, and romance scams, many of which
operate through e-wallets and cryptocurrency. Authorities are playing catch-up
while Malaysians continue to suffer.
The cost of inaction is stark.
With over 6,745 scam-linked bank accounts frozen and 750 Malaysians rescued
from foreign scam syndicates, the threat has clearly escalated beyond isolated
digital crimes as it is now a full-blown national crisis.
Yet, Malaysia’s legal response
remains reactive rather than preventive. Without robust laws to prosecute
intentional deception, authorities are left scrambling after the fact, unable
to disrupt scams before they cause harm.
Reform or Regress
Introducing a modern fraud law
would signal that Malaysia is serious about protecting its citizens not just
from petty scams, but from systemic economic crimes. It would also improve
Malaysia’s international standing, including its Corruption Perception Index
(CPI) score, which currently sits at a troubling 50/100, far behind regional
peers like Singapore.
But that reform requires
political will and right now, it’s lacking by design. The existing legal vacuum
isn’t a gap. It’s a shield, protecting those who benefit from opacity and
inaction.
Until that changes, the Malaysian
public will remain vulnerable to both digital fraudsters and the fraud of
governance.
Malaysia doesn’t lack the
blueprint. It lacks the backbone.
23.06.2025
Kuala Lumpur.
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