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Thursday, 23 November 2023

Using algorithms to check fraud

New way: In addition to developing algorithms to trace money that could have ended up in the hands of fraudsters, the NFP will be able to forecast the pattern of mule accounts. — AZLINA ABDULLAH/The Star

New National Fraud Portal to streamline end-to-end scam responses

PETALING JAYA: The National Fraud Portal (NFP) will be able to predict the pattern of mule accounts as well as create algorithms to track funds that may have fallen into the hands of scammers, says Bank Negara governor Datuk Abdul Rasheed Ghaffour.

Bank Negara, he said, had decided to put more effort into curbing fraud, especially online financial fraud, as the perpetrators were not only “getting smarter by the hour” but also more sophisticated in their use of new technologies.

These efforts, said Abdul Rasheed, were also in line with the National Risk Assessment of 2023 findings that fraud was one of the five high-risk crimes beside corruption, drug trafficking, smuggling and organised crime.

ALSO READ: NFP requires certain policies to be effective, say experts

“Bank Negara is actively collaborating with PayNet and the financial industry to launch the NFP by the middle of next year.

“Building on the framework and foundations of the National Scam Response Centre (NSRC), the NFP will streamline the industry’s end-to-end scam response, from initial identification and reporting to the recovery of funds.

“This platform will enhance efficiency by automating processes, enabling a more rapid response to assist victims.

“We envision the NFP expanding to include predictive assessments of mule accounts, advanced analytics, and fund-tracing algorithms,” said Abdul Rasheed, declining to divulge further details.

ALSO READ: Budget 2024: National Scam Response Centre allocation doubled to RM20mil

PayNet is the national provider of financial market utilities, set up to build inclusive, accessible and efficient payments and financial ecosystems for Malaysia.

Bank Negara is PayNet’s single largest shareholder, with 11 of the country’s financial institutions as joint shareholders.

Abdul Rasheed said since the NSRC was launched in October 2022, it had received over 19,000 reports on scam cases, leading to the freezing of over RM60mil and the identification of 43,000 mule accounts.

The NFP currently being worked on by the central bank stems from the success of measures such as the “kill switch” for customers introduced by all major banks, he said.

“Falling victim to financial fraud is undoubtedly difficult for those affected, with some victims losing their entire life savings and struggling to regain their economic footing.

ALSO READ: National fraud portal to be ready by mid-2024 - BNM

“With the support of the banking associations, all major banks have implemented these measures, including restricting authentication apps to a single device and introducing a ‘kill switch’ for customers.

“We have observed a 58% reduction in unauthorised online banking transactions reported to the NSRC in the last five months.

“Bank Negara is now also assessing a number of additional policy enhancements on the handling of financial scams.

“This includes strengthening the requirements for financial institutions to undertake more robust investigations, adopt stronger preventive controls, and review the effectiveness of these mechanisms.

“We also plan to clarify the responsibilities of customers to protect themselves and their rights if they fall victim to fraud,” said Abdul Rasheed.

Bank Negara’s efforts to curb scams have been ongoing, with the past year seeing financial institutions migrate from the one-time password (OTP) system to having a ‘cooling-off period’ for the first-time registration of online banking services or secure devices and limiting authentication to one device per customer.

Banks now have their own scam hotlines with more advisories for their customers.

A source with Bank Negara said the portal’s secrecy was one of the key factors in ensuring that scammers were not working in tandem with its development.

“It is crucial that we are one step ahead of the scammers. The problem has always been that we are always running behind the scammers, and now we are playing catch-up,” said the source.

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