Just days before the LexisNexis Risk Solutions Risk Ready 2025 panel discussion took place, Bank Negara hit several banks with RM5 million in fines for AML-related breaches.
It reminded all of us that financial crime is not slowing down, and (luckily) at the same time, regulators are watching. But beyond the numbers and enforcement actions, the bigger question lies in how truly prepared the industry really is to deal with what’s coming next.
During the panel, speakers from LexisNexis Risk Solutions, alrajhi bank, and PayNet shared insights from the front lines of compliance and fraud prevention in Malaysia.
The discussion opened up a clearer view of what banks are really up against. The threats aren’t just the usual suspicious transactions anymore. Human desperation, technology, and the speed of digital channels are increasingly driving these threats.
At the same time, banks and regulators are trying new ways to respond. Some of it is still early, but there are signals that progress is possible.
Fraud Is Getting Personal
Azhar Awang Kechil, Chief Retail Banking Officer at alrajhi bank Malaysia, believes that human vulnerability is the common thread behind the different types of fraud making headlines in Malaysia.
According to him, scammers simply rotate their methods depending on what people are falling for at any given moment. Quoting him:
“As long as we have people who are vulnerable, people who are greedy, people who are desperate, scams will always happen.”
Paynet’s Senior Director, Risk & Compliance, Ken Yon, then shifted the perspective on how scammers are constantly shifting tactics based on what people are most vulnerable to at any given moment.
This can be in the form of a variety, ranging from job scams to malware to love scams. All of these scams are designed to exploit emotional and psychological weak points.
While individual customers are the target, Rohit Mittal, Director of Market Planning for Financial Crime Compliance at LexisNexis Risk Solutions, pointed out that the cracks often begin within institutions themselves. A fragmented system, if you will.
Rohit gave an example of one case of operational risks that are caused by fragmented systems. He began telling a story of where a large insurer admitted they couldn’t even get a unified view of their customers across life and general insurance.
“So if a customer has, let’s say, both a life insurance policy and an auto insurance policy. Both of those policies could be administered differently. Both of the forms of those processes would be different. Potentially, risk identification would be different, which is which should not be the case,” Rohit told.
It shows a clear example of the “disconnection” that many institutions still face.
The result? Gaps in customer risk assessments, duplication of efforts, and missed signals, all of which can be and are often exploited.
Old Crimes Are Taking New Forms
Rohit then gave his thoughts that compliance challenges are being compounded by how fast fraud in Malaysia is changing. He alluded to how crime typologies are evolving, with mule accounts no longer limited to money laundering. They now play a major role in facilitating fraud.
This convergence is happening just as compliance costs reach new highs. The cost of compliance globally has reached USD $200 billion, while in Asia Pacific alone is now around USD $45 billion, according to Rohit, who quoted the stats from the LexisNexis research, which most of the part is driven in part by higher transaction volumes and the need for instantaneous screenings.
Azhar then shared a chilling example that hit close to home. A video call involving what appeared to be a full management team from a Malaysian bank. Only it wasn’t real.
“That happened to one of the banks here in Malaysia recently, where millions of ringgit was transferred,” he said. “Luckily it was stopped before it’s been done.”
Rohit added that fraud is also now a business. Most of which are “sold as a service” on the dark web, with developers building and distributing sophisticated scam toolkits for others to use.
And with synthetic identities increasingly hard to detect, criminals are combining real and fake data to create convincing documentation and even falsified invoices for trade-based money laundering.
Early Wins and What’s To Come
Despite the bleakness of it all, there have been breakthroughs. PayNet’s national fraud portal, launched in 2024, has started producing results. Ken noted that in the early stages of the fraud portal’s rollout, there was a 71% rise in reported cases from April to December.
Of the cases that led to fund recovery, he said about 20% saw full restitution.
“That is actually very surprising,” Ken joked
The longer-term goal, however, is prevention. PayNet is now testing a system that scores transactions in real time based on risk signals, using data from Malaysia’s mule database to flag high-risk transfers before they go through.
Ken explained that the system under development will assign a risk score to each transaction, allowing banks to decide how to act (on whether or not to allow it, flag it, or intervene) based on their own internal thresholds and risk appetite.
Even with warnings, though, not every customer takes heed.
Even with well-timed warnings, some customers still go through with transfers, which is a sign, Ken said, of just how convincing and emotionally charged scam tactics have become.
It is best to note that in places like Singapore, regulators have the authority to freeze suspicious accounts swiftly. While Malaysia currently lacks that same level of immediacy, it’s a direction that local authorities are beginning to consider.
Azhar said we need more personalised engagement. He also stressed that traditional methods of financial education, such as emails or pop-ups, aren’t enough. Stopping scams before they happen requires better customer engagement. To be effective, this engagement needs to be timely, contextual, and hard to ignore.
Instead, banks need to personalise those interactions. It should not just be with better segmentation and nudges. It also has to be by designing their platforms to pause, escalate or even trigger a manual intervention if needed.
Azhar suggested tailoring these interventions to each customer’s behaviour and situation, delivering them at the right time and with enough weight to actually change decision-making.
Watch the full panel discussion: Why Financial Crime Keeps Rising, Even After $200 Billion in Compliance Costs on our YouTube page.
