KUALA LUMPUR (March 29): Some 19,165 cases of online banking fraud involving RM94.6 million were reported by customers of financial institutions in the second half of 2022 (2H2022), up from the 9,735 cases totalling RM39.9 million reported in 1H2022.

A rise in the number of payment-related fraud incidents, both globally and domestically, highlights growing concern with cybercrimes, Bank Negara Malaysia (BNM) said.

However, such operational risk losses remained small relative to the banking sector’s capital and profits.

“Financial institutions continued to be operationally resilient, with no major system-wide disruptions in 2H2022,” BNM said.

The central bank said that it, along with the financial industry, had continued to intensify ongoing efforts to educate the public on cyber hygiene measures that play a critical role in preventing fraud.

“These measures include a requirement for banks to expedite the migration from short messaging service (SMS) one-time passwords (OTPs) to more secure forms of authentication for online activities or transactions by June 2023,” BNM said.

Banks have also continued to refine and improve other security measures, including stepping-up verification processes for mobile device enrolment, conducting call-back verifications, and continuously fine-tuning fraud detection rules to block suspicious transactions.

Additionally, banks are also conducting ongoing brand monitoring to detect and take down fake websites in collaboration with the Malaysian Communications and Multimedia Commission.

“While operational losses from financial scams do not currently pose a risk to overall financial stability, their rising trend, left unabated, can affect public confidence in banks and payment infrastructure in more significant and uncertain ways,” BNM added.

In 2022, over 90% of financial institutions achieved substantial compliance with the Risk Management in Technology (RMiT) standards issued by the central bank, up from 35% in 2020.

BNM further said financial institutions continue to identify cyber risk as a top risk facing the industry in 2023, amid growing digitalisation and use of technology in finance, as well as widespread remote working arrangements, which increase the potential for exploitation of vulnerabilities.

“This is expected to keep financial institutions focused on prioritising efforts to improve cyber resiliency,” the central bank added. 

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