IN recent decades, financial or white-collar crimes have proliferated, as evidenced by the increasing number of victims and the substantial financial losses incurred.

This escalation underscores the gravity of such offenses. A pertinent inquiry arises regarding whether these crimes should be classified as a national threat, or if there is a need to reassess the prosecution methods employed in the courts.

In addition, it is essential to evaluate whether current legislation requires modification to effectively address contemporary and future trends in combating these crimes.

According to PwC’s Global Economic Crime and Fraud Survey 2022, fraud cases constituted the majority of commercial crimes in 2021, with 28,842 incidents reported.

This figure accounts for a significant share of the total 31,490 commercial crime cases that year, reflecting a 15.3% increase from 2020.

Furthermore, PwC’s 2020 survey indicated that 43% of Malaysian respondents had encountered fraud or corruption within the preceding 24 months.

The most prevalent economic crimes reported included customer fraud (20%), bribery and corruption (18%), cybercrime (16%), and asset misappropriation (16%).

Also, the Royal Malaysia Police (PDRM) disclosed that over RM5.2 bil was lost to scams from 2020 to May 2022, with a total of 71,833 scams documented during this timeframe.

Recent cases of financial crime in Malaysia

PDRM recently reported a notable increase in investment fraud cases in 2021, with total losses surpassing RM420 mil.

The number of reported cases rose from 1,671 in 2020 to 3,195 in the following year.

Additionally, as reported by Al Jazeera, Malaysia has been engaged in the recovery of assets linked to the 1MDB scandal.

In the last 13 months, the Malaysian Anti-Corruption Commission (MACC) has successfully retrieved assets valued at over RM23.9 mil which includes properties and assets associated with former 1MDB employees and Jho Low, the financier implicated in the scandal.

Since 2017, Malaysians have incurred substantial losses due to cyber-crime fraud, totalling around RM2.23 bil, with e-commerce scams, illegal loans, and investment frauds being the most prevalent categories.

The existing legal framework 

Malaysia possesses a robust legal structure aimed at addressing financial crimes. Notable legislative measures include the Anti-Money Laundering, Anti-Terrorism Financing, and Proceeds of Unlawful Activities Act 2001 (AMLATFPUAA), which delineates the responsibilities of financial institutions and various businesses in the prevention and detection of money laundering and terrorism financing activities.

Additionally, the MACC Act 2009 establishes the MACC and specifies strategies to tackle corruption within both public and private sectors.

Furthermore, the National Anti-Financial Crime Centre Act 2019 facilitates the creation of the National Anti-Financial Crime Centre, which is tasked with coordinating collaborative efforts related to financial crime among governmental bodies and enforcement agencies.

Besides, Malaysia’s Penal Code encompasses various sections that specifically target financial crimes. Notable provisions include:

In Malaysia, the multitude of legislative provisions presents significant challenges for investigators and prosecutors, as cases frequently involve various agencies, which may hinder the prosecution’s efforts and advantage the accused.

Furthermore, the current legal framework mandates that prosecutors fulfil the burden of proof by providing all definitive and irrefutable evidence against the accused in court to achieve a conviction.

In contrast, adept and seasoned criminal defence attorneys can capitalise on any uncertainties surrounding the prosecution’s case or pinpoint procedural irregularities, which may result in the dismissal of charges.

This scenario raises serious concerns about potential injustices and poses a direct risk to the national economy.

Additionally, it prompts inquiries into whether such conditions could inadvertently threaten national security.

It is my assertion that the prevailing legal landscape imposes considerable burdens on investigators and prosecutors addressing financial crimes while favouring defendants, as the onus is on the prosecution to demonstrate in court that defendants have perpetrated financial offences.

Consequently, it is an opportune moment for Malaysia to reassess its current legislation on financial crime by considering the UK Fraud Act 2006.

Under this act numerous fraud-related cases have been successfully prosecuted by shifting the burden of proof to defendants, requiring them to establish their innocence in court, thereby enabling prosecutors to bring charges against them for fraud-related offenses.

In the subsequent section of this article, I will analyse the UK Fraud Act 2006 and the responsibilities of prosecutors in handling financial crimes. - Sept 16, 2024

R. Paneir Selvam is the principal consultant of Arunachala Research & Consultancy Sdn Bhd (ARRESCON), a think tank specialising on strategic national and geo-political matters.

The views expressed are solely of the author and do not necessarily reflect those of Focus Malaysia.

https://focusmalaysia.my/financial-crime-needs-a-fresh-approach-heres-why-part-1/