Fraud in Internet Banking: A Malaysian Legal Perspective

Gita Radhakrishna and Leo Pointon

The IUP Journal of Bank Management, 2007, vol. VI, issue 1, 47-62

Abstract: Internet banking made its advent in Malaysia in June 2000. This paper examines the legal issues specific to internet banking, focussing on the incidence of fraud and its prosecution. The objective of research is to investigate three questions in relation to Malaysia. Firstly, the incidence of fraud in internet banking; secondly, the adequacy of the relevant regulations and statutes; and thirdly, whether the setting up of a cyber court would better facilitate the prosecution of such financial crimes in Malaysia. Technology and the borderless nature of the internet present fraudsters with manifold opportunities. ‘Phishing’ leads to identity theft and ‘money laundering’ has been found to be the main threat to internet banking, the selected fraud for study in this paper. The newness of the subject and traditional banking secrecy have contributed to a dearth of legal literature pertaining to issues in internet banking, specific to Malaysia. This research attempts to fill the current lacuna. The methodology adopted was to liaise with Bank Negara Malaysia, the Commercial Crimes Department of the Polis diraja Malaysia and the Commercial Crimes Division of the Attorney General’s Chambers by means of questionnaires, personal interviews and discussion for data with respect to Malaysia. Further material was sourced from the relevant statutes, text books, journals, research papers and case studies. It was found that the applicability of various existing laws and banking practices to internet banking has not been fully tested in Malaysia and is still evolving.

Date: 2007
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