"Get-Rich-Quick" Scams in Malaysia

The Central Bank of Malaysia has created a useful FAQ section in their website that will greatly help create awareness of "get-rich-quick" scams that are victimising the Malaysian public:

1. What is a "Get-Rich-Quick" scheme?
   A plan which offers high or unrealistic rates of return for a small investmentwhile at the same time promising that such investment is easy and risk -free.
   
   The following "Get-Rich-Quick" schemes are prohibited under the legislation administered by Bank Negara Malaysia :
   

   Illegal Deposit Taking Activities
   
   Illegal deposit taking is an act of receiving, taking or accepting of deposits (moneys, precious metal, precious stone, any other article etc.) from members of the public that promises a repayment with interest or returns in money or money's worth without a valid licence under the Banking and Financial Institutions Act 1989 (BAFIA).
   

   Illegal Foreign Currency Dealings
   
   The following acts tantamount to illegal foreign currency dealings:

   • Buying or selling of foreign currency by a person who is not an authorized dealer unless such person has obtained the permission of the Controller of Foreign Exchange under the Exchange Control Act 1953 (ECA).
     
     
   • Buying or selling of foreign currency by a resident who is not an authorised dealer, with a person outside Malaysia except if the resident has obtained the permission of the Controller of Foreign Exchange under the ECA.
     
     

CAUTION: Internet Investment Schemes Members of the public are cautioned to be on guard against some investment schemes promoted on the internet as these schemes are not licensed or authorized by Bank Negara Malaysia to accept deposits or deal in foreign currency. Such schemes often come in the guise of attractive investment returns or opportunities involving unrealistic rates of returns withzero to low risk. Investors are reminded that they should only place deposits with institutions licensed or deal in foreign currency with institutions authorised by the Bank. Unlicensed operators may cease operating their business resulting in the investors with no means to recover their investments or seek redress against the persons connected with the scheme.




2. How To Spot The Scams?
   

   Illegal deposit taking scam

   • The person (an individual, a company or an organisation) receives, takes or accepts deposits from members of the public and is not licensed under section 6(4) of the BAFIA;
     
   • The person promises to repay the deposit, with or without interest or returns, over a period of time in the form of money or money's worth, etc.; and
     
   • The person promises to repay the initial deposit upon demand or at a time or in circumstances agreed by or on behalf of the person making the payment and the person receiving it, with any consideration in money or money's worth (the repayment of initial deposit is sometimes included in the fixed interest or returns promised).
     
     

Warning Signs for Investors • Illegal deposit taking activities have been disguised and camouflaged in various forms to deceive the public to fall victim to the investment scams, by giving valuable goods as part of the promised returns and camouflaging the deposits as loans to the company; • Illegal deposit taking activities appear to be able to provide high or unrealistic rates of interest or return over a short period of time as compared to licensed institutions. However, these schemes will not last long; • The survival of this scheme is dependent upon the recruitment of new depositors, i.e., new funds obtained will be used in paying dividends to the existing depositors. Therefore , the scheme will fail when there is no contribution of funds from new depositors; and • Initially the depositors may be paid their promised returns. However, the operator would eventually abscond with the moneys collected when he feels that the scheme is about to fail, thus leaving the depositors at the losing end.

Illegal foreign currency scam

Foreign currency dealings with a person, other than an authorized dealer, who has not obtained the permission of the Controller of Foreign Exchange under the ECA, often:

• Offer investors or members of the public the opportunity to deal in foreign currencies with a principal company (purported to have a valid licence to trade foreign currencies overseas);
  
• Facilitate the trading of foreign currencies by providing access to the principal company's website and trading facilities via internet;
  
• Recruit fresh graduates as marketing executives and allure them to get their family members to invest;
  
• Instruct the investors to deposit the investment moneys into either the principal company's bank account or a third party bank account; and
  
• Induce the investors to top up their investment ("margin call") or otherwise risk losing their investment.
  
  

Warning Signs For Investors Illegal operators of foreign currency scams will try to entice potential investors with a marketing strategy which promises quick and high returns - • By projecting a professional and reputable image with smart-looking employees, a high-tech office layout and advanced IT facilities where investors are induced to operate their accounts via the internet; • With tools of the trade, e.g., a news screen showing movements in exchange rates, to give the impression that a professional and legitimate business is being conducted; and • A business contract is usually entered into between the investors and the company. Such contracts are usually left unsigned by the company. This means no action can be taken by the investors against the company as there is no binding written contract.




3. How To Protect Yourself From The Scams?
   
   
• Remember the golden rule - if it sounds too good to be true, it's probably a lie;
• Deal only with licensed financial institutions and authorized dealers;
• Check with the relevant authority before investing;
• Don't be pressured or rushed to invest;
• Be extra careful with investments over the internet;
• Be skeptical of any investment opportunity that is not in writing; and
• In case an investment has been made, keep copies of all the investment and communications.
  
  
4. What Should You Do If You Are a Victim of such Scams?
   
   If you have any information pertaining to illegal deposit taking activities or illegal foreign currency dealings or are a victim of such activities or scams you can send details of such information or complaint together with the documents to Bank Negara Malaysia as follows:

Address:

Unit Penyiasatan Khas
Bank Negara Malaysia
Jalan Dato' Onn
50480 Kuala Lumpur
Fax: 03-26987467
E-mail: upkinfo@bnm.gov.my

Bank Negara can also be contacted at the following telephone numbers:

Tel.: 03-2691 5090 / 2698 4163 / 2691 0824 / 2692 6482 / 2694 2143