Notification Of Illegal
​​​​​​​Financial Activities

Members of public are advised not involve with any illegal financial activities which include reveal or disclose personal financial credentials and involve or associate themselves with any of the illegal financial service providers.

Consumer protection under the laws administered by BNM IS NOT APPLICABLE should the members of the public choose to deal with the illegal financial service providers.

Members of the public who participate in the illegal financial activities could also BE CHARGED under the law as abetting the operators of such illegal activities.

Among the illegal financial activities that could be reported to BNM are:

  • Illegal deposit taking
  • Illegal foreign exchange trading scheme
  • Illegal money services business activities
  • Improper market conduct or practices by BNM’s licensee
  • Misuse of BNM and senior officers’ names and positions
  • Other illegal financial activities expressly mentioned in the relevant law and regulations administered by BNM

Illegal Foreign Exchange Trading Scheme

Illegal Foreign Exchange Trading Scheme refers to the buying or selling of foreign currency by an individual or company in Malaysia with any person who is not a licensed onshore bank or any person who has not obtained the approval of Bank Negara Malaysia (BNM) under the Financial Services Act 2013 or Islamic Financial Services Act 2013.

This scheme involves the act of buying or borrowing foreign currencies from or selling or lending foreign currencies to a non-licensed onshore bank.

It can also be in the situation where the non-licensed onshore bank does an act that involves, is in association with, or is preparatory to, buying or borrowing foreign currencies from, or selling or lending foreign currencies to, any person outside Malaysia.

  • Illegal operators usually operate on a small scale and claim they can provide remittance services efficiently, without the need for any documents or identification. They rarely use documents to validate and verify the transactions. By engaging in these transactions, customers run the risk of being cheated and their funds may never reach its intended destination.
  • Illegal operators usually target job seekers by placing attractive advertisements to lure prospective employees to join the company, after which they use them to solicit for new investments. Most often, employees will be encouraged to approach their direct family, relatives and friends before targeting members of the public.
  • Illegal operators usually portray a professional and reputable image, a high-tech office layout and advanced IT facilities, such as a LCD screens displaying movements in exchange rates to provide the impression that a legitimate and real business is being conducted. These facilities are merely a false front.
  • Investors can either trade using their trading accounts with the company or through dealers appointed by the company. In some cases, investors are allowed to operate their accounts via the Internet.
  • Investors are also required to sign a business contract which is normally entered between the investors and a principal company overseas.
  • In most instances, the operators will inform the investors that they will have to send these contracts to its principal company overseas for signing. However, such contracts are usually left unsigned.
  • As such, in the event the investors are unhappy with future dealings and transactions, no action can be taken against the company as there is no binding contract between them.
  • Investors will usually get high returns on their initial investments. This will convince them to increase their investments in hopes of higher returns. Eventually, they will end up losing everything when the illegal operators suddenly go missing.
  • Investors who lose their money through purported volatility of exchange rate movements are informed by the illegal operators that they need to pay margin-call in order to recover their paper lose.
  • The illegal operators may also encourage investors to increase their investment to try to recover their losses.
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Source: http://www.bnm.gov.my (Financial Consumer Alert)

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