KUALA LUMPUR: It is indeed alarming that Malaysians lose RM54 billion to scams in a year, which is about three per cent of the country's Gross Domestic Product.

Such financial fraud is significant when seen relative to allocations set aside for healthcare (RM45.3 billion) or even public infrastructure (RM9.3 billion).

Silently eroding economies worldwide, online scams do not just hurt individuals but collectively cause a ripple effect that can weaken entire economies.

As the backbone of the manufacturing sector, small and medium enterprises (SMEs) especially first-timers in the business must exercise caution.

Of greater concern is that organised crime is now joining the illegal bandwagon of online scams as it has become a very "lucrative" business.

Syndicates have set up "special economic zones" for scams in border towns of Myanmar and Cambodia based on reports that are coming out.

Why this menace is pervasive can be attributed to online scammers being reportedly two steps ahead of the advancements in digital technology including artificial intelligence (AI).

This now requires authorities and the financial institutions to equip and build AI driven capabilities to counter this.

To this end, the National Scam Response Centre (NSRC) has been beefed up with the launch of the National Fraud Portal (NFP).

NFP is a technology-based platform to detect, verify, track fraudulent activities and trace stolen funds reported to the NSRC which on its part encourages more victims to report and tackle online scams.

Among the root causes of scams in Malaysia is the availability of mule accounts.

A setback however is that globally, the State of Scam Report in 2024 highlights that 70 per cent of scam victims do not report their cases to the authorities.

The same goes for Malaysians, who feel it wouldn't make a difference by reporting or not reporting.

What's the point, they say as they are not going to get their money back and more so because the criminals are not going to be caught.

Basically, they feel that the police, banks, financial institutions and regulators don't have the essential tools and expertise plus the legal framework to stamp out the menace.

For sure, the legal framework is there.

But for any country to win the confidence of its people on the war against scammers, citizens must experience the lost money returned and scammers prosecuted to the fullest extent of the law

It is evident the Malaysian authorities have painstakingly put in place protection to prevent scams.

The only way we're going to have more people come up front to report is to increase their trust in the system itself.

If left unchecked, it will affect trade, tourism as well as investor confidence and scuttle Malaysia's efforts to emerge as a foremost investment destination.

There is no doubt scammers had taken advantage of the COVID-19 pandemic to dupe people who were pushed towards embracing the digital economy via online shopping.

NFP would strengthen NSRC's enforcement and fraud detection capabilities. NSRC handled more than 41,000 cases since its launch in 2022.

There is a need for greater cooperation and sharing of responsibilities among agencies, banks, financial institutions, financial regulators and the government to weed out scams.

From a national perspective, it's crucial for those going online and the authorities to step up their vigilance as scams can have national reverberations.

It must be remembered that no one would want to do business in a jurisdiction where the rate of scams is very high.

- BERNAMA