LETTER | Financial crimes point to systemic compliance and risk

LETTER | The Social Protection Contributors Advisory Association Malaysia views with concern the recent uncovering of an organised crime syndicate which has been linked to the disappearance of RM24.2 million from several bank accounts.

We do not wish to comment on the criminal investigation at this point in time, as the process should take its course.

What concerns us though is the fact that the system in banks can be penetrated and public funds are being misappropriated. What has to be brought into question is whether banks have adequate safeguards in place to prevent such crimes from happening.

It appears that the banks are being outsmarted by crime syndicates, which effectively means that the safeguards in place at present to prevent such financial crimes are not adequate.

Banks, whose motives are centred around maximising profit and shareholder value, would view risk and compliance mechanisms as cost centres. For any commercial enterprise, that must be expected.

This is where Bank Negara has to come in as the country’s financial regulator and impose itself adequately and appropriately.

To begin with, Bank Negara should conduct a full-scale inquiry and then declare to the public the shortcomings regarding risk safeguards within the financial services industry in the country which has resulted in criminal syndicates misappropriating large sums of public funds.

The safeguards within the financial services industry must not just be able to keep up with syndicates but stay ahead of them.

As part of its inquiry, Bank Negara should examine whether banks have adequate staff with the appropriate level of training to manage the risks that the system is exposed to.

The central bank should also review whether the services which have been outsourced and even offshored have created more risks for the sector.

Bank Negara should play the role of a regulator in a non-partisan manner, to serve the good of the Malaysian public and economy as a whole.

The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.