BNM orders banks migrate to more secure authentication

SHAH ALAM - The growing number of financial scams in the country has led the Bank Negara Malaysia (BNM) to urge the banking industry to execute additional measures in combating financial crimes.

The measures that would be taken were to tighten detection rules and triggers to block scam-related transactions and subject first-time enrolments of online banking services and secured devices to a cooling-off period.

BNM governor Tan Sri Nor Shamsiah Mohd Yunus said BNM was committed to putting effort to tackle fraud by introducing controls from time to time.

“First, financial institutions are required to migrate from SMS One Time Passwords (OTP) to more secure forms of authentication for online activities or transactions relating to account opening, fund transfers and payments.

“Second, financial institutions will further tighten fraud detection rules and triggers for blocking suspected scam transactions. Customers will be immediately alerted when any such activity involving their banking accounts is detected.

“Third, a cooling-off period will be observed for the first-time enrolment of online banking services or secured devices.

“During this time, no online banking activity is allowed to be conducted,” she said.

She added customers also would be restricted to one mobile or secure device for the authentication of online banking.

Moreover, it was crucial for hotlines within financial institutions in order to ease customers to make a report about financial scam incidents.

Shamsiah said to prevent further losses, financial institutions were directed to facilitate efforts in recovering and protecting stolen funds, which included collaboration with relevant agencies.

Nevertheless, she further said the controls implemented might also lead to inconvenience in the online banking experience of customers.

“Financial institutions will also conduct more checks when customers request to change or register a new phone number. Make no mistake, while these measures entail some inconvenience, they are important to protect the interests of customers.

“In implementing these measures, BNM and the financial industry will continue to carefully balance between security considerations and customer convenience.

“BNM will also continue to monitor and take appropriate action on financial institutions to ensure that the highest levels of controls and security standards are observed,” she said.

To tackle the financial scam issues, Shamsiah said it required cooperation from many parties not only BNM and financial industries, but also law enforcement agencies, ministries and agencies and the public.

Shamsiah said this during the virtual launch of the Financial Crime Exhibition by BNM Museum and Art Gallery, which was jointly officiated by Nor Shamsiah and Inspector-General of Police Tan Sri Acryl Sani Abdullah Sani.