What new law will address negligent banks in online fraud cases?

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A New Law Will Address Negligent Banks in Online Fraud Cases

A new law is being drafted to specifically address the procedures and enforcement of a "kill switch" mechanism aimed at enhancing digital security and tackling online fraud. This legislation will include provisions for taking strict action against negligent parties, including financial institutions, in their handling of online fraud cases. The government is actively studying and developing this new legal framework to ensure greater accountability.
Provisions for Action Against Negligent Parties

The forthcoming law is designed to hold negligent entities accountable for their role in online fraud incidents. This includes financial institutions, which will be required to take responsibility and implement appropriate actions when fraud occurs due to their negligence. The inclusion of these measures signifies a commitment to strengthening the digital security framework and deterring complicity, even if unintentional, in fraudulent activities.
Study and Development of the Legal Framework

Currently, the new law is under study, with a comprehensive review of its proposed provisions underway. This process involves examining the necessary procedures and the enforcement mechanisms for the "kill switch" system. The aim is to create a robust legal framework that effectively deters online fraud and ensures that all parties, particularly financial institutions, fulfil their obligations in preventing and responding to such crimes.
Scope of the "Kill Switch" Enforcement

The new legislation will encompass detailed procedures and enforcement guidelines for the "kill switch" mechanism on online platforms. This mechanism is intended to enable rapid intervention to halt fraudulent activities. The law will clarify the responsibilities and actions required from various stakeholders, including banks, in implementing and utilising this crucial digital security tool.
Broader Measures Against Online Fraud

Beyond the specific legislation concerning negligent banks and the "kill switch," the government is implementing comprehensive measures to combat online fraud. This includes the establishment of a National Scam Response Centre (NSRC) to facilitate rapid tracing of funds and enforcement actions. The NSRC, in collaboration with the Malaysian Communications and Multimedia Commission (MCMC) and the telecommunications industry, also works to identify and block phone numbers used in fraudulent activities. Between 2020 and 2023, 107,716 cases of online fraud were reported nationwide, resulting in estimated losses of RM3.2 billion.

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What new law will address negligent banks in online fraud cases?

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