Forex frauds in malaysia. PETALING JAYA: A Malaysian man is said to have been involved in a large-scale forex investment scheme which is believed to have received some RM19 billion.

Forex frauds in malaysia

How to spot a scam in Malaysia?

Forex frauds in malaysia. KUALA LUMPUR: Some investors have become victims of forex investment schemes with losses estimated to reach almost RM80 million. Bukit Aman Commerc.

Forex frauds in malaysia


Home Forex Articles Malaysia — Forex fraud schemes are making headlines across the nation. Retail forex trading is a global phenomenon. Growth dynamics for the past two decades across the globe attest to this very fact, but each region and each nation, for that matter, have developed at their own pace. Developed economies can easily boast of better banking infrastructure and Internet access, but technology knows no boundaries in this day and age.

People of all nationalities and cultural diversity have welcomed the opportunity to trade major currency pairings, as well as their local currency, if laws permitted. Central bankers typically frown on speculation, but they have been receptive. It sounds as if our industry is a paradise, awaiting every citizen of the planet to bathe in the glory of our favorite pastime or career path.

There is, however, a problem with this rosy picture. The criminal element in our society has been observing the action, always looking for just the right opportunity, and has been more than quick to target the most unsuspecting consumers, especially in our developing markets. Malaysia is a prime example. For those of you that are unfamiliar with Asia Pacific geography, Malaysia is one of the major emerging economies of the Pacific Rim. It is definitely on the move.

East Malaysia shares land and maritime borders with Brunei and Indonesia and a maritime border with the Philippines and Vietnam. The capital city is Kuala Lumpur, while Putrajaya is the seat of the federal government. With a population of over 30 million, Malaysia is the 44th most populous country. Malaysia, like many of its Asian brethren, is highly dependent upon international trade. In this case, there is a heavy dependence on gas and oil exports. As you might expect, the Ringgit has not fared that well since , as oil prices, along with the prices for several other mined commodities, have plummeted.

Countries like Malaysia are waiting for demand to pick up, especially in China, but the Ringgit over the past four years has fallen from 3. As with other countries in this situation, the central bank of Malaysia has tried its best to curtail unnecessary capital flows that might depreciate the value the local currency on the international stage.

BNM, however, is separate from the local regulatory entity that has domestic oversight responsibility for investment vehicles. Many developing countries have followed this model where two government entities work together, but the problem with this approach is that some things may fall between the cracks, so to speak. Regulations, however, have not been updated to accommodate retail forex trading, and in some cases, pronouncements from government officials have suggested that some forms of trading may be illegal.

Many central banks and security commissions around the globe, particularly in developing markets, have had difficulty adjusting to the nuances presented by modern retail forex trading. Existing regulations may only deal with buying forwards or contracts in the futures market, previously established modes of investment, but when it comes to dealing with trading positions in the spot forex market without actual currency delivery, the legal framework of existing law may fall short of addressing the real world of foreign exchange trading possibilities.

Due to the confusion found within local laws and official efforts to protect consumers from fraud, a single question is often heard: Leverage can be nonexistent, another reason why locals might prefer to deal with a foreign-based broker or with a local provider that seems to be speaking their language and obeying their customs.

Greed is alive and well in Malaysia, from the perspective of both an innocent citizen, as well as from the purview of local fraudsters. The thinking is that the loan could be paid back in a manner of a few months, and then everything after that would be cash in the bank. Foreign exchange is often touted as the vehicle to riches, but rarely is any principal ever used to conduct trades. These Ponzi-type con games lure in investors, but rarely return a any portion of the original investment.

Propelled by mobile and Internet technologies, these cleverly designed products — ranging from investments in foreign exchange forex to gold, palm oil and pyramid selling — continue to lure investors with promises of very lucrative returns for very little or no risk over a very short period of time. Although the dangers and features of such schemes have been well articulated in the media over the years, with multi-billion-ringgit losses being reported, many ordinary Malaysians still fall victim to the various financial scams promoted by dubious companies and individuals.

The Bank Negara Malaysia and the Securities Commission have done their level best to warn consumers by posting alerts and listing unauthorized schemes, companies and individuals on their respective websites. Most current estimates put the actual total in excess of , and many of these fraudulent enterprises are doing business in other Asian markets, including China. Firms will typically open a local office for credibility reasons and purport to have a headquarters in the United States, another ruse that works more often than you might think.

Investigators believe this figure to be conservative, claiming that the real number may be closer to three times this amount. The ink had not dried on these stories before authorities had shut down three more entities of similar ilk: Local actions can be initiated, if the perpetrators are onshore, but, if the brokers operate in a foreign jurisdiction, then your rights are limited.

Per one local lawyer familiar with the current dilemma: Bank Negara can only regulate or recognise financial institutions such as banks and finance firms that are based here. Crooks today are very well educated and well resourced in the art of deception. They are especially drawn to the Internet, where online anonymity can easily disguise their identities, their whereabouts, and whether they are a regulated entity in another jurisdiction.

In other words, they know how to use your greed as a weapon against you and then fleece you of your hard-earned and often borrowed cash. Here are a few tips on fraud prevention:. Forex fraud schemes are alive, well, and global, especially in developing markets where retail forex trading is something new or where the crooks from foreign jurisdictions prey upon local citizens.

Be skeptical at all times, and be sure to keep your greed in check. Remember -- You are your first and last line of defense when it comes to preventing forex fraud! Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors.

The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. No information or opinion contained on this site should be taken as a solicitation or offer to buy or sell any currency, equity or other financial instruments or services.

Past performance is no indication or guarantee of future performance. Only the NFA regulated brokers featured on this site are available to U. Read our full legal disclaimer.


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