PETALING JAYA: There are many areas in which the Securities Commission Malaysia (SC) and the Inland Revenue Board (IRB) can collaborate closely to address the multifaceted nature of financial crime, even if the statutory functions of both agencies may appear distinct.
SC chairman Datuk Mohammad Faiz Azmi said it is timely for the SC and the IRB to formalise cooperation and work more closely within a secure and structured framework for the exchange of relevant information.
“Such cooperation will enhance our collective ability to detect, deter and effectively enforce cases involving tax evasion, market misconduct and abuse of the financial system,“ he said at a memorandum of understanding (MoU) signing ceremony between the SC and the IRB in Kuala Lumpur today.
Mohammad Faiz said the signing of the MoU marks an important milestone in strengthening interagency collaboration, underpinned by a shared commitment to safeguarding the integrity of Malaysia’s financial ecosystem.
In sharing examples of collaboration, he noted that fraudulent investment schemes that involve collecting funds from investors for purported securities investments may give rise to offences under securities laws.
At the same time, any failure by investors or perpetrators to declare income generated from such schemes may also constitute offences under the IRB’s purview.
Secondly, he said, listed companies on Bursa Malaysia are statutorily obliged to ensure true and accurate financial reporting.
Any false, misleading or material omission statements may not only attract possible disclosure breaches under the Capital Markets and Services Act 2007, but also possible tax evasion offences for either reporting profits or inflating losses to avoid tax.
Mohammad Faiz said financial crimes are becoming increasingly complex, and combating them successfully requires multipronged strategies, strong interagency collaboration, and approaches that address the multifaceted nature of such crimes.
“To achieve effective enforcement outcomes, coordinated efforts across all law enforcement agencies are required to address the evolving nature of financial crime,“ Mohammad Faiz said.
On Dece 11, Malaysia’s FATF/APG Mutual Evaluation Report was released, upgrading the 2015 evaluation to Regular Follow-Up status, the highest category under the FATF Mutual Evaluation process.
Mohammad Faiz said this achievement not only demonstrates Malaysia’s firm commitment to combating money laundering, terrorism financing, and proliferation financing through a comprehensive legal and institutional framework, but also showcases robust domestic coordination and cooperation among relevant authorities.
“Such cooperation between law enforcement agencies is even more vital now, given that financial losses reported in Malaysia amounted to RM54 billion last year, equivalent to 3% of Malaysia’s gross domestic product,“ he said.
Beyond information sharing, Mohammad Faiz said, the MoU also provides a valuable platform for the SC and the IRB to leverage each other’s expertise through knowledge-sharing initiatives on securities laws and tax offences.
He added that based on public complaints and enquiries received by the SC, financial crimes involving securities offences are not only increasing in frequency but are also evolving in sophistication.
“New modus operandi has emerged, including the use of mule accounts, cash trust arrangements, and the misuse of unlisted public companies. Within the public market, funds have been raised by public listed companies through various corporate exercises, only for such funds from the public to be subsequently misappropriated.
“In market abuse cases, there has been a notable shift from dealer-assisted trading to online trading platforms,“ Mohammad Faiz said.
In relation to scams and unlicensed activities, social media platforms such as WhatsApp, Telegram and Facebook are increasingly used to lure victims, often without any physical interaction.
Mohammad Faiz said the widespread use of these digital channels underscores the urgent need for proactive, coordinated measures to address financial crime in the digital environment.
“Where appropriate, the SC and the IRB may also explore secondment opportunities under this MoU. Such arrangements would allow officers from both agencies to gain invaluable hands-on experience, enhance case handling capabilities, and foster a deeper understanding of each other’s operations,“ he said.
