The evolution of fraud and scam prevention

Key takeaways
Biometrics are the new baseline
Fraud and scams are evolving fast
What Malaysia is doing differently
Why this matters beyond Malaysia
Biometrics aren't just about compliance
The real risk in fraud and scam prevention? Doing nothing
Ready to rethink fraud and scam prevention?

Key takeaways

Malaysia is driving a strong regional standard in fraud and scam prevention by enabling biometric and liveness detection for all digital banking onboarding through its 2024 e-KYC policy.
Traditional fraud and scam prevention methods are now inadequate against sophisticated, AI-driven threats like unauthorized payments and scams.
Consumer protection is at the forefront of the Malaysian approach to promoting safe and efficient payments.
Proactive adoption of biometrics coupled with real-time monitoring is crucial for banks to control fraud risk and build customer trust.
The real risk for banks is inaction. Modern fraud prevention demands moving beyond outdated methods to stay ahead of evolving threats.

Biometrics are the new baseline in fraud and scam prevention

Fraud prevention software in many banks today is barely fit for purpose. Let’s put it this way: if you’re still locking your front door with a flimsy latch while burglars are using power tools, it’s only a matter of time before someone walks in. That’s the state we are in when fighting fraud and scams. Static checks and basic ID scans used to be enough, but those days are long gone.

In April 2024, the Central Bank of Malaysia – Bank Negara Malaysia (BNM) – took a bold step in their approach to KYC and CDD. The bank issued a revised e-KYC policy that includes biometric facial recognition and liveness detection for digital customer onboarding. [1]

The biometrics industry is only going to grow. According to Aware, the market size for biometrics across finance, healthcare, and government is expected to reach $83.5 billion by 2028, growing at a compound annual growth rate (CAGR) of 20.1% from 2021 to 2028.

Recently, BNM and the Securities Commission have continued their prevention efforts, with banks and related firms required to implement enhanced controls to quickly detect and stop suspicious transactions. [2]

Fraud and scams are evolving faster than some banks

Scams and unauthorized fraud are no longer a niche problem. With the advent of AI, they’re the fastest-growing threats in digital finance. Fraudsters are generating fake faces, using AI-driven voice clones, and submitting doctored documents that can fool even experienced risk teams. Worldwide, cyber incidents in the financial industry have rocketed in recent years. [3]

The truth is that many banks are still using onboarding systems that weren’t built to handle this. They need to be able to evolve their monitoring capability to intervene in real-time during customer transactions.

What Malaysia is doing differently in fraud and scam prevention

BNM’s fraud prevention policy spells out what a secure onboarding process should look like:

Biometric facial matching: a live photo or video compared against an official ID

Liveness detection: a way to confirm the customer is a live person, not a photo or a deepfake

External validation: third-party assessment of the system’s accuracy, with strict limits on false acceptance rates

The e-KYC policy recognizes the importance of efficient and safe digital payments, and it shows regulatory leadership to protect consumers, banks, and payment systems.

And the introduction of the National Fraud Portal provides the foundation for real-time information sharing and fast recovery of funds to compensate victims of fraud. The portal brings together the payments system and financial institutions to help prevent consumer losses.

Why this matters beyond Malaysia

When it comes to fraud and scam prevention, many banks globally are still sitting on the fence. Biometrics sound expensive. There are concerns about privacy and implementation, so, the argument goes, it’s easier to patch up existing workflows than rebuild them.

But authorized payment fraud and scam threats do not wait for your transformation roadmap.

Malaysia has shown that using behavioral intelligence is the way forward with biometric technology ready, scalable, and accurate enough to be enforced. And when coupled with the ability to monitor payments in real-time, it is a formidable protection against financial crime actors. With regulators across Europe and Asia-Pacific starting to take notice, this looks like the beginning of a wider trend in financial crime compliance.

Biometrics aren’t just about compliance, they’re about taking control

But this isn’t just about financial crime compliance. Malaysia’s decision is ultimately about control:

Controlling fraud before it enters your ecosystem.

Controlling customer trust by proving you take their security seriously.

It’s not a matter of banks having to keep up with regulators. It’s about recognizing where the ‘game’ is headed and moving there first, in readiness for whatever future comes next.

AI is still developing, and financial criminals will continue to use it for money laundering, evading sanctions, and committing fraud. It makes sense to therefore be ready to fight as financial crime – including fraud and scams – continues to evolve. [4]

The real risk in fraud and scam prevention? Doing nothing

Because of how fast technology and innovation are evolving, preventing digital fraud without biometrics and real-time monitoring today is a bit like trying to catch forged currency using only a magnifying glass. That might have worked when counterfeits were basic, but today’s threats are faster, smarter, and far more convincing.

Malaysia recognizes this and has responded by strengthening the entire onboarding process and guiding the financial sector on detecting and preventing payments linked to fraud and scams. Biometric verification and real-time monitoring are now built into regulation expectations as standard tools for fraud and scam prevention. Similarly, these risk signals become standard inputs when managing risk at a customer level – with all available data about risk, providing better context to managed financial crime risk.

For banks advancing their digital transformation then, this isn’t about playing catch-up. It’s an opportunity to take note of a regulatory approach that sets a higher standard. The real question is no longer whether biometrics belong in your fraud strategy, but when they will become a fundamental part of it. [5]

Ready to rethink fraud and scam prevention?

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Get in touch to learn more about NetReveal Payment Fraud and our full financial crime prevention suite of products including AI agents, AI overlays and the award-winning Sensa Investigation Hub case management system.