Foreign Currency Trading Scams

Foreign Currency Trading Scams

March 20, 2016 Scams 0

Many unsuspecting Malaysians have been cheated by foreign currency trading scams and as a result have lost millions of ringgit. Such scams are conducted by companies which operate illegally. The illegal operators normally target job seekers and investors who seek quick and high returns for their investments. 

Warning Signs For Investors 

Illegal operators of foreign currency trading scams will try to impress potential investors:

  • With the marketing strategy of the company which promises quick and high returns
  • By portraying a professional and reputable image with smart-looking employees, a high-tech office layout and advanced IT facilities. In some cases, investors are even allowed to operate their account via internet
  • With tools of the trade e.g. a news screen showing movements in exchange rates to give the impression that a professional and legitimate business is being conducted. These facilities are merely cosmetic and do not reflect an actual foreign currency trading office

Investors can either trade using their trading accounts with the company or through dealers appointed by the company. Investors are also required to sign a business contract which is normally entered between the investors and the company. In most instances, the operators will inform the investors that they will have to send such contracts to its company’s headquarters based overseas for signing. 

However, such contracts are usually left unsigned. As such, in the event the investors are not happy with the transaction, no action can be taken against the company as there is no binding contract between them. 

In the cases reported to Bank Negara Malaysia, there are two scenarios on how investors usually lose their money:


Scenario 1:

Investors will usually get high returns on their initial investments. This will convince investors to increase their investments to make higher returns. 

Eventually they will end up losing everything when the owners of the company suddenly go missing.

Scenario 2:

Investors who have lost their money were told that the market will go up and if they were to increase their investment, they may be able to get back their money. Obviously, this did not happen and they ended up losing everything they had invested.

How To Report Foreign Currency Trading Scams

If you have been offered a job to look for potential investors in foreign currencies or have been approached to invest in the foreign currency market from a company, you can lodge a report at the following address: 

Foreign Exchange Administration Department
Bank Negara Malaysia
Jalan Dato’ Onn, 50480 Kuala Lumpur

Telephone: 03-2698 8044 ext 8211 or 8233
Fax: 03-2691 3266 

This article is reproduced with permission from Banking Info, a consumer education programme by Bank Negara Malaysia and The Association of Banks In Malaysia