Get-Rich Quick scheme: Malaysian current legal development
| DOI | https://doi.org/10.1108/JFC-05-2020-0097 |
| Date | 24 August 2020 |
| Pages | 49-59 |
| Published date | 24 August 2020 |
| Subject Matter | Accounting & finance,Financial risk/company failure,Financial crime |
| Author | Aspalella A. Rahman,Ruzita Azmi,Rosylin Mohd Yusof |
Get-Rich Quick scheme:
Malaysian current legal
development
Aspalella A. Rahman
School of Law, Universiti Utara Malaysia, Sintok, Malaysia, and
Ruzita Azmi and Rosylin Mohd Yusof
Universiti Utara Malaysia Kuala Lumpur Campus, Kuala Lumpur, Malaysia
Abstract
Purpose –In Malaysia, Get-Rich-Quick scheme (GRQS) is one of the financial fraud activities prohibited
under Malaysian law. The common facet of such schemes involves plans that promise unrealistic rates of
returns, and this new scheme continues to proliferate everyyear as the list of illegal investment companies
and websites are growing. Indeed,GRQS will remain proliferating as long as there are people who are easily
lured by the promise that wealth can be generatedwith little skill, effort or time. This paper aims to explain
the phenomenon of GRQS in light of the existing laws in Malaysia. This paper also highlights the current
developmentof Australian law pertaining to GRQS forcomparative purpose.
Design/methodology/approach –This paper mainly relies on statutes as its primary sources of
information. As such, this paper analysesthe scope and provisions of the relevant laws that regulate GRQS
and comparethe existing GRQS provisions that are equivalentwith Australian law.
Findings –Malaysia has comprehensivelaws to combat GRQS activities. However, these laws are far from
perfection, and only with immediate amendments, GRQS problemscan be resolved more effectively. One of
the weaknesses of current Malaysianlaws to tackle GRQS is the lack of more stringent punishment against
the operators of GRQS as well as the participantsof the scheme. A comparison with equivalent GRQS law in
Australia demonstrates that Australian laws provide a wide range of punishment to the operators and
prohibits participation in GRQS.More importantly, Australia regards the offense as a strict liabilityoffense
where the mens rea or guilty mind of the perpetratorsis exempted. Indeed, numerous proceedings have been
institutedin the Australian Court against the operators and participants of GRQS.
Originality/value –This paper analyses the scope of relevant laws in Malaysia to combat GRQS and
examines the strengths and weaknesses of these laws. This paper also compares Malaysian law with
equivalent GRQS-related laws available in Australia. This paper further suggests that Malaysia should
regulate sterner punishment for operatorsand participants of the scheme and that the offense is categorized
under a strict liabilityoffense where the mens rea or guilty mind of the offender is exempted.
Keywords Malaysia, Pyramid scheme, Get-Rich-Quick Scheme, Strict liability
Paper type Research paper
Introduction
Get Rich Quick Scheme (GRQS) may be defined as a fraudulent investment which offers
unrealistic rates of return for a small investment Zyzy-Sazannie, ZA (2016). According to
Bank Negara Malaysia (BNM, 2010), the most favoredGRQS in Malaysia are illegal foreign
exchange trading and goldinvestments. This scheme continues to flourish every year as the
list of illegal investment companiesand websites keeps growing even though the authorities
such as BNM, Credit Counselling and Debt Management Agency or also known as AKPK
and Securities Commission (SC) joined the effort to constantly educate the public about the
Legal
development
49
Journalof Financial Crime
Vol.28 No. 1, 2021
pp. 49-59
© Emerald Publishing Limited
1359-0790
DOI 10.1108/JFC-05-2020-0097
The current issue and full text archive of this journal is available on Emerald Insight at:
https://www.emerald.com/insight/1359-0790.htm
To continue reading
Request your trial