Get-Rich Quick scheme: Malaysian current legal development

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 every year 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 generated with 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 development of Australian law pertaining to GRQS for comparative purpose. Design/methodology/approach This paper mainly relies on statutes as its primary sources of information. As such, this paper analyses the scope and provisions of the relevant laws that regulate GRQS and compare the existing GRQS provisions that are equivalent with Australian law. Findings Malaysia has comprehensive laws to combat GRQS activities. However, these laws are far from perfection, and only with immediate amendments, GRQS problems can be resolved more effectively. One of the weaknesses of current Malaysian laws to tackle GRQS is the lack of more stringent punishment against the operators of GRQS as well as the participants of 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 liability offense where the mens rea or guilty mind of the perpetrators is exempted. Indeed, numerous proceedings have been instituted in 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 operators and participants of the scheme and that the offense is categorized under a strict liability offense where the mens rea or guilty mind of the offender is exempted.

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