Deputy Inspector-General of Police Datuk Seri Ayob Khan Mydin Pitchay announced that the police are currently investigating the connection between illegal remittance service operators in Malaysia and serious crimes like illegal gambling and fraud. The police are analyzing cash transactions and suspicious financial activities involving 39 bank accounts with funds worth RM47 million from 2021 to 2023, as these operators may be facilitating other illegal activities through fund movements.
Ayob Khan highlighted the impact of illegal remittance on the shadow economy, which is estimated to be around 18% of Malaysia’s total GDP, or RM275 billion. The activities contributing to the shadow economy include trade mispricing, overseas fund transfers through illegal channels, and indications of corruption.
He mentioned that these illegal remittance services in Sarawak are operating behind legitimate businesses such as retail and telecommunications shops to avoid detection by the authorities. In collaboration with Bank Negara Malaysia (BNM), the police conducted a special operation and raided eight premises in several areas of the state, leading to the arrest of 17 individuals to aid in the investigation. Additionally, approximately RM1 million and 1.1 million Indonesian Rupiah (equivalent to RM332) in cash were seized during the operation.
Ayob Khan emphasized that the illegal remittance activities involved destinations like Indonesia, Bangladesh, Myanmar, and the Philippines, often involving foreign workers who lack proper documentation and are unable to open bank accounts. However, he stated that this is not a valid reason for them to utilize unlicensed remittance services.
The remittance service operators are being probed under Section 4(1) of the Money Services Business Act 2011 and may also face charges related to money laundering, an offense under Section 4(1) of the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001. Ayob Khan warned other illegal financial services operators to cease their unlicensed operations, stating that more raids will be conducted and that some premises may be linked to syndicates or utilize a similar concept as the ‘hawala’ system for foreign money transfer.
