Budget 2026 must fund AI, victim recovery to combat digital fraud

SHAH ALAM – The fight against cybercrime in Malaysia isn't just a policing problem, it's a multi-billion ringgit crisis.

With online scams costing the nation over RM1.2 billion in less than a year, experts are now calling on Budget 2026 to take a systemic approach, urging massive upgrades in technology, victim support and education to combat the surging tide of sophisticated digital fraud.

Criminologist R. Paneir Selvam warned that the upcoming budget should not treat scams as just another enforcement challenge.

“Online scams in Malaysia are not merely a policing issue but a systemic threat that involves financial systems, communication platforms, consumer education and cross-border criminal networks.

"Budget 2026 should therefore emphasise three overlapping pillars: proactive prevention and awareness, rapid response and disruption capacity and victim support and recovery,” he told Sinar Daily.

Paneir also clarified that prevention should go beyond flashy campaigns.

He suggested sustained, multi-year awareness efforts tailored to different age groups, regions and languages, backed by digital literacy modules integrated into school curricula.

He further added that grassroots groups and non-governmental organisations (NGOs) should be supported through grants.

“Partnerships with banks, fintech firms and telecommunications providers should be leveraged to embed ‘scam awareness nudges’ such as transaction warning screens,” he said.

Commenting on the enforcement, he highlighted that while the National Scam Response Centre (NSRC) had been making progress, blocking RM380 million in suspicious transactions with a RM20 million allocation in Budget 2025, the sheer scale of losses, RM1.22 billion between January and October 2024, showed that existing capacities remained under severe strain.

“Investment should be made in real-time transaction monitoring and blocking systems, tools to trace and freeze assets quickly and the development of advanced cyber-forensic and AI-driven analytics,” he added.

He also called for dedicated liaison offices with international partners since many scams originated abroad.

For victims, Paneir said recovery services must be prioritised.

“This includes the establishment of a specialised victim-recovery fund to partially defray losses, as well as counselling, legal aid and support services to address psychological and reputational harm,” he said.

He recommended a one-stop portal for reporting, redress and tracking, as well as the use of analytics to detect repeat victimisation patterns.

He also cautioned against blind spending on gadgets without planning.

“The real risk is ‘shiny gadget syndrome,’ where expensive technologies go underused or are misaligned with institutional capacity.

"For this reason, technology spending must be accompanied by robust training, organisational redesign and governance,” he said.

Technology and education were key

Manipal University College Malaysia criminologist Nadiah Syariani Md Shariff shared similar concerns that outreach and education must remain central.

“The budget should prioritise sustained public awareness campaigns across multiple languages and platforms, with special outreach to vulnerable groups such as retirees, youth, organisations and rural communities,” she said.

She further added that education should begin early, suggesting that funding should also include education and training on digital and financial literacy modules at schools and universities as part of early prevention.

"The same could be done targeting at-risk demographics, where allocations could be made through research or community-based project grant applications,” she said.

Meanwhile, on the technology front, she stated that artificial intelligence could be a turning point, suggesting it was also a reasonable consideration to fund AI-embedded technology for scanning potential frauds and other digital threats.

"This could be a game changer since cybercriminals and fraudsters are leveraging AI and deepfake, turning cybercrimes into more sophisticated attacks,” she said.

However, she stressed that this required strong coordination between law enforcement, fintech firms and regulators.

Nadiah also highlighted the importance of victim support, stating that allocating funds to support services could strengthen hotlines, counselling and fast-track reporting systems, as many crime cases go underreported due to stigma or the complexity of the reporting process.

She further emphasised that technology upgrades must come with investment in people, stating that having such resources is essential to ensure enforcement agencies are up to par with the current threats since these threats are fast-paced and accelerated by technological development.

"This includes strategic allocation for cybercrime labs, surveillance tools, and data integration systems among multiple agencies,” she said.

Prime Minister Datuk Seri Anwar Ibrahim, who is also the Finance Minister, is scheduled to table the Budget 2026 in Parliament on Oct 10.