RECOMMENDATIONS TO MITIGATE BANKRUPTCY FRAUD

Malaysian Department of Insolvency (MdI) plays a vital role in detecting and preventing bankruptcy fraud cases. Therefore, the trend of fraud cases has decrease intensely over the years. Based on the cases, among measures taken to counter bankruptcy frauds are:

1 - Strong Government Regulations

The enactment of Bankruptcy Act 1976 and Bankruptcy Rules 1969 provides a comprehensive guidelines to MdI and other enforcement agencies in performing their roles and responsibilities. The act covers the legal issues and offences of bankruptcy. Currently, the Bankruptcy Act 1976 is being revised for further enhancement and any interested party can give comments or feedback on the proposed reform of the act. 

2 - Proper Customer Due Diligence

Financial institutions are highly exposed to the bankruptcy fraud cases. Therefore MdI has developed Insolvency Notification System (INS) to assist financial institutions in tracing a customer who has been declared bankrupt and a wound up company. Thus, financial institutions should use the INS system effectively in performing customer due diligence before any transactions or business contracts being executed.

3 - Effective Awareness Campaign

Many awareness campaigns have been organized to educate people on bankruptcy matters. In fact, MdI also provides consultancy session to the bankrupt persons on the roles and responsibilities in dealing with bankruptcy matters. Once the bankrupt persons have fulfilled their obligations, they can be discharged of bankruptcy status in pursuant to the Bankruptcy Act (Zainol, 2015). 

References:
Zainol Abidin, Norina. Interview by Zamri, Siti Syarina. Bankruptcy Fraud in Malaysia, Putrajaya. 03 June 2015.

http://www.insolvensi.gov.my/about-us/proposed-reform-of-the-bankruptcy-act