Forex trading scams in Malaysia. How to spot and avoid them.

• Forex trading is legal in Malaysia
• Buying and selling currencies with an Islamic account is halal
• Forex scams are abundant in Malaysia
• Never trade with unauthorized brokers
• Promises of exorbitant profit are a red flag
• You can report forex scam instances with the Malaysian central bank

Yes, forex trading is legal in Malaysia.
However, buying and selling foreign currency in Malaysia is only allowed with licensed commercial banks, Islamic banks, investment banks  and international Islamic banks as well as licensed money services business providers (money changers).

In addition, Shariah-compliant financial products, including foreign exchange related transactions, offered and transacted by licensed Islamic financial institutions are approved by the Shariah Committee of the respective financial institutions with endorsement from the Shariah Advisory Council of Bank Negara Malaysia, the country’s central bank.

Several online forex brokers accept retail investors from Malaysia. Nevertheless, the brokers must have an international license or be registered with the Securities Commission Malaysia (SCM), the country’s securities market regulator, to legally offer their services in Malaysia. 

Another authority in the region is the Labuan Financial Services Authority (LFSA), which is the regulator of the Labuan International Business and Finance Centre (IBFC). Labuan has been designated as a financial center and free-trade zone by the Malaysian government. Here is list of brokers licensed with them.

The official religion of Malaysia is Islam and forex brokers catering to Malaysion retail investors are obliged to offer Islamic forex accounts that adhere to the Sharia law. Forex trading is Halal with the use of an Islamic account.

An Islamic trading account is an optional account type that prohibits generating income from interest payments. Islamic foreign currency accounts will not charge interest on open positions held overnight, but on the other hand, some Islamic accounts will charge commission or offer wider spreads than a traditional forex account.

See the best forex brokers in Malaysia that are licensed to operate in the country and provide Islamic accounts. 

For a personal recommendation of the best brokers available to you, check out our unique broker finder tool.

The buying or selling of foreign currency by an individual or a company in Malaysia with any person who is not a licensed onshore bank or any person who has not obtained the approval of Bank Negara Malaysia is considered an illegal foreign exchange trading scheme.

Forex scam operators usually operate on a small scale and claim they can provide services efficiently, without the need for any documents or identification. They rarely use documents to validate and verify the transactions. By engaging in these transactions, customers run the risk of being cheated and their funds may never reach its intended destination.

Forex scammers usually target job seekers by placing attractive advertisements to lure prospective employees to join the company, after which they use them to solicit for new investments. Most often, employees will be encouraged to approach their direct family, relatives and friends before targeting members of the public.

Once lured by fraudsters, investors can either trade using their trading accounts with the company or through dealers appointed by the company. They are required to sign a business contract which is normally entered between the investors and a principal company overseas. However, such contracts are usually left unsigned. If investors are unhappy with the dealings and transactions, no action can be taken against the company as there is no binding contract between them.

Even though investors will usually get high returns on their initial investments, eventually, they will end up losing everything when the illegal operators suddenly go missing. 

If you suspect you have been approached by a scammer, read our article on forex trading scams to help identify whether that is indeed the case. 

First and foremost, trade only with licensed brokers and operators. Never send money to unchecked entities. 

Do not be fooled by promises of exorbitant profits in a short time. Forex trading is involves a high degree of risk and many investors lose money on their trades. There is never any guarantee that your investment will be profitable. The forex market is complex, exchange rates change unpredictably and profit is not a given. If an offer sounds too good to be true, it probably is. 

Keep a record of all communication between you and the operators and read the fine print of any document you are asked to sign. 

The SCM has a list of unauthorized websites, investment products, companies, and individuals in Malaysia. Check this list to make sure the person or enterprise you are dealing with is not featured on it. 

The safest bet to avoid a scam is to open a trading account at one of the top-tier regulated brokers. BrokerChooser’s team of experts compiles a list of the best forex brokers every year after checking more than 500 criteria for each broker. We have more than 100 brokers reviewed on our site and our analysts examine over 40,000 data points.

The best forex brokers for Malaysia in 2022 are:

1. Saxo Bank
2. Fusion Markets
3. CMC Markets
4. Interactive Brokers
5. Axi

Not sure if a broker is legit or scam? Write to us at [email protected] and our broker experts will answer your questions. BrokerChooser is here to help people invest. 

You can report forex scams or scam brokers directly to Bank Negara Malaysia via the following communication channels:

• Call: 1-300-88-5465 (1-300-88-LINK)
• Fax: 03-2174 1515
• SMS to 15888: BNM TANYA [your report / query]
• Email: [email protected]

Can you get scammed on forex?

The forex trading universe is ripe with forex scams. Forex trading scams can cause real damage to retail investors, and it is hard to recover your money once you fall prey to scammers. Make sure your broker is regulated at least by one top-tier regulator, such as the UK's Financial Conduct Authority (FCA) or the US Securities and Exchange Commission (SEC). If your forex broker is very pushy (keeps calling, emailing, etc.), that's a red flag. Double check how you can withdraw your funds from the broker. Withdrawal restrictions or excessive extra costs are suspicious. Deposit and withdraw a small amount as a test. Cosmic high returns are never realistic

Is forex trading legal in Malaysia?

Yes, forex trading is legal in Malaysia. However, people in Malaysia are allowed to buy or sell foreign currency or do any act which involves, is in association with, or is preparatory to, buying or selling of foreign currency only with an authorized entity (bank, broker, trading platform). Shariah-compliant financial products, including foreign exchange related transactions, offered and transacted by licensed Islamic financial institutions are approved by the Shariah Committee of the respective financial institutions with endorsement from the Shariah Advisory Council of Bank Negara Malaysia, the country’s central bank. 

How do I report a scammer in Malaysia forex?

You can report a forex trading scam to the Bank Negara Malaysia (the nation’s central bank) by using the following communication channels:

• Call: 1-300-88-5465 (1-300-88-LINK)
• Fax: 03-2174 1515
• SMS to 15888: BNM TANYA [your report / query]
• Email: [email protected]

Feeling confused? Check out our educational material on forex trading. 

You can also dive into our broader glossary explaining all the exotic terms of the financial world. 

If you're looking for a forex broker, check out the best forex brokers or read all forex broker reviews. Alternatively, visit our unique broker finder tool for a personalized broker recommendation.