KUALA LUMPUR: K&N Kenanga Holdings Bhd, the holding company of Kenanga Investment Bank Bhd, has teamed up with the Association of Certified Fraud Examiners (ACFE) to combat the occurrence of fraud, such as insider trading, money laundering and cybercrime — the first Southeast Asian organisation to do so.

The occurrence of insider trading has been rising in the country, with the latest being the case of former executive deputy chairman of Malaysian Merchant Marine Bhd Datuk Ramesh Rajaratnam, who was charged by the Securities Commission Malaysia (SC) with three counts of insider trading.

K&N Kenanga (fundamental : 1.8; valuation: 1.65) group chief regulatory officer Maheswari Kanniah, who is one of the 1,000 certified global fraud examiners in Malaysia registered with the Global Anti-Fraud Association, said the partnership with ACFE helps create more robust internal controls for the financial institution.

“Before our partnership with ACFE, we have already put in place the relevant internal controls to prevent and mitigate any risks of fraud in our organisation. But now with the partnership, it enhances our efforts as ACFE is a renowned authority on anti-fraud training and education, from which we can gain new knowledge,” she told The Edge Financial Daily in an interview.

She noted that K&N Kenanga has been working closely with Bank Negara Malaysia, Bursa Malaysia and the SC in its efforts to combat fraud.

Maheswari added that the investment bank’s role in combating fraud such as insider trading involves putting in place relevant training programmes.

“This programme helps our staff to recognise glaring red flags or early warning signals for fraud; there is also the Code of Ethics and Conduct for employees and dealer representatives, the Group Fraud Reporting Policy and the Group Whistle Blowing Policy & Guidance notes,” said Maheswari.

She added that by having these policies in place, there is an avenue for all employees and stakeholders to report non-compliance and abuses they see in businesses and operations.

IDC Financial Insights director Chew Li May said in a previous report carried by The Edge Financial Daily that almost 70% of all commercial crimes committed in Malaysia are cybercrimes.

Chew also shared that cybercrime has even surpassed drug trafficking as the most lucrative crime, costing enterprises more than RM1 billion in losses in 2013.

Based on these statistics, Maheswari said more emphasis should be placed on cybercrime. “What we should emphasise more now is cybercrime, as this new born genus of fraud covers [all types of fraud] in a more sophisticated manner which hits organisations very fast and mutates upon detection, or even before,” she said.

She stressed that financial institutions in particular need to conduct themselves ethically and responsibly, and that senior management needs to set the tone for that in order for their staff to follow suit.

“Management ultimately needs to guide the culture of the organisation and set the tone for it and like it or not, employees pay careful attention to their leaders’ calls and actions. Therefore, it is vital to create and maintain a culture of honesty and high ethics in order to prevent the occurrence of fraud in the first instance,” she said.

The Edge Research’s fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations. Go to www.theedgemarkets.com for more details on a company’s financial dashboard.

This article first appeared in The Edge Financial Daily, on May 25, 2015.