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Explainer: Who should bear responsibility for CPF monies lost in malware scams, and what recourse do victims have?

SINGAPORE — A recent spate of scams that resulted in some Central Provident Fund (CPF) holders losing their money has raised the question of how victims can recover their losses, and who should be held liable.

Explainer: Who should bear responsibility for CPF monies lost in malware scams, and what recourse do victims have?
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  • Parliament recently discussed how victims of CPF scams can recover their monies
  • MOM had said that it does not intend to introduce an insurance scheme to protect CPF members from losing their funds
  • Experts said that the onus is currently on scam victims to bear losses through financial institutions
  • They said it would be difficult to include CPF in an upcoming framework that will spell out how losses from scams are to be shared between consumers and financial institutions
  • Insurance schemes could also be too expensive for CPF members, they said

SINGAPORE — A recent spate of scams that resulted in some Central Provident Fund (CPF) holders losing their money has raised the question of how victims can recover their losses, and who should be held liable.

Last week, Workers’ Party Member of Parliament (MP) Jamus Lim had asked in Parliament if the Government had considered initiatives such as insurance to recover fraudulent monies, similar to banking-related frauds.

In response, Manpower Minister Tan See Leng suggested that insurance to assist in the recovery of money lost to scams is being considered under a "shared responsibility" framework that involves financial institutions, telcos and other entities.

The framework, which was mooted last year after a spate of scams involving OCBC Bank, aims to spell out how losses from scams are to be shared between consumers and financial institutions, and the responsibilities of other parties involved.

The Ministry of Manpower (MOM), which oversees the CPF board, clarified shortly after Mr Tan's response that CPF has “no intent” to consider introducing an insurance scheme to protect its members from losing their CPF funds, which are predominantly used as retirement savings, to scams.

The ministry also said that insurance schemes are not part of the framework that the Government is developing.

TODAY looks at whether CPF or losses related to CPF funds can be considered under the shared responsibility framework.


Last month, the authorities said that about S$8 million was lost in more than 700 malware-related scams reported in the first half of this year. At least eight of these scams involved CPF savings, with losses amounting to S$124,000.

The victims were tricked into downloading malware onto their phones, resulting in unauthorised transactions from their bank accounts.

In some cases, CPF savings were withdrawn and credited to victims' bank accounts before being transferred out.

The details come amid greater public concern over digital payment scams. About 790 OCBC Bank customers lost at least S$13.7 million through phishing scams in 2021. The bank offered customers “full goodwill payouts” to cover their losses.

The Government announced in February last year that it would work with the industry to set up the shared responsibility framework. A task force, called the payments council, is looking into the framework.

The Monetary Authority of Singapore (MAS), which leads the council, had said in February last year that it would publish a draft of the framework for public consultation in three months’ time. However, the regulator said last July that the deadline had been delayed due to the complexity of the issues involved.

There are similar discussions globally on who should take responsibility for reimbursing bank losses through fraud.

For instance, the United Kingdom from next year onwards will require banks to reimburse victims who are tricked into sending money to scammers. The reimbursement will be split equally between the firm behind the customer’s account sending the funds and the company running the receiving account.


Experts said that the onus is currently on the scam victim to bear the losses, even though banks and financial institutions sometimes compensate these losses out of goodwill.

Mr Eric Chan, a partner at law firm Shook Lin & Bok, said that the primary responsibility should always be on the individual. However, the law can impose a degree of liability on banks or financial institutions if they had assumed responsibility for the loss or it was “glaringly obvious” that they were at fault.

It is difficult to impose a greater level of responsibility on financial institutions, said Mr Chan, who specialises in financial services regulations. 

“After all, it is not the role of the financial institution to be intrusive. A customer may take offence if his bank asks too many questions as to the purpose for a particular transaction that he wants to undertake,” he said.

Ms Emily Lai, a business risk services partner at business advisory firm Grant Thornton Singapore, also noted that banks are not required to maintain money on standby to compensate people who lose their deposits through scams.

Currently, licensed banks in Singapore are required to maintain an aggregate minimum cash balance with MAS of at least 3 per cent of its average qualifying liabilities. This is to ensure sufficient liquidity in the banking system.

However, they are not designed as a means to compensate those who lose their money through scams, said Ms Lai.

Under the proposed shared responsibility framework, however, banks and financial institutions will have to share responsibility if they do not put in sufficient measures to ensure that such scams do not happen.

The MAS had said last February that under the framework, “all parties have responsibilities to be vigilant and to take precautions against scams”.

For example, financial institutions must have measures to safeguard customer accounts, and detect and respond to suspicious transactions.


Mr Chan said that the proposed framework will be a very complicated regime as it would need to take into account the role of different parties and their relative degree of culpability or negligence.

Including CPF funds in the framework would “significantly complicate matters” given the limitations on the use of these funds, he said.

Unlike bank deposits which customers can use anytime, a CPF member can only use his funds for specific purposes. As such, the risk of losing CPF money is less compared to the loss of bank money, he said.

Mr Ang Yuit, the vice president of the Association of Small and Medium Enterprises, said that it would be difficult to include CPF in the framework as the laws governing CPF and financial institutions are different.

The association is a party to discussions on the framework.

“Legally, they don’t fall under the same regulations so that is material in deciding in what the framework covers,” he said.

Mr Ang suggested the “spirit” or intention of the shared responsibility framework be applied in a different framework to CPF-related losses instead.

Dr Douglas Streeter Rolph, a senior lecturer of finance from the Singapore University of Technology and Design, also agreed that it would be complicated to ascribe responsibility for the losses to different players, such as CPF or the payment system through which the transfer occurred.

Dr Jess Tan, a senior lecturer from the Singapore University of Social Sciences’ Business School, said that the framework is more appropriate for financial institutions where funds flow more freely. This is because the measures to withdraw bank funds are less stringent and vigorous than that of CPF's. 


While some experts believe that an insurance scheme would make sense to cover potential losses of CPF monies through fraud, others also said that such schemes might be expensive and not worth the cost.

As any authorised withdrawal from CPF will have to go through a bank, Dr Tan feels that it would make sense for CPF members to get insurance cover for the monies in their banks.

However, other experts such as Dr Rolph pointed out that such insurance could be expensive for regular people.

Mr Chan added that having insurance coverage for funds held by CPF could also increase the operating costs of the fund.


Ultimately, if the scope of the shared responsibility cannot be expanded to include CPF-related fraud and having an insurance scheme is not a cost-effective option, the liability of losses will primarily be borne by the individual CPF member, said experts.

Therefore, the Government should create systems to make scams more difficult, such as facial recognition systems when accessing CPF funds or “kill switches” to stop transfers of funds over a certain dollar value, said Dr Rolph.

Last week, the authorities said that CPF members aged 55 and above and who use Android phones will need to go through face verification when logging into their accounts, using Singpass as an additional precaution against malware scams.

“Most importantly, the public needs to be constantly educated on scam tactics and prevention,” added Dr Tan.

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