KUALA LUMPUR: Malaysia has 10 laws governing public fundraising, but gaps in the existing framework could leave room for misconduct, fund misappropriation and abuse without effective oversight.
Existing laws have failed to address systemic weaknesses in public funding, particularly regarding the transparency of fund sources, the accountability of recipients, and enforcement against misuse.
More critically, four of these laws are seen as obsolete, with some pre-dating the country's independence.
They are the House to House and Street Collections Act 1947 (Act 200), which regulates the collection of money or goods; the Trustee Companies Act 1949 (revised 1973) (Act 100), which regulates trust companies; the Trustees (Incorporation) Act 1952 (Act 258), which governs the incorporation of trustees; and the Kootu Funds (Prohibition) Act 1971 (Act 28), which prohibits kootu fund activities.
The Societies Act 1966 (Revised 2021) (Act 832) and the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (Act 613) play important regulatory roles.
However, both fall short of providing a comprehensive framework for public fundraising because their provisions are broad and do not specifically cover the entire fundraising ecosystem, including the transparency of donations and monitoring of how funds are used.
Other relevant legislation includes the Capital Markets and Services Act 2007 (Act 671), which regulates and develops the capital market; the Financial Services Act 2013 (Act 758), which regulates financial institutions, payment systems and the foreign exchange market; the Interest Schemes Act 2016 (Act 778), which regulates non-corporate interest schemes; and the Companies Act 2016 (Act 777), as amended in 2024, which governs the incorporation, management and dissolution of companies.
These findings were highlighted in a study titled "Strengthening Governance and Integrity of Trust Companies and Crowdfunding in Malaysia" by a team of 10 researchers from Universiti Sains Islam Malaysia (USIM).
The study underscored the need for a new commission empowered by a specific act as an effective regulatory mechanism.
Lead researcher Associate Professor Dr Muhammad Iqmal Hisham Kamaruddin said the establishment of a Public Funding Commission was essential to oversee public funding activities in Malaysia.
"The establishment of this commission is proposed with full registration and regulatory functions merged from existing authorities. However, it can also be established with specific regulatory functions without disrupting existing authorities.
"We also propose that it can be created through a council or committee carrying out regulatory coordination among existing authorities.
"The commission's core functions would include setting guidelines and basic integrity principles for fundraising organisations, monitoring compliance with governance standards, taking firm action against violations and misconduct, and promoting a culture of integrity through training and education," he told Berita Harian.
Iqmal said the commission should also be responsible for formulating and overseeing a proposed Charities Act to address longstanding regulatory gaps.
To strengthen governance and integrity, he said the commission should classify entities according to the amount of public funds they collect, introduce an entity rating system, establish governance frameworks and issue general financial management guidelines.
He said stronger governance and integrity standards for trust companies and public fundraising were essential to ensuring transparency, accountability and sustainability.
The study recommended stricter regulatory standards, including licensing requirements for fundraising platforms to prevent fraud, as well as regular professional audits and monitoring to verify the legitimacy of fundraising projects.
He said full financial disclosure, including transparent transaction displays and clear cost breakdowns, was necessary to protect public trust.
"Donor information access, fund status, and amounts must be available in real time, and educational awareness programmes should be developed to encourage the public to report abuses," he said.
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