Rogue Staff Have Stolen Over Shs 1.5Billion From Kenyan Banks

Improved technology, a growing number of techno-savvy employees have exposed the region to fraudsters. Fraudsters have stolen at least Sh1.5 billion from Kenyan banks in the past one year in schemes hatched by technology-savvy employees. 

Fraudsters have stolen at least Sh1.5 billion from Kenyan banks in the past one year in schemes hatched by technology-savvy employees.

According to data from the Banking Fraud Investigations Department (BFID), financial institutions reported that Sh1.49 billion ($17.52 million) was stolen from customers’ accounts between April 2012 and April 2013. Investigators recovered only Sh530 million ($6.2 million). Several cases are pending in court or are still under investigation.

Between November 2012 and April this year alone, Sh952 million was stolen. Of this, only Sh345 million was recovered.

According to security experts, the amounts reported reflect only a small portion of the real losses since banks prefer internal disciplinary measures in cases involving thieving employees.

“Of all the risks, reputational risk is the worst,” said a security director at a top financial institution. “Most banks would rather keep cases of attempted fraud or actual fraud under wraps to avoid the damage disclosure would do to their reputation. Most of these cases involve bank employees.” 

The BFIB data shows that at least half of the crimes reported had a bank employee involved.

A banker who declined to be named estimated that the amounts lost could be more than triple what was reported, suggesting banks could have lost close to Sh2 billion in the six months to April.

Cyber crime

Growing cases of fraud and cyber crime mean that financial institutions need to urgently invest in detection and prevention mechanisms to catch increasingly sophisticated fraudsters.

In its monthly crime reports, BFID listed identity theft, electronic cash transfers, bad cheques, credit card fraud, loan fraud, forgery and online fraud as some of the ways used to defraud financial institutions.

Of the 20 cases taken to court in April, six involved cheque fraud while five involved forgery.

Story Courtesy of Daily Nation News