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Days numbered for bank fraudsters

NAIROBI, Kenya Jul 20 – Players in the banking sector are mulling the establishment of a fraud database to facilitate information between banks.

Commercial Bank of Africa Head of Security and Investigations Phillip ole Perrian said on Wednesday this would help banks spot potential fraudsters who have been identified carrying out illegal transactions in other banks.

“What is very important is that all stakeholders work together to ensure that criminal activities are contained.

It’s only through sharing information about the criminals that we can say that we are working together,” Mr ole Perrian said.

Data from the Central Bank’s Bank Fraud Investigation Department shows that banks have lost Sh277.3 million between January and March 2011 to fraudsters with only 12 cases having been filed so far.

His sentiments come at a time the CBK has been tightening the noose on bank fraudsters by issuing guidelines asking banks to report suspicious transactions in their institutions.

Mr ole Perrian, who is also a member of the Anti-Money Laundering Taskforce, however wants the quick enforcement of the Anti Money Laundering law to ensure the quick prosecution of people found to be defrauding banks.

“Currently the laws are not in place hence why banks are not quick to file any suspicious cases,” he said.

The Proceeds of Crime and Anti Money Laundering Act came into effect last year as a means to curb fraudulent activities. However, structures such as the Financial Reporting Centre (FRC) have not yet been established making it difficult to establish the full extent of the vice.

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“What there is, is talk about money laundering but it has not been documented anywhere and therefore it’s still difficult to tell just how much is being lost,” he said.

Deloitte Head of Financial Advisory Harveen Gadhoke said use of innovation in the banking sector to increase efficiency and boost business growth had opened up systems to fraudsters.

“Technology use by banks is a double edged sword that has increased vulnerability to money launderers,” Mr Gadhoke said.

A forensic study carried out by Deloitte had identified collusion between money launderers and youthful tech savvy bank employees to siphon money from banks.

“Because of the secure nature of the systems in place, the fraudsters are going after internal staff to alter documents in their favour making off with huge sums of money,” Mr ole Perrian said.

The majority of such fraud cases may not have been reported due to many banks wanting to protect their reputation, indicating that the level could be higher.

“Banks need to do thorough vetting of their employees before hiring them to ensure they do not collude with criminal elements,” he said.

The Central Bank wants financial institutions to improve monitoring of their customers by conducting ongoing monitoring of accounts and reviewing transaction patterns and volumes so as to be able to assess whether the activity on the accounts are consistent with the line of business or occupation of the customer.

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