NAIROBI, Kenya, Oct 7 – Police are concerned at the increased cases of fraudsters using mobile phone money transfer systems to deposit fake currencies.
Numerous cases have been reported in parts of Eastern and Nairobi Provinces where criminals have been depositing fake currencies with M-PESA dealers and quickly transferring them to third parties.
Police in Makueni district told Capital News that they handle up to four such cases a week in the region.
“These cases are rampant; criminals are taking advantage of the money transfer systems in mobile phones to con dealers,” Joseph Mumira, the Makueni District criminal investigations chief said.
In most cases, he said, people with fake currency notes purchase SIM cards and mobile phone handsets which they use to transact and then dispose immediately the money was transferred electronically.
“They have been depositing between Sh10,000 and Sh20,000. Dealers only realise much later that they have been given fake currency,” Mr Mumira said.
The cunning criminals use stolen ID cards in their transactions to conceal their identity.
“The transaction is done very fast and the numbers they use are usually switched off almost immediately the money is transferred,” he said.
Another officer at Nairobi’s Central Police station said they had also received such complaints from some dealers in town, although no suspect had been arrested.
An M-PESA agent on Tom Mboya Street who requested to remain anonymous said he had twice detected Sh5,000 in fake currency but failed to trace the person who had deposited the money.
“It was late when I was closing down, that is when I realised part of the money I had was not genuine. It taught me a lesson because since then I have been thoroughly scrutinising notes before accepting them,” the agent said.
Safaricom’s Chief Executive Officer Michael Joseph told Capital News that it was the primary responsibility of M-PESA agents to ensure they received genuine currency notes in all their transactions.
He however, says the company has put in place measures to curb the vice and is in the process of training M-PESA agents.
“Safaricom realises that the easiest way to counter circulation of counterfeit notes is to educate the handlers of such notes on the features of currency notes. Safaricom has therefore initiated interventions with the Central Bank with the aim of educating M-PESA Agents on the same,” he said.
“We do stress however that it is everyone’s responsibility to detect fake currency notes.”
Mr Joseph said the company has lately been encouraging M-PESA agents to acquire currency verification devices.
A spot check by Capital News established that most agents, particularly in Nairobi’s Central Business District (CBD) are using the currency detecting devices in their daily transactions.
While confirming that Safaricom had received complaints from M-PESA agents over the fake currency issue, Mr Joseph warned that the risk incurred by the agents, if any, will not be transferred to the company.
“The risk solely lies with the bearer of the note at any given time. Safaricom does not bear any liability for the agent’s acceptance of fake currency notes,” he said, and urged agents to be on the look out for fraudsters who may be out to take advantage of the money transfer system.
He however, said that such cases were too minimal and cannot therefore affect the operations of M-PESA at any given time.
Issue taken seriously
Below are excerpts of the interview with Mr Joseph
Q: Is Safaricom concerned, in any way, that what was initiated as a money transfer system is being turned to a money laundering tool by criminals?
A: Safaricom treats the risk of M-PESA being used for money laundering very seriously. To this end, Safaricom has taken the initiative to set up an anti-money laundering (AML) function in the absence of legislation, based on international best practice to ensure that there are AML controls in place to detect and prevent money laundering and terrorist financing using the M-PESA service. The CBK is aware of the controls in place and supports this initiative.
Q: Police in Makueni and other parts of Ukambani have specifically raised concern that such cases are on the increase there and done in a sophisticated manner whereby criminals have resorted to use ID cards of dead people to register new SIM Cards which they use in new Mobile phone hand sets which are immediately disposed off after each transaction. Comment?
A: The presumption made when a person registers on the M-PESA system is that they are the bona fide owners of the ID document they present. This is a rebuttable presumption which must be corroborated with evidence to the contrary. We therefore cannot comment on the statement alluding to the use of IDs belonging to others. The police nevertheless have a responsibility in curbing emerging trends in crime. We require agents to verify the identity of the customer by confirming that the person who presents the ID is the person on the ID. If there are specific cases that this is not happening we need to be alerted so that relevant action can be taken.
Q: What happened with the directive by President Mwai Kibaki to have all Mobile phone subscribers registered?
A: The Communications Commission of Kenya (CCK) has been consulting operators to agree on the manner and information to be collected from each of their subscribers. The guidelines to manage this process will be communicated to all operators who are expected to commence subscriber registration as soon as they receive them. Safaricom will ensure that the exercise is carried out in compliance with the guidelines and any future legislation enforcing the directive. Even then, all our M-PESA customers and a sizeable portion of our subscriber base are already registered.