Share data to fight fraud, banks urged
Posted Tuesday, July 31 2012 at 19:35
- Firms lose Sh4.06 billion in 18 months even though audit firm Deloitte says this could be higher
An audit firm has asked banks to develop ways of sharing information on fraud as way of fighting the vice that is on the rise.
Deloitte on Tuesday said that East African banks lost Sh4.06 billion ($48.3 million) to fraud in the 18 months ended June 2012 due to failure to keep pace with technologically savvy criminals and employees. This was 25 per cent higher than a similar period in 2010.
About 50 per cent of the fraud was committed in complicity with banking staff. However, Deloitte said the figures may be understated as financial institutions remain tight-lipped about fraud due to inside jobs.
“The pervasiveness and magnitude of fraud is on the rise. Technology is turning out to be a double-edged sword,” said Deloitte’s forensic director, Mr Robert Nyamu.
Last year, accounting firm PricewaterhouseCoopers reported that the surge in banking fraud was due to “disgruntled or disillusioned employees who are usually young and more tech-savvy than their superiors.”
Mr Nyamu said that although technological advancements were increasing efficiency in the banking system, they also make it easier for banks to be defrauded.
Currently, the Real Time Gross Transfer System and other electronic money transfer modes pose the greatest fraud risk. Cheque fraud has also increased tenfold.