Skip to main content

How do Kenyan Banks lose your money to fraudsters?

Well, not only their fathers. Their banks might also be left with some explanation in case one
turned up as the other. 
I met some acquaintance the other day. They are some manager in one of the top five banks in Kenya. They also happened to mention to me how lots of bank fraud in the country takes place.

As usual, it is an insider job - not surprising seeing that many crimes usually involve insiders, plus crime seems to be quite a widespread problem in Kenya, including the less mentioned but high occurrence blue collar crime.

What happens in bank fraud is that bank staff identify a number of potential target accounts. Such accounts will normally have more than KSh. 100,000 in deposits. They then print a statement of the account, the owners photo and the owner's signature.

The then go to cartels who they work with, and issue them the three items - statement, photo and signature. The cartel then looks amongst themselves, of also amongst people, for a person who somehow resembles one of the account owners. Once a person is identified and is ready to take part in the "business", they are then coached on the bank statement. They are also coached on the owner's signature, and practice till they have something close.

The fraudster then walks into a bank branch and asks to withdraw, say KSh. 200,000. The signature they give might be a little different from the account owners, but most of us have inconsistent signatures. Bank staff will normally allow you to carry out a transaction with a signature close to that in the file for this matter.

For the withdrawal, the cashier will normally approach the bank manager to approve the withdrawals as it will be above their standard limit. The bank manager might approve, and this is where the two end  up becoming liable to the transaction once the fraudster withdraws the cash.

The issue will crop up later when the actual account owner raises a complaint on the fraudulent withdrawal. Sometimes, such fraudulent withdrawals are usually targeted at dormant bank accounts where the owner has not interacted with the account for a while.

For banks, I believe that technology can come in handy in sorting such issues. An audit system should track all actions that involve a bank account. Audit logs on an account hit by fraud should be combed through and should reveal issues such as which bank staff accessed the details and even who printed out details. A red flag should be raised if the account was accessed from a branch rarely frequented by the account owner.

Additionally, audits can reveal a pattern, such as a common bank staff on accounts hit by fraudsters. Additionally, the bank system should warn bank managers when approving large withdrawals for accounts than barely withdraw such figures, or if the withdrawal is in a branch that does not fall in the normal places frequented by the account holder.

Additionally, controls can be implemented on transactions to make them safer. Account holders might get a text, or even a phone call for large withdrawals. This however might also ran into issues. M-Pesa fraudsters have been known to instruct users to press certain keys on their phone. Safaricom says you can bar all calls (and SMS on some phones) by dialling #35*0000 . The possibility of fraudsters calling you and asking you to press a series of keys, including the above set, to "clear a problem" with your phone is not remote.

Comments

Popular posts from this blog

Best and Most Durable Highway SUV Tyres

Buying tyres is a dilemma - how do you get the best tyres without spending much more than is necessary?  If that's your dillema, well, you have come to the right place. We will look at tyres that are at the sweetspot of durability, performance and affordability especially for SUVs.  You'll find that most of my top picks are Asian brands. These tend to last longer and are more affordable. European brands are engineered more for comfort and ride quality. So if comfort is your top concern when buying tyres, I would recommend Pirelli and Michelin.  1. Otani   Otani is a little known tyre brand made in Dubai. It however rates quite highly for durability and hardiness, with most of its tyres coming in 'Extra Load' specification. Extra Load tyres are designed if you carry a lot of weight or if you do a lot of towing. Even if you don't, it means you end up with more hardy tyres than your manufacturer recommends. Propelling Otani to the top of my ranking is th

Twitter? What the hell?

Twitter has been in the news on several occasions in the recent past. It all began with a few celebrities using twitter, then it caught on to CNN and Ashton Kutcher going head to head for who gets a million followers first. Ashton Kutcher beat CNN in what was the first demise of CNN on Twitter. This event was closely by Oprah's grand entry into twitter. It was at this point that many people actually joined twitter. Oprah happened to be a major occasion on twitter, with many geeks anticipating that twitter would be overwhelmed by the interest brought on it by Oprah and her millions (if they haven't hit a billion) of fans worldwide. In fact, we gave a Before Oprah and After Oprah Twitter ages. Twitter has continued growing, with it been claimed to be the fastest growing social network in the world, with a growth rate of about 1300% per month. Ironically , a Harvard research says that only 10% of twitter users contribute to 90 % of the content on twitter; the content is known as t

Beers in Kenya: A sober opinion

Note: This is a dated post and has since been mostly passed by events. SAB Miller beers including Castle and Peroni are no longer widely available in Kenya after their exist. Sirville Brewery was bought out by Brew Bistro before being permanently shut in a tax dispute. Kenya is a land of milk, honey, beaches and taxes. I have penned, or is typed, a newer post here .  Peroni - One of the best beers in Kenya. Did a taste of canned and bottled Italian, and bottled Tanzanian I like the tangy flavour and body in Tanzanian Peroni. The can is close. Heineken drinkers will like the Italian one.  I have had a short beer swigging stint in my life. It has however been long enough for me to share my opinion of Kenyan beer. Interestingly, over the course of sharing such opinions with other drunkards connoisseurs,  I have found that we all have different views as to what beer is the best, which one makes you too drunk, or which one gives one free, extra hangover for every hangover you get

Nairobi's Top 4 Texas Brisket Places Reviewed and Ranked

Brisket on a bed of roast vegetables with barbecue sauce at Texas Brisket, Kikuyu  This review has been updated after a number of you suggested I try the brisket at County2County.  What's the best place to have Brisket in Nairobi? What's even brisket?  Brisket is one of the toughest cuts in a cow, from around the belly. It is so tough that it has to be smoked for about 16 hours to tenderise. But that there, is the catch.  12 to 16 hours later, it is the most flavourful and softest cut you will ever have. So full of flavour and so soft you can pick it apart with your fingers.  However, due to the long cooking time involved, only a few places offer brisket in Nairobi.  The best so far is Texas Brisket which is located within Kikuyu Railway station.  They do the meat for a proper 16 hours, and will usually have a fatty or non-fatty portion. The fatty portions are more tasty. A 500 gram serving goes for KSh. 900 and a 1 KG order comes with a serving of free fries. Their brisket has

Kenyan products: The art of punishing your consumer

This post was written in 2011. Facts may have and indeed have changed - but the conclusion has not.  Dormans instant coffee tastes better than Sasini instant coffee. Ramtons electronics are manufactured for Kenya's Hypermart Limited, yet maintain a high product quality Peanut butter used to taste so good, but you could not afford it on the pocket money that you got back in school. A few years later, you have your first real job and your first "disposable" income. You buy your first real tub of peanut butter, probably the first in your life. You feel proud that Dominion peanut butter is manufactured in Ruiru, a town that you visited in your campus days to withdraw your pocket money, it was the nearest bank ATM to your campus.  This was before Equity bank became a mainstream bank and decided to open an ATM in your campus, and before M-Pesa meant that you