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

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

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

Kenya Power customers suffer from Ksh 0.5 billion faulty prepaid meters

1st Phase Actaris prepaid meters , which work well Kenya Power is a famous company in Kenya, one which draws what my colleagues in media will call "mixed reactions". While those in urban areas such as Nairobi regard Kenya Power as a very unreliable firm, I have heard of villages in rural areas where blackouts go unreported for even 3 days . To the rural people, recent electrification means that at least they get to get electricity for some days, which is better than no electricity. In urban areas, the story is not any different. Around Imara Daima along Mombasa Road, power is mostly reliable, with blackouts been few in a week, and even at times been less than 10 in a month. In other places in the city, blackouts are a daily occurrence, and in some places, the blackouts are more than meals, counting two teas , breakfast, lunch and dinner. Another aspect about Kenya Power is the prepaid meters, which like the firm, are equally loved and hated. Ever since I became prou

The bitter story of the downfall of Mumias Sugar company

A spoonful of sugar, but for who? ( Image: Carol Wallis on Flickr ) Have you heard the bitter story of Mumias Sugar? Regarded by many as Kenya's most successful sugar miller, Mumias Sugar Company was a disaster waiting to happen. Many pointed out how Mumias Sugar Company was a fortress in the wreck that is Kenya's sugar industry, only unaware that it was just a matter of time. As the old wise men said, "Ukiona cha mwenzako cha nyolewa, tia chako maji". The proverb means that if you see your neighbour's head getting shaved, your head will soon be undergoing the same - you'd therefore better wet your head for a smoother shave, otherwise you will be forced to undergo a painful, dry, shave. But what ails Kenya's sugar industry? The Kenya sugar industry is under legal siege. The typical Kenyan issue of coming up with laws to tackle a problem is evident here. Many of Kenya's sugar factories are owned by the government, and have slowly decline

KB Lager, The Beer Meant to be Drank Warm

KB Lager settles quite quickly when served and is very drinkable while warm. It's flavour maintains a strong profile of roasted grain.  In Nairobi, beers are usually served cold, or sometimes warm depending on the mood of who’s serving you. Outside Nairobi, warm beers may come as a standard and you may have to specify that you indeed would prefer a cold beer, as I once found in Naivasha. I was at an infamous bar next to the Nairobi - Nakuru highway and this was my first time ordering a KB Lager. By the time I realised I had been served a warm beer, it had already been opened and the only option was a second bottle of cold beer then I could mix half-and half. It did not escape my attention that the waitress serving me slightly hesitated when I asked for a cold beer. I got the impression that it was taboo to order a cold KB Lager.