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

RE: Appointment as Ambassador of the Republic of Kenya to The United States of America

Image: South African marriage courtesy The Telegraph ( http://www.telegraph.co.uk/news/worldnews/africaandindianocean/southafrica/6237922/South-African-man-marries-4-women-at-same-ceremony.html  ) Dennis Kioko, Address Pending. President to-be-elect, Republic of Kenya, Address Pending, Again. Dear Sirs/Madams, RE: Appointment as Ambassador of the Republic of Kenya to The United States of America  I would like to draw your attention to news reported across various sections of the press (way behind your daily portraits on the front page) that several Missions to the country are equivalently vacant with the duty of appointed high commissioners having expired. This includes Kenya's High Commission to the United States of America. Among your first duties, having assumed duty as Kenya's president, duly elected or otherwise, will be to appoint commissioners to these missions. It is in this regard that I highly invoke you to consider me as a likely appointment to the

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

A to Z of Girl Pick-up Lines

Girl,  You are like a breath of fresh air , like an outstanding piece of Art in an art gallery  There are many things you and me can be, but it puts a smile of satisfaction on my face and a smile of envy on my buddies faces that you both beautiful and bootyfull  E ither your creator must have taken the greatest care creating you or your cheated your way around heaven, 'coz you clearly the prettiest girl on earth  D on't ask why my breathing quickens every time I see you; setting my eyes on you makes me feel like I am drowning in your beauty, I have to catch my breath   Exciting, Exotic, Elegant, Electrifying ; so many definitions in english , but when it comes to the human race, girl, you are the one and only definition of all the above  W hen I say you are fly , it may be due to the sensation of flying off the ground that I get when I am around you. Some girls are beautiful, a few are decent, even fewer got class; I didn't know I could find all this qualities in one gir

Counterfeit alcohol hits Nairobi

Counterfeit The Famous Grouse    bought at a shop along Nairobi's Dubois road, note the packaging. Dishonest dealers in Kenya are now repackaging various alcohols and selling them off to unsuspecting buyers. The scam appears to target a broad range of popular spirits, including Smirnoff Vodka and The Famous Grouse Whiskey. Various residents have reported that the drinks are sold in shops in down-town Nairobi and cheap clubs. Popular drinks are either substituted with similar looking forms of alcohol or blended with them. Vodka is substituted with chang'aa , a local moonshine drink while brandies are used to dilute, or wholly sold off as more expensive whiskies. There is suspicion that some of the alcohol used in this drinks is diluted industrial alcohol. Industrial alcohol is normally cleared, with tricks such as food colouring and perfume deployed to have the counterfeit alcohol look like the genuine one. The syndicate appears to be recycling bottles which are colle