Banks, insurers lose Shs12 billion to fraud annually
Many people have been victims of fraud related crimes including at ATM points. PHOTO BY STEPHEN WANDERA
What you need to know:
According to a report from Deloitte fraud related crimes have been growing in the last few years.
Kampala
Commercial banks and insurance companies lost more than Shs12billion last year alone to fraud and money laundering.
Experts say the loss is a result of weak internal controls and staff connivance a challenge that has also spread to telecom companies, particularly those that are involved in the money transfer businesses.
Additionally players in the banking , industry agree that there is evidence suggesting that financial fraud is on the increase in the East Africa region.
“East Africa as a region lost $48.3 milllion in fraud and money laundering, and out of that Uganda’s share is about 25 per cent (about Shs12 billion),” Mr Robert Nyamu, Deloitte’s director forensic and litigation support said yesterday in an interview with Daily Monitor. He added: “That amount could even be higher because banks and other financial institutions do not report most fraud related cases as they prefer to deal with them internally.”
And for that, experts now recommend that financial institutions including telecom companies should upgrade their systems or else risk aiding terrorism, believed to be funding its activities from monies obtained through money laundering and other related fraud channels.
“The needs of each company differ, but we can refer or guide them into acquiring solutions that will help them detect and monitor financial crimes and money laundering,” said Mr Nyamu.
Even as financial institutions and telecoms deploy a number of safeguards against fraud, hackers seem to be bent on beating such systems. Thus according to experts there is need for automated systems that can fight the vice (fraud).
“It is necessary for us to move from manual systems to automation or else we shall continue to have these challenges, fraud related crimes,” Centenary Bank general manger in charge of audit, Michael Nyago said yesterday in a separate interview.
Mr Steven Kwesiga, the head of risk and compliance, Bank Of Africa said the fight against financial fraud should be a concerted effort of all the industry players, including the financial sector regulators.
