Certification programme to curb bank fraud in offing

Tuesday July 28 2020

A customer withdraws money from an automated

A customer withdraws money from an automated teller machine recently. Uganda leads in losses incurred from bank fraud in the region. PHOTO/RACHEL MABALA 

By Christine Kasemiire

The East African Community (EAC) is in the process of establishing a common banking certification programme.
This was revealed by the patron of the Uganda Institute of Banking and financial services (UIBFS) and Central bank governor, Prof Emmanuel Mutebile, during the institute’s annual general meeting recently.

He says unlike other professions such as accounting, auditing, and procurement, the financial services industry has for a long time lacked a structured practical oriented training programme.

The gap has had detrimental effects on the productivity of the sector.

“However, through collaboration across the banking institutes in the EAC region, this deficiency is about to be ameliorated. The EAC is in the process of establishing a common banking certification programme, which will eventually be the regionally recognized qualification,” he says, imploring the industry practitioners to widely enroll on the programme to enable the industry achieve the desired standards.

Banks have recently fallen prey to fraud perpetrated by their own staff.
The number of fraud cases by banks would have one think that they are looking outward for all types of threats and turning a blind eye to their own internal staff.

There are cases in court against commercial banks and others hashed down in their own banking circles about internal staff making away with customer deposits through fraud.
The most recent example is Tropical Bank.
Bank of Uganda and Tropical bank recently revealed that two senior bank managers were fired because of their alleged involvement in fraudulent activities.

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“The stories in the media are misleadingly stating that they quit because the bank is bankrupt. The information we have is that those people were dismissed for fraud and they did not resign as alleged,” Dr Adam Mugume, the Bank of Uganda director for research and acting deputy governor, told Daily Monitor in an email recently.

It was never known what type of fraud the senior bankers were alleged to have been involved in. dfcu Bank in May also fell victim to fraud and it was alleged that there could have been involvement of the bank’s staff.

“Investigations are ongoing into circumstances under which one of its employees, at the Ntinda branch was involved in the fraudulent transfer of funds. The employee, in question, was apprehended on Wednesday, May 13, and is aiding the police in the ongoing investigations,” a statement on one of the bank’s social media platforms read in part.
Where is the problem?
Mr Mathias Katamba, the chief executive officer dfcu Bank, says banks’ risk management frameworks are one of the most robust among business and from time to time, the risks manifest.

“You will find banks in court over human capital matters, credit matters and more. That will always be around. That is why risk management frameworks of the banks are so crucial,” he says.
He goes on to advise; “The key is to keep on evolving because risks evolve and our risk management frameworks need to keep evolving as well.”

Are the educators doing enough?
Mr Katamba, who also served as the board chairman of Uganda Institute of Banking and Financial Services (UIBFS) does not believe that the educator of bankers is falling short on its responsibility.

“I will not say there is anything lacking in ethics. The key thing is to keep checking what is changing and to improve how we train around those issues whether it is around governance, environmental protection or cyber security risks,” he says.

Established in 1990, UIBFS is a training and certification body for the banking and financial services industry in Uganda. However, enrollment into the institute for certification is not mandatory which limits its influence on the banking practitioners.

The institute at the close of 2019, had 32 corporate members (regulated financial institutions and 966 individual members who include fellows, associates, students and ordinary members.

Ms Masadde Goretti is the institute’s new CEO appointed by UIBFS board to replace Mr Anthony Mulindwa.
The board of UIBFS also appointed Ms Charity Mugumya, director communications Bank of Uganda as the Central Bank’s representative.

Former BoU deputy governor, Dr Louis Kasekende was also appointed as a representative of fellows and honorary fellows on the UIBFS board.

Commenting on the fraud perpetrated by bank staff, Ms Masadde, says the institute will on an annual basis expose bankers to issues of ethics and integrity and introduce a code of conduct.

“What we are trying to do now is to strengthen and tighten the quality and values of the people that will be members of the institute. As we do training, people will sign a code as a member that will require them to abide by it,” she says.

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