Bank Fraud in East Africa Grows by 25%

Fraud has grown by 25% in the East African Banking sector compared to a simillar period in 2010.

The statistics have been presented by Deloitte an audit firm.

Deloitte claims that the figures may be understated as financial institutions remain tight-lipped about fraud figures.

“The pervasiveness and magnitude of fraud is on the rise. Technology is turning out to be a double-edged sword,” said Deloitte’s Forensic Director, Robert Nyamu.

The Real Time Gross Transfer System (RTGS) and other electronic money transfer modes pose the greatest fraud risk. Cheque fraud has also increased tenfold.

Deloitte argues that innovations such as Mobile Money and Agency Banking are also presenting money launderers with security gaps to exploit. Both services are gaining regional currency as major banks open subsidiaries across East Africa.

Further, about 50% of total fraud was committed in complicity with banking employees.

Last year, accounting company PricewaterhouseCoopers reported that the surge in banking fraud was due to “disgruntled or disillusioned employees who are usually young and more tech-savvy than their superiors.”