Sh60m online theft jolts banks into action

By Cyrus Ombati

Banks have been put on alert over increasing multi-million fraud cases through a recently introduced money transfer system within the industry.

The recent incident involved CFC Stanbic Bank whereby a fraudster stole more than Sh60 million from an account.

The man, who is on the loose, faked his identity and convinced workers at the bank headquarters to transfer the money to his account in a different bank through the Real Time Gross Settlement (RTGS) and then wired the same to another account in Dubai. Detectives said they had frozen part of the $800,000 in the Dubai account.

Two weeks ago, fraudsters attempted to transfer Sh30 million from an account at I&M Bank to their account but were detected.

Were fake

The transfer was stopped at the last minute when bankers called the contacts that had been provided only to realise they were fake.

The Central Bank, through the Banking Fraud Investigations Unit (BFIU), have since told financial institutions to be cautious and know their customers well, especially those involved in the transfer of huge amounts.

It also wants banks to ensure their staff are vetted and always monitored. The demand came after it emerged some of the thefts were committed as a result of inside jobs.

KBA CEO John Wanyela said there has been increased cases of fraud through the system but banks have been advised on the way forward.

"We have told them to ensure their staff are trustworthy because such incidents cannot happen without the involvement of an insider," said Mr Wanyela.

Final and irrevocable

RTGS, according to CBK, is a funds transfer systems in which the transfer takes place from one bank to another on "real time" basis. Once processed, payments are final and irrevocable.

In the case of CFC Stanbic, an imposter is said to have made a call to a manager and demanded that money in a certain account, which he apparently knew well, be transferred to a different bank.

Police investigating the case say the man had detailed information about the account including amount.

"We believe he was working with some insiders," said a detective handling the file.

After convincing the bank managers he was the "real" owner of the account, the money was transferred within an hour.