Banks, staff to blame over soaring theft

By Morris Aron

Bank management and their staff are to blame for the high incidence of fraud cases in the financial sector, a report by an anti-fraud body to Kenya Bankers Association (KBA) says.

In a confidential letter and report to KBA, the Banking Fraud Investigations Department (BFID) has pinpointed key areas and flaws that need to be addressed if efforts to combat fraud are to bear any fruit.

BFID has drawn the attention of KBA on the failure by bank staff to appear in court for cases where they are witnesses, banks failing to report fraud cases and the need for Central Bank of Kenya (CBK) to organise training for magistrates on the complexity of some fraud cases.

“We are of the view that KBA should chip in and ensure that bank staff who are witnesses to pending cases and have moved to other banks to co-operate when called upon to testify,” the report recommends.

“It has been noted that some managers do not allow their staff to attend court cases.”

In addition to cases where bank employees do not appear in court, BFID — the police arm that investigates banking fraud — has also called the attention of KBA on banks supplying the anti-fraud body with uncertified documents on accounts that are being investigated, to freeze such accounts.

“Investigators do serve warrants to investigate accounts which are under investigation to banks,” said the report

“However, some bank investigators supply uncertified copies which leads to more lost time.” BFID also expressed concern over incidences where banks do not act on warrants issued to them, in the process giving fraudsters more time to continue with their act.

Time wastage

“The department is of the view that when documents are supplied to the investigators to facilitate investigations, all copies should be certified to minimise time wastage.”

But as concerns over in-house inefficiencies come to the fore, a number of banks have been put on the spot for flouting CBK requirements as far as ATM machines are concerned.

BFID found out that in some ATM lobbies there were no CCTV cameras, a development that not only complicates investigating fraud if it occurs and reduces the chances of any suspect being apprehended.

The department called on commercial banks to set up fully-fledged forensic audit departments as opposed to having them under internal audit or security departments.

Other concerns were over banks getting on a reconciliatory mode with fraudsters who have already been charged.