From insurance fraud, tax fraud and pyramid schemes to the social engineering attacks and cybercrime we experience today, fraud is an issue that has plagued Kenya, and the African continent at large.
African nations have been able to develop solutions and implement different measures to combat the effects and occurrences of fraud.
One sector where fraud is experienced, especially in Africa, is the mobile ecosystem. Mobile phone and internet penetration are constantly rising, and this has served to increase the size of the sector by giving individuals across different economic segments access to a wider variety of services. Despite the advantages this possesses, there are also pitfalls that come with it.
The fight against fraud has been backed by the developments made in technology. Seeing as technology has made a contribution towards the growth of fraud, it makes sense that it should be employed to help protect individuals from the negative effects. So as to ease the burden on regulators and assist them in strengthening their capabilities for fighting fraud, it is important for them to adopt technological solutions.
A report released by Interpol in 2020 noted that the billion-dollar mobile money industry in Africa is being exploited by organized crime groups – a trend only set to increase as the service is rolled out in more countries across the continent. It further highlights that a lack of robust identity checks to verify users combined with a need for greater law enforcement resources and training on mobile money-enabled crimes have created a financial system distinctly vulnerable to criminal infiltration.
The fight against fraud must encompass all the players in the sector to guarantee a wholesome approach towards limiting the instances of fraud. This includes the regulators and the mobile network operators (MNOs). The MNOs are responsible for the development of services for the consumers to use, such as mobile money, as well as their maintenance and growth. The regulators are responsible for protecting the consumers and implementing the various checks and balances to assure that consumers are free from exploitation and fraud.
In November 2020, Evina - a Paris-based anti-fraud and cybersecurity specialist, released research citing the five countries in the Middle East and Africa where fraud in the mobile ecosystem is most prevalent as Cameroon, Kenya, South Africa, Jordan and Oman.
The percentage of mobile-based billing transactions in each country that have been identified as suspect by Evina’s network of fraud sensors are 51 per cent, 30 per cent, 20 per cent, 18 per cent and 10 per cent, respectively and they go further to indicate that about one in four mobile subscriptions in Africa are fraudulent. They estimate that Africa’s mobile fraud losses will continue to rise above the 2020 figure of $4 billion if nothing is done to prevent global cybercriminals from looting the digital space.
There are, however, digital solutions that have been developed to assist the sector in fighting fraud. For example, a report by the GSMA indicates that MNOs have adopted GSMA recommended techniques for detecting and dealing with the international transmission of fraudulent mobile spam. Thus far, they are yet to be fully adopted in regions such as Africa where they have great potential for success.
In particular, in markets where there is a low-level of technological understanding, consumers today are often not using available protective technology features to their full potential. Customers within the mobile ecosystem are the most vulnerable of the lot as they often lack knowledge and the technological means to properly defend themselves. Security must be viewed as a chain: one weak-link and the fraudsters rejoice for they interpret this as an open-door for malwares.
James Claude, the CEO of Global Voice Group, believes that it is important we move with the times and look towards digital solutions in the fight against mobile ecosystem fraud. He says, “We live in a world that is constantly evolving, especially from a technological perspective. We therefore have to constantly innovate to stay ahead of the curve and ensure that we maximise on the benefits technology provides us”.
Global Voice Group (GVG) is a big data analytics company and regulatory technology developer working with several governments and regulators in Africa. They have assisted in the monitoring of mobile money ecosystems where they have collaborated with regulators to implement their solutions.
The company’s Visio Device solution provides regulators the ability to control the country's handset population in real time, based on reliable and accurate data. This data can then be used to fight counterfeiting and other device-related issues and tackle other types of telecom fraud to ensure an all-round healthy mobile ecosystem.
“Our work at GVG helps us to assist governments and regulators in this effort and some of the solutions we provide are able to strengthen their capabilities when it comes to fighting fraud in the mobile ecosystem. As such crimes move toward a bigger digital arena, it is important to detect them in a much easier and more efficient manner so as to keep all users within the ecosystem safe,” Claude goes on to add.
GSMA’s report on Safety, privacy and security across the mobile ecosystem, highlights the importance of mandatory prepaid Mobile SIM registration to protect the mobile ecosystem from fraud. Many countries have strengthened their SIM registration protocols over the years.
For instance, in Kenya, an individual must provide a formal identification document - such as an identity card or passport – for them to register a new SIM card. This has helped the Communications Authority of Kenya (CA) to link each SIM card to a Kenyan citizen or a registered resident of the country. Nonetheless, that cannot be deemed enough and there must be further steps taken.
The Visio Sim solution by GVG provides regulators with the capabilities to identify and authenticate users using SIM cards. This can help regulators to efficiently certify that any new SIM cards registered comply with the Know Your Customer (KYC) requirements provided by the regulator. Mobile phone penetration is constantly growing at a fast rate and there is need for a system that can assist in the authentication of the individual identities to weed out any potential fraudsters.
In the recent past, there have been efforts made towards adopting technology across various areas of life. There have been greater pushes for customers to make use of digital banking solutions, as well as incentives for them to further grow their use of mobile money. African governments are also putting a greater emphasis on cyber security and cyber resilience to counter the rise in cyber-attacks experienced since the Coronavirus pandemic began.
As African economies and the mobile money ecosystem continue to grow, so does the amount of data collected and without efficient systems in place it will be harder for fraudulent transactions and fraudsters to be identified. But when all is said and done, the entire ecosystem, must work together to weed out the perpetrators of fraud.