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Embrace modern technology to make ATM fraud harder

By - | Jul 19th 2013 | 3 min read

The National Assembly and Attorney-General are sleeping on the job even as criminals exploit gaps in the country’s laws and walk away with billions of shillings every year.

According to data from the Banking Fraud Investigations Department (BFID), fraudsters have stolen at least Sh1.5 billion from Kenyan banks in the past year alone.

Obviously, the majority of these thefts are hatched with the assistance of people working in these banks. It is also sad, but true, that many of the people charged with the responsibility of detecting, stopping and prosecuting these criminals get compromised, sooner or later, after their efforts to take these criminals to book are frustrated by weak laws or compromised members of the Judiciary.

Kenya’s economic growth is held back by the high interest rates charged by banks in efforts to claw back the money stolen and make profits.  Players in the criminal-justice system and the financial sector must wake up and do whatever is necessary because the country can’t afford the luxury of criminal gangs walking away with Kenyans’ hard earned money. Whereas it is not known what the State agencies expected to close the legal loopholes the criminals are using to fleece banks and their customers are doing, it was heartening to learn last week that the financial sector is moving into action by installing a new generation of Automated Teller Machines (ATMs) already in the country.

Digital age

The expected roll-out of the machines will mean that the simple act of withdrawing money is about to enter the digital age, because the ATMs have biometric fingerprint scanners which will be used alongside the traditional PIN system.

Launched last week by an American technology company and a local IT solutions firm Tracom Services, the new generation ATMs have the biometric function alongside a raft of other security features aimed at helping banks and their customers fight fraudsters.

The extra safety measures on the ATMs are being brought in as the banking industry moves from the old magnetic strip ATM cards to the new generation micro-chip embedded cards that have EMV (Europay Master Card Visa) technology designed to make it more difficult to illegally scan a card’s details. The EMV technology is boosting the popularity of card trapping because it counters the long-standing problem of skimming. With the fingerprint required to complete a transaction, a fraudster who traps the card will still not be able to access the account because. The fingerprint is thus the one unique thing a fraudster cannot steal from a bank’s customer.

The new ATMs will in addition have a one-way safety lock system to prevent insertion of jammers into the money dispensing unit, thus helping deal with the problem of fraudsters who use jammers to block cash from the ATM, removing it after a frustrated customer moves out of the ATM lobby.

The card insertion also comes with a sensor that detects whether any object other than the card is inserted, and stops the transaction and detaining the card. This is to thwart scammers who have been placing objects in the ATM slots which skim and mimic card details which are later used to duplicate the card and fraudulently access the owners account. Sadly, despite the banks’ best efforts to deal with fraud, their biggest challenge is, and will always be, the integrity of their own employees, because most of their losses, including armed robberies, are a result of collusion between insiders and outside criminals.  

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