The Computer Society of Kenya

Since 1986


Monday April 25, 2016

Cheque and internal fraud are the major risks that banks are grappling with in Kenya, according to security solutions firm NetGuardian.

The Swiss Financial technology company says that local lenders are increasingly being targeted by their own staff and IT workforce.

“We see a lot of collusion with the IT guys who are able to delete logs after withdrawing customers money, and it may take time for banks to capture the fraud that has happened,” NetGuardina IT Risk and Internal Control Consultant John Kiptum told the Nation.

The recent crisis in Kenya’s financial sector points to increasing cases of irregular reporting after bank management siphon customer deposits in webs of internal loans.

According to Imperial Bank shareholders, the late managing director Abdulmaleck Janmohamed ran two sets of accounts with flexcube IT system.

“One regular reported, which did not reflect the true financial position of the bank, while the other, not disclosed to the board, comprised fraudulent disbursements,” a failed suit seeking to adjoin owners of the bank in a case against the alleged fraudsters read.

In Chase Bank, an initial report indicated that Sh7.9 billion was extended in internal loans against banking principles.

Incidentally NetGuardians was in talks with Chase Bank to improve its internal controls just days before the lender went belly up.

Manage Africa operations

The firm is already contracted by Kenya Commercial Bank, Commercial Bank of Africa, NIC Bank and the Kenya Womens’ Finance Trust (KWFT).

It will use the Nairobi office to manage its Africa operations in South Africa Swaziland, Nigeria and Egypt where it serves Zenith Bank in UK, HFC Bank in Ghana; Swazi Bank, Commercial Bank of Ethiopia; Central Bank of Nigeria.

The Central Bank of Kenya has instructed bank auditors to probe financial statements as well as interrogate IT systems for risks. “Some of the very big banks have just five risk assessment officers against their whole networks, and they go through samples manually,” Mr Kiptum said.

NetGuardian chief executive and co-founder Loel Winteregg said it also offers security against mobile banking fraud, Internet banking, account takeovers and data theft.

Card skimming and mobile banking fraud are also on the increase due to weak controls at the end user.

According to Kenya Cyber Security report, there is a sharp rise in financial fraud within banks through mobile money, system tampering and mobile network exploitation

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