Assess your staff to reduce fraud -BoG urges banks

The Bank of Ghana (BoG) has directed banks, special deposit-taking institutions, electronic money issuers and cheque printing companies to ensure that persons they engage as contract or temporary staff are adequately vetted by the Ghana Police Service in order to curtail the employment of fraudsters in the industry.

It said licensed institutions were required to strictly monitor staff (including contractual staff) and every transaction executed by staff by implementing appropriate internal controls.

The directive comes after the 2019 Banking Industry Fraud report revealed that suppression of cash and deposit reported were committed by staff (contractual or permanent) or other insiders of the above stated institutions.

It noted that staff who suppressed cash or deposits were usually ‘frontline staff’, particularly tellers, mobile bankers or sales agents.

According to the report, “Fraud cases reported by financial institutions in relation to manipulation of accounts and negotiable instruments resulted in attempted fraud values of approximately GH¢38.81 million, of which GH¢33.06 million was recovered and GH¢5.75 million was lost.

“Over 80 per cent of perpetrators for all cases reported on manipulation of accounts and negotiable instruments were staff of the financial institutions. Staff in question mostly manipulated the internal accounts and dormant salary accounts of customers.”

The report
The report released by the BoG on August 12, 2020, showed the banking industry recorded a total of 2,295 fraud cases valued at about GH¢115.52 million in 2019, compared to 2,175 in 2018.

Approximately GH¢33.44 million (28.96 per cent) was reported as losses incurred, while GH¢82.06 million (71.04 per cent) was recovered.

About 83 institutions reported cases of fraud in 2019 against 72 in 2018. Rural and community banks reported 55 per cent of the total cases, and commercial banks, savings and loans institutions reported 23 per cent and 22 per cent respectively.

It cited cyber fraud, cheque fraud, suppression of cash and deposits, and manipulation and forgery of documents as some of the high-risk fraud types that financial institutions faced in relation to carrying out effective banking operations.

Cyber fraud cases relating to cyber-crime involved email fraud, crime perpetrated through internet banking and other localised payment and mobile banking platforms accounted for the highest value of attempted fraud amounting to GH¢50.54 million (with actual loss of GH¢14.31 million cases).

“Cheque fraud involved cloned cheques, stolen cheque leaflets and cheque alteration. Notable ,however, is the increase in the number of cases reported as cheque cloning, which originates from the operation of syndicates involving staff of financial institutions, telecommunications companies and cheque-printing houses,” it stated.

The report recommends that remuneration and working conditions of contract staff and mobile bankers in banks and specialised deposit-taking institutions should be reviewed and aligned to that of permanent staff since they are often found to be involved in suppressing the value of cash and deposits.

“The Know Your Customer Policy / Customer due diligence (KYC/CDD) systems of banks and specialised deposit-taking institutions should be strengthened in order to facilitate the detection of suspicious or unusual transactions initiated on customers’ accounts,” it said.

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