Cloned Cheques...The Banker’s Nightmare

April 16, 2017
Source: Gabriel Asante-Gyabaah
Cloned Cheques...The Banker’s Nightmare

The financial market in Ghana has in the past witnessed a number of financial innovations in a bid to establish a cashless society. One of such innovation is the infrastructures to aid in the speedy clearing of cheques. This has come with its attendant problems and prominent among them is the cloning of cheques. A number of banks in Ghana have been victims of this phenomenon. However, current statistics involving this crime is not readily available and the only documented evidence is in respect of the year 2014.

A story published by Adnan A. Mohammed on an online news website indicated that, “twenty- six (26) cloned cheques fraud transactions worth GH¢ 923,883.86 were presented at various banks in 2014. The Financial Intelligence Centre has confirmed that, eight (8) out of the 26 cloned cheques, with face value of GH¢ 88,623.54 were successfully drawn whilst the remaining eighteen (18) with face value of GH¢ 835,260.32 were returned unpaid.

In view of the effect of cheque cloning on the integrity of the financial system in terms of money laundering, the Central Bank, Financial Intelligence Centre, Economic and Organised Crime and other law enforcing agencies have all joined the fight to curb this canker.

Cloned cheque defined

It is very important to give a fair explanation of what a cloned cheque really represent. According to Merriam-Webster dictionary, a clone is “one that appears to be a copy of an original form”. In simple terms a cloned cheque refers to a direct replica of an original cheque. Admittedly, it is very challenging and in most cases impossible detecting a cloned cheque with the naked eyes or through physical examination. This is because of the precision that comes with the creation of cloned cheques.

Modus Operandi of Fraudsters

To begin with, fraudsters need intelligence on the targeted account in order to be able to complete their intent. This information include and are not limited to unused cheque leaves, account balances, account mandate. With this information, fraudsters are able to generate the cheques either through the original printers or their own machines. It is significant to note that the information is provided by either an employee of the bank or close associates of the targeted customer.

Fraudsters in most instances open accounts with fictitious identification documents either with targeted account bank or with a different bank. The purpose of using fictitious identification documents for account opening is to curtail any traces to them. In situations where the fraudster opens account with the targeted account bank these cloned cheques may come in as a cheque deposit into their account. Also, fraudsters can pay cloned cheques into the accounts of unsuspecting individuals.

The opposite holds through where the fraudster opens account with different bank then the cloned cheques will come in through the clearing system (Cheque Truncation System). Again, the fraudster can also decide to withdraw the cloned cheque over-the-counter with a fictitious identification document.

How do we prevent cloned cheques?

Some industry experts have suggested that banks should employ sophisticated security features on their cheques to avoid cloning. Some have suggested water tight surveillance on companies that are contracted to print cheques. Whiles others believe that the initiative of Central Bank to deploy systems to reduce the use of cash can reduce the menace of cheque cloning.

However, I do not believe that introduction of sophisticated security features is enough to fight this canker. This is because if the printing house is compromised then of course these sophisticated security features can as well be replicated.

Again, to what extent can banks mount watertight surveillance on the printing houses? In practice this will be a tedious task and in most cases impossible.

The initiative of the Central Bank to ensure cashless society has the potential to reduce cheque cloning. The reduction will be achieved when the over-the-counter cash limit directive to 3rd party withdrawal is extended to account owner. This is because majority of successful instances shows that huge amount of cash are withdrawn over-the-counter.

Ultimate remedy to counter cheque cloning on banks

The various suggestion given by industry experts have the potential to reduce cheque cloning. Two fundamental and significant antidote that have not been considered in tackling cheque cloning are Customer Due Diligence/Enhanced Due Diligence (CDD/EDD) and Know Your Customer (KYC). Customer Due Diligence and Know Your Customer are synonymous and therefore both have the same goal of better identifying, verifying and monitoring of customers and their account transactions.

Evidence available shows that for any cloned cheque that is successfully withdrawn there has been a breach in controls and due diligence. As bankers, it is obligatory that in paying a transaction we must ascertain how the funds came in and whether that transaction is consistent with the account historic performance. Unfortunately, this is an act that is usually not performed therefore makes fraudster succeed in defrauding banks.

The two concepts are backed by the legislation in Ghana. These provisions are made in Section 23(1)(a) of the Anti-Money Laundering Act,2008(ACT 749) and Regulation 13(1)(a) of the Anti-Money Laundering Regulations,2011 (LI 1987).

Banks are obliged by law to identify and verify from independent sources the identification documents submitted by prospective customers who want open account. This is extended to 3rd party customers who present cheques over-the-counter for encashment under the AML Amended ACT 2014 (ACT 874). Banks must engage customers (3rd party) to have better understanding of the purpose of funds especially when the suspected cheques is over-the-counter. Banks must encourage customers update their account information especially when there are changes in trend and status.


Banks should as a matter of prudent and sound banking contact drawers to confirm payments. In situations of possible call diversion, basic questions should be asked to establish true identity of the recipient.

Branch Managers must find legal grounds to return cheques they find suspicious. This will aid them buy time to do an in-depth customer due diligence.

All these remedies must be applied to all cheques that are presented through the Cheque Truncation System to banks.

The Regulator, as part of a mechanism to enforce policies should sanction and make public offences of banks that are seen to be non-compliant. This in a way will deter other banks from exhibiting non-compliance.


The banking industry cannot do away with cheques for the simple reason that it has the features to help economies achieve cashless societies even though it is heckled with cloning.

Your Due Diligence is the only insurance the Bank has in order to survive in the face of cheque cloning business environment.

The author is a Compliance Officer with GCB Bank, Compliance Department.