- “Let us not look back in anger or forward in fear, but around in awareness”. — James Thurber
Last week I shared some lessons that have come out as a result of the Bank of Ghana Fraud reports for 2019 and 2020. The recurrent issue that is also of a global nature is that more than fifty percent of frauds are done with the connivance of internal staff.
Some aspects of the reports were highlighted and some lessons gathered were shared. There were a few sections that showed some reduction, but we still need to be forewarned and not be taken by surprise. This week, I will move on to other fraud cases which continue to lure in the path of financial service providers:
“This type of fraud involves the impersonation of beneficiaries of inward remittances, especially funds sent via Western Union and MoneyGram. Incidents filed as remittance fraud involved wrong payments made as a result of fictitious identification documents presented to the banks. Unfortunately, some staff of banks in charge of processing these transactions fail to use the G-Vive platform to authenticate the identity cards provided.
In other instances, fraudulent staff perpetuate the remittance fraud by themselves. After collecting IDs from beneficiaries, they deceive the beneficiary into believing that their transactions cannot be completed due to network challenges.
They advise them to proceed to another branch to undertake the transaction only for the customers to realise on arriving at a different branch that the transaction has already been completed. These fraudulent staff utilize the information presented to process the transaction when they turn away the customer and appropriate their funds.
In other instances, staff of banks relay personal information of beneficiaries to their accomplices, to generate fake IDs to withdraw beneficiaries’ funds in other financial institutions. Remittance fraud incidents recorded in 2020 accounted for 0.37% of fraud cases reported in 2020 as compared to a rate of 0.35% recorded in 2019. Remittance fraud accounted for 0.2% of total loss incurred through fraud in 2020”
Although this report indicates remittance fraud proportion as 0.37% of total frauds in 2020, it is important to bring it to a minimum tolerance level. Since many beneficiaries now have more options to receive payment either through their accounts or through their mobile money accounts, the digitization option is gradually taking over such frauds.
Reminders and lessons:
- Banks who appoint Rural and Community banks, savings and loans companies as their Agents in areas of need to ensure that their reputation is not damaged by the infractions caused on their Remittance accounts. Delegation of their services to serve the unbanked demands monitoring and control around all areas that perform such services.
- Requests for “proof of payment” by the money transfer operations companies usually brings unusual transactions under suspicion and delays in responses by banks cause them to be blacklisted especially by Western Union and Moneygram.
- Remittance Tellers are to be monitored by their Supervisors to ensure their transactions are done within the approved limits per transaction and referred to Compliance department when they are above the authorized limit.
- Regular snap checks and reminders will prevent any collusion by staff with fraudsters who may impersonate the actual beneficiaries.
“Burglary is steadily rising from obscurity and gaining ground in its impact on the banking industry. Loss incurred through burglary in 2020 accounted for 5.3% of total fraud related losses recorded in 2020, overtaking prevalent fraud types such as E-Money and Cheque Fraud in the process. (refer to Table 5) This may be as a result of laxity in the establishment and enforcement of physical security systems by some industry players, thereby exposing their premises to higher risks of invasion”.
Physical Security in Branches
This section is typically the preserve of the Operational manager in the typical branch environment. Due to automation, some of the functions may not be applicable especially in the case of a near cashless banking environment. However, for the sake of the existing banking structures which cater for a section of the public who still rely on cash, it becomes relevant.
Physical security in branches is sometimes treated lightly. The following lessons are obvious:
- Need for financial institutions to conduct regular countrywide operational risk awareness program in all outlets because it exposes the vulnerability of the physical outlets such as branches and agencies.
- Some vulnerabilities can be exposed to enable Supervisors use them as reminders to reduce burglaries. The Business Continuity Plan should be workable and in force.
- The security guard not ready for work at the approved time.…. still dressed in mufti clothes or not even available.
- The front door may be left ajar, especially in branches where there is only one entrance (no back door, only one exit in case of fire or alarms).
- Unlocked cabinets and drawers containing some incriminating documents which an unscrupulous cleaner can use for wrong purposes
- Cluttered desks, confidential documents in the printer, identity cards in the Remittance Teller’s enclosures.
- Loose and opened files showing customers’ correspondence with the bank, with their exposed signatures and personal information!!
- Un-shredded documents like computer print-outs of customers’ transactions revealing so much information which fraudsters would have paid thousands of cedi to get, making secrecy a joke.
- Customers’ copies of cheque or cash deposit slips in the drawers of tellers, and customer service staff.
- Blank letterheads, statement sheets and even real customers’ statements waiting to be collected. This was “gold” for visa racketeers.
- Official stamps lying about. When it is copied and used for fraud, the staff may suspect the poor, innocent cleaner.
- CCTV not working? Had the relevant department been notified? How was it positioned? Where were the back-ups kept? Are the recordings being over- ridden when replayed? Were the complaints logged?
- Electronic gadgets still on after close of work, and overnight…especially the printers, air conditioners, photocopiers, kettles still plugged in, etc?
- Many staff may not have had any training on fire prevention and may be ignorant of such end of day procedures.
Basic Branch Opening and Closing Procedures
- All Branches must have both day and night security services in place. All staff must take note of the opening and closing procedures. For example, check for the signal, any signs of damage or break-in and any persons acting suspiciously before attempting to enter the branch. If there is any other cause for concern, staff must not attempt to enter the branch. They should alert the police and the branch manager and warn others who may attempt to enter the branch.
- If a guard or staff member is attacked or taken hostage when in or attempting to enter the branch, he/she should follow the procedures for hostage incidents and wait for assistance to arrive. If it is possible to do so without putting themselves at greater risk, he/she should, activate the attack/duress system on the branch alarm.
I will pause here. Next week, we shall look at E-money frauds, correspondent banking frauds and others. For more insights into operational risk management, frauds and other relevant experiences, please book a copy of my new book, “THE MODERN BRANCH MANAGER’S COMPANION” which involves the adoption of a multi-disciplinary approach in the practice of today’s branch management. It also shares invaluable insights on the mindset needed to navigate and make a difference in the changing dynamics of the banking industry. Call 0244333051 for your copy.
TO BE CONTINUED
ABOUT THE AUTHOR
Alberta Quarcoopome is a Fellow of the Institute of Bankers, and CEO of ALKAN Business Consult Ltd. She is the Author of Three books: “The 21st Century Bank Teller: A Strategic Partner” and “My Front Desk Experience: A Young Banker’s Story” and “The Modern Branch Manager’s Companion”. She uses her experience and practical case studies, training young bankers in operational risk management, sales, customer service, banking operations and fraud.
Email:firstname.lastname@example.org or [email protected]