LET’S TALK BANKING WITH PAUL LUO-BAZ FRAUD PREVENTION COMMITTEE MEMBER
YES! YOU ARE AT RISK OF FRAUD!
IN its shortened form, fraud is simply- deception intended for gain. When therefore, any utterance, document alteration (forgery), reproduction of document (counterfeiting), withholding of information to pervert the truth and indeed any form of misrepresentation, is done with a view to deceive another for gain, an act of fraud has occasioned. There are no institutions, persons or groupings of persons spared from fraud. We constantly hear of impersonations, embezzlements, counterfeit products or legal tender, quackery, cybercrime, social engineering scams and many other fraud types affecting individuals, banks, government wings, NGO, SMEs, churches etc. The question is -Why are there so many fraud incidents?
There are various reasons why fraud incident trends are worsening and affecting many more people than previously. Allow me to discuss a few in the hope that readers’ awareness can be enhanced.
Fraud is seldom, an aggravated offence, save for situations where extortion is involved. There is rarely neither force nor the threat of force used to extract gain or value from victims. In its stead deception is used. This has two effects, firstly the courts tend to seemingly be lenient on offenders, sparing custodial sentences for aggravated offences such as robbery and murder. The second effect also is victims’ reaction is somewhat subdued or delayed given lingering doubts on what has truly happened.
When a confident trickster walks away with money from a black dollar scam, the victim is left fully trusting the perpetrator. The victim only realises something is amiss after agreed milestone events do not happen, mostly many days after the last interaction.
This delayed response is evident in fraudulent encounters with say witch doctors and false men of god. Victims return to them several times when the remedies brokered do not work. The victims are misled repeatedly and remain in a state of confusion for long periods of time before it fully dawns on them that they have fallen victim to fraud.
Another illustration would be the utterance of forged cheques. Traders falling victim to this type of fraud remain convinced that the cheques upon which they have released goods would clear when processed by their bankers. It only becomes apparent that they are victims when the cheques are returned to drawer, again, days after their last encounter with perpetrators.
This lead period that is common across the majority of fraud incidents between commission of the offence and the realisation that one has fallen victim, coupled with the “perceived” leniency of the courts on non-aggravated crime, make the prospect of attempting fraud attractive to many with criminal inclinations. As unemployment raises across the world, as disposable income becomes more scarce, as land becomes more difficult to acquire, as draughts and floods increase many people turn to quick wins either as inadvertent willing or unwilling fraud victims or as fraudsters.
Aside from the variables causing fraud to be comparatively a more attractive crime, there is also the issue of Opportunity. Thinktanks on the subject say there are only three causes of fraud –
- Financial Pressure (Resulting from economic environment, lifestyle, greed, peer pressure etc),
- Opportunity and;
- Rationalisation (the perpetrator’s ability to mentally justify criminal acts).
Opportunity refers to the effectiveness of controls in institutions, groups or teams where fraud is likely to occur. If for instance an institution receiving cash from daily sales keeps no record of it, has no role appointed to manage it and keeps the day’s takings unsecured overnight with all staff having unfettered access to the premises, we certainly expect to see rampant acts of fraud. This has accounted for many business failures internationally and locally.
Leading surveys remain unanimous on findings that the highest risk to corporates is its staff. If you provide the opportunity for staff to commit fraud then you will surely find that fraud will be rife in your entity. Estimates speak to a portion of up to 20% of all staff in corporate entities being criminally inclined and having joined institutions with the sole purpose of perpetrating fraud. This is compounded further by many professionals being unemployed and willing to use their skills to earn a living in any way. When therefore such professionals collude with staff in corporate or business entities, losses are inevitably perilously high.
In the recent past, compounded by the advent of Covid-19, industries and individuals have increased their uptake of electronic channels for banking, bill payments and money transfers. The skewed levels of knowledge among citizens has resulted in both -the prospect of fraud being more attractive, given fraud can now be perpetrated remotely, away from banks, financial institutions and Mobile Network Operators and reducing the prospect of being caught; and unprecedented Opportunity for intending fraudsters. What traditionally were low risk activities such as completing attendance registers when entering premises or completing manual applications when sending money on mobile money platforms are now a critical source of information for fraudsters to ply their wares.
Full names, phone numbers and NRC numbers can now be used for SIM replacements and activate Mobile Banking accounts impersonating unsuspecting owners by unscrupulous individuals. The capability of buying goods and services online from foreign countries only using card details as another example, introduces scary possibilities for account holders leaving their banking and identity documents unsecured even only for short periods of time. The design and ease at which national identity can be falsified speaks also to unprecedented Opportunity.
Children and dependants, normally far more tech savvy than their parents, with peculiar financial pressures of their own also pose an additional risk of fraud. Therefore, when we say you are at risk of fraud individually we are being sincere. To protect yourself you must ensure that your banking, identity documents, PINs and passwords to your phone, electronic accounts and platforms are secured. This is not the time to leave such documents in glove compartments of your vehicle, at home unattended or share PINs.
As always, your feedback is highly valuable, and this platform offers an opportunity for further engagement with members of the public on matters relating to Commercial Banking. Please share your feedback with us via E-mail: Mirriam.Zimba@baz.co.zm