A local commercial bank has lost millions of shillings to fraudsters
based in Russia. The fraud has seen five staff members of the bank, with
regional presence sacked. The fired employees have since moved to court
and sued the bank management.
Investigations by Weekend in Business revealed the bank lost Sh7.29 million after its Western Union money transfer service was hacked, and 21 money transactions made, with payments being traced to Russia.
The transactions were made on April 6th, 7th and 8th with Sh356,875.95 being reversed after the fraud was detected. Western Union’s web-based system’s global operations are controlled from a server in the US, with Kenya being under the European Region Operation Centre.
The system used a unique identification called terminal identification (ID) and a digital certificate associated to each terminal ID. It is believed the fraudsters used the terminal identification and a digital certificate but also got access to the first two through hacking the bank’s system.
It has been established that the bank’s management brought in the Banking Fraud Investigation Unit team and KPMG but separate reports by investigators has not been made public.
In the latest fraud, employees who have been dismissed by the affected bank have argued in court through their lawyer, stated they were being sacrificed for no reason.
“The bank’s system is to blame for the financial loss,” said one of the sacked employees.
The affected staff noted a week before the scandal was committed, they had pointed out to the bank’s management the issue of its system and warned of it risking being compromised if not strengthened.
They have also questioned why the bank dismissed them even before investigations had been carried out to a logical conclusion. Among those dismissed include an international money transfer manager, two Information Technology experts, one customer care staff and one banking clerk.
Financial fraud is common in Kenya. Last year, a report indicated local banks were victims of more than half the Sh4.1 billion ($48.3 million) fraud that hit East African banks as technology made the crime easier.
A single bank in the economic bloc lost Sh2.72 billion ($32.1 million) to account for a third of the total fraud through data manipulation.
Deloitte Forensic director Robert Nyamu noted that actual statistics were difficult to determine due to the numerous unreported fraud cases. He said incidence of fraud was significantly understated despite cutting across the financial industry, including the insurance sector.
The Director of Public Prosecutions Mr Keriako Tobiko recently said the latest crimes necessitate fresh approaches to deal with them. “
New and emerging crimes such as money laundering, drug and human trafficking, cyber crime, terrorism, wildlife crimes and maritime piracy require specialised prosecution skills which calls for continuous training and skills development,” noted Tobiko.
Investigations by Weekend in Business revealed the bank lost Sh7.29 million after its Western Union money transfer service was hacked, and 21 money transactions made, with payments being traced to Russia.
The transactions were made on April 6th, 7th and 8th with Sh356,875.95 being reversed after the fraud was detected. Western Union’s web-based system’s global operations are controlled from a server in the US, with Kenya being under the European Region Operation Centre.
The system used a unique identification called terminal identification (ID) and a digital certificate associated to each terminal ID. It is believed the fraudsters used the terminal identification and a digital certificate but also got access to the first two through hacking the bank’s system.
It has been established that the bank’s management brought in the Banking Fraud Investigation Unit team and KPMG but separate reports by investigators has not been made public.
In the latest fraud, employees who have been dismissed by the affected bank have argued in court through their lawyer, stated they were being sacrificed for no reason.
“The bank’s system is to blame for the financial loss,” said one of the sacked employees.
The affected staff noted a week before the scandal was committed, they had pointed out to the bank’s management the issue of its system and warned of it risking being compromised if not strengthened.
They have also questioned why the bank dismissed them even before investigations had been carried out to a logical conclusion. Among those dismissed include an international money transfer manager, two Information Technology experts, one customer care staff and one banking clerk.
Financial fraud is common in Kenya. Last year, a report indicated local banks were victims of more than half the Sh4.1 billion ($48.3 million) fraud that hit East African banks as technology made the crime easier.
A single bank in the economic bloc lost Sh2.72 billion ($32.1 million) to account for a third of the total fraud through data manipulation.
Deloitte Forensic director Robert Nyamu noted that actual statistics were difficult to determine due to the numerous unreported fraud cases. He said incidence of fraud was significantly understated despite cutting across the financial industry, including the insurance sector.
The Director of Public Prosecutions Mr Keriako Tobiko recently said the latest crimes necessitate fresh approaches to deal with them. “
New and emerging crimes such as money laundering, drug and human trafficking, cyber crime, terrorism, wildlife crimes and maritime piracy require specialised prosecution skills which calls for continuous training and skills development,” noted Tobiko.
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