Cybercrime cases pegged to agent banking model are fast becoming a routine fixture in the country’s banking sector with billions of shillings lost. PHOTO/FILE Cybercrime cases pegged to agent banking model are fast becoming a routine fixture in the country’s banking sector with billions of shillings lost, Daily Monitor can reveal.
Unsuspecting customers have for the most part bore the brunt of the perpetual fraud. Only recently, apps of some reputable banks operating in the country were breached.
Mr Mwanje Moses and Ms Edith Nakacwa were some of the victims whom rogue elements ended up gaining unrestricted access to their deposits.
While Ms Nakacwa has had the situation remedied, most victims don’t always enjoy such happy endings. Most of them tend to have their accounts breached through apps that are usually their bank’s innovation.
These apps typically provide agents with the opportunity to open new accounts, process balance inquiry, cash deposits, and cash withdrawals. They also allow remittance with multi-currency, collection of loan instalment, and payment of third party bills.
This was hardly what regulators envisaged when agent banking was given the all-clear in January of 2016. The model was in fact part of the amendment made to the Financial Institutions Act of 2004.
The amendment gave leeway to third parties contracted by banks to provide receipt and forwarding of documents in relation to loans and leases; payment of retirement and social benefits; account balance enquiry; provision of account statements; and any other permitted products.
The objective of decentralising banking was to deepen financial inclusion. While the intentions were noble, cracks have started to appear in the architecture.
“Most of the challenges faced by mobile money agents today without a doubt plague bank agents since both models operate similar systems,” Mr Agaba Muhairwe, a financial sector analysts as well as industry legal expert, writes.
He adds: “These challenges include but are not limited to fraud, personal security of agents arising from robberies that endanger their lives, lack of support from network operators, theft and poor connectivity.”
Earlier this month, Stanbic Bank Uganda Limited confirmed it had noted and swiftly countered fraudulent activity by a few of its banking agents aimed at defrauding the bank.This, it further revealed, was through a process flow error that affected some third party agent banking transactions. According to the statement issued by the bank, the incident did not affect customer transactions or balances. Agency banking services, the bank noted, continue to operate normally. Effective […]