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Banks grapple with digital fraud

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Kampala, Uganda | THE INDEPENDENT | Experts have raised a red flag, urging Ugandan banks to close digital loopholes, after Equity Bank Uganda launched investigations into cases of fraud surrounding their Stock Loan and Agent Float financing. The fraud is likely to lead to a sh65billion loss.

“Looking at the press release share by Equity Bank, the issue facing them is not exclusive to them alone but something that the larger financial institutions and the country is facing,” said an expert in the banking sector.

“A key question for policymakers is how best to harness the benefits of technological banking advancements while identifying, monitoring, managing and mitigating digital fraud risks with appropriately designed and implemented controls.”

Digital fraud in the context of the banking system encompasses activities that are committed remotely andor virtually, and relies on deception to achieve its outcome.  It is primarily focused on banks’ customers, even though banks can play an indirect and involuntary role in facilitating fraud.

He said digital fraud is grouped into four broad categories:) unauthorised retail payment transactions ; manipulating bank customers to issue retail payments; fraud related to other banking products and fraud through customers’ data or banks’ systems.

According to Mastercard, losses on ecommerce online payment fraud hit $41 million last year, in 2022 and, according to Juniper Research, the total cost of ecommerce fraud to merchants will exceed $48 billion globally this year.

Of this startling figure, North America is cited as comprising 42% of fraud by value, followed by Europe at 26%.

According to The 2022 Annual Crime Report, a total of 286 cases of Cybercrimes were reported to the Police in the period under review compared to 258 cases reported in 2021, giving a 10.8% increase in this crime category.

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By the end of the year, 45 cases were taken to Court, 09 cases were not proceeded with while 232 cases are still under inquiry. Out of the total cases taken to Court, 05 cases secured convictions, 01 case was dismissed while 39 cases are pending in Court. Cybercrimes led to a loss of Ugx. 19,209,798,000 in 2022, out of which only Ugx. 16,790,000 was recovered.

There has been a general increase in cases of Cybercrimes from 256 cases reported to the Police in 2020 to 286 cases reported in 2022

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