Fraud litters banking landscape in 2009

Staff Writer | Friday January 15, 2010 00:00

 

In recent years, local banks have introduced several measures to curb fraud, including discontinuing the special clearance of cheques and introducing tighter controls on daily withdrawal limits. The Bank of Botswana has also weighed in by placing a P500,000 limit on the value of cheques, with any amount higher requiring the use of the Society for Worldwide Interbank Financial Telecommunications (SWIFT).

However, the introduction of advanced technology and the advent of paperless transactions has aided the growth of fraud, as seen by the banking industry's ombudsman last year.

Banking Adjudicator, Gabriel Maotwanyane, said fraud was among the biggest challenges of 2009, with a significant proportion of complaints against banks turning out to be a result of the vice.

'Fraud involving debit/credit cards and ATMs, particularly in cross-border transactions, was a prominent issue last year. In some cases, consumers would travel outside the country, use an ATM somewhere, only to find that their details have been cloned.

'The criminal would then continue using that consumer's cloned card and in some instances, the victim only discovers that their funds are missing when they return to Botswana and check their bank statements. One could say the advancement in technology is to blame,' said Maotwanyane.

While card cloning is a new trend in Botswana, the practice has been rampant in developed countries. In one incident in 1996, a British man stole more than one million Pounds (P10.8 million) after securing the ATM card numbers, expiry dates and other information from consumers cards, using high definition video cameras hidden in ATMs.

Another variation of the vice, is where consumers give service providers their ATM cards which then get cloned by the criminals under the guise of swiping the cards.

aotwanyane said the key to stamping out this type of fraud was to take extra care and caution when using one's ATM card.

'There have been instances where someone at a filling station would give the attendant their card and that person goes and swipes inside, without knowing whether there's a cloning machine inside.

'Never let your ATM card out of your sight; even if the service person wishes to swipe it. Also, consumers should scrutinise the locations of the ATMs they use, and avoid using out-of-the-way machines which are sometimes used by the criminals who clone cards,' he said.

The Banking Adjudicator and members of the Botswana Bankers Association are set to launch a comprehensive educational campaign designed to sensitise consumers on the trends in transactional fraud. According to Maotwanyane, the campaign will be done through radio, fliers, billboards, notices placed on ATMs, bank statements and individual bank branches.

Meanwhile, a review of the Office of the Banking Adjudicator, to bring it up to international standards, is planned for this year. The review is using benchmarks set by the International Network of Financial Ombudsmen (INFO). Maotwanyane explained that the review was scheduled for last year, but failed to take place due to the restrictions on spending brought on by the global recession.

'All the banks operating in Botswana are international and a decision taken by the banking adjudicator here is the same as the one taken by a banking adjudicator in Dubai.
'That's why this review in terms of benchmarks is so important,' he said.

Some of INFO's benchmarks include accessibility, independence, fairness, accountability, efficiency and effectiveness of the adjudicator's office. The benchmarks will come to the fore this September when Botswana participates in INFO's annual conference to be held in Cape Town, South Africa.

The Banking Adjudicator is a designated impartial dispute resolution practitioner who provides confidential and informal assistance to the customers of local commercial and merchant banks. The Adjudicator investigates complaints on unfair, biased or improper treatment involving banking services and mediates resolutions between banks and customers.