N$38m lost to banking fraud

The Namibian economy bled N$38.8 million in losses due to fraudulent activities in Namibian banks, involving both the public and banking industry employees, The Villager has learnt.
Speaking to The Villager this week, Bank of Namibia (BoN), Director of Strategic Communications and Financial Sector Development, Ndangi Katoma said, “The nature of fraud relates to fraud committed by outsiders, manipulation/forgery of negotiable instruments, failure to adhere to bank’s procedures, computer related fraud, ATM (automatic teller machine) related fraud, forgery of authorised signatures and fraud committed by staff members”.
Last year the banks reported 251 cases of fraud, an increase from the 178 cases that were reported the year before.
Banks also reported 15 fraudulent activities such as embezzlement by employees last year, although this indicated a decrease from 21 cases reported in 2014.
According to BoN, with the current payments systems environment, card fraud is the most common in Namibia.
“This can be explained by the volume of card transactions in the industry, compared to other payment streams that are not as widely used such as cheque or EFT (electronic funds transfer)”, Katoma said.
Card fraud also involves lower values because of institutions’ limits in the terms of transaction value. Industry limits for other payments streams (EFT and cheque) are also aimed toward increasing the safety of the instrument, apart from other considerations such as cost, he added.
To counter fraudulent activities, BoN is in constant consultation with bodies such as the Payments Association of Namibia (PAN), and platforms created through this body, to actively address new forms of fraud, as well as consult on affective measures to address common occurrences of fraud.
“Through vehicles such as the National Payment System (NPS), Vision 2015 and recently launched NPS Vision 2020, the bank has worked to establish industry best practices to increase the safety of our payment instruments”, Katoma added.
Last month The Villager wrote that BoN and the Institute of Bankers Association of Namibia has set in motion an exercise to pull the plug on cheque payments by 2017, after first reducing the cheque limits to N$100 000.
The bulk of commercial banks are already operating with notifications indicating that they will be phasing out cheque payments within a foreseeable time with the complete disengagement expected in 2017.
 BoN told The Villager that this strategy is expected to minimise risks associated with cheque payments as they are prone to fraud, costly and inefficient.
Earlier this year, the banking industry agreed to reduce the limit on cheque payments to N$100 000 from N$500 000.
 “The Bank of Namibia supported this banking industry decision and issued a determination to this affect. There are various efficient electronic payment mediums in place to facilitate retail payment services other than cheques”, Katoma told The Villager.
BoN said that it and the industry players under the auspices of the Payment Association of Namibia (PAN) will ensure that the impact on the general public will be taken into serious consideration before moving forward.
According to BoN, during the 4th quarter of 2015, cheque volumes and values processed by Namclear continued to decrease compared to the year before (4th quarter of 2014).
 The cheque volumes and values decreased by 82.5% and 87% respectively, and the Bank said, the continuing downward trend in volume and value is mostly due to the shift to electronic payment and the inefficient nature of cheques as the payment instrument when compared to cards and electronic funds transfer.
There are alternative means of making payments which do not carry the same risks and are faster and cheaper such as electronic funds transfer payments, which can be done through internet banking, at an ATM or in a branch, BoN emphasised.