January 2015 Issue

Our 'Newsletter on Financial Fraud' is your monthly insight into the various new fraud types and methods used by fraudsters globally in the banking space. 

In this issue, we bring to light the effect of banking fraud creeping in and making banks lose millions to this plaguing menace.

Cyber-crime in India likely to double in 2015


Rising at an alarming rate, the number of cyber crimes in the country may double to 3 lakh in 2015 and could pose serious economic and national security challenges, an Assocham-Mahindra SSG study has warned. The increasing use of smartphones and tablets for online banking and other financial transactions have increased risks.

India has emerged as a favorite among cybercriminals, mostly hackers and other malicious users who use the Internet to commit crimes such as identity theft, spamming, phishing and other types of fraud. As per the study’s findings, total number of cyber crimes registered during 2011, 2012, 2013 and 2014 stood at 13,301, 22,060, 71,780 and 1,49,254 respectively.

Phishing attacks of online banking accounts or cloning of ATM/debit cards are common occurrences. Maximum number of offenders belong to the 18-30 age group, added the report.

With increasing use of information technology (IT) enabled services such as e-governance, online business and electronic transactions, protection of personal and sensitive data have assumed paramount importance. The attacks have mostly originated from the cyber space of countries including the US, Europe, Brazil, Turkey, China, Pakistan, Bangladesh, Algeria and the UAE, the study revealed.

Smartphone users rarely check for security certificates while downloading apps (games, music and other software) from third party or unsecured sites, the study said, adding that mobile banking apps store data such as PIN and account number, on the phone. There is a risk that if the phone is hacked or stolen, then the information is compromised, the study said.

It further stated that mobile frauds are an area of concern for companies as 35-40 per cent of financial transactions are done via mobile devices and this number is expected to grow to 55-60 per cent by 2015.

Rising Internet penetration and online banking have made India a favorite among cybercriminals, who target online financial transactions using malicious software (malware). India ranks third after Japan and US in the list of countries most affected by online banking malware during 2014, the study said.

Source: The Financial Express

Nigerian Banks Lose N21.7 Billion to Fraud in One Year


Banks step in to stop check fraudThe  Nigeria Deposit Insurance Corporation (NDIC) said the nation's banking sector recorded a total number of 3,756 fraud cases worth N21.79 billion within the 2013 financial period.

NDIC, in its 2013 yearly report for the banking sector noted that the reported cases represent an increase of 11.12 per cent over the 3,380 fraud incident in the industry in 2012.

The report said while the frequency of fraud cases rose by 11.12 per cent within the period under review, the sector recorded a 20.8 per cent increase in monetary value from N18.05 billion in 2012 to N21.79 billion. In terms of actual loss from these fraud cases, the report said N5.75 billion may not be recovered, adding that this is N1.24 billion or 27.4 per cent higher than the N4.51 billion recorded in 2012.

"A total of 275 responses were received from 21 commercial banks, one non- interest bank and two merchant banks during the year under review.  Out of the 272 responses received, 3,756 fraud cases were reported in 2013 as against N21.79billion reported in 2012, showing an increase of 11.12 per cent. There was also a 20.8 per cent increase in the amount involved as N18.05billion was reported in 2012 as against N21.79 billion reported in 2013.”

Also, the expected/actual loss increased by N1.24billion or 27.4 per cent from N4.52 billion in 2012 to N5.76 billion in 2013.

The highest expected/actual loss of N2.5 billion occurred in the first quarter ended March 2013, which represented 47.4 per cent of the total industry expected/actual loss, the report added.

Giving a quarterly breakdown of the amount involved, the report pointed out that N7.80 billion fraud was recorded in the first quarter while the second, third and fourth quarters had N4.85bn, N3.84bn and N5.28bn respectively.

For the proportion of losses, the report said that N2.51billion is expected to be lost in the first quarter, while N1.16billion, N906 million and N1.18billion was lost in the second, third and fourth quarters respectively.

Source: allAfrica

Banks step in to stop check fraud


A number of Saudi banks are moving to protect customers from thieves who manipulate bank checks, after a number of video clips went viral on social networking sites showing how scammers manipulate numbers and data on original checks.

In response, a number of banks have provided their VIP customers with checkbooks with “carbon” sheets in order to allow the writer of the check to maintain a copy and protect against fraudulent transactions. Such checkbooks will become widely available in coming weeks.

According to Talaat Hafez, the secretary-general of the Committee of Media and Banking Awareness, the videos circulating on YouTube cannot be confirmed as accurate. The video clips demonstrate how scammers change checks and wipe out data using a lighter, without causing changes to the check paper itself, allowing anyone to change the amount and check type.

“To avoid falling victim to such types of fraud, everyone should ensure financial transactions are occurring safely and all transactions and documents are personally monitored,” he advised.

According to lawyer and legal adviser Ahmed Al-Sudairi, fraud in this case is defined as changing the terms of a particular check that is written down, printed, or otherwise, as well as making changes to other government transactions or private transactions of other kinds.

He said that the punishment for such fraud is decided by the judge on a case by case basis, and can include a prison sentence of up to 10 years, as well as fines of up to SR10 million.

Source: Arab News

Financial Crime in South Africa


Financial Crime in South Africa is overwhelmingly omnipresent. According to Christopher Malan, Head of Financial Intelligence Center, South African banks have to work towards being more compliant in combating financial crime i.e. Terrorism Financing and Money Laundering. The most common scams prevailing in South Africa are internal fraud, money laundering, e-mail scams, identity theft, remittance scams, bribing and corruption, and misappropriation of assets. Internal fraud leads the list of frauds. This revelation by PWC has built a cloud of uncertainty and mistrust inside organizations and has shattered trust of bank customers.

The infographic below highlights the different kinds of frauds prevalent in South Africa 

Financial Crime in South Africa!

Source: CustomerXPs

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