Recent concerns have emerged as Equity Bank Uganda initiates investigations into cases of fraud related to their Stock Loan and Agent Float financing. Experts warn that if left unchecked, these fraudulent activities could result in a loss of up to sh65 billion.
According to specialists in the banking sector, the issues faced by Equity Bank are not unique to them alone. Rather, they reflect broader challenges within the financial institutions of Uganda.
A critical question arises for policymakers: how can the benefits of technological banking advancements be maximized while effectively identifying, monitoring, managing, and mitigating digital fraud risks through well-designed and implemented controls?
Digital fraud within the banking system encompasses various activities conducted remotely or virtually, often relying on deception to achieve its objectives. While its primary focus is on banks’ customers, financial institutions can inadvertently facilitate fraud.
Experts categorize digital fraud into four main groups: unauthorized retail payment transactions, manipulation of bank customers to issue retail payments, fraud concerning other banking products, and fraud perpetrated through customers’ data or banks’ systems.
Statistics from Mastercard indicate that losses due to ecommerce online payment fraud amounted to $41 million in the previous year (2022). Additionally, Juniper Research projects that the total cost of ecommerce fraud to merchants globally will exceed $48 billion this year.
Within this staggering figure, North America accounts for 42% of fraud by value, followed by Europe at 26%.
The 2022 Annual Crime Report reveals a concerning trend in cybercrimes, with 286 cases reported to the police during the review period compared to 258 cases in 2021, marking a 10.8% increase in this category of crime.
Of the reported cases, 45 were brought to court, while nine were not pursued further. Currently, 232 cases remain under investigation. Out of those that went to court, five secured convictions, one was dismissed, and 39 are still pending. In total, cybercrimes resulted in a loss of Ugx. 19,209,798,000 in 2022, with only Ugx. 16,790,000 recovered.
There has been a general uptick in cybercrime cases, rising from 256 reported cases in 2020 to 286 in 2022.
