BOU urges banks on cyber risks and fraud

NCBA bank branch at Namanve

The Bank of Uganda has urged commercial banks to strengthen their risk management systems to mitigate cyber risks and fraud.

Hannington Wasswa, the director of Commercial Banking at the Bank of Uganda, said advancements in technology have increased exposure to cyber risks. These developments call for financial solutions to continue strengthening their risk management systems to mitigate any exposure to fraudulent activities.  

Fraud manifests in three major categories – cyber, electronic, or digital fraud, which constitutes 31.9 per cent of all cases reported, while loan-related fraud accounts for 25.7 per cent. The other category involves impersonation, identity theft, forgeries, and cash suppression, which constitutes 42.4 per cent.

At least Shs 43.6 billion was lost to fraud in 2022, according to the annual crime report of 2023. The report indicates that 43 cases of bank and other corporate fraud were reported in 2023, 135 cases of issuing false cheques, 245 cases of cyber crimes, and 868 cases of forgeries and uttering of documents.

Wasswa said, “Financial service consumers should be informed of potential risks that they may encounter while using different delivery channels. The bank exhibited robust risk management processes, and is eager to strengthen the same for stability in the financial sector.”

He was speaking at the launch of the NCBA bank branch at Namanve. Wasswa noted that the Bank of Uganda has implemented reforms geared towards strengthening risk management systems in financial institutions.

Key among the recent reforms include the issuance of the revised corporate governance guidelines, enhancing the vetting criteria for appointment to senior managerial positions, and an increase in the minimum paid-up capital requirements for financial institutions.

In line with the BoU’s agenda to promote financial inclusion in the country, Wasswa urged Ugandans to access banking services through mobile phones for convenient and timely services.

“Customers have the right to obtain sufficient information pertinent to financial transactions from the service providers as provided for by the Bank of Uganda consumer protection guidelines,” he stated.

“Cyber risks are a real threat to the times you are in. For banks that deal with a lot of data like ourselves, this is certainly a big concern. However, we have continued to make investments to monitor the activity going on in our system 24 hours a day. We have built the right firewalls. We continue to make sure that we are keeping up with the latest technology. Luckily, the latest technology available comes with security protections and you should continually train your staff on what to watch for in terms of phishing and other attacks that can happen to the organisation,” John Gachora, group managing director of NCBA Bank, said.

He said the bank regularly communicates with their customers to let them know what to watch out for and how to keep their money safe because the real protection comes from the employees you have employed.

Mark Muyobo, the CEO of NCBA bank, said from the studies that have been carried out, most of the frauds started internally.

“As an industry, through the Uganda Bankers Association, we collaborate to ensure that we learn from experience. If there has been experience at one financial institution, we are able to share information amongst ourselves to ensure that it doesn’t happen again.

“We are in the final stages of ensuring that the people who are involved in fraud are blacklisted so that they are not able to move from one financial institution to another…,” Mayobo said.

Source: The Observer

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