Kenya’s Equity Bank hit by $2.1 million debit card fraud

by MMC
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Stock Banking, Kenya’s largest bank, was the target of a debit card fraud in which the perpetrators stole $2.1 million. According to a letter sent to the Criminal Investigation Department, the stolen funds were transferred to more than 500 bank and mobile money accounts. The bank restricted all accounts that received these funds.

A DCI fraud detective confirmed the incident to TechCabal and claimed that 19 people had been arrested in connection with the fraud.

Equity Bank declined to comment.

Three sources familiar with the investigation said the perpetrators carried out a “card not present” scam to steal money from victims. Although this type of fraud typically involves using stolen card details to make online purchases, fraudsters often create websites and route payments to these websites to access the funds contained in these cards. These funds are then transferred to other bank accounts.

“Preliminary investigations revealed that between 04/09/2024 and 04/15/2024, KES 179.6 million ($1.3 million) was fraudulently remitted from GL into Equity’s 551 accounts Bank”, a letter signed by Gerald Munyiri, Managing Director of Equity. Security said.

“KES 63 million ($478,360) was sent to Safaricom and KES 39 million ($296,015) to eleven commercial banks. We are in contact with Safaricom and the respective banks to help trace the movement and protect the funds,” read part of the same letter.

One theory is that the transactions were carried out in batches because Kenyan banks require their customers to disclose information for all transactions over $10,000. Mobile wallets also have a limit of $1,900 per transaction, with a maximum of $3,800 per day.

Fraud is a growing concern in Kenya’s financial services sector. According to TransUnion Africa, a credit reporting agency, Kenyan banks lose about $130 million to cybercriminals each year, mainly through loan stacking and identity theft.

Kenya’s Financial Reporting Center (FRC), an agency that tracks money flows through financial institutions, has reported more than $600 million linked to card fraud, corruption and terrorism financing over the past few years. three years preceding July 2023.

Most cases of bank fraud in Kenya go unreported as most financial institutions choose to resolve them silently, albeit with the knowledge of the Central Bank of Kenya (CBK), the sector regulator.

In March 2024, Habil Olaka, the outgoing chief executive of the Kenya Bankers Association (KBA), told the Business Daily that local banks were increasing their spending on technology to combat growing fraud.

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