The advent of electronic banking has revolutionized the way people conduct financial transactions.
However, according to business analysts at the Publicisteastafrica.com this convenience has also introduced new risks, particularly in the form of electronic fraud.
In Uganda, several banks are grappling with the issue of rampant electronic fraud, which has resulted in significant financial losses and threatens the future of e-channels.
Types of Electronic Fraud
Electronic fraud in the banking sector takes many forms, including:
Phishing
Fraudsters use emails, texts, or social media to trick customers into revealing sensitive information such as passwords, PINs, or account numbers.
Malware and Trojans
Malicious software is used to gain unauthorized access to customers’ devices or bank systems.
Card skimming
Fraudsters use devices to capture customers’ card information at ATMs or point-of-sale terminals.
Identity theft
Fraudsters use stolen identities to open bank accounts, obtain loans, or conduct transactions.
Insider collusion
Bank staff collude with outsiders to commit fraud, often by exploiting weaknesses in the bank’s systems.
The Case of Bank of Uganda
Recently, Bank of Uganda suffered a significant loss of over Shs60 billion to hackers. Investigations led to the arrest of officials from the Ministry of Finance, Planning and Economic Development, as well as some staff from the Central Bank.
While appearing before Parliament in December 2024 to explain the loss, newly appointed BoU governor Michael Anti-Ego had this to say; “We conducted a thorough review, and there is no proof that our systems were hacked.”
He explained that the fraudulent transfers involved two transactions: USD 6.134 million intended for the World Bank, which was mistakenly sent to Road Way Company Limited in Japan on September 12, 2024, and USD8.596 million meant for the African Development Fund, also transferred to Japan on September 20, 2024.
However, this incident, much as it has since been contained by the police and other relevant authorities, highlights the need for robust cyber security systems and expertise by the Central Bank to combat electronic fraud, which also applies to commercial banks.
Mitigating Electronic Fraud
To combat electronic fraud, banks and other stakeholders must work together to implement the following measures:
Sensitizing customers
Banks should educate customers on the various forms of electronic fraud and how to protect themselves.
Training in cyber security
There is a need to train more ICT experts, judges, lawyers, and technocrats with specialized knowledge of e-fraud.
Upgrading technology
Banks must routinely upgrade their technology and cyber readiness to stay ahead of fraudsters.
Engaging expert hackers
Banks can also engage expert hackers to test their cyber security systems and identify vulnerabilities.
Collaboration and information sharing
Banks and other stakeholders must share information and collaborate to combat electronic fraud.
Electronic fraud is therefore a growing concern in Uganda’s banking sector. To combat this threat, banks and other stakeholders must work together to implement robust cyber security measures, educate customers, and collaborate to share information and best practices.
By doing so, we can reduce the risk of electronic fraud and protect the integrity of our financial systems.