Bank of Uganda has warned that rising cases of “internally perpetuated or assisted fraud” is hurting public confidence in commercial banks.
The Central Bank also says many banks lack regulatory frameworks to fight Money Laundering/Countering the Financing of Terrorism.
According to the Central Bank’s 2020 Annual Supervision Report, this was observed during onsite inspections of 10 Commercial Banks during the year under review.
“The key findings from the onsite examination for banks are; i) Growth in the incident and materiality of internally perpetuated or assisted frauds; ii) Cybersecurity vulnerability, inadequacies in AML/CFT (Anti-Money Laundering/Countering the Financing of Terrorism) frameworks, and KYC (Know Your Customer) procedures and compliance thereto. And iii) Instances of non-compliance with regulatory requirements. As a result, a number of penalties were levied upon some of the non-compliant SFIs,” the report reads in part.
This comes after it emerged that top executives and junior staff at Centenary Bank were in April under investigation over allegations of stealing Shs3.5b in foreign exchange deals.
A scandal, which the police said appeared to involve a syndicate, had been ongoing since 2019, but worsened last year during the lockdown, according to preliminary findings.
The fraud in the financial sector has been massive and prompted Uganda Bankers Association to fund procurement of equipment and training of police officers investigating economic and cyber-crimes.
According to the Annual Crime and Traffic Safety report 2020, Uganda lost money or property valued at Shs11.5t just only in economic crimes, translating into Shs32b being stolen every day last year. This is an increase from a Shs297b loss due to economic crimes in 2019.