In the wake of the recent fraud incident at Stanbic bank that resulted in the misappropriation of $1.8 million from a customer’s business account, the police commended the bank for its expedient and proactive response that resulted in the apprehension of 10 suspects, including staff, who have since been charged at the Anti-Corruption court.

In a media interview on February 22, ANNE JUUKO, the Stanbic bank Chief Executive, said fraud is a serious threat to the reputation of the country’s financial sector, writes Ernest Jjingo.

How secure is the customer’s money in the bank?

Your money and all our customer deposits – are safe, and there is no need for alarm. With regard to the recent unfortunate and rare incident involving one of our business customers, the suspects are now in custody, and we are vigorously pursuing justice for the client and the bank with the objective of maximizing recovery.

I am happy to share that we have received many messages of support and appreciation from our stakeholders, for being transparent and accountable in managing the incident. These are core Stanbic bank values, which we will always refer to in navigating these types of unfortunate events—we always take responsibility; that is why we are in the business of trust.

What exactly happened and how did you unearth the fraud?

It is prudent for me to limit my response to this question given the case is still active in the court of law. Allow me to use an alternative and comparable scenario in your industry—the media business. The tenets of success in the editorial business include the provision of credible, verified, and well-written content.

The editors are “custodians of quality” and are tasked with ensuring these tenets are delivered consistently. The process, professionally referred to as gatekeeping, involves editors at various levels reviewing and approving the content for print, radio, or television.

The objective is to consistently maintain the highest editorial standards. Unfortunately, there are often deliberate attempts to circumvent the editorial review process to publish unverified and unreviewed content.

These unfortunate attempts are not limited to the media industry; we experience them in banking, and consequently, we at Stanbic bank have developed a sophisticated, multi-layered, internal control system designed to mitigate the risk of unauthorized access to customer accounts—call it our gatekeeping system.

This system helps us maintain a proactive fraud risk posture that allows us to respond to the threat in a timely manner. In this case, the fraud was identified during the call-back confirmation process, during which our client advised that they had not authorized the transaction; in response, we immediately activated internal and external mitigation measures.

Though the fraud was already active, our internal controls managed to stop the proliferation and limit the impact. We await the completion of investigations to ascertain possible internal complicity.

There are claims there was “intrusion into the bank’s computer system.” To what extent is this true?

As we said in our statement to the press, the bank’s computer systems and information technology infrastructure were not compromised at all. I want to emphasize that customer funds and bank assets are intact and were not in any way affected by this fraud, which, to our knowledge— supported by available evidence, was purely based on forged documentation and impersonation, aided by possible internal collusion, and is currently subject to a police investigation, whose findings we eagerly await.

Meanwhile, there are conflicting reports of how much the fraudsters managed to withdraw from the customer’s account. Was it $1.8m or $2.46m?

Let me first state that, in principle, not a cent should be withdrawn from a customer’s account without their verified authorization. So, for us, it is not a question of how much—it is a question of the sanctity of a core banking principle and our fundamental responsibility as a trusted banking brand to keep depositors’ money and data safe.

Nonetheless, to set the record straight in this case, we can confirm that $1.8m was illegally removed from the customer’s account.

Will the customer get back their money?

Absolutely. We have stayed in direct contact with our client since noticing the red flag transaction and alerting them of our suspicions. We are closely working together to help authorities with investigations and recovery, and I request that we respect that process.

Now that Stanbic bank staff are among the suspects, what is the bank’s policy on fraud and ethical conduct?

The bank has a robust anti-fraud culture and has zero appetites for willful misconduct that is contrary to our values and professional code of ethics. Our business as Stanbic bank— and indeed, banking in general—is built on trust and integrity, and we are guided by a set of values and a code of ethics that enable our foundation as a trusted financial services organization.

Any suspicion or instance of fraud or other forms of misconduct is reported, investigated, and, where appropriate, involves law enforcement. All our staff are aware of the price of willful misconduct—it is very high!

We regret the alleged involvement of our staff in this fraud and await the outcome of the investigation and attendant legal proceedings. Fraud is a sector-wide problem that threatens the reputation of the country’s financial services industry.

What do you think should be done to combat the vice in the future?

Firstly, I thank the media for taking a keen interest in these matters. There is no bank or business that enjoys this level of negative publicity. However, we acknowledge that it is important to engage with fraud events of this nature in a very transparent manner to ensure all stakeholders are informed. In the recent past, we have seen many similar reports involving other banks in the industry.

So, indeed, this is a sector-wide challenge that undermines the ability of banks to deliver services that are critical to a functioning economy. And to give you a bit of statistical context, operational risk—under which fraud and process management-related losses fall—on average costs the banking sector, Shs 24bn every quarter.

Process management risk—a loss in revenue resulting from inefficient internal processes, accounts for 51% of all operational risks each quarter, while fraud cases account for 25% of sector losses. There is therefore a need for a concentrated effort by all stakeholders to prevent any acts of fraud and prosecute fraudsters to the full extent of the law.

Stanbic bank pledges to continue its efforts in this fight. For instance, we are working with stakeholders to organize the first ever ‘Bank Fraud Conference’ where we will invite different experts and stakeholders from around the world to chart an effective strategy to combat fraud in the financial services sector.

But all said and done, it is important that customers remain fraud-vigilant and protect their personal and business account information jealously. For example, do not share your banking details with anyone without doing proper due diligence. In addition, if you notice any suspicious activity on your account, Stanbic bank has a toll-free hotline where you can report it.

What are your message to customers and other stakeholders of Stanbic bank?

Our first and most important obligation is to protect and defend the interests of Stanbic bank customers. We regret incidents in the past or future where we fell short of expectations. What we can assure our stakeholders of, however, is transparency and proactive accountability.

We thank all friends of Stanbic who have sent us messages of support, especially those recognizing our bold and proactive actions in bringing to justice elements that are attempting to mutilate the reputation of our brand—and that of the banking sector in general, with willful acts of fraud and professional misconduct.

It would also be helpful for the press to report these cases with less sensationalism and fearmongering, which are counterproductive to the fight against fraud and general misconduct.

Story Credit: Ernest Jjingo (The Observer)