Banks told tighten internal controls
Aug 31, 2008
BANKS and credit institutions should tighten internal controls in the wake of increasing bank fraud that has rocked the financial sector, a central bank official has suggested.
By Sylvia Juuko
BANKS and credit institutions should tighten internal controls in the wake of increasing bank fraud that has rocked the financial sector, a central bank official has suggested.
“They have to intensify internal controls by putting more checks and balances and also improving inspection and internal audits,†Juma Walusimbi, the central bank’s spokesman, said.
Early this month, the Police warned the public against a new wave of crime in financial institutions, which is perpetuated by staff members.
Simeo Nsubuga, the Kampala Extra Region spokesman, said banks were reluctant to talk about the issue for fear of negative publicity.
“Banks do not want to reveal what is happening. They say it is an internal matter,†Nsubuga said, adding that bank officials transfer money to accounts of their accomplices without informing customers.
He said 11 suspects, including four officials of Crane Bank, had been arrested for fraudulently withdrawing over sh50m.
Walusimbi said during the monthly press briefing that banks and credit institutions should continuously vet their staff.
He appealed to the financial institutions to aggressively enforce the ‘know your customer’ requirement. It is a due diligence performed to identify customers and ascertain relevant information pertinent to doing business with them.
“The commercial banks and credit institutions should ensure these requirements are fulfilled by new and existing customers as well as monitoring the activities on the accounts,†Walusimbi said.
Analysts said this requirement has become increasingly important globally to prevent identity theft fraud, money laundering and terrorist financing.
He appealed to customers to check their bank statements regularly to ensure they reflect the transactions carried out during the specified period.
“If you find an item on your account especially credit, do not withdraw the money thinking it’s a windfall,†Walusimbi advised.
BANKS and credit institutions should tighten internal controls in the wake of increasing bank fraud that has rocked the financial sector, a central bank official has suggested.
“They have to intensify internal controls by putting more checks and balances and also improving inspection and internal audits,†Juma Walusimbi, the central bank’s spokesman, said.
Early this month, the Police warned the public against a new wave of crime in financial institutions, which is perpetuated by staff members.
Simeo Nsubuga, the Kampala Extra Region spokesman, said banks were reluctant to talk about the issue for fear of negative publicity.
“Banks do not want to reveal what is happening. They say it is an internal matter,†Nsubuga said, adding that bank officials transfer money to accounts of their accomplices without informing customers.
He said 11 suspects, including four officials of Crane Bank, had been arrested for fraudulently withdrawing over sh50m.
Walusimbi said during the monthly press briefing that banks and credit institutions should continuously vet their staff.
He appealed to the financial institutions to aggressively enforce the ‘know your customer’ requirement. It is a due diligence performed to identify customers and ascertain relevant information pertinent to doing business with them.
“The commercial banks and credit institutions should ensure these requirements are fulfilled by new and existing customers as well as monitoring the activities on the accounts,†Walusimbi said.
Analysts said this requirement has become increasingly important globally to prevent identity theft fraud, money laundering and terrorist financing.
He appealed to customers to check their bank statements regularly to ensure they reflect the transactions carried out during the specified period.
“If you find an item on your account especially credit, do not withdraw the money thinking it’s a windfall,†Walusimbi advised.