Banks must verify background of employees to curb rising fraud

The Head of the Financial Integrity Office at the Bank of Ghana, George Nkrumah, is urging financial institutions to ensure strict compliance with employee background checks as a way of minimizing fraud perpetuated by employees.

“When you are employing, you have to do Know Your Employee (KYE ). Know the person you are recruiting. Make sure you do a verification of their qualifications; check from the police Criminal Investigations Department about any criminal record.

The Bank of Ghana also has a database of persons that may have caused certain fraud in banks — employers must crosscheck potential employees against this database to ensure criminals are not recycled,” he added.

Mr. Nkrumah’s comment comes after commercial banks last year lost nearly GH¢20 million to employee-related fraud, according to the 2018 BoG’s report on fraud in the banking sector.

Speaking at the opening of a workshop organized by the central bank and the Committee for Cooperation between the Law enforcement and Banking Community (COCLAB), Mr. Nkrumah said banks should not take employee background verification for granted.

“The point is, as we put measures in place, they come up with new methodologies,” he said, justifying the essence of the 3-day COCLAB workshop which is being attended by bankers, personnel from the security agencies, justices, as well as key staff of the mobile network operators.

Rising bank fraud

The number of fraud cases reported by commercial banks in the country in 2018 increased by 50 percent from the figure recorded in 2017, according to a Bank of Ghana report sighted by Citi Business News.

According to the report, the banking industry reported a total of 2,175 fraud cases as compared to 1,418 fraud cases reported in, 2017.

The report which captures the prevalence of fraud in the banking sector said the ‘significant’ increase in the number of fraud cases reported may partly be attributed to the improved efforts by the Bank of Ghana t to monitor fraud cases in the industry and also to ensure compliance with reporting.

The report prepared by the Financial Stability Department of the central bank stated that, out of the more than 2,170 cases of fraud reported, 1,239 cases were committed by banks’ staff in the form of suppressing cash or deposits from customers.

The 2018 figure of employee fraud reported by the central bank shows a 78 percent increase in the 697 cases reported a year earlier.

Commenting on the rising incident of fraud committed by banks’ employees, the central bank noted that: “It is important to stress that about 99 percent of the fraud cases reported as suppression of cash and deposits were perpetrated by staff (either contract or permanent) of the financial institutions.

Source: Citibusiness