The KCB Group fired 34 employees in the year to December over allegations of fraud and professional negligence.
The bank’s latest sustainability report, released on Tuesday, shows the sackings in the wake of fraud jumped from 11 cases in the year to December 2023.
The sackings come as Central Bank of Kenya (CBK) reports indicate that banks lost Sh1.59 billion last year due to hackers and fraudulent wire-transfer requests, up from Sh412 million in 2023.
KCB says it blocked 339 attempts of fraud last year that placed Sh212.9 million at risk, up from 249 attempts a year earlier, preventing loss of Sh362.7 million.
“We enforce a strict zero-tolerance policy on tax evasion, fraud, and facilitation of unlawful conduct. This applies to all employees, agents, and third parties operating on behalf of the Group,” KCB said.
KCB Kenya accounted for 25 of the 34 employees sacked, while nine were from Rwanda.
The other subsidiaries – Uganda, Burundi, South Sudan, and the Democratic Republic of the Congo – did not record any attempted fraud.
Kenya built a reputation as a pioneer of financial inclusion through its early adoption of a mobile money system that enables people to transfer cash and make payments on cellphones with or without a bank account.
This has become a hackers’ paradise. Mobile banking was the hardest hit, with criminals siphoning off Sh810.68 million, translating to a 344 percent rise from Sh182.41 million in the prior year.
This accounted for more than half of the amount lost to the fraudsters as bankers struggle to cope with the rising wave of late-night fraud, where unsuspecting revellers are tricked into revealing their passwords.
The CBK reported that fraud cases more than doubled to 353 in 2024 from 173 a year earlier.
Absa Kenya reported it blocked fraud of Sh306 million last year, with Sh169 million lost.
Staff involvement in fraud has been a headache for banks, with some forced to conduct ethical audits.
KCB disclosed 9,468 employees had undertaken ethics courses, up from 6,667 in 2023.
Equity Bank conducted a staff audit early this year, which saw it issue show cause letters to more than 1,200 employees in Kenya. Equity had said it was extending the staff audits to its other regional subsidiaries, including Uganda, Tanzania, Rwanda, South Sudan and the Democratic Republic of Congo.
Commercial banks do not have a staff database to tag employees who are fired due to ethical issues, which has seen fraudulent persons remain in the industry.
In its latest industry supervision report, the CBK noted that industry players have stepped up the use of artificial intelligence technologies to spy on their employees in an effort to combat fraud and theft perpetrated by internal actors.
“To foster the trust required for widespread digital adoption, we have fortified our defences through a dual approach of advanced technology and customer empowerment,” said KCB.
Absa Bank Kenya said it had set a target to overhaul its back-end processing by automating and using machine learning and artificial intelligence to drive operational efficiency and enhance early fraud detection capability.
“Overall, fraud is expected to remain a material issue with financial effects on the Bank,” added the bank.
Banks have also been forced to take costly insurance premiums to cover themselves in case such attempts materialise. Banks are spending up to Sh400 million in annual insurance premiums in regards to fraud protection.
The CBK has highlighted cyber-attacks and fraud as major operational risks facing banks.
“Successful attacks lead to an increase in operational cost to restore services and a decline in revenue because of distributed denial of services,” warned CBK.
“The losses will lead to capital decline, leading to some banks to fail the test in terms of their capital dropping below the required minimum,” said the regulator.
The central bank disclosed that mobile banking was the hardest hit with criminals siphoning off Sh810.68 million, translating to a 344 percent rise from Sh182.41 million in the prior year.
CBK data shows computer fraud, which includes hacking into systems to steal data, saw bank customers lose Sh209.39 million, a 2.7 times jump from the preceding year, while fraud through identity theft grew six times to Sh199.08 million.
Card fraud cost customers Sh263.29 million last year, 16.9 times the Sh15.59 million lost in the prior year.
The review period saw online banking fraud rise to Sh111.83 million from Sh106.2 million, while internet scams cost lenders Sh6.07 million, up from Sh797,700 in the previous year.
