The deal formalises the Sacco Societies Fraud Investigation Unit (SSFIU) that will detect and investigate crimes linked to embezzlement of members’ funds and cyber-related attacks.
Fraud is the second biggest cause of concern in the sector and has seen members lose millions of shillings in recent months, shining the spotlight on the efforts to curb the vice.
The Sacco Societies Regulatory Authority (Sasra) chairman John Munuve said Monday the regulator is betting on the new unit to stem loss of members’ cash and instil confidence in the financial sub-sector.
Savings and credit co-operative societies (Saccos) have inked a deal with the Directorate of Criminal Investigations to form an anti-fraud unit in a bid to protect the sector’s over Sh800 billion of customer deposits.
The deal formalises the Sacco Societies Fraud Investigation Unit (SSFIU) that will detect and investigate crimes linked to embezzlement of members’ funds and cyber-related attacks.
Fraud is the second biggest cause of concern in the sector and has seen members lose millions of shillings in recent months, shining the spotlight on the efforts to curb the vice.
The Sacco Societies Regulatory Authority (Sasra) chairman John Munuve said Monday the regulator is betting on the new unit to stem loss of members’ cash and instil confidence in the financial sub-sector.
“We view this MoU as an important and serious commitment to work closely with DCI in transforming the sacco subsector. A time has come when the safety of members’ savings and deposits in Saccos must be guaranteed and always assured,” Mr Munuve said.
Suspected fraud is the third biggest source of complaints from members in deposit-taking Saccos at 9.64 percent. Complaints on guarantors and guarantee for loans is at 12.05 percent, loans issuance 22.29 percent and claims and refunds of savings at 36.75 percent.
The vice is the second-biggest cause of concern in non-deposit talking Saccos, making up 6.67 percent of the complaints after claims for refunds and savings at 70 percent.
Saccos lost Sh106 million in the 17 months to March to cyber theft amid increased mobile banking, data from Central Bank of Kenya and Sasra shows, highlighting the need to form the elite unit to curb the crime.
The data shows that the frau was perpetrated through software vendors engaged by the Saccos, underlining the vulnerabilities of the sector and need to beef up anti-fraud systems.
The losses came at the back of increased mobile banking in the wake of the Coronavirus restrictions on handling of cash, expanding branch networks and increased connectivity to external IT networks.
Operationalisation of the unit comes two years after President Uhuru Kenyatta directed State Department of Cooperative, to form an investigative fraud unit.
Saccos have also stepped up their budgetary allocations on anti-fraud systems in a bid to cut losses and instill members’ confidence.
A report by cybersecurity consulting firm Serianu shows the number of Saccos spending between Sh500, 000 to Sh1 million on modernising IT systems had risen by 27 percent last year from 14 percent in 2019.
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