Banking customers more vulnerable to online frauds

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Kenanga Investment Bank Bhd group chief regulatory and compliance officer Maheswari Kanniah said during the MCO, there was an increase of potential and actual fraud cases involving clients of the financial institutions.

As financial institutions started to offer more products and services online, especially during the Movement Control Order (MCO), they are alerted to fraudsters who identified loopholes or opportunities to take advantage of the situation.

Kenanga Investment Bank Bhd group chief regulatory and compliance officer Maheswari Kanniah said during the MCO, there was an increase of potential and actual fraud cases involving clients of the financial institutions.

“With this comes the challenge of making sure that the security and safeguards which traditionally exist when services are offered through conventional means continue to be present and further enhanced when things go digital.

“At the same time, financial institutions had to swiftly take steps to ensure that there are no disruptions or interruptions to their services and that employees can continue operating as usual to ensure deliverables,” she told the New Straits Times in an interview recently.

Maheswari said at Kenanga, managing the risk of fraud has always the main consideration in doing business.

She said Kenanga’s digitilisation journey did not just start when the MCO was announced as it had long embraced technology and as part of its growth plans and evolution strategy.

“Our technology strategy comes with implementation of the required systems and controls aimed at combating potential fraud involving our online services. Therefore, when the MCO was announced, Kenanga was well prepared and this includes having its employees ready to work-from-home,” she said.

Kenanga recently launched the fourth edition of its Fraud Awareness Week (FAW).

Maheswari said since Kenanga FAW’s inception in 2017, it had always been about raising fraud awareness and highlighting the importance of fraud detection and prevention.

“This year’s fourth FAW was vastly different because of the on-going Covid-19 pandemic and the SOPs that are in place. In light of the current situation that we are in and noting the risk of fraud increases, the fourth FAW’s theme was Ethics & Integrity: Culture for Combating Fraud in the New Normal.

“All activities for the fourth FAW were held virtually employing the use of technology such as video-conferencing platforms and survey administration applications. Taking the fourth FAW digital was in line with the present ‘new normal’ of physical distancing to safeguard the participants while still ensuring that the objectives of the FAWwere achieved,” she said.

Meanwhile, Association of Certified Fraud Examiners (ACFE) development head of Asia Pacific Ganesh Thuraisingham said based on the ACFE’s 2020 Report to the Nations, occupational fraud was among the costliest forms of financial crime.

He said it was difficult to determine the full scope of losses because occupational fraud is frequently undetected and often never reported.

“At the highest level, there are three primary categories of occupational fraud: asset misappropriation, corruption, and financial statement fraud.”

“The main industries that are victimised by occupational fraud in the Asia Pacific region are banking and financial services (19 per cent), government and public administration (13 per cent) and manufacturing (13 per cent).”

“This is then followed by the technology industry at six per cent, and energy and retail both at five per cent,” he said.

Ganesh said in order to uphold the anti-fraud culture, organisations can empower employees with the right knowledge and skillset to prevent and detect fraud.

“While in most organisations, there are relevant departments whose jobs are to be on the lookout for fraud on a daily basis, every employee regardless of their duties should play a part.”

“A simple tip can prevent a huge loss for an organisation. The tone from the top has to be strong and effective.”

“An effective whistleblowing policy in place will also encourage more people to come forward to report anything suspicious,” he added.

You can watch the full Fraud Awareness Week video here.

The original article came out on 28 December 2020, NST Online.

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