[dropcap]T[/dropcap]he number of Savings and Credit Co-operative Societies (Saccos) that have fallen prey to a web of cyber c***inals- is on the rise. These electronic *****sters are either lone rangers or colluding with unscrupulous managers and directors of these financial societies, to cart away m***ions in cash.
The last few months has also seen several directors of some societies being implicated ***** of cash through unaut**rised cheque payments either to themselves or cronies.
The latest ******** involves a re****ble IT Vendor which was recently ******ed by a web of *******, w** swept all the cash that has on the t***s of several Saccos.
While these lost amounts of cash are being refunded to the affected Saccos by the IT firm, there are t**se w** have yet to be sorted.
While mobile service provider Safaricom Limited was able to reverse all the *****ulent transactions that were executed on its platforms, other Saccos rare said to have lost their cash held by other smaller IT service providers and are now suffering in silence so as not to cause panic among their members.
Cyber c***inals are said to have used fake mobile p**ne numbers to access payb*** platforms of these Societies, carting away of m***ions in stolen cash.
“We are continuously evaluating our IT systems to protect ourselves from electronic *******, including t**se emanating from insiders as well as t**se links connecting us to the IT vendors,” said Moses Chebor, CEO, Boresha Sacco Society Limited.
“Saccos s**uld engage in daily reconciliations so as to quickly deal with any ******* on their IT systems. Cyber c***e, which is a worl***de problem, is not unique to financial ins***utions in Kenya. It is happening everywhere with many firms suffering in silence,” advises Chebor.
Targeted Saccos
The list of Saccos that have been hit by cyber c***inals includes Kenya Police Sacco, Stima Sacco, Bandari Sacco and Safaricom Sacco Society Limited. Other Saccos prefer to keep info on cyber ****** incidences or *****ulent activities on their IT systems, within the safe confines of their boardroom walls.
An increasing number of financial co-operatives are now deploying huge sums of cash to secure their IT systems and safeguard the vaults against ****** by *****sters and electronic *******.
Financially crippled Saccos, on the other hand, remain vulnerable and are sitting ducks as cyber c***inals in ********* with unscrupulous employers and directors, cart away m***ions through their IT systems.
These c***inals are taking advantage of weak internal controls as well as a gullible board of directors and senior management, to take these financial ins***utions to the cleaners.
In a knee-**** reaction to this unfolding scenario, some of these co-operatives find themselves constantly upgrading their IT platforms and systems so as to counter ******* from cyber c***inals and insiders.
Other Societies have also gone ahead to take out huge insurance premiums against ***** and loss of members’ funds through *****.
For instance, Kenya Police Sacco spent close to Ksh 500 m***ion this year in undertaking various ICT projects, including website redesign and acquisition of a new ERP system.
“In order to meet the ever dynamic changes in technology, we have engaged the services of audit firm KPMG to lead the process of acquiring a new IT system for the Society, David Mategwa, Chairman of Kenya Police Sacco Society Limited.
“Alt**ugh the entry of ICT has been able to support growth of Saccos, let us be a***e that cyber-c***e is thriving. There is therefore need for DT Saccos to constantly review their internal systems in order to protect cash that belong to members,” said Fred Obonyo, Deputy Commissioner for Co-operatives in charge of Co-operatives Finance and Banking.
These sentiments are shared by a cross section of top executives in the co-operatives sector, w** have expressed concerns on the need to come up with solutions to deal with the problem of insecure IT systems within the industry.
“We have already lined up several works**ps organised by Sacco Societies Regulatory Aut**rity (SASRA), Kenya Union of Savings and Credit Co-operatives Organisations (KUSCCO) Limited and Co-operative Alliance of Kenya (CAK), among others, to strategise on **w to effectively deal with Cyberc***e in Saccos and charting the way for***d,” said Chebor, Chief Executive Officer of Boresha Sacco Society Limited.
Available figures indicate that that DT Saccos are deploying huge sums of cash to insure their funds against ***** and electronic *****.
For instance, the year ended 31st December 2017, Kenya Police Sacco emerged as the Best Insured Sacco overall in the Government sector with Ksh 248 m***ion in premiums underwritten by CIC Insurance Group Limited.
It was followed by Harambee Sacco Society (Ksh 232 m***ion), Mwalimu National (Ksh 56 m***ion) and Imarisha Sacco Society (Ksh 51.4 m***ion).
In the private sector in Nairobi, Kimisitu Sacco led with premiums worth Ksh 23 m***ion followed by Nyati Sacco (Ksh 20 m***ion) UN Sacco (Ksh 18 m***ion) and Ufanisi Sacco (Ksh 17 m***ion).
System safeguards
A trend where many Saccos are constantly upgrading their IT systems and installing ****walls to safeguard their systems from intruders has now become top priority for many of these savings and credit co-operative societies.
The latest player to upscale its IT platform is Muranga-based Unaitas Sacco Society Limited, which is already on the T24 platform-hitherto only in the possession of commercial banks.
IT firm Serianu Limited indicates in its reports that Saccos have historically rel*** heavily on manual or basic transactional systems to run their back office operations.
As the sector has grown, transaction volumes have also increased, forcing most Saccos to automate their back end operations. Unlike Commercial Banks, Saccos lack s****** IT security personnel and anti-***** systems. This has led them in becoming easy targets for cyber c***inals.
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The 2017 Kenya Cyber Security Report ***led Demystifying Africa’s Cyber Security Poverty Line indicates that Kenya lost over $ 210 m***ion to cyber c***inals in 2017. This is compared to $ 61 m***ion (Uganda) and $99 m***ion (Tanzania).
“Our research reveals that the most vulnerable small and medium enterprises are t**se in the financial sector such as co-operatives, Saccos, microfinance ins***utions, fintech service providers and mobile cash transfer platforms,” said W***iam Makatiani, CEO, Serianu Limited in the 2017 report.
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