[dropcap]T[/dropcap]he number of Savings and Credit Co-operative Societies (Saccos) that have fallen prey to a web of cyber criminals- is on the rise. These electronic fraudsters are either lone rangers or colluding with unscrupulous managers and directors of these financial societies, to cart away millions in cash.
The last few months has also seen several directors of some societies being implicated theft of cash through unauthorised cheque payments either to themselves or cronies.
The latest incident involves a reputable IT Vendor which was recently attacked by a web of hackers, who swept all the cash that has on the tills of several Saccos.
While these lost amounts of cash are being refunded to the affected Saccos by the IT firm, there are those who have yet to be sorted.
While mobile service provider Safaricom Limited was able to reverse all the fraudulent 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 criminals are said to have used fake mobile phone numbers to access paybill platforms of these Societies, carting away of millions in stolen cash.
“We are continuously evaluating our IT systems to protect ourselves from electronic attacks, including those emanating from insiders as well as those links connecting us to the IT vendors,” said Moses Chebor, CEO, Boresha Sacco Society Limited.
“Saccos should engage in daily reconciliations so as to quickly deal with any attacks on their IT systems. Cyber crime, which is a worldwide problem, is not unique to financial institutions 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 criminals includes Kenya Police Sacco, Stima Sacco, Bandari Sacco and Safaricom Sacco Society Limited. Other Saccos prefer to keep info on cyber attack incidences or fraudulent 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 attack by fraudsters and electronic thieves.
Financially crippled Saccos, on the other hand, remain vulnerable and are sitting ducks as cyber criminals in collusion with unscrupulous employers and directors, cart away millions through their IT systems.
These criminals are taking advantage of weak internal controls as well as a gullible board of directors and senior management, to take these financial institutions to the cleaners.
In a knee-jerk reaction to this unfolding scenario, some of these co-operatives find themselves constantly upgrading their IT platforms and systems so as to counter attacks from cyber criminals and insiders.
Other Societies have also gone ahead to take out huge insurance premiums against fraud and loss of members’ funds through theft.
For instance, Kenya Police Sacco spent close to Ksh 500 million 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.
“Although the entry of ICT has been able to support growth of Saccos, let us be aware that cyber-crime 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, who 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 workshops organised by Sacco Societies Regulatory Authority (SASRA), Kenya Union of Savings and Credit Co-operatives Organisations (KUSCCO) Limited and Co-operative Alliance of Kenya (CAK), among others, to strategise on how to effectively deal with Cybercrime in Saccos and charting the way forward,” 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 fraud and electronic theft.
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 million in premiums underwritten by CIC Insurance Group Limited.
It was followed by Harambee Sacco Society (Ksh 232 million), Mwalimu National (Ksh 56 million) and Imarisha Sacco Society (Ksh 51.4 million).
In the private sector in Nairobi, Kimisitu Sacco led with premiums worth Ksh 23 million followed by Nyati Sacco (Ksh 20 million) UN Sacco (Ksh 18 million) and Ufanisi Sacco (Ksh 17 million).
System safeguards
A trend where many Saccos are constantly upgrading their IT systems and installing firewalls 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 relied 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 skilled IT security personnel and anti-fraud systems. This has led them in becoming easy targets for cyber criminals.
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The 2017 Kenya Cyber Security Report titled Demystifying Africa’s Cyber Security Poverty Line indicates that Kenya lost over $ 210 million to cyber criminals in 2017. This is compared to $ 61 million (Uganda) and $99 million (Tanzania).
“Our research reveals that the most vulnerable small and medium enterprises are those in the financial sector such as co-operatives, Saccos, microfinance institutions, fintech service providers and mobile cash transfer platforms,” said William Makatiani, CEO, Serianu Limited in the 2017 report.
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