Kenyan banks are grappling with a rising tide of insider fraud, with employees exploiting their positions to siphon millions from financial institutions. Recent cases involving major banks highlight the severity of the crisis, exposing weaknesses in internal controls and the sophisticated tactics used by rogue insiders.
I&M and SBM Bank Scandals Uncovered
Two Kenyan banks, I&M Bank and SBM Bank Kenya, recently fell victim to insider fraud, losing a combined KSh 36.64 million in separate incidents. At I&M Bank’s Kisii branch, former operations manager Daniel Ochieng’ Okweh orchestrated a KSh 27.14 million fraud by disguising lower denomination notes as KSh 1,000 bills. The deception was uncovered through an internal audit, which exposed discrepancies in cash vaults, ATM balances, and Mobicash float records.
SBM Bank, on the other hand, suffered a KSh 9.5 million loss through a cyberattack on its Mfukoni Mobile Banking app. Investigations revealed that IT officer Melvin Wairimu Njoroge had left her computer remotely connected, allowing hackers to install malware that compromised user credentials. Fraudsters exploited the breach to execute three unauthorized transactions linked to accounts associated with Njoroge’s contacts.
Read: NCBA Will Support SACCOs in Cybersecurity Efforts – John Gachora
Equity Bank Hit by a Billion-Shilling Heist
The most alarming case occurred in August 2024 when Equity Bank, Kenya’s second-largest lender, lost KSh 1.5 billion in an elaborate insider fraud scheme. The stolen funds, intended for employee salaries, were transferred across multiple bank accounts in 47 transactions without corresponding credits in Equity’s ledger.
Internal security measures flagged the transactions, prompting the bank to involve the Banking Fraud Investigations Unit (BFU). Authorities arrested David Machiri Kimani, a bank manager who was on leave at the time, along with his father, Joseph Kimani Machiri. Investigators believe the father-son duo collaborated in setting up new business accounts to facilitate the massive heist.
Equity Bank has dealt with insider fraud before. In 2023 alone, it handled 48 disciplinary cases related to fraud, leading to 22 terminations and 26 resignations.
Businesswoman Falls Prey to Credit Bank Fraud
In another shocking case, a businesswoman lost KSh 36.5 million in a scam orchestrated by insiders at Credit Bank. The victim initially deposited KSh 30 million, intending to secure a Standby Letter of Credit for business expansion. However, bank-connected fraudsters misled her into making additional payments to a fraudulent intermediary, who provided fake documents before disappearing with the funds. She later reported the scam to the Directorate of Criminal Investigations (DCI).
A Recurring Problem in the Banking Sector
Insider fraud is not a new challenge for Kenyan banks. In 2014, KCB Bank dismissed 94 employees due to fraud and professional negligence, with 22% of the cases directly linked to fraudulent activities. Additionally in 2018, a branch manager at DTB Kisii was arrested for stealing KSh 25 million from a customer’s fixed deposit account, a case detected through internal reconciliation processes.