A recent letter from the Directorate of Criminal Investigations (DCI) revealed that four individuals are suspected of being involved in a $2.4 million card fraud targeting Equity Group. The suspects allegedly transferred the funds to an account in Abu Dhabi shortly after.
The DCI claims that three of the suspects manipulated an integration in Equity’s CyberSource system, which is a payment gateway, enabling them to carry out multiple fraudulent card transactions. The illicitly obtained funds were then moved to a fourth suspect, who proceeded to transfer them to Abu Dhabi in the United Arab Emirates.
Investigators are exploring the possibility of collusion between the merchants and insiders within the bank, highlighting growing concerns about internal fraud within Kenya’s banking industry, which results in significant financial losses annually.
The DCI stated in a letter to the Office of the Director of Public Prosecutions (ODPP) that one suspect facilitated further transfers of the stolen funds to widen the scope of money laundering. The funds were shifted between accounts before ending up in Abu Dhabi, resulting in Equity Bank losing KES322,154,851 ($2.4 million) to online fraud committed by the four individuals.
Equity Group has chosen not to provide a comment on the matter.
According to a source familiar with the situation, the four suspects are now facing charges related to money laundering and cyber fraud. They are believed to be part of networks that exploit vulnerabilities in banks’ card management systems to carry out large-scale thefts.
Equity Group has reportedly been significantly impacted by such incidents in recent years. While the exact amount lost to fraud by Kenyan banks this year remains unspecified, reports indicate a surge of over 50% in fraud cases.
Many cases of banking fraud go unreported as lenders handle them discreetly, albeit with the oversight of the Central Bank of Kenya (CBK) and other financial regulators.
In 2023, Kenya’s Financial Reporting Centre (FRC) flagged over $600 million linked to card fraud, corruption, and terrorism. Additionally, financial institutions lose approximately $130 million annually due to identity theft and loan stacking.