Rwandan banks have fallen prey to technologically savv criminals, working in collusion with bank staff, who are quietly siphoning cash out of customer’s accounts using credit and debit cards.

Bank scammers

The crooks appear to work out a way around Rwanda’s technology strategy — of installing a hard chip and a pin to guard against card cloning — and invested in a technology that captures data on the automatic teller machine (ATM) card and personal identification numbers.

Although the sum total of the amounts lost to fraud is not known, Lawson Naibo, chief operating officer of the Bank of Kigali, says the menace is widespread and affects all banks.

Before the use of cards, the most common fraud involved forgery of chequebooks bearing the serial numbers of customers with large deposits. This too was done in cahoots with bank staff.

“It was a disease that had hit the market. But police moved in to break the racket. Most of them are now in 1930 (Central Prison),” Mr Naibo said, noting however that there were few cases of cloning ATM cards as banks in Rwanda are compelled to use the hard chip and pin, unlike other East African countries which use the easy to forge magnetic stripe card.

In these countries, the most common fraud is “card skimming,” whereby a card’s magnetic stripe details are captured at the ATM by a modified card reader called a skimming device.

Criminals find duplicating the card much easier and the manufacturing costs pocket friendly. That is why they target banks still using magnetic stripes, according to experts.

Not only did Rwanda choose the chip technology to strengthen e-banking, it also invested in machines that manufacture the chips, making it the third country in Africa after Egypt and South Africa manufacturing chip cards.

With the latest wave of fraud, Rwandan banks are as much at risk as others in the region.

The EastAfrican has learned that one case involved a cardholder who lost money from his account when a cashier at a retail store connived with Cameroonians to rob him.

The cashier reportedly obtained the details on the card and passed them on to the Cameroonians. The information was used by the crooks to buy an air ticket to Dubai.

Fortunately, the card issuer had in place an alert system that sent out a phone message to the customer, “thanking” him for purchasing the ticket.

He reported the matter to police who arrested the crooks.

In another case, a driver is reported to have withdrawn Rwf800,000 ($12,000) from his boss’s account using a duplicate card issued to him by a bank employee.

According to Maurice Toroitich, managing director of KCB Rwanda, “banks have lost huge amounts of money through fraud.”

Last year, KCB was hit by the biggest single fraud in the country when it lost half a billion Rwandan francs or nearly $800,000. The matter is in court and Mr Toroitich would not discuss it further.

His counterpart Sajeev Anand, managing director of Rwanda Commercial Bank (BCR), also confirmed banks had been hit by fraud.

“The most common type of fraud on the Rwandan market is fraudulent attempts on account and forgery of cheques,” said Mr Anand who is also the vice president of Rwanda Banker’s Association.

He was quick to add: “But fraud is not limited to Rwanda alone. It is a regional problem. In fact, comparatively, the cases in Rwanda are still very few.”

Police and the National Bank of Rwanda would not provide any data on the magnitude of the problem.