Financial Crime World

Banking Fraud Types Worry Authorities as Losses Mount to N$26.3 Million

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Namibia’s banking sector has been plagued by a significant number of fraud cases in the past year, with losses amounting to N$26.3 million.

Fraudulent Activities in 2023

According to Finance and Public Enterprises Deputy Minister Maureen Hinda-Mbuende, 357 fraud cases were reported in 2023, including:

  • ATM fraud
  • Electronic fund transfers
  • Credit and debit card fraud
  • Mobile application fraud
  • Theft of cash

Losses and Recovery

The banking sector has managed to recover N$4.8 million of the losses, but concerns remain over the impact of these fraudulent activities on individual clients.

Concerns Over Compensation Measures

Hinda-Mbuende expressed her concern over the issue, saying that it is imperative for stakeholders involved to take responsibility and implement relief measures or strategies to compensate for the losses.

United Nations Study Reveals Illicit Financial Flows

A United Nations study revealed that Namibia experienced inward illicit financial flows of N$19.6 billion and outward illicit financial flows of $4.7 billion between 2018 and 2020. Hinda-Mbuende emphasized the need for concerted efforts to curb these illegal activities and bolster cybersecurity defenses to safeguard the integrity of the financial system.

Banking Sector’s Profitability

Despite the significant fraud cases, the banking sector has remained profitable, with an income of N$12.8 billion and a net income after tax increase of 24.5% to N$3.7 billion. The growth is attributed to the Bank of Namibia raising interest rates in 2022 and early 2023.

Risks to the Banking Sector

Central Bank Spokesperson Kazembire Zemburuka warned that the risks to the banking sector are centered around:

  • Climate change
  • Greylisting
  • Cybersecurity

He also noted that the sector’s asset quality has deteriorated slightly, with non-performing loans increasing by N$456 million to N$6.5 billion.

Credit Risk Remains a Key Concern

The credit risk remains a key financial risk factor, as more than 50% of the increase in non-performing loans is for the mortgage loan category. Hinda-Mbuende warned against raising interest rates, saying it may lead to borrowers defaulting on loans, especially mortgages which accounted for more than half of the total private sector credit extension.

Conclusion

Namibia’s banking sector faces significant challenges, including climate change and greylisting, but authorities are working towards implementing measures to mitigate these risks. As the country continues to navigate economic challenges, it is crucial that stakeholders remain vigilant against fraud and take proactive steps to protect the financial system.