Financial Crime World

Namibia Grapples with Financial Institution Fraud

A staggering 357 fraud cases were reported in Namibia last year, resulting in losses totalling N$26.3 million, according to Finance and Public Enterprises Deputy Minister Maureen Hinda-Mbuende’s presentation at the Bank of Namibia’s annual results presentation in Windhoek on Tuesday.

Types of Fraud Reported

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

The total value of these reported fraud cases is N$27.2 million, with the banking sector having managed to recover only N$4.8 million of these losses, leaving individual clients out of pocket for the remaining amount.

Concerns and Questions

Hinda-Mbuende expressed concern over the high number of fraud cases, suggesting that both internal and external negligence may be contributing factors. She questioned whether there are adequate relief measures in place to compensate affected clients.

Illicit Financial Flows

The Bank of Namibia’s annual report also highlighted a worrying trend of illicit financial flows, with preliminary estimates suggesting that Namibia lost N$19.6 billion through inward illicit financial flows and gained N$4.7 billion through outward illicit financial flows between 2018 and 2020.

Banking Sector Performance

Despite the economic challenges facing the country, the banking sector remains profitable, thanks to higher net income and interest income. However, asset quality has deteriorated slightly, with non-performing loans increasing by N$456 million to N$6.5 billion.

Risks Facing the Banking Sector

  • Climate change
  • Greylisting
  • Cybersecurity threats

The Bank of Namibia’s spokesperson, Kazembire Zemburuka, warned against raising interest rates, which could lead to borrowers defaulting on loans, particularly mortgages, which account for more than half of private sector credit extension.

Conclusion

Hinda-Mbuende echoed these concerns, highlighting the need for concerted efforts to curb illicit financial flows and bolster cybersecurity defences to safeguard the integrity of the financial system.