FINANCE: Electronic Banking Pitfalls
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ELECTRONIC funds transfers (EFTs) have become commonplace and are used for virtually all types of payments ranging from salaries and wages, to supplier payments, to buying books on-line.
Large sums of money are transmitted at the click of a mouse, with clients falsely secure in the knowledge that because they keep their passwords safe, these transactions are protected.
“Our experience at BDO reveals that in many cases there are ineffective, alarming technical configurations, which easily allow fraudulent activity which is difficult to detect,” says Carl Bosma, a director of BDO, Cape Town.
As white collar employees are put under more and more pressure due to the economic downturn, these incidences are increasing.
The scams are often elusive, creative and complex.
While South Africa has amongst the highest fraud and corruption statistics in the world, the UK showed an increase in online banking fraud during the period January to June 2008 of 185% which amounted to £21.4m. Although South African figures have not been released, we have recently witnessed cases of:
• Inadequate training provided to system users resulting in fraudulent transactions in excess of R500 000 within a period of two weeks;
• In excess of 7 000 beneficiaries or creditors created on an electronic banking system allowing fraudulent payments to be made. Adequate reviews of beneficiary lists were not performed;
• User privileges not being regularly reviewed resulting in abuse by staff members with excessive permissions;
• Intermediary files generated by other applications (eg. payroll) being intercepted and modified prior to upload into the banking application.
“The advent of electronic banking has shifted a lot of responsibility to the client with banks carefully repudiating liability. We believe that it is in your best interest to have a review of your electronic banking system and processes to ensure that your controls are adequate and functioning as envisaged.”
“We have experience in dealing with EFT solutions provided by all of the major financial institutions and can perform a review of your system,” Bosma says.
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