The Sacco Societies Fraud Investigation (SSFIU) has warned Saccos over the emergence of a new frontier theft by insiders.
While the unit, which SASRA funds, does not deal with debt collection on behalf of Saccos due to limited resources, it currently deals with criminal cases.
“Cyber incidences have greatly reduced since the Authority adopted the issuance of early warnings to Saccos, and so Saccos should carry out thorough due diligence on the staff they recruit,” warned Peter Njuguna, SASRA Chief Executive Officer.
SSFIU revealed that it has already forwarded 2 cases involving fraud (cyber-attacks) or online fraud to the Office of the Director of Public Prosecutions(ODDP), while investigations involving one such case are still in progress.
The unit has also unearthed several forgeries involving falsification of documents, forgery of signatures and fraudulent funds deductions. One such incident has been referred and resolved through the SASRA compliance department, while two cases are currently awaiting arrests of suspects whose names have already been forwarded back from the ODPP. Four incidents involving forgeries are also under investigation by the unit.
In other legal, policy and regulatory developments, SASRA has also stepped up by Credit Information Sharing among Saccos. This is the practice of sharing information about a borrower’s credit history and financial behaviour among lenders and credit bureaus.
The information shared typically includes details such as the borrower’s credit score, outstanding loans, repayment history, and any defaults or delinquencies.
“Overall, credit information sharing in Saccos plays a vital role in promoting financial inclusion and stability, enabling members to access credit on fair and affordable terms, and helping Saccos manage their lending risk more effectively,” said Mr Njuguna.
Saccos plan to adopt Risk Based Lending, the new norm supporting data analytics capability on individuals and businesses, through the Kenya Credit Reporting Strengthening Project Phase II sponsored by the Central Bank of Kenya and International Finance Corporation(IFC), the private lending arm of the World Bank.
SASRA is urging Saccos to use internally available information and credit scores from Credit Reference Bureaus(CRBs) to determine how to graduate their borrowers to the minimum loan amount in one band to the next band
In a fast-changing financial landscape, Saccos have been told that while purchasing loans from other financial institutions, they should secure credit scores from CRBs of those facilities to safeguard the Sacco from purchasing poor credit score borrowers.
“Climate change is posing an impact on Sacco operations and is manifesting in all risks. Saccos should therefore incorporate climate-related risks into their risk management framework,” said Mr Njuguna.
To deal with Climate Change risks, the regulator wants Saccos to develop green finance credit products, support the implementation of low-carbon, climate-resilient development pathways and engage in capacity building of their staff on green finance and blue economy.
Other mitigation measures include supporting afforestation through Corporate Social Responsibility(CSR) activities and ensuring no leading is targeted at activities that degrade the environment.
