Uganda’s Criminal Intelligence and Investigations Directorate (CIID) reportedly has indicated that mobile money fraud comprises the largest number of cases lodged with its economic crimes unit. Acting Economic Crimes Commissioner Susan Kalukusu reportedly stated that her department is investigating a recent theft of UGX 100 million (USD 36,000) by three female employees of an unnamed mobile money service provider. According to Ms. Kalukusu, mobile money service companies share responsibility for these types of crimes because they have been uncooperative. In this case, one of the female employees was fired by the provider, against the CIID’s instructions, before an investigation could take place. Additionally, the mobile money firm would not provide CIID with a printout of the transactions in question. Without this evidence, the case no longer stands. Ms. Kalukusu was quoted as saying, “It makes no sense for one to report a case [to] police and at the same time try to protect the suspects.” She added that the distribution of fake currency is also rampant within the mobile money services industry.
These concerns were reiterated by Godfrey Yiga Masajja, the deputy director of commercial banking at the central Bank of Uganda (BoU), who reportedly stated that he is aware of numerous complaints from clients who claim to have been swindled by mobile money agents. Mr. Masajja was quoted as saying, “We are currently working with the Uganda Communications Commission (UCC) to put in place a regulatory framework for these financial institutions. Our role as Central Bank is to regulate any organization with a financial aspect and soon we shall take over.” Moses Ihoza, chairman of the Ugandan Mobile Money Agents Association (UMMAA), reportedly agreed that the lack of a regulatory framework is a major reason for the challenges faced by the industry. He further noted that UCC, BoU and UMMAA will be working together to create a regulatory framework in order to improve consumer confidence.
By Lena Phillips, Research Associate
About Bank of Uganda (BoU)
BoU, established in 1966 by an act of parliament, is Uganda’s central bank. It is mandated to supervise financial institutions in the country including commercial banks and non-bank financial institutions such as forex bureaus, money remitters, deposit-taking microfinance institutions and microcredit institutions. As of December 31, 2011, BoU reported total assets of UGX 13 trillion (USD 4.7 billion).
Sources and Additional Resources:
Observer.ug Article: by Benon Tugumisirize, “Fraud, fake notes hit mobile money services”, http://www.observer.ug/index.php?option=com_content&view=article&id=22912:fraud-fake-notes-hit-mobile-money-services&catid=34:news&Itemid=114
MicroCapital.org Article, 28 February 2012: “MICROCAPITAL BRIEF: In Kenya, Fraud Cases Embarrass Mobile Money Industry”, https://www.microcapital.org/microcapital-brief-in-kenya-fraud-cases-embarrass-mobile-money-industry/#more-17247
MicroCapital.org Article, 13 February 2012: “MICROCAPITAL BRIEF: “Uganda’s Airtel Launches Mobile Money Platform”, https://www.microcapital.org/microcapital-brief-ugandas-airtel-launches-mobile-money-platform/#more-16901
MicroCapital.org Article, 7 April 2011: “MICROCAPITAL BRIEF: World Bank Group Publishes Guide to Reducing Fraud in Mobile Banking Services for Unbanked Clients, ‘Protecting Mobile Money Against Financial Crimes’”, https://www.microcapital.org/microcapital-brief-world-bank-group-publishes-guide-to-reducing-fraud-in-mobile-banking-services-for-unbanked-clients-protecting-mobile-money-against-financial-crimes/#more-11191
MicroCapital.org Article, 14 May 2010: “MICROCAPITAL BRIEF: Plan for New Law to Regulate Microfinance Sector in Uganda Announced”, https://www.microcapital.org/microcapital-brief-plan-for-new-law-to-regulate-microfinance-sector-in-uganda-announced/
MicroCapital Universe Profile: Bank of Uganda (BoU), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Bank+of+Uganda+%28BoU%29
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