Analysis of the legal framework for combating bank fraud in Uganda

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Kamapala International University
Bank fraud, defalcation and forgeries have unprecedented prepositions and dimensions in the banking industry. Fraud in Ugandan is epidemic and has its root firmly entrenched in the social setting . A report of the Uganda Bankers Association indicates that albeit the good performance of the financial system in supporting the economy through intermediation and operation of the payment system, the financial sector faces the problem of bank fraud which unfortunately is on the increase. Bank frauds take various forms ranging from alteration of cheques and / or counterfeit to skimming or cloning of cards . To combat bank fraud, a number of laws were enacted in Uganda but still fraud is in increase amid these existing laws. The study objectives included; finding out the types of bank fraud experienced in the commercial banks in Uganda, as well as examining the efficacy of the existing legal regime and control of bank fraud in commercial banks in Uganda. The study was a doctrinal and cross sectional. The study employed both qualitative and quantitative approaches. Findings on the types of bank fraud experienced in the commercial banks in Uganda indicate; online fraud wiring of money from accounts, ATM fraud, forged cheque fraud, Credit fraud as well as Money transfer fraud as major forms of frauds experienced and the major factors leading to increased bank fraud included; inadequate training on prevention of bank fraud, failure in management supervision, inadequate staff to carry out work banking operations meticulously, poor physical controls, lack of segregation of duties, lack of oversight by management on deviations from existing processes, business pressures to meet unreasonable targets, lack of tools to identify potential red flags are factors responsible for increased fraud. The legal challenges included poor coordination with law enforcement, lack of proper knowledge of the existing legal framework on bank fraud and inadequate knowledge of fraud investigation. There is need for continuous training of employee and customer education on bank fraud, review of the fraud detection mechanisms to be able to quickly detect fraud and harsh penalties should be imposed on those who are found guilty of the fraud so as to deter others who would be intending to do the same.
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Legal framework, Bank fraud, Uganda