The Sacco Societies Regulatory Authority (SASRA) has signed a Memorandum of Understanding (MOU) with the Directorate of Criminal Investigations (DCI) to investigate officials who steal funds from Savings and Credit Co-operative Societies(SACCOs).
The deal now formally establishes the Sacco Societies Fraud Investigation Unit similar to the Anti-Fraud Unit at the Central Bank of Kenya(CBK), that police activity of Banks.
This move follows an earlier directive during a past International co-operatives day celebration by President Uhuru Kenyatta for the establishment of the Sacco Societies’ Fraud Investigation Unit within the Sacco Societies Regulatory Authority (SASRA).
According to SASRA Board Chairman, the establishment and operationalization of the Fraud Investigations Unit will complete the cog of the supervisory framework of SACCOs in Kenya, which was initially largely reliant on prudential supervision.’
SASRA Fraud Investigation Unit
The Unit comprises specialised officers seconded from the Directorate of Criminal Investigations (DCI) and is functionally supported by SASRA’s technical staff.
Munuve disclosed that the SSFIU is and will remain critical in complementing the prudential supervision conventionally undertaken by SASRA’s technical staff, by taking-up identified cases of fraudulent conduct during prudential supervision and investigating the same.
This fraud investigation unit is expected to collaborate with the Authority to develop and implement robust market surveillance and monitoring mechanism to prevent frauds or disrupt planned fraudulent activities in the SACCOs sub-sector.
Available figures indicate that Kenya’s SACCO sector lost KSh 106 million in 17 months to March 2021, with attackers targeting weak controls of the systems given minimal verification of members’ identity.
According to a Financial Sector Stability Report, September 2021 by the Central Bank of Kenya(CBK), all SACCOs must now review and enhance their IT security including their service level agreements to ensure that those affected are compensated by the vendor in the event of an attack where the vendor is culpable.
SACCOs are also encouraged to undertake indemnity covers to safeguard against attacks.
SACCOs face operational risk, arising from cyber-attacks through their software vendors-which remains high as the use of technology increases.
“It is important to stress that in today’s economy, financial transactions are heavily conducted using technology and other digital services. And SACCOs have not been left behind in this,” said John Gathomo, DCI representative during the MOU signing ceremony.
The unit will be domiciled at SASRA and is expected to detect and prevent fraud as part of improved corporate governance in the Sacco sector in line with SASRA’s Strategic Plan for 2018-2022.
In March 2019, the State Department for Co-operatives signed an MOU with the Ethics and Anti-Corruption Commission (EACC).
EACC CEO, Twalib Mbarak, warned corrupt cartels in the cooperative movement to reform or else the Commission would initiate “lifestyle audits of all the personnel charged with the running of Saccos to catch those who have accumulated unexplained wealth”.
The MoU aims to among others, promote ethics and integrity through the enforcement of the Declaration of Income, Assets and Liabilities and Code of Conduct for State and Public Officers.
There are certain SACCOs that now have higher governance thresholds such as requiring any director to indemnify the Society against any losses that might occur due to the person being in office.
