A Directorate of Criminal Investigations (DCI) letter seen by TechCabal showed that four suspects involved in a $2.4 million Equity Group card fraud transferred the funds to an account in Abu Dhabi within hours.
DCI alleged that three suspects—whose names TechCabal will withhold for legal reasons—altered an integration in Equity’s CyberSource system, a payment gateway, allowing them to process multiple fraudulent card transactions. The funds were then transferred to a fourth suspect, who wired them to Abu Dhabi, United Arab Emirates.
Investigators are working with a theory that the merchants colluded with bank insiders, reflecting mounting concerns over internal involvement in fraud within Kenya’s banking sector–a problem that costs the industry millions of dollars annually.
“One suspect, in a scheme to widen the scope of laundering of the funds, further transferred the stolen funds from Mobile VOIP Networks Limited account to Geonosis Capital Limited account held at I&M Bank by [name withheld] who in turn transferred the funds to [name withheld] domiciled in Abu Dhabi,” DCI said in a letter to the Office of the Director of Public Prosecutions (ODPP).
“As a result of the fraud, Equity Bank lost a sum of KES322,154,851 ($2.4 million) through online fraud committed by the four suspects.”
Equity Group declined to comment.
One person with direct knowledge of the matter told TechCabal that the four suspects, who are now facing money laundering and cyber fraud charges, are part of merchant networks that exploit loopholes in banks’ card management systems to steal billions.
Equity Group has been the hardest hit in recent years, that person said. While the amount of money Kenyan banks have lost in fraud this year is unspecified, the investigator said fraud cases have risen by more than 50%.
Most banking fraud cases go unreported, as lenders resolve them quietly, albeit with the knowledge of the Central Bank of Kenya (CBK), and other financial sector regulators.
In 2023, Kenya’s Financial Reporting Centre (FRC), an agency that tracks the flow of money in financial institutions flagged more than $600 million linked to card fraud, corruption and terrorism. The lenders also lose about $130 million through identity theft and loan stacking.
