Question

Fraud is a wrongful or criminal deception intended to result in financial or personal gain. It is an
aspect of corruption and it occurs in organizations where governance structure is weak.
a. In your simple understanding, what constitutes a banking fraud? 5 marks
b. Identify and discuss extensively various types of fraud as related to banking operations in
Kenya given reasonable examples.

Answer 1

a. Banking fraud is motivated by willingness of the banks to report higher profits and willingness of the bank to hide such information that could be e injurious for the company's existence. It is also motivated by mismanagement of books of accounts and employees personal interest of reporting higher profits, which will lead to job security.

b. Various types of fraud related to banks in Kenya are-

1. Accounting fraud-this relates to mis management of books of accounts and non disclosure of various informations.

2. Fraudulent loans in which there is no creditworthiness of buyer to pay the loan.

3. Fraudulent loan applications are another reasons of fraud in Kenya.

4. Fraud and altered cheques are also major contributory to total amount of banking fraud in Kenya