Bank of Uganda governor Emmanuel Tumusiime-Mutebile has asked bank managers to cooperate with the Central Bank to fight fraud in their institutions.
While addressing the Uganda Bankers’ Association (UBA) during an informal dinner held at Kampala Serena Hotel recently, Mutebile said that fraud involves committing and concealing of bad behaviour from relevant authorities.
“Bank supervision depends on the cooperation of the management of the supervised bank with the regulator whereby the regulator must trust the integrity of the management team at a supervised financial institution to provide accurate data to the regulator. Unless the regulator has evidence for suspecting that vital information about the institution has been falsified or concealed,” he said.
Mutebile added that the fact that a bank’s management has successfully concealed fraud from the regulator as well as its own external auditors, does not imply that either the regulators or the external auditors are negligent, let alone that they must have colluded with the fraudsters.
Mutebile whose focus was on fraud in banks and clarifying the crane bank saga said that when fraud is committed, it is not easily detected in the normal course of bank supervision or the external audit procedure.
“That unavoidably means that in some cases, which are relatively uncommon, fraud is carried out undetected over a period of time,” he added.
Additionally, Mutebile urged that undoubtedly, bank regulators could enhance their ability to detect frauds sooner if bank supervision were much more intrusive; for instance, by undertaking forensic audits on a routine basis, even when there is no suspicion of fraud.
Bank fraud is the use of potentially illegal means to obtain money, assets, or other property owned or held by a financial institution.