Staff Reporter :
The Mobile Financial Service (MFS) operators are allegedly opening millions of accounts without proper implementation of KYC (Know Your Customer) protocol enforced by Bangladesh Financial Intelligence Unit (BFIU).
The random account opening is not also validated by the Bangladesh Bank CBB the regulatory authority for the MFS sector, it is alleged.
“Such accounts may open doors for fraudsters and criminals to steal money from innocent consumers, which will discourage people to cashless transactions,” a BB official said.
“The MFS account without KYC rules poses risks of money laundering and financing to terrorists,” he added.
The KYC (Know Your Customer) is a mandatory rule for banks and MFS operators to ensure that financial service professionals authenticate and assess the identity, suitability and risks involved with maintaining a business relationship with a client.
The KYC process is a combination of some programmes like Customer Identification Programme (CIP), Customer Due Diligence, and ongoing monitoring process.
“Some operators are opening MFS accounts based on photo copy of NID submitted through their own network channel and on the basis of list provided by mobile network operators that do not cover all KYC rules,” said Fakhruddin Ahmed, a security expert of the International Cyber Security Institute (ICSI), Bangladesh.
“Any criminal can open account in the name of an innocent person as the data is not validated by BB,” he added. He also said the MFS accounts opened on the basis of customers list provided by mobile network operators is not enough for money transaction as criminals can easily buy SIM cards with NID document of others. The picture submitted online is not enough to know the account holders, he said.
The country’s leading MFS operators are alluring people through media campaign to open them accounts within a few seconds, which may allow fraudsters to open MFS account for criminal purpose.
Globally online fraud attacks rose 250 per cent over the course of 2020 as the pandemic pushed people to digital banking. Attempted fraud increased by 200 per cent in mobile banking and 250 per cent increase in online banking between the first and fourth quarters, according to the Feedzai Financial Crime Report published recently.
One of the key reasons behind the rising trends of frauds is account opening without regulatory compliance. Other reasons are lower level of financial literacy and weak technology infrastructure and weak regulatory oversights.
Bangladesh is moving fast towards a cashless society with its Digital Bangladesh Vision thanks to robust growth of MFS industry.
Millions of young consumers are avoiding cash and using cards to buy foods in restaurants, pubs and shopping malls, which is pushing up e-commerce and cashless transactions day-by- day.
