Kenya’s Directorate of Criminal Investigations (DCI) has arrested eight men who are alleged to have been part of a criminal ring that defrauded mobile money users of over KES 500-million.

According to investigators, the suspects gained access to the National Registration Bureau, which hosts identification information that was then used to register mobile SIM cards.

The DCI said, “The service provider (Safaricom), through its Fuliza overdraft service, where customers can complete their MPESA transactions, even when they do not have enough funds in their MPESA account, lost the money in a well-coordinated scheme by eight young men based in Nakuru and Trans-Nzoia counties.”

The investigations revealed that over 123 000 new mobile SIM cards were opted into Fuliza since January 2022 and took up loans. The fraudsters seemed to have outsmarted the entire system that requires users to confirm their identity before registering any mobile phone numbers.

The DCI said: “Further, the detectives uncovered that some of the lines had been registered as Safaricom agents, where the borrowed funds would be deposited to personal bank accounts belonging to the individuals, disguised as MPESA float.”

MPESA float is the balance agents have to maintain to facilitate withdrawals and deposits into the MPESA wallets.

Additionally, the suspects would initially borrow money and repay thereby improving their credit scores, until the SIM cards achieved their limits when they would borrow for the last time before disposing of the SIM card, according to the investigations.

Safaraicom has yet to comment on the revelations.

Increasing Mobile and Banking Fraud

The suspects were also arrested with over 200 ATM cards from Kenya’s major banks, sparking suspicion that the fraud roped the top banks into the scheme.

This incident comes after a local bank was accused of doing little to curtail the loss of funds of its customers to fraudsters. Kenya’s Equity Bank recently acknowledged some of the alleged fraud cases brought to its attention by its clients, after numerous reports online on how some customers had lost money.

In October, the Communications Authority of Kenya (CA) concluded its mobile verification exercise to root out mobile money fraud, among other issues. The exercise required that mobile operators validate all their users with identification registration in the hopes of rooting out impersonation and mobile fraud.