Africa`s small banks and financial institutions are increasingly looking to join high-security communications networks to accelerate interbank financial transactions, and to help combat fraud and money laundering.
Mauritius-based ACE (African Commerce Exchange), part of JSE-Security Exchange Global Technology, operates the SWIFT (Society for Society for Worldwide Interbank Financial Telecommunications) Africa Bureau, which provides secure financial telecommunications to smaller banks in Africa at reduced rates, helping to meet the rising demand on the continent for these services.
Barry Botes, MD at Fin-X, a division of Global Technology, says until recently, many smaller banks in Africa could not justify the cost of SWIFT.
SWIFT provides encrypted financial messaging facilities to over 7 000 institutions in 192 countries. The initiative by COMESA (Common Market for Eastern and Southern African States) and ACE has changed this situation. Participating banks in Africa receive the full SWIFT service, at reduced set-up costs, because of the shared-cost model available to SWIFT Africa Bureau customers.
"Smaller banks can now use SWIFT and provide secure foreign exchange and trade payments clearing services equal to those of larger institutions which are already SWIFT users. Security, in particular, is a vexing problem so the security features of the SWIFT Africa Bureau service are critically important in the current environment in Africa, where under-resourced local regulators and banks have to contend with internal corruption and increasingly sophisticated global crime syndicates," says Botes.
A recent survey run on white-collar crime by Ernst & Young found that 82% of all bank fraud is committed by staff. Outsourcing financial telecommunications to the bureau, where trading patterns are independently tracked and monitored makes fraud much more difficult.
Botes continues: "SWIFT replaces many of the paper-based transactions in banks, increasing efficiency and reducing the opportunities to commit fraud. With paper processing, it is easy for a fraudster to disguise a transaction in some form. However, automation reduces the opportunities for `re-input` of data - it can be input once only."
SWIFT is for electronic transfers between banks and financial institutions. Electronic transfer is still the safest form of payment and the most difficult for any would-be criminal to exploit.
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