Joint Public Notice – Growing Trend of Fraudulent Loan Applications

The Financial Intelligence Agency (FIA) and the Non-Bank Financial Institutions Regulatory Authority (NBFIRA) have observed a developing trend of fraudulent loan applications, particularly targeting Micro-Lending Institutions. Recent reports indicate that fraudsters use falsified documents and deceptive tactics to obtain loans. The schemes typically involve:

• Impersonation and use of Fabricated Identification Documents: Fraudsters submit counterfeit national identity cards or altered personal details to conceal their identity and use the information to apply for loans in the names of unsuspecting individuals.
• Falsified Proof of Income: Forged payslips, employment letters or bank statements are used to convince lenders of the applicant’s repayment ability.
• Collusion with Insiders: In some cases, employees within Lending Institutions are bribed to support fraudulent applications without proper verification.

Considering the above, financial institutions especially Micro Lenders are urged to strengthen their loan application processes, enhance control measures at all levels of the process and in addition consider the following:

• Strengthen identity verification procedures – Confirm national identity numbers and employment records with issuing authorities and employers.
• Enhance document authentication measures – Use advanced and secure systems to detect alterations or forged documents.
• Training and periodic refresher training of staff on Red Flags for fraud – Capacitate staff to recognise suspicious patterns in loan applications.
• Prompt reporting to relevant authorities – Prompt reporting of fraud incidents to Botswana Police Service and suspicious transactions to the FIA in accordance with the Financial Intelligence Act.

This notice underscores that loan fraud is a criminal offence as well as a predicate offence for money laundering under the laws of Botswana. We call upon the public to exercise vigilance and to report any suspected fraudulent activities to the relevant authorities, including the FIA, NBFIRA, Botswana Police Service and the affected financial institution.