In Kazakhstan, approximately a thousand sham loans have been distributed.
Breaking Down the Slump in Microloans
Last year saw a dramatic drop in the number of microloans issued, plummeting by a whopping four times. This startling trend was discussed by Madina Abylkassymova, Chairperson of the Financial Market Regulation and Development Agency of Kazakhstan, as reported by "Kazinform".
Abylkassymova shared insights on the monitoring of microloans disbursed by microfinance organizations to the populace during 2020-2021. According to the data, internet fraud cases in 2020 reached a concerning 3,000, involving not only financial organizations but also financial pyramids, illegal investment schemes, and scammers targeting citizens. In 2020 alone, 956 instances of fake microloans, amounting to approximately 0.05% of all online microloans, were detected, totaling 77.9 million tenge.
Fast forward to the first four months of 2021, and the number of fake microloans decreased by an impressive 3.6 times to 94 cases totaling 10.6 million tenge. The Ministry of Internal Affairs (MVD) reported that 96% of these cases had a criminal character and were associated with the misuse of lost, stolen, or fake identity documents, as well as the simplified method of identifying borrowers when microloans are issued remotely.
To combat microloan fraud, the Agency has taken several measures this year:
- In February 2021, the Agency instructed MFIs to stop providing microloans electronically without biometric identification or an electronic digital signature.
- Affected citizens were temporarily shielded by having interest and penalties on fraudulently obtained microloans suspended by the MFIs, and their credit histories were corrected.
- In March 2021, the Agency mandated all MFIs issuing online loans to ensure the client's authenticity and match data across various platforms, including verification of biometric information in identity documents and recording client consent for microloan disbursement.
Although the specific actions of the Financial Market Regulation and Development Agency of Kazakhstan to deter microloan fraud are not outlined extensively in search results, financial regulators usually work towards enhancing transparency, enforcing reporting requirements, and safeguarding consumers by implementing rigorous oversight and enforcing financial regulations. The National Bank of Kazakhstan, for instance, imposes sanctions on microfinance organizations for various violations, enforces strict currency regulations, and mandates exchange operations to be conducted via authorized banks. Further research or official sources would be required for a more detailed understanding of the specific agency's actions.
- The four-fold decrease in microloans in 2020 was linked to a surge in internet fraud cases, with over 3,000 instances involving financial organizations, pyramids, and scammers, according to Madina Abylkassymova.
- In a bid to address microloan fraud, the Financial Market Regulation and Development Agency of Kazakhstan instructed microfinance organizations (MFIs) to stop providing microloans electronically without biometric identification or an electronic digital signature.
- Affected citizens have been temporarily protected by the suspension of interests and penalties on fraudulently obtained microloans, along with corrections to their credit histories.
- The Agency also mandated MFIs to ensure the authenticity of clients and match data across various platforms, including verification of biometric information in identity documents and recording client consent for microloan disbursement.
- In the general-news and crime-and-justice sector, reports concerning the specific actions of the Financial Market Regulation and Development Agency of Kazakhstan to deter microloan fraud are limited, but financial regulators often aim to boost transparency, enforce reporting requirements, and safeguard consumers by implementing stringent oversight and enforcing financial regulations.
