Financial fraud is an issue that pervades almost every level of society in Bangladesh. From individuals to domestic banks, none has been spared from varieties of financial fraud, scams, and deceptive schemes masquerading as get-rich-quick schemes or multi-level marketing cabals.
Regular unsuspecting individuals are being targeted every day by specious and resourceful scammers, and are losing large amounts of assets. A college student, Asif Alam Shimanto, was enticed by advertisements on YouTube about an app called "Taka Kamai." Hoping for an opportunity to make some quick and easy money, he invested around Tk 5,000. The initial success he experienced led him to introduce the app to his friends, who followed suit. However, after only ten days, the app mysteriously stopped working and was absent in all app stores, leaving no way to reach the development team. Shimanto and his friends ended up losing a significant amount of money. Shimanto's story is not an isolated one. In 2022, labourer Shobuj Ali spent Tk 160,000 on an app called 'Ultima' and, in a month, received Tk 8,000 in dividends at a rate of 5 per cent. Since then, he has not received any further payments. The situation was especially devastating since Tk 120,000 of his investment was a loan from an NGO debited to his mother.
These individual experiences are emblematic of a larger issue in Bangladesh, where law enforcement agencies are grappling with the ever-pervasive growth of financial frauds and scams, now more endemic than ever on the internet. As perpetrators of these scams grow more sophisticated, their tactics become increasingly difficult to detect and trace. They employ a range of strategies, from lending money on easy terms to enticing individuals into deceitful online "get-rich-quick" schemes, committing various cybercrimes. The Cyber Crime Investigation Division of Dhaka Metropolitan Police analysed 406 cases and found that 24.13 per cent of the total complaints were related to online scams. These scams operate in the guise of betting, gambling, gaming, investment, and online casinos. These gain traction through advertisements on established platforms like YouTube and Facebook and are easily accessible in all app stores. Although similar scams have been in operation for years, little effective action has been taken to stop them. Regulatory arms of the government are reluctant to take responsibility and trade blame with each other.
And these scams aren't limited to individuals; organizations as large as Bangladesh Bank have fallen prey to online-based scams. In 2016, a team of North Korean hackers now known as the Lazarus Group made off with almost $81 million from the Bangladesh Bank.
In addition to these blatant cyberattacks, more subtle scams posing as loans continue to drain the Bangladeshi public's funds. According to the Centre for Policy Dialogue (CPO), more than Tk 920 billion have been embezzled from the banking sector through 24 major loan scams from 2008-2023. Bangladesh's banking sector has continuously shown vulnerability to scams, mostly as a result of poor administration, lack of accountability, and necessary reforms. The government's responses have not been sufficient in light of the repeated instances of irregularities and fraudulent operations. Unchecked non-performing loans (NPLs) pose a threat to the stability of the nation's financial system.
The fallibility of even centrally responsible organizations like the Bangladesh Bank ascertains that the financial scam issue extends beyond individual purview. Lax enforcement from regulatory authorities, limited investor education, economic instability, unemployment, and the lure of quick wealth all contribute to the problem. However, an underlying distrust in mainstream financial institutions, a lack of awareness, and an inability to verify fraudulent claims further exacerbate the issue. Even those with high levels of education are not immune to these scams. Recent data breaches of public websites have given scammers access to personal information, which they exploit to defraud thousands.
As these modern scams continue to evolve and disguise themselves as legitimate businesses, they pose a multidimensional threat that's challenging to combat. Prevention and recovery require a comprehensive approach that extends beyond regulation and law enforcement.
The intervention regarding cybersecurity should start with a robust regulatory framework, fostering intelligence sharing among stakeholders and enabling both preemptive and corrective action by law enforcement. The Government of Bangladesh has drafted the Personal Data Protection Act 2023 (PDPA), but the timeline for this act going into effect is still unclear. Moreover, transparency regarding the parameters and effectiveness of the act when implemented remains undetermined. Stringent laws, coupled with swift legal action against perpetrators, can serve as powerful deterrents. Specialized task forces, in collaboration with international counterparts, should monitor cross-b order operations to bring culprits to justice.
Moreover, widespread awareness and education campaigns about cybersecurity hygiene are imperative. These campaigns may be disseminated through various media outlets, workshops, NGOs, and seminars. Engaging local influencers and respected community leaders can amplify the message and create a network of vigilance against scams. Moreover, social media marketing can help with gaining traction and turning heads in the public.
For the individual victims of scams, it is essential to understand that the scope of these fraudulent activities is far-reaching enough to influence the most secure institutions and personnel in theory. Essentially, no one is 100 per cent safe regardless of their station, and educating oneself on detecting fraudulent activities is the best any regular person can do. Regulatory bodies, authorities, and law enforcement agencies have a greater role in this than they have played so far. The dedication to enforcement, public participation in reporting suspicious activities and the dissemination of knowledge can collectively fortify the nation's resilience against financial scams.
The writer is Portfolio Lead, Inspira Advisory & Consulting Limited.
[This article is being published as part of an effort to bring further awareness regarding cybersecurity and policy gaps relating to cybersecurity in Bangladesh to the general public, stakeholders, and policymakers and is supported by the South Asian Regional Digital Initiative (SARDI) by DAI and USAID under the Digital Connectivity and Cybersecurity Partnership (DCCP) Program.]