Thousands of fraudulent loans distributed in Kazakhstan

Revamped Article:

Those microloans in 2021 took a nose dive—dropped an astonishing four times. That's the gist from Madina Abylkassymova, the bigwig at Kazakhstan's Financial Market Regulation and Development Agency, when she shared insights about microloans distributed by microfinance orgs to the public. "Kazinform" was the source of this intel.

In 2020, the Kazakhstan Ministry of Internal Affairs clocked a whopping 3,000 instances of net fraud, stretching beyond financial businesses. It also encircled phony financial pyramids, swindling investment groups, and dodgy money-grabbing schemes aiming for the public's wallet. According to the agency's findings, a disheartening 956 instances of fake microloans, amounting to around 77.9 million tenge (roughly 0.05% of all online microloans), slipped through the cracks in 2020.

Fast forward to the first four months of 2021, and the number of these underhanded microloan creations plummeted 3.6 times to a mere 94 instances, totaling a comparatively manageable 10.6 million tenge.

The Ministry of Internal Affairs reveals that 96% of these underhanded acts carry a criminal vibe, stemming from the misuse of lost, stolen, or forged identification docs, or by exploiting a casual method of borrower identification during remote microloan issuance.

Since the year's outset, the agency has stepped up its vigilance to thwart microloan fraud, putting these moves into action:

Ban on Electronic Microloans: In February 2021, microfinance institutions were directed to put a hold on providing microloans electronically without the use of biometric identification or digital signatures.
Protecting the Affected: To safeguard vulnerable citizens, microfinance institutions have suspended the calculation of interest and penalties on fraudulently obtained microloans and reported fraudulent activities to credit bureaus to correct credit histories.
Verification Crackdown: By March 2021, microfinance institutions were obligated to verify and validate clients' authenticity, compare their data with application data, ensure the client's biometric data matches identity documents, and obtain the client's explicit consent before disbursing a microloan.

More stringent measures might've been implemented by the agency to quell microloan fraud, but those details don't seem readily available. If you're keen to learn about such measures, your best bet would be to reach out to the Financial Market Regulation and Development Agency or catch their official announcements.

In the broader picture, regulatory agencies often tackle microloan fraud through:

Tightened Supervision: Regular inspections and audits of microfinance institutions to ensure adherence to guidelines.
Education for Consumers: Informing consumers about microloan risks and identifying fraud signs.
Advanced Fraud Detection: Implementing fancy systems to spot suspicious activities that suggest fraud.
Collaboration with Law Enforcement: Teaming up with law enforcement agencies to prosecute microloan fraud cases.

But specific action points by the Financial Market Regulation and Development Agency of Kazakhstan require explicit inquiries or official communications from the agency itself.

The four-fold drop in microloan distributions in 2021, as reported by Madina Abylkassymova, is a concerning sign of fraud in microfinance businesses in Kazakhstan.
The General-News and Crime-and-Justice sectors have been abuzz with stories of fraudulent microloans, with over 956 instances identified in 2020 alone.
In response to this rise in microloan fraud, the Financial Market Regulation and Development Agency in Kazakhstan has implemented several measures to bolster security, including the ban on electronic microloans and stricter client verification processes.
The Agency's efforts to protect the public from microloan fraud include suspending the calculation of interest and penalties on fraudulently obtained microloans and reporting fraudulent activities to credit bureaus.
The Agency's ongoing vigilance and enhanced measures against microloan fraud in Kazakhstan serve as a reminder of the need for increased security and regulation in the microfinance sector, especially in the face of growing instances of fraud.