Number of Microfinance Frauds Decreases in Kazakhstan

Over the first quarter of 2021, the number of sham loans plummeted 3.6 times, according to Dauren Salimbayev, from the Department of Methodology and Prudential Control under the Agency for Regulation and Development of the Financial Market.

Since the start of 2021, the agency has been involved in a series of measures aimed at preventing crimes of cheating with microfinance loans.

As Salimbayev noted, since March 2021 all the microfinance organizations that specialize in alternative financing have been obliged to make sure that the applicant for a loan is the right person and can identify himself. For example, microlenders have to match a person’s ID with data in his application; check his biometrics and prove client’s intention to take a loan by recording it on camera.

«To avoid any risk of fraud with microloans, a new order of a borrower identification has been introduced. If someone wants to get a loan, he or she needs to have a digital signature. Also, the borrower’s biometrics can be matched to his official samples in the National Bank of Kazakhstan. Two-factor authentication of the borrower may also be required,» Salimbayev explained. 

If a microlender has noticed an unauthorized attempt to get access to sensitive information about a loan, this company must take all proper actions to protect its clients from fraud. 

This issue is very sensitive for Kazakhstanis, who are regular users of microlender services. In one case in Kostanay, 44 people have found themselves indebted to a microfinance company due to fraud.