IIARD International Institute of Academic Research and Development

INTERNATIONAL JOURNAL OF SOCIAL SCIENCES AND MANAGEMENT RESEARCH (IJSSMR )

E-ISSN 2545-5303
P-ISSN 2695-2203
VOL. 10 NO. 8 2024
DOI: 10.56201/ijssmr.v10.no8.2024.pg18.29

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The Impact of Letter of Credit Fraud on The Bank’s Service Retail in Tanzania

Seif Lukanga, Msabaha Juma Mwendapole, Keneth Oliver Mbaga

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Abstract

This research delves into the intricate relationship between letter of credit (LC) fraud and its repercussions on the retail banking services sector in Tanzania, with a specific emphasis on CRDB Bank. By employing a mixed-methods approach, encompassing both qualitative and quantitative data collection from 43 respondents, this study paints a comprehensive picture of the extent and impact of LC fraud. The research uncovers prevalent types of LC fraud at CRDB Bank, such as falsification of shipping documents, misrepresentation of goods, and collusion among fraudulent parties. Through a multi-faceted analysis of interviews, surveys, and data, the study reveals the detrimental effects of LC fraud on CRDB Bank's banking services, encompassing substantial financial losses, operational inefficiencies, and erosion of customer trust. Furthermore, the investigation extends its reach to examine the broader implications of LC fraud on Tanzania's maritime services, highlighting delays in shipments, escalated costs, and strained business relationships. Despite CRDB Bank's proactive measures to mitigate LC fraud, including stricter verification protocols, advanced fraud detection technologies, and staff training initiatives, the study identifies persistent gaps in the bank's defenses. Consequently, the research underscores the necessity for more robust and holistic strategies to effectively combat LC fraud. These recommendations encompass bolstering technological capabilities, strengthening regulatory compliance, intensifying staff and stakeholder training, enhancing customer awareness programs, and fostering international cooperation. In sum, this study contributes valuable insights into the challenges and potential solutions associated with LC fraud in Tanzania's banking and maritime sectors, aiming to fortify service delivery and bolster the reliability of international trade transactions.

keywords:

Fraud Case, Letter of credit, financial stability

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