GH¢1bn Bank Fraud Recorded In 2020

Dr. Ernest Addison – Governor BoG

THE BANK of Ghana (BoG) says 2,670 cases of transaction-related fraud, valued at GH¢1 billion, was recorded by banks in the country during the Covid-19 pandemic.

According to the central bank, there was an 86.6% increase in bank transaction fraud in 2020 compared to 2019, with GH¢25.40 million lost to such scams in the year under review.

In its executive summary, the BoG stated that the year 2020 also recorded a 26.4% decrease in the success rate of attempted fraud.

“Some  fraud  types  experienced  a  significant  increase  in  the  rate  of success,  as  compared  to  2019, while  others  recorded  a  remarkable  decrease  in their  rate  of  success,  in  comparison  with  2019,” the report said.

It, however, indicated that fraud  types  such  as  ATM/PoS  fraud, impersonation  and  remittance  fraud  recorded  ‘significant  increases’  in  their  rate  of success  for the period under review.

ATM/PoS-related  fraud  accounted  for  32.2%  of  total  fraud-related  losses  incurred  in 2020  and “recorded  the  highest  loss  value  of  GH¢8.19  million  in  2020,  as  compared to  GH¢1.26  million  recorded  in  2019,  representing  a  548.1%  increase  in  year  on year terms.”

There was an increase in online banking activities, with several routine activities of financial institutions, including financial transactions that were usually undertaken in-person were conducted online.

The report revealed that customers who  were  not  used  to  digital/electronic methods  of  making financial transactions  were  compelled  to  use  the platform.

“Consequently,  some  sections  of  the banking  sector  were  exposed  to  heightened  levels  of  fraud-related  risk  due  to the  increased  patronage  of  electronic/digital  products  and  services,” the report pointed out.

“The  year  2020  recorded  a  marginal  increase  in  reported  fraud  incidents  with  a minimal  decrease  in  losses,” the report stressed, adding that “the  reduction  in  losses  was  mainly  due  to  a  reduction in the rate of success for most fraud types.”

The report indicated that a total of 2,311 cases were recorded in 2019 with a value of GH¢115.51 million.

It said the notable increase in  the value  reported  was  as  a result of high values recorded  in  attempted correspondent  banking  fraud  (forgery  of  SWIFT  advice).

“Even  though  the banking sector  did  not  suffer  any losses  from any of the correspondent  banking  fraud attempts,  it  posed a reputational risk to some banks,  whose staff  were  found culpable  in two  of  the three reported incidents,” the report noted

The report attributed the surge to the increased use of digital/electronic platforms for financial transactions after the financial institutions had encouraged their customers to take full advantage of the various digital products and services as part of an effort to contain the spread of the virus.

“The surge  in  usage  led  to  an  increase  in  the  incidence  of fraud-related  to  digital/electronic  products  and  services  and  consequently,  an increase  in  losses  emanating  from  products  such  as  E-Money and  ATM/Card fraud.”

It said the submission of fraud returns for 2020 recorded a slight improvement, and that the banks continued to maintain a 100%  rate  of submissions, while the  rural and community banking  sector  recorded  a remarkable  increase of 75%  in  the rate  of  submissions due to  administrative sanctions  issued  against  non-submitting  banks  in  the  first  half of the year.

The report said the submission rate across the SDIs would improve marginally if reporting

Staff Involvement

Staff involvement in the crime also increased significantly, especially the suppression of cash, adding that 56%  of  reported  fraud  cases  and  93%  of reported  cash  suppression cases  involved  staff  of  the  reporting  institutions.

“Data  recorded  over  the  years  shows  a  persistent  trend  of  staff  involvement  in fraud,” the report said, and continued that despite  the  “numerous  notices  of  caution” given out  to  the banking industry, the  phenomenon continued  to  increase.

BY Ernest Kofi Adu