Ghana’s banking sector recorded a total of GH¢1 billion fraudulent transactions in 2020, the latest figures from the Bank of Ghana have indicated.
In the central bank’s executive summary of the report, it said in 2020, many routine activities of institutions, including financial transactions that usually would have been undertaken in-person were conducted online.
Customers who were not used to digital/electronic methods of making financial transactions were compelled to use them, BoG noted, adding: “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 central bank also said the emergence of the COVID-19 pandemic propelled the use of digital/electronic modes of transacting business, leading to higher exposure to fraud.
“The year 2020 recorded a marginal increase in reported fraud incidents with a minimal decrease in losses”, BoG’s report noted. “The reduction in losses was mainly due to a reduction in the rate of success for most fraud types”.
A total of 2,670 cases were recorded in the year 2020, as compared to 2,311 cases in 2019, it said.
The reported value of fraud for 2020 was GH¢1.0 billion, as compared to GH¢115.51 million recorded in 2019, the bank 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), the report noted.
“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 said.
Losses incurred as a result of fraud for 2020 stands at GH¢25.40 million, as compared to an estimated loss of GH¢33.44 million in 2019, representing a 24.0% decrease.
It said the “COVID-19 pandemic resulted in a surge in the use of digital/electronic platforms for financial transactions, considerably” and in an effort to contain the spread of the virus, “financial institutions encouraged customers to take full advantage of the various digital products and services available, to execute financial transactions”.
The central bank said 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 submission of fraud returns for 2020 recorded a slight improvement.
The banks continued to maintain a 100% rate of submissions and 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 submission rate across the SDIs, the central bank noted, “will improve marginally if reporting institutions are adjusted to exclude the distressed institutions”.
The report said the the year 2020 recorded a 26.4% decrease in the success rate of fraud attempted.
“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”.
Fraud types such as ATM/POS fraud, impersonation and remittance fraud recorded “significant increases” in their rate of success for the period under review, the report said.
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”.
The COVID-19 pandemic, the bank noted, “forced bank customers to use alternative channels for payments and bank services”, pointing out, “poor personal safety perception and inadequate customer sensitisation by the banking institutions may be the cause of the increase in the ATM/POS-fraud type.”
Staff involvement in the commission of fraud also experienced a “significant increase, especially suppression of cash”, the report revealed.
Also, it said, 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 bank noted.
It said despite the “numerous” notices of caution sounded out to the banking industry, “in almost every fraud report issued since 2017, the phenomenon continues to increase”.
“The steady rise in this phenomenon generally could be attributed to the use of poorly remunerated temporary staff, who undergo limited background checks, for sensitive tasks and a lack of corporate governance systems that helps to ensure accountability and fairness and transparency”, the report added.
It said E-Money fraud is beginning to show a “steady rise” in the count of reported incidents.
E-Money-related losses accounted for 4.1% of the total fraud-related losses incurred in 2020, as compared to a rate of 1.1% recorded in 2019.
The proportion of E-Money-related fraud incidents reported rose from 0.6% in 2019 to 4.7% in 2020.
The key recommendations to help fight current fraud trends include consumer education on the safe usage of digital/electronic products, the improvement of KYC information gathered by mobile money operators (MMOs), and the acquisition of transaction monitoring systems by MMOs to help monitor suspicious transaction.