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 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