Banks Record GH₵63m loss

– To fraud in 2023, amid rise in ATM & card-related cases

Story: Isaac AIDOO, Accra

BANKS in Ghana reported a significant rise in losses due to fraud in 2023, amounting to GH₵63 million, a 21% increase from the GH₵52 million recorded in 2022. This increase was highlighted in the 2023 Fraud Report released by the Financial Stability Department of the Bank of Ghana (BoG).

Despite the monetary losses rising, the total number of fraud cases actually decreased by 17%, with 969 cases in 2023 compared to 1,163 in 2022.

Sharp Rise in ATM/POS/Card Fraud

One notable trend identified in the report is the sharp increase in ATM/POS/Card fraud, which recorded 218 cases in 2023, compared to just 9 cases in 2022. This surge is attributed to the growing use of digital banking channels, which, while offering convenience to customers, have become a target for fraudsters. The increase in digital transactions has created new vulnerabilities that banks must address to safeguard their customers.

To mitigate the rising threat of ATM and card-related fraud, banks have been urged to enhance the security of their electronic banking systems by incorporating advanced security measures such as multi-factor authentication and biometric verification. These measures are expected to make the systems more resistant to unauthorized access and fraud attempts.

Emerging Threat: SIM Swap Fraud

The report also identified SIM swap fraud as a growing concern in Ghana’s banking sector. SIM swap fraud occurs when a fraudster manipulates a mobile phone network provider to transfer a victim’s phone number to a new SIM card, allowing access to sensitive banking information. In 2023, 15 cases of SIM swap fraud were recorded, an emerging trend that banks will need to monitor closely.

Cash Theft Emerges as the Biggest Contributor to Fraud Losses

Although there was a decline in the number of fraud cases, the largest financial losses in 2023 were attributed to cash theft, particularly cash suppression fraud. The total value lost to cash theft rose dramatically to GH₵14.8 million, a staggering increase from the GH₵1 million recorded in 2022.

Cash suppression, which typically involves the manipulation of cash handling processes within financial institutions, was initially associated with rural banks. However, in 2023, universal banks also fell victim to this type of fraud, contributing to the significant rise in losses.

A major incident cited in the report was a case of cash theft involving USD466,000 at a universal bank. When converted to Cedi terms, this loss significantly impacted the total fraud loss recorded by the banking sector.

Foreign Currency Fraud Adds to Losses

Fraud involving foreign currencies was another area of concern in 2023. Losses amounted to USD1.7 million and GBP 0.048 million. These foreign currency fraud activities had a notable impact on the total loss value in Cedi terms, further exacerbating the financial hit to the banking sector.

The report concludes with recommendations for Ghanaian banks to bolster their fraud prevention mechanisms. Financial institutions are encouraged to invest in more robust monitoring systems and to strengthen collaboration with law enforcement to track and prevent fraudulent activities.

In light of the growing threats posed by digital and foreign currency fraud, the BoG has called for increased vigilance, particularly in areas such as cash handling, digital banking, and foreign currency transactions. The 2023 Fraud Report offers a comprehensive overview of the types of fraud affecting Ghana’s financial institutions, including banks, specialized deposit-taking institutions, and payment service providers. Covering the period from January 1 to December 31, 2023, the report provides valuable insights into the evolving threats facing the sector and outlines the necessary steps to safeguard against future losses.