Fraud across Banks & SDIs: Staff involvement alarming

STAFF involvement in fraudulent activities within Ghana’s banking and Specialised Deposit-Taking Institutions (SDIs) witnessed a disturbing hike in 2023, according to the latest fraud report released by the Bank of Ghana.

The number of staff implicated in fraud cases rose by 46%, from 188 in 2022 to 274 in 2023. Out of these, an alarming 77% (211 cases) were connected to cash theft, also referred to as cash suppression, up from 66% (140 cases) in 2022.

This worrying trend has prompted the central bank to call on financial institutions to strengthen internal controls, improve recruitment diligence, and enhance continuous in-house staff training on professional conduct.

The Bank of Ghana expressed concern over these statistics, urging banks and SDIs to take immediate action to address the root causes of staff-related fraud.

In its report, the BoG stressed the need for reinforcing employee integrity through background checks and training, aimed at reducing internal fraud cases.

Rise in electronic fraud cases

Electronic fraud, also saw an upward trend in 2023. The number of incidents reported by Payment Service Providers (PSPs) increased by 20%, rising from 12,166 cases in 2022 to 14,655 cases in 2023.

 However, the financial loss associated with these incidents decreased by 38%, with GH¢16 million lost in 2023 compared to GH¢26 million in 2022. This reduction in losses, despite the increase in fraud attempts, was attributed to heightened awareness and improved security measures in the sector.

Interestingly, December 2023 witnessed the highest loss value for the year, largely due to the surge in festive activities, which often presents opportunities for fraudsters.

The BoG has urged stakeholders to intensify sensitization programs and reinforce security measures during peak periods, particularly festive seasons, to mitigate future risks.

Fraud type in Banks and SDIs

The report also presented a detailed analysis of the various types of fraud impacting the banking and SDI sectors over the past four years.

The report indicated that ATM Card, and POS fraud, for example, recorded significant fluctuations, with GH¢8,191.37 lost in 2020, peaking at GH¢22,850.67 in 2021 before falling to GH¢34.32 in 2022. In 2023, this type of fraud saw a modest rise to GH¢3,528.83.

Cheque fraud, also rose from GH¢467.47 in 2020 to GH¢6,157.59 in 2023.

 Meanwhile, Cyber and Email fraud followed an upward trajectory, climbing from GH¢1,056.09 in 2020 to GH¢10,522.00 in 2023.

Cash theft or cash suppressionalso emerged as one of the most significant forms of fraud, with losses soaring from GH¢2,393.96 in 2020 to GH¢16,702.72 in 2023. This alarming trend underlines the need for stricter controls, especially concerning internal handling of cash.

The report also stated the emergence of other fraud types including Impersonation.  for instance, impersonation fraud saw a sharp rise in 2021 to GH¢10,322.25 before dropping to GH¢674.50 in 2023.

Similarly, forgery and document manipulation peaked at GH¢33,074.89 in 2022 before declining to GH¢7,466.42 in 2023.

Sim swap fraud, the new threat

The report mentioned SIM swap related fraud as one of the notable developments in 2023, which accounted for GH¢4,633.21.

This form of fraud was absent from previous reports and marks a new area of concern for financial institutions. As fraudsters continue to adapt to technological advancements, it is crucial for banks and PSPs to stay ahead of these threats by adopting more robust security frameworks. A total fraud loss of GH¢72,540.26 was recorded in 2023, up from GH¢56,348.86 in 2022.