Ghana’s banking sector faced tumultuous risks in 2020 with total value of reported fraud ballooning to GHS1 billion, and losses from fraud amounting to GHS25.4 million.

Compared with the value of fraud reported in 2019 (GHS115.51 million), this is approximately nine times larger than the value in 2019. Albeit, the losses incurred in 2020 declined marginally from the estimated loss of GHS33.4 million in 2019.

“The Reported value of fraud for 2020 was GHS1.0 billion, as compared to GHS115.51million recorded in 2019. Losses incurred as a result of fraud for 2020 stands at GH¢25.40 million, as compared to an estimated loss of GHS33.44 million in 2019, representing a 24.0% decrease.”
Bank of Ghana

According to BoG, the escalated amount in value of fraud reported was as a result of the high values recorded in attempted correspondent banking fraud (forgery of SWIFT advice).

This notwithstanding, the report hints that the banking sector, generally, did not suffer any losses from any of the correspondent banking fraud attempts. However, the report notes “it posed a reputational risk to some banks, whose staff were found culpable in two of the three reported incidents.”

COVID-19 and banking fraud

While the covid-19 pandemic revolutionized banking and scaled the use of digital technology in an accelerated pace, the associated risks of cyber fraud were not likely to remain peripheral as experienced in previous years.

Furthermore, the report notes that the reduction in losses was mainly due to a decline in the rate of success for most fraud types. A total case count of 2,670 cases was recorded in the year 2020, as compared to 2,311cases in 2019.

Also, the submission of fraud returns for 2020, recorded a slight improvement. Commercial banks continued to maintain a 100 percent rate of submissions.

Similarly, the rural and community banking sector recorded a remarkable increase of 75 percent in the rate of submissions. This was due to administrative sanctions issued against non-submitting banks in the first half of the year.

Banking Fraud types

Moreover, the success rate of attempted fraud decreased by 26.4 percent. Fraud types such as ATM/POS, impersonation and remittance fraud recorded significant increases in their rate of success for the period under review, the report highlights.

Accordingly, ATM/POS related fraud accounted for 32.2 percent of total fraud-related loss incurred in 2020. It also recorded the highest loss value of GHS8.19 million in 2020, as compared to GHS1.26 million recorded in 2019. This represents a 548.1 percent increase on a year-on-year basis.

“The COVID-19 pandemic forced bank customers to use alternative channels for payments and bank services. Poor personal safety perception and inadequate customer sensitization by banking institutions may be the cause of the increase in the ATM/POS fraud type.”
Bank of Ghana

Additionally, banks’ staff involvement in the commission of fraud also increased markedly, especially regarding the suppression of cash. As such, 56 percent of reported fraud cases and 93 percent of reported cash suppression cases involved staff of the reporting institutions.

Over the years, available data shows that E-Money related loss accounted for 4.1 percent of the total fraud-related loss incurred in 2020, as compared to a rate of 1.1 percent recorded in 2019. Also, the proportion of E-Money related fraud incidents reported increased from 0.6 percent in 2019 to 4.7 percent in 2020.

In order to fight the current trend in banking fraud, the report highlights the need for education on the safe usage of digital or electronic products. Also, there is a need for the improvement of Know Your Customer (KYC) information.

Furthermore, the report recommends the acquisition of transaction monitoring systems by MMOs to help monitor transactions.