Financial Crime World

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Bank Fraud Detection in Jamaica Sees Decline, but Occurrences Jump by Two-Thirds

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According to the Bank of Jamaica’s recent Financial Stability Report 2022, the value of bank fraud dipped to approximately $700 million in 2022, marking a five-year low. This decline follows a pattern of decreasing losses over the past few years, with a total of $715 million detected by local banks in 2021, $800 million in 2020, and $1.3 billion in 2019.

Despite Decrease in Value, Number of Fraud Occurrences Jumps

However, despite this decrease in value, the number of fraud occurrences jumped by two-thirds to over 25,000, the highest level seen in at least five years. Credit card fraud continues to dominate, but internet banking fraud has gained ground, with criminals using SIM-swap fraud to bypass two-factor authentication and gain access to online banking accounts.

Demographics of Bank Fraud Victims

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  • Women are more likely to be victims of bank fraud than men, accounting for 51.6% of all cases.
  • The majority of fraud losses involve the theft or use of credit card numbers, with 70% of losses attributed to this method.
  • Persons aged between 35 and 50 are most commonly targeted.

Causes of Decline in Bank Fraud Losses

The Bank of Jamaica attributed the decline in bank fraud losses to improved combative measures implemented by financial institutions and the introduction of chip encryption in cards. “Deposit-taking institutions observed a general downward trend in annual bank fraud-related losses, concurrent with improved combative measures implemented by licensees,” the report stated.

Rise in Fraud Occurrences

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Despite the decrease in value, the number of fraud occurrences has increased significantly since 2020, with over 25,000 reported cases in 2022 alone. The Bank of Jamaica defined bank fraud as the use of unlawful means to obtain funds or other property owned by a financial institution or depositor, and noted that it can also be viewed as a predicate offence for money laundering.

Types of Fraud

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The report highlighted six specific types of fraud:

  • Fraudulent cheques
  • Credit and debit cards
  • Wire transfers
  • Loans
  • Internet banking
  • Internal or occupational fraud

Ongoing Concerns

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While the report did not mention any ongoing bank fraud cases before the courts, it noted that internal or occupational fraud remained relatively low, accounting for 4.0% of total fraud losses per annum.

The rise in fraud is not unique to Jamaica, with international reports showing a global increase in fraud since the pandemic. The Bank of Jamaica’s report also highlighted concerns over further inflationary pressures, associated increases in interest rates, and weakening global growth as potential risks to the financial system in 2023.