Fraudulent Activities in Banking Sector Dip to $700 Million in 2022, BOJ Reports
The Bank of Jamaica (BOJ) has released a report highlighting the country’s financial stability, revealing that fraudulent activities in the banking sector decreased to approximately $700 million last year, the lowest figure in five years.
A Significant Decline in Fraudulent Activities
Local banks detected about $715 million in fraud losses in 2021, $800 million in 2020, and $1.3 billion in 2019. The five-year average from 2018 to 2022 dipped to $900 million, down from $1 billion a year earlier. However, the number of attacks or occurrences of fraud jumped by two-thirds from 15,000 to over 25,000 in 2022 - the highest level seen in at least five years.
Credit Card Fraud and Internet Banking Frauds
Credit card fraud continues to be a major issue, but internet banking fraud has gained ground. Fraudsters are using SIM-swap fraud to bypass two-factor authentication and access online banking accounts. The report noted that women are more likely to be victims of bank fraud, with 51.6% of cases involving female victims.
Contributing Factors
The BOJ attributed the decline in losses to the introduction of chip encryption in cards. “Notably, while remaining more prevalent, card fraud losses displayed notable declines,” the report stated.
Definition and Types of Bank Fraud
The BOJ defined bank fraud as the use of unlawful means to obtain funds or other property owned by a financial institution or a depositor of a financial institution. The report listed six specific types of fraud relating to:
- Fraudulent cheques
- Credit and debit cards
- Wire transfers
- Loans
- Internet banking
- Internal or occupational fraud
Global Trend
The rise in fraud is not unique to Jamaica’s banking sector, as international organizations have reported a global increase in fraud since the pandemic. The BOJ revealed that 66% of its global members reported an increase in fraud since the pandemic.
Financial and Tourism Sectors’ Resilience
In other news, the BOJ also released data on the financial and tourism sectors’ resilience to stress tests related to a USA recession. The report stated that both sectors can survive stress tests related to a USA recession. However, it noted that the principal risks to the financial system in 2023 relate to further inflationary pressures, associated increases in interest rates, and weakening global growth.
Conclusion
The BOJ’s report highlights the country’s efforts to combat fraudulent activities and maintain financial stability. While there is still room for improvement, the decline in losses and resilience of the financial and tourism sectors are encouraging signs for Jamaica’s economy.