Financial Crime World

Jamaica Sees Decline in Bank Fraud Losses, But Number of Incidents Jumps by Two-Thirds

The Bank of Jamaica has reported a significant decline in bank fraud losses in 2022, with the total value dipping to approximately $700 million. This marks a five-year low, according to the Financial Stability Report 2022.

Decline in Losses

Despite the decrease in financial losses, the number of fraudulent occurrences jumped by two- thirds from 15,000 to over 25,000 in 2022, the highest level seen in at least five years. This surge in incidents is a cause for concern, as it suggests that fraudsters are becoming more brazen and sophisticated.

Types of Bank Fraud

Credit card fraud remains the most prevalent type of bank fraud, accounting for 70 per cent of all cases. However, internet banking fraud has gained ground, with criminals using SIM-swap fraud to bypass two-factor authentication and gain access to online banking accounts.

Victim Profile

Interestingly, women are more likely to be victims of bank fraud than men, with 51.6 per cent of reported cases involving female victims. Meanwhile, persons in the prime working age range of 35-50 years old are the most common targets.

Factors Contributing to Decline in Losses

The Bank of Jamaica attributed the decline in losses to the introduction of chip encryption in cards, which has made it more difficult for fraudsters to conduct transactions.

Regulatory Measures

Notably, financial securities dealers, which invest funds on behalf of clients, are now coming under the supervision of the BOJ following revelations of a multimillion-dollar fraud at Stocks & Securities Limited. This move aims to strengthen oversight and prevent similar incidents in the future.

Trend Analysis

The report noted that the number of fraud occurrences has been steadily increasing since 2020, with over 25,000 reported cases in 2022 alone. Credit card fraud occurrences more than doubled during the year.

Forms of Bank Fraud

According to the Financial Stability Report 2022, bank fraud can take many forms, including:

  • Fraudulent cheques
  • Credit and debit cards
  • Wire transfers
  • Loans
  • Internet-based schemes
  • Internal or occupational fraud

Concerns

The report highlighted six specific types of fraud but did not provide details on any ongoing cases before the courts. It also noted that while internal or occupational fraud remained relatively low, accounting for 4 per cent of total fraud losses per annum, it still remains a concern.

The rise in fraud is not unique to Jamaica, with international organizations reporting an increase in fraud cases globally since the pandemic. The BOJ has warned of potential risks to the financial system in 2023, including further inflationary pressures, interest rate increases, and weakening global growth.

Conclusion

In conclusion, while the decline in bank fraud losses is a positive trend, the significant increase in fraudulent occurrences is a cause for concern. It is essential for individuals and businesses to remain vigilant and take proactive measures to protect themselves against fraud. The Bank of Jamaica’s efforts to strengthen oversight and prevent similar incidents in the future are also commendable.