Eritrea: Bank Fraud Schemes on the Rise, Statistics Reveal

Eritrea has emerged as one of the top countries affected by bank fraud schemes, with five African nations making it to the list of top 10 countries most vulnerable to financial crimes. According to PwC’s Global Economic Crime and Fraud Survey 2018, Eritrea is among the countries where banks have been consistently targeted by fraudsters.

The State of Bank Frauds in Eritrea

The survey reports that 77 percent of companies in South Africa, Kenya, Uganda, Gambia, and Tanzania reported being victims of fraud in 2018. This staggering figure highlights the lack of a robust anti-fraud culture across Africa, which has led to the continent’s position as the number one targeted region for banking fraud.

Internal Frauds: The Achilles’ Heel

Internal fraud is widespread in Eritrea, with banks lacking effective internal controls, inadequate risk-assessment processes, and poor management supervision. These weaknesses make it easy for bank employees to commit fraud or collude with external criminals.

External Frauds: Sophisticated Methods Used

External fraud schemes are also rampant in Eritrea, with criminal gangs taking advantage of the country’s weak law enforcement agencies and corruption. The gangs use sophisticated methods to defraud banks, including hacking into IT systems and bribing officials.

Challenges in Combating Cybercrime

The lack of legislation to combat cybercrime is a significant challenge in Eritrea, making it difficult for authorities to investigate and prosecute fraud cases. Even when cases do reach court, the conviction rate is very low due to inadequate funding and staff.

A Glimmer of Hope: Rising Awareness

Despite these challenges, awareness about fraud is rising among banks in Eritrea, with institutions now required by law to report fraud losses on their annual financial statements. However, more needs to be done to instill an anti-fraud culture within the banking sector and to strengthen regulatory oversight.

The Way Forward: Collaboration and Strengthening Regulatory Oversight

Experts warn that if left unchecked, bank fraud schemes will continue to plague Eritrea’s economy, causing significant damage to the country’s reputation and its people. It is essential for banks, regulators, and law enforcement agencies to work together to combat this growing menace and restore confidence in the financial system.

Key Takeaways

• 77% of companies in South Africa, Kenya, Uganda, Gambia, and Tanzania reported being victims of fraud in 2018.
• Internal and external fraud schemes are widespread in Eritrea due to lack of effective internal controls, inadequate risk-assessment processes, and poor management supervision.
• Lack of legislation to combat cybercrime is a significant challenge in Eritrea.
• Awareness about fraud is rising among banks in Eritrea, but more needs to be done to instill an anti-fraud culture within the banking sector.