Financial Crimes Surge in South Africa: A Threat to Banking Industry and Economy
South Africa is facing a significant surge in financial crimes, which has resulted in losses of over R1 billion for the banking industry and its clients in 2022. The country’s economy, society, and governance are all impacted by these crimes.
Types of Financial Crimes on the Rise
According to the latest crime statistics report from the South African Banking Risk Analysis Centre (Sabric), various forms of financial crime are on the increase:
- Contact Crime: Incidents involving physical contact with individuals or properties.
- Digital Crime: Cyber-related crimes, including online banking and card fraud.
- Application Fraud: Identity theft and false applications for financial services.
- Card Fraud: Theft and misuse of debit and credit cards.
ATM Bombings and Related Crimes
The number of ATM bombings has increased by 23% between 2021 and 2022, with losses from these attacks rising by 59% to R45.2 million. Perpetrators often use angle-grinder or blow-torch style burglaries to gain access to cash.
Bank Branch Burglary
Incidents of bank branch burglary have increased by 17%, with related cash losses rising by 366%. In some cases, nothing was stolen, indicating a lack of sophistication among some criminals.
Digital Banking Fraud on the Rise
There has been a significant increase in digital banking fraud, with a 36% rise in incidents. Tactics used by fraudsters include social engineering and “vishing” scams to deceive victims into divulging sensitive information.
Online Banking Fraud
Online banking fraud accounted for the highest average financial losses per incident in 2022, reflecting a 9% increase compared to the previous year. However, there was a 9% reduction in reported mobile banking fraud incidents, while SIM swap incidents declined from 87% in 2021 to 76% in 2022.
Card Fraud
Card fraud, including debit and credit cards, dropped by 18.4%, with losses amounting to over R800 million. Card not present (CNP) was the fraud type with the highest values, but this category recorded a decrease in the number of incidents.
Combating Financial Crime
Sabric chief executive Nischal Mewalall emphasized the need for urgent and sustained action to combat financial crime. He highlighted the importance of collaboration among government entities, the private sector, and civil society to effectively address financial crime.
The commitment of organizations like Sabric to bolster law enforcement capabilities, fortify regulatory frameworks, and promote transparency and accountability is unwavering, Mewalall said.