Financial Crime World

Title: Unchecked Financial Fraud Threatens Ghana’s Banking Sector: Kwasi Ntim’s Story

Unwelcome Surprise: Kwasi Ntim’s Compromised Account

In the bustling city of Kumasi, Ghana, Kwasi Ntim, a local businessman, received an unwelcome surprise in February 2023 when his bank account was compromised. Unsuspecting of the impending danger, Kwasi assumed numerous alerts he had received were mere random messages. He soon realized the gravity of the situation when he attempted to withdraw cash from an ATM.

Alarming Losses: The Ghanaian Banking Sector’s Struggle with Fraud

Kwasi’s experience echoes those of countless others who have fallen victim to banking sector fraud in Ghana. Between 2019 and 2022, the Banking and Specialised Deposit-Taking Industry reported over 10,000 attempted fraud cases, totaling more than Ghanaian Cedi (GHS) 1 billion in cumulative losses.

  • Total reported fraud cases: 10,000+
  • Cumulative losses: Over GHS 1 billion

An Increase in Attempted Fraud Cases

The numbers reveal an increase in attempted fraud cases from 2,175 in 2018 to 2,998 in 2022. The highest loss value, GHS 61 million, was recorded in 2021. However, the numbers do not account for cases left unreported.

Most Prevalent Types of Fraud

The most common types of fraud in Ghana’s financial sector are:

  1. Suppression of cash/deposits
  2. Forgery
  3. Manipulation of documents
  4. Cyber-email fraud
  5. ATM/POS fraud

Rural and Community Banks: High Incidence of Fraud

Despite their significant role in the financial sector, rural banks have been fraught with weak internal control systems, leading to a documented prevalence of fraud. RCBs accounted for either a high number of overall fraud cases or high staff involvement in the four-year period reported at 80% of the total fraud count.

Consequences of Financial Fraud

Financial institutions bear the financial burden of these losses. In significant cases, it could affect the dividends paid to shareholders and the bank’s equity capital. The lack of confidence in the financial sector can result in economic instability, with the potential for civil unrest and political upheaval.

Combating Financial Fraud

Financial institutions must adapt to technological advancements to combat such breaches effectively. Measures include:

  • Multi-factor authentication
  • Robust cybersecurity measures
  • Continuous auditing

Staff must also undergo rigorous training on internal processes and risk management procedures to mitigate potential vulnerabilities and prevent fraudulent activities.

Warning Against Phishing Scams

Consumers are advised to be cautious against potential phishing emails and phone calls posing as representatives from their financial institutions, requesting sensitive information.

[Dr Atuahene and the National Computer Emergency Response Team (CERT-GH) at the Ghana Cyber Security Authority (CSA)]