Financial Fraud Statistics Paint Mixed Picture for Jamaica’s Banking Sector

The Bank of Jamaica’s latest Financial Stability Report 2022 has presented a mixed bag of statistics on bank fraud in the country, highlighting both positive and negative trends.

Decrease in Losses, Increase in Occurrences

While the value of bank fraud losses dipped to approximately $700 million in 2022, the lowest in five years, the number of attacks or occurrences of fraud jumped by two-thirds from 15,000 to over 25,000 - the highest level seen in at least five years.

Credit Card Fraud Dominates, Internet Banking Fraud Gains Ground

According to the report, credit card fraud continues to dominate, but internet banking fraud gained ground, with fraudsters using SIM-swap fraud to bypass two-factor authentication and gain access to online banking accounts. Credit card fraud losses still accounted for the bulk of fraud losses (70%), although methods have changed, with criminals now targeting individuals more frequently.

Demographics of Bank Fraud Victims

Interestingly, women were victims of bank fraud at a slightly higher rate than men, accounting for 51.6% of reported cases. Persons in the prime working age range of 35-50 were found to be the key targets.

Reasons Behind Decline in Losses

The report attributed the decline in losses to the introduction of chip encryption in cards, which has made it more difficult for fraudsters to carry out their schemes. Additionally, commercial banks have implemented improved combative measures to combat fraud, resulting in a general downward trend in annual bank fraud-related losses.

Rise in Occurrences Since Pandemic

However, the number of occurrences of documented fraud has continued to rise since the onset of the pandemic in 2020, with over 25,000 cases reported in 2022 alone. This is a significant increase from less than 5,000 instances reported in 2019 and 15,000 in 2020.

Definition of Bank Fraud

The Bank of Jamaica 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, including:

• Fraudulent cheques
• Credit and debit cards
• Wire transfers
• Loans
• Internet banking
• Internal or occupational fraud

Global Trend

While the local banking sector has seen an increase in fraud, this trend is not unique to Jamaica, with international reports indicating that 66% of global members reported a rise in fraud since the pandemic.