Financial Crime World

Types of Financial Fraud on the Rise in Jamaica Despite Decline in Losses

A recent report by the Bank of Jamaica (BOJ) has revealed that despite a decline in financial fraud losses to roughly $700 million in 2022, the number of occurrences of documented fraud jumped by two-thirds to 25,000, the highest level in at least five years.

Shift in Types of Fraud

The report highlights a significant shift in the types of fraud being perpetrated. Internet banking fraud is gaining ground, while credit card fraud continues to dominate. According to the Financial Stability Report 2022:

  • Credit card fraud remains the most common type of fraud, accounting for 70% of all losses.
  • However, fraudsters have found ways to bypass two-factor authentication using SIM-swap fraud, where fraudulent SIM cards are used to receive phone calls or text messages to gain access to someone else’s online banking account.

Victims of Bank Fraud

The report reveals that:

  • Women are more likely to be victims of bank fraud than men, with 51.6% of reported cases involving female victims.
  • Persons between the ages of 35 and 50 were found to be the key victims of financial fraud.

Causes of Decline in Losses

The BOJ attributed the decline in losses to the introduction of chip encryption in cards, which has made it more difficult for criminals to conduct fraudulent transactions. However, the report notes that the number of occurrences of fraud has been increasing steadily since the onset of the pandemic in 2020.

Types of Bank Fraud

The report defines 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. It lists six specific types of fraud:

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

The International Organisation of Securities Commissions has also reported that 66% of its global members have seen an increase in fraud since the pandemic, as individuals grapple with changes to their health and wealth. The BOJ’s report notes that financial institutions must continue to implement robust measures to combat fraud and protect customers’ assets.

Other Key Risks

The report highlights other key risks facing Jamaica’s financial system:

  • Further inflationary pressures
  • Associated increases in interest rates
  • Weakening global growth

However, the bank noted that stress tests carried out on various financial sub-sectors showed that the financial system remained broadly resilient to these shocks.