South Africa’s Banks Hit by Record-Breaking Digital Banking Fraud

A staggering R740 million was stolen from unsuspecting bank customers through digital banking fraud in 2022, according to the South African Banking Risk Information Centre (Sabric). The organisation has revealed that social engineering techniques played a pivotal role in perpetrating these fraudulent transactions.

Surge in Reported Incidents of Digital Banking Fraud

The statistics published by Sabric show a significant surge in reported incidents of digital banking fraud, with a 24% increase compared to the previous year. The majority of these cases were attributed to fraud related to banking applications and internet banking.

Gross Losses Escalate

Gross losses escalated from R440 million in 2021 to R740.8 million in 2022, reflecting a 68% rise in financial impact. As more banks report significant increases in clients’ use of digital banking platforms, cybercriminals have taken advantage of this trend to engage in unlawful activities.

Social engineering techniques were used to manipulate individuals into serving as intermediaries or “mules” in fraudulent schemes. These mules were often enticed with promises of easy money or job opportunities and instructed to open bank accounts under their own names.

Complex transactions and movements of funds through multiple accounts or financial institutions were used to obscure the money trail.
Cryptocurrency was also used to launder money due to its perceived anonymity.

Fraudsters’ Tactics

Fraudsters employed various tactics to obtain victims’ private information, including:

Vishing: posing as bank officials or service providers over phone calls and manipulating victims into disclosing confidential information
Concealing illicit origins of funds using complex transactions and movements of funds through multiple accounts or financial institutions

Decrease in SIM Swap Fraud Incidents

The statistics also revealed a significant decrease in SIM swap fraud incidents, from 4,508 cases in 2021 to 71 reported incidents in 2022.

Online Banking Fraud: A Growing Concern

Online banking fraud accounted for only 26% of reported incidents but resulted in the second-highest proportion of gross losses, reaching 47%. Mobile banking fraudulent incidents saw a 9% decrease between 2021 and 2022, making it the second-largest segment with a low proportion of gross losses at 4%.

Banks’ Enhanced Detection Measures

Banks have implemented enhanced detection measures to curb mobile banking fraud, which has contributed to its lower financial impact. However, the increasing use of digital banking platforms presents a significant challenge for the industry to prevent fraudulent transactions.

Prevention and Protection

The South African Banking Risk Information Centre warns that individuals must remain vigilant and take steps to protect themselves from these types of attacks. Bank customers are advised to:

Be cautious when receiving suspicious calls or messages
Never share confidential information
Regularly monitor their accounts for any unusual activity

By being aware of these tactics and taking necessary precautions, individuals can help prevent falling victim to digital banking fraud.