Consumers should spend cautiously, despite the positive outlook for the year
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South Africa is facing a surge in ATM bombings, digital banking fraud and other financial crimes that are costing the banking industry and its customers more than R1 billion a year, a report shows.
The South African Banking Risk Analysis Centre’s (Sabric) 2022 crime statistics report released this week says the sector is struggling to combat rising financial crimes, which led to losses of more than R1 billion, from online banking “vishing” to attacks on ATMs, bank robberies and fraud.
“South Africa faces significant challenges when it comes to financial crime which encompasses a wide range of crime types, including contact crime, digital crime, application fraud and card fraud, all of which have far-reaching consequences for the economy, society and governance,” the report said.
Attacks on ATMs — including bombings, angle-grinder and blow-torch style burglaries — increased by 23% between 2021 and 2022 to 441 incidents, despite the activation of dye-stain on banknotes. Losses incurred as a result of ATM attacks rose 59% to R45.2 million.
“Of concern is that, in several instances, the perpetrators still removed the stained cash,” the Sabric report said.
In most ATM angle-grinder attacks, perpetrators targeted shopping centres where security guards were held hostage, while some perpetrators, dressed in guard uniforms, kept watch while the rest used grinders to access cash in the ATMs.
There was a 17% increase in bank branch burglary incidents in 2022, with the related cash losses increasing 366%. Ten incidents were reported where cash was targeted during the burglary, as well as assets such as computers. In 58% of the burglaries nothing was stolen.
A total of R21.2 million in losses was incurred due to financial contact crimes such as robberies at ATMs and before depositing or after withdrawing cash in bank branches. About 534 incidents were reported across the country, mostly in Gauteng (224), North West (57), Limpopo (56) and KwaZulu-Natal (54) and the Eastern Cape (51).
On a positive note, incidents for the associated robbery subtype branch before deposit decreased by 39% during 2022, which Sabric attributed to “the arrest of the main suspects in KwaZulu-Natal where the majority of branch before deposit incidents were occurring”.
Sabric reported an “alarming” 36% rise in digital banking fraud incidents during which
fraudsters deployed tactics such as social engineering and “vishing” scams to deceive victims into divulging sensitive information.
Vishing occurs when fraudsters make phone calls purporting to be a bank official or a representative of a reputable company and trick people into divulging personal information such as bank details, credit card numbers, one-time pins (OTPs) and random verification numbers (RVNs).
“Phishing and vishing remained the preferred methods for illicitly gaining access to confidential banking information. Phishing emails led victims to counterfeit websites closely resembling legitimate bank websites, while vishing was employed to acquire OTPs and RVNs,” the report said.
Online banking fraud accounted for the highest average financial losses per incident in 2022 reflecting a 9% increase when compared to the previous year.
The report said there was a 9% reduction in reported mobile banking fraud incidents in 2022, while SIM swap incidents in mobile banking fraud declined from 87% in 2021 to 76% in 2022, suggesting that this tactic was becoming less successful for criminals.
There was also a 17.6% decrease in fraudulent applications for vehicle asset finance, attributed to the effectiveness of fraud detection systems implemented by banks to identify and prevent most fraudulent applications from being approved.
Card fraud, including debit and credit, dropped 18.4% overall, with losses amounting to more than 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.
“A contributing factor to high fraud values for CNP was scammers that continued to find innovative ways to defraud unsuspecting clients by obtaining their OTPs via vishing tactics,” the report said.
Sabric chief executive Nischal Mewalall said there was a need for urgent, sustained action to combat financial crime.
“Collaboration among government entities, the private sector and civil society is
paramount to effectively combating financial crime,” Mewalall said.
“The commitment of organisations like Sabric to bolster law enforcement capabilities, fortify regulatory frameworks and promote transparency and accountability is unwavering.”