Rural and Community Banks recorded highest rate of staff involvement in fraud cases in 2021 – BoG report

The Bank of Ghana (BoG) says the incidence of staff involvement in fraud has been very persistent in Rural and Community Banks.

In its Banking, SDI, and EMI Fraud report, the Central Bank found that Rural and Community Banks recorded the highest incidence of staff involvement in fraud cases in 2021.

Released on June 28, 2022, the report showed that out of the 278 cases of staff involvement in fraud recorded in 2021, the Rural and Community Banks accounted for 128 cases, representing 46.04% of the total number of cases.

The Universal Banks accounted for 28.06% of fraud involving staff, while the Savings and Loans sector accounted for 16.55% of fraud involving staff recorded for 2021.

Overall, 53.46% of fraud incidents reported in 2021 involved staff of the reporting financial institutions.

“Incidence of staff involvement in the commission of fraud has seen an increase compared to data recorded in 2020. The situation continues to persist in the sector despite several recommendations and notes of caution issued by the Bank of Ghana to the Banking and SDI sector. The Rural and Community Banks recorded the highest incidence of staff involvement in fraud cases,” the report said. 

The situation according to BoG is due to a lack of adequate control systems in the financial institutions, poor background investigations for prospective, newly appointed, and temporal staff, poor remuneration in the Banking and SDI sectors, among others.

“The persistent rate of increase in staff involvement in fraud recorded over the last three years shows that the Banking sector, especially the Rural, and Community Banking sector has not put in place enough effort into curbing the trend,” it said. 

BoG says as the regulator of the sector, it would increase its focus on the Rural and Community Banks. 

“The Rural Banking sector has been directed to implement access and control systems that will help reduce the high level of risk posed by the incidence of staff involvement in fraud. The BoG in collaboration with ARB Apex Bank has made concerted effort to curb the phenomenon,” it said.

The report also highlighted the incidence of losses due to fraud experienced by banks and Specialised Deposit–Taking Institutions  (SDIs) in the period 2021. 

It indicated that even though 2021 showed a minimal decline of 12.09% in the number of attempted fraud cases (2,347 for the Banking and SDI sector as compared to 2,670 in 2020), losses to banks and Specialised Deposit-Taking Institutions (SDIs) through fraud rose by 144% at approximately a loss of GH¢61 million, as compared to a loss of GH¢25 million recorded over the same period in 2020.

“This significant increase in losses recorded for the period was due to the increased use of online payment platforms for fraudulent transactions,” it said. 

The most significant types of fraud recorded by banks and SDIs relates to Cheque fraud, Cyber/email fraud, Lending/credit fraud, Burglary, and Impersonation.