BoG report shows rising staff involvement in bank fraud

The Bank of Ghana (BoG) has revealed a persistent trend of staff involvement in banking fraud in the country.

The regulator attributed the steady rise in the phenomenon to the use of poorly remunerated temporary staff, who undergo limited background checks, for sensitive tasks, and lack of corporate governance systems that help to ensure accountability, fairness and transparency.

“Staff involvement in the commission of fraud experienced a significant increase, especially suppression of cash,” said the BoG in its 2020 Banks and Specialised Deposit-Taking Institutions (SDI) Fraud report.

The bank said 56 percent of reported fraud cases and 93 percent of reported cash suppression cases involved staff of the reporting institutions.

It added that despite the numerous notices of caution sounded out to the banking industry, in almost every fraud report issued since 2017, the phenomenon continues to increase.

“Fifty-six percent of fraud incidents reported in 2020 indicated the involvement of staff members of the reporting institutions, as compared to 51 percent of staff involvement reported in 2019. This may be a consequence of the absence of corporate governance structures in some sections of the banking sector, resulting in the lack of accountability and transparency in their activities,” the central bank said.

Suppression of deposits accounted for 73.3 percent of all fraud incidents reported in 2020 and 76.8 percent of all fraud incidents reported in 2019.

Suppression recorded the highest rate of staff involvement.

In general, there were a total of 2,608 incidents of fraud in 2020 as compared to 2,311 fraud cases reported in 2019, representing a year-on-year increase of 12.9 percent. The value involved increased from GH¢115.51m in 2019 to GH¢1bn in 2020.

The BoG said the notable increase in the value reported was as a result of high values recorded in attempted correspondent banking fraud (forgery of SWIFT advice).

Even though the banking sector did not suffer any losses from any of the correspondent banking fraud attempts, the regulator said it posed a reputational risk to some banks, whose staff were found culpable in two of the three reported incidents.

Losses incurred as a result of fraud stood at GH¢25.4m last year as compared to an estimated loss of GH¢33.44m in 2019, representing a 24 percent decrease.