Be afraid, be very afraid. Bank robbers no longer need getaway cars

THE SOUTHERN African Fraud Prevention Service (SAFPS) had its International Fraud Summit this week. And if I wasn’t scared of the bogeyman before, I am definitely now. I’m not even sure who the bogeyman is anymore, as international cybercrime syndicates have made financial fraud faceless and fearless. The SAFPS research shows that identity theft has grown by more than 300% between 2021 and 2022. Additionally, cases involving money muling have increased by 97% over instances recorded in 2021, the organisation said.

Now money mule actions are linked to cybercrime and are intertwined with illegal financial flows that often come from illicit activities like phishing, malware attacks, online fraud and business e-mail compromise, just to name a few.

These stats are frightening and highlight the need for an urgent conversation not only on a national level but globally as well. Virtually everywhere and all the time. But while the man on the street, the bank branch and government watchdogs at the physical gate, are still trying to figure out who or what we are dealing with, it has become imperative for every individual and sole proprietor to become overly proactive and not put the most basic safeguards in place, but become as paranoid as hell.

I myself have had my credit card cloned. Twice. So from a persona experience, I would advise setting up notifications on your phone and/or e-mail and to your neighbourhood watch if you must, and also set daily limits on what and where your cards and accounts are allowed to transact or transfer funds to and from.

That is how I quickly realised that I was in the process of becoming a statistic, or a statistic again, and could inform my bank before too much damage could have been done. But replacing your cards and going into a branch to verify your identity and accounts, which are the only two top-of-my-head red tape hoops I can think of, to simply get access to your own money, is a major pain in the behind, and it is probably going to get worse. I got a 1,000-word e-mail (and I’m not exaggerating) from my bank this week, notifying me of all the forms I have to fill in if I MYSELF was even considering taking any money overseas. So while tech terrorists have a field day with our funds, we are the ones forced to face drowning in paperwork. It’s actually quite ironic if you think about it, as our federal agents try to use paper in more of a rock-or-scissors situation. Have you tried being Fica’d lately?

Point is, like other fraud scams, money mule scams are run by professional, well-organised and well-financed syndicates that capitalise on a person's desire to be a good person, or believe that the logos of the South African Revenue Service, Reserve Bank, Financial Intelligence Centre or Financial Sector Conduct Authority on a document, means that they have their ships together. It doesn’t.

“One of the most common forms of money muling is when a victim is approached by someone claiming that they need to send money to a family member in another country and they need a bank account to perform this transaction. Wanting to help, many people willingly let these fraudsters use their bank account,” said Manie Van Schalkwyk, CEO of SAFPS, who added there are many other ways an individual can become a victim of money muling.

While this may seem like an innocent mistake or a once-off occurrence, the repercussions of becoming a money mule are significant and was discussed in depth by panellists David Pegley, the CEO of the Australian Financial Crimes Exchange, and Mike Haley, CEO of Cifas at the conference. Cifas is the UK’s leading fraud prevention service offering individuals and organisations help in combating the growing threat of fraud and financial crime

South Africa has become quite the popular stomping ground for fraudsters as our digital regulators and rules have failed to keep up with the times. Times are also tough and people who are desperate to break the cycle of desperation have become very vulnerable to these vultures. SAFPS statistics point out that there was a 600% increase in incidents reported by their members in 2022 when compared to 2018. These include your conventional advance-fee scams, banking scams, and impersonation scams whereby a scammer can take control of a person's identity. Current members of SAFPS include leading companies and credit providers from a range of industries:

“We need to be cognisant of the fact that there are a plethora of scams that the public can fall victim to, and these are growing every day,” said Van Schalkwyk.

One of the biggest challenges in South Africa is that consumers often discover that they have become a victim of impersonation fraud after the crime has already been committed.

“By this stage, the damage has already been done as fraudsters may have upgraded cellphone contracts, opened clothing accounts, and racked up other significant debts that the victim, unfortunately, has to deal with. Therefore, the reactive nature of fraud prevention is consumers’ biggest challenge, and the SAFPS must deal with it,” says Van Schalkwyk.

Since the early 2000s, South Africa has made significant investments in digitalisation, catching up with the rest of the world and the impact technology has had on the future development of many global economies. But we still have a long way to go.

The penetration of smartphones in South Africa cannot be underestimated. Research shows that there are currently 26.3 million smartphone users in South Africa. This has grown from 9.7 million smartphone users in 2014. Digital technology is taking off in South Africa and will be a significant business platform for companies in the future.

“While digitisation will revolutionise the South African economy, it has risks. According to a 2021 Interpol report, South Africa tops Africa in cyber threats and is third in the world, with 230 million threats detected in 2021. Of these, 219 million threats were related to emails,” Van Schalkwyk said.

The South African insurance industry has also been an industry that has been a traditional hotbed for fraudsters.

According to research by the Association for Savings and Investment South Africa, South African life insurers detected 4 287 fraudulent and dishonest claims in 2021. This was a significant increase over 2020, where life insurers uncovered 3 186 cases of fraudulent and dishonest claims.

Given the increasing fraud landscape and the fact that new risks are emerging daily, Van Schalkwyk feels that a much wider discussion is essential and that the SAFPS will have a vital role to play in the future of fraud prevention.

– PERSONAL FINANCE