Fraud accounts for a quarter of all financial crime in South Africa
• Control violations, theft and embezzlement take second and third spots respectively
• South Africa second to Nigeria for total fraud reports in Africa
• Globally, USA followed by India and China are top countries for reported fraud
• Risk Revealed event shines spotlight on financial crime in South Africa
Fraud has been the most frequently recorded type of financial crime in South Africa – accounting for 26% according to an analysis by LSEG Risk Intelligence.
The research was presented at the inaugural LSEG Risk Revealed event, held in Cape Town. The event brought together officials, organisations and opinion formers focusing on key risk and compliance themes including South Africa on the FATF grey list, the complexity of sanctions and the evolution of digital fraud.
The research showed control or regulation violations and theft and embezzlement took second and third spots with 13% and 12% respectively. Across the continent, South Africa was second for overall recorded fraud volume with 5,114 records globally – 0.94% to Nigeria’s 12,038 - 2.21%.
Global picture
South Africa follows the global trend of fraud becoming the dominant form of financial crime. According to a World-Check analysis of 545,000 fraud records across 224 countries, fraud accounted for 37.3% of reports followed by control or regulation violations on 12%.
The USA had the most reported fraud with just over a quarter (26%) of the global total, followed by India on 11% and China on 8%. On a city level, Mumbai was responsible for the most reported frauds with 22,601, followed by Buenos Aires on 20,625 and New Delhi, some way behind with 8,569.
Demographic data was also included with 62% of all frauds perpetrated by men, 20% by women and 16% by an entity. 50s and 60s were the most common age group making up 43% of perpetrators, followed by 30-40s slightly behind on 42%, 70-80s on 10% and 20s and below on 5%.
Additionally over half of offenders didn’t act alone. 52% had associates they perpetrated the fraud with.
Politically Exposed People were responsible for 10% with non-PEPs taking the lion’s share of 90%.
The research uncovered the extent to which financial crime is becoming increasingly integrated with criminals exploiting the synergies between various types such as money laundering and corruption to maximise profits and minimise detection.
Ruth Helena Alves da Mota, Content Partnership Manager at LSEG Risk Intelligence, comments: “Fraud is becoming the lynchpin of the entire global financial crime ecosystem and South Africa hasn’t escaped this global phenomenon.
“It provides a relatively easy path to support a whole host of more serious illicit activity as the volume of our online activity provides criminals with a multitude of opportunities to target victims.
“This convergence of crime poses a significant challenge to regulators, financial institutions, and corporations, requiring a comprehensive and nuanced understanding of the risks involved. This also necessitates increase private-public partnering such as information sharing across borders to meet these threats.”
Kishor Harri, Manager of Monitoring and Analysis at the Financial Intelligence Centre of South Africa, comments: “The South African Anti Money Laundering Integrated Task Force (SAMLIT), a financial information sharing partnership, established by the Financial Intelligence Centre in 2019 continues to strengthen efforts to combat serious financial crime. SAMLIT is supporting law enforcement efforts in their investigations of serious financial crime through tactical operation groups. In addition, the public-private partnership conducts research through expert working groups to improve the detection and reporting of serious financial crime in South Africa.”
