BoG Governor Expresses Concern Over Increasing Staff Involvement In Fraud

The Governor of the Bank of Ghana, Dr Ernest Addison, has expressed concern about the involvement of some staff members in fraudulent activities within the banking sector at the Ghana Association of Banks (GAB) Annual General Meeting held in Accra, Ghana.

His concerns reflect the broader challenges that financial institutions face regarding internal fraud, which can undermine trust in the banking system.

Such issues are typically addressed through strengthened internal controls, more rigorous audits, and efforts to enhance the ethical standards and accountability of staff.

This situation emphasizes the importance of ensuring transparency and integrity within the central bank and other financial institutions, as fraud not only impacts the financial system’s stability but also the reputation of these institutions.

Dr. Addison’s remarks likely point to ongoing efforts to reinforce anti-fraud measures and safeguard the interests of the public and stakeholders in the financial system.

“Fraud prevention and detection remain at the heart of BOG’s efforts at maintaining financial integrity and stability of the banking system. As you would notice from the latest 2023 Fraud Report published by the Bank of Ghana this week, while banks reported a total count of 969 fraud cases which shows a 17℅ drop from the count of 1,163 cases 20222, there has been an increase in the monetary loss from fraud. The total loss value to banks with respect to fraud cases recorded an increase of 21℅ in 2023 to Ghc63 million compared to Ghc52 million in 2022” he said.

In 2022, the banking sector in Ghana saw an increase in staff involvement in fraudulent activities. According to reports by the Bank of Ghana (BoG) and the Ghana Association of Banks (GAB), the rate of banking fraud involving employees rose, posing significant risks to financial institutions.

The nature of these fraudulent activities included forgery, unauthorized access to customer accounts, manipulation of internal systems, and collusion with external parties to syphon funds. Key factors contributing to these fraud cases include:

1. WEAK INTERNAL CONTROLS: Some financial institutions had lapses in their internal systems that staff exploited to commit fraud.
2. COLLUSION: In many cases, staff collaborated with external parties to carry out large-scale fraud.
3. INEFFICIENT MONITORING SYSTEMS: Some banks failed to detect suspicious activities on time due to inefficient monitoring systems, allowing fraud to go unnoticed for longer periods.
4. INADEQUATE BACKGROUND CHECKS: Lapses in thorough background checks during the hiring process led to individuals with fraudulent tendencies securing employment in banks.

Key Statistics:

-REPORTED INCIDENTS: The Bank of Ghana’s Fraud Report for 2022 indicated a substantial rise in the number of fraud cases involving staff. While exact numbers vary across reports, insiders were responsible for a significant portion of the total financial losses recorded in the banking sector.

-MONETARY LOSSES: The total losses attributed to staff-related fraud amounted to millions of Ghanaian cedis. However, banks managed to recover part of these funds due to timely intervention in some cases.

-REGULATORY RESPONSE: The Bank of Ghana and other regulatory bodies have since increased their scrutiny of financial institutions, focussing on improving internal controls and strengthening corporate governance frameworks.

Banks were also encouraged to invest in better fraud detection systems and conduct regular audits to mitigate these risks.

Measures Taken:

1. EMPLOYEE VETTING: Banks have started conducting more rigorous background checks on staff and increasing the frequency of internal audits.
2. TRAINING and AWARENESS: Many financial institutions introduced mandatory fraud awareness and ethics training for employees to reduce insider threats.
3. ENHANCED TECHNOLOGY: Banks are adopting advanced technology for monitoring transactions and identifying anomalies, such as the use of artificial intelligence (AI) and machine learning (ML) systems.

The issue of staff engaging in fraud remains a concern, and further steps are being taken to restore confidence in Ghana’s banking sector.