Financial crime evolving in Sub-Saharan Africa risking huge losses


When it comes to the financial crimes on the internet, the most at risk are people whose digital footprint is easily accessible and trackable.

This means that the least you share online the better for you and those around you.

Those who live their lives online are more at risk of identity theft where it could lead to lost finances through impersonation and hacking.

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In Sub Saharan Africa (SSA), mobile money has become the norm while most fintechs are now focusing on digital money in the region which is among the fastest growing in the world when it comes to mobile telephony connectivity.

With this comes the danger of losing money to fraudsters who could easily access the information left on the blogosphere in a multi-layered heist where billions could be lost.

According to Refinitiv, SSA shows a high level of awareness of financial crime and a desire to upgrade compliance systems especially by those offering financial services in the region.

In its Financial crime in Sub-Saharan Africa Report 2020, Refinitiv notes that crime threat continues to evolve, with techniques used by organised crime groups and fraudsters becoming more diverse and sophisticated.

“According to the findings this year, more than 28 per cent of respondents recognise that driving internal behaviour change within their companies is their primary challenge, 61 per cent expect a substantial increase in their compliance investment, 74 per cent have a Know Your Customer (KYC) programme, while 66 per cent embraced innovative compliance technology,” notes the report.

The Covid-19 coronavirus pandemic has played a role in seeing the faster growth in transitioning to digital money.

Refinitiv Middle East and Africa Managing Director Nadim Najjar notes, “The shift towards digitalization and the pace of this transformation is likely to have accelerated in response to covid-19 and it is unlikely to diminish once we exit the pandemic.”

In the report, only 43 per cent of those surveyed indicated that they have a sanctions programme despite the growth in regulatory risk, especially in the area of ‘green crime’.

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“Sub-Saharan Africa is home to a diverse range of wildlife and plants, as well as natural resources, and this has increasingly become the target of organised crime. We note that there is a robust regulatory response to green crime, thus increasing regulatory risk. The European Union has included environmental crime as a predicate offence under the 6th EU Anti-Money Laundering Directive (6AMLD); and the Financial Action Task Force (FATF) priorities for 2020 will focus on illegal wildlife trade,” notes the report.

Najjar adds that the Sub-Saharan Africa-based organisations should be especially vigilant to meet the regulatory challenge.

“Africa is at the forefront of embracing mobile technology and is host to more than half the world’s mobile money services. With this increased mobile access comes the threat of identity theft and money-laundering. In response, digital identity technologies, including those of Refinitiv, are quickly evolving to meet this need with a quarter of respondents have already adopted digital identity solutions,” he adds.

“The shift towards digitalization is a theme that comes through very clearly in our report. The pace of this transformation is likely to have accelerated in response to covid-19 and it is unlikely to diminish once we exit the pandemic,” Najjar added.

With the evolution from cash to digital currencies, the fintech future for Africa looks bright since the region is looking for solutions driven by the need to resolve and fill the gaps left by mainstream payment systems.

In addition to digital payment solutions, easy access to digital banking will ensure that Africans are not limited to a few options but that they can send and receive not only cash but other equivalents like crypto coins.

According to the report, regulators have shown a greater degree of flexibility concerning the adoption of technology to help combat the criminals seeking to profit from the pandemic and to support continuing access to critical services during a period of social distancing.

Refinitiv adds that forward-thinking compliance functions will be focussed on how service providers can best make the transition towards digital channels and tools, while ensuring the needs of their business and customer base are accounted for and their regulatory requirements are fully addressed.

Already, more that 66% of SSA respondents have embraced innovative technology and 90 per cent are expecting their financial crime technology to change in next two years.

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