FSCA's Deepfake Admission Sparks Industry Outrage: Why is Banxso facing the brunt?

The Financial Sector Conduct Authority (FSCA) has issued a damning public warning over a sophisticated network of deepfake investment scams exploiting high-profile South African figures, including President Cyril Ramaphosa, Dr Patrice Motsepe, Ms Leanne Manas, and Deputy President Paul Mashatile. But industry insiders are asking a pointed question: why is Banxso being crucified when others are quietly cautioned?

This month's FSCA release formally acknowledges what many in the financial services industry have long suspected — that the problem of unauthorised third-party affiliates deploying AI-generated deepfake advertisements is industry-wide, not confined to one firm. Yet, in what critics describe as a deeply unbalanced enforcement approach, Banxso has seemingly become the regulator's scapegoat whilst other implicated platforms escape scrutiny.

The Scale of Deception

The FSCA's June 10, 2025, warning reveals the alarming sophistication of these fraud networks. Scammers are promising investors "unrealistic returns of between R13,000 and R17,000 per day, on an investment of R4,500" using fabricated endorsements from South Africa's most trusted public figures.

In one particularly brazen deepfake video, Dr Motsepe appears to promote the investments, whilst Deputy President Mashatile is shown "confirming that the platform is authorised and that investors will receive returns". Another synthetic video features President Ramaphosa endorsing "guaranteed returns" — content so convincing it has fooled hundreds of potential investors.

The FSCA explicitly states that "the individuals behind the platforms are not authorised in terms of any financial sector law to provide financial services to the public" and that these operators "failed to respond to FSCA queries." This represents a clear acknowledgement that multiple unauthorised entities are operating these schemes across various platforms and seemingly the FSCA has no way of combatting this.

Selective Enforcement Under Fire

"Banxso acted swiftly when made aware of the deepfakes — refunding over R14 million of their own capital to affected consumers and laying criminal charges against the entity identified as operating the scam," an anonymous compliance expert said. "Other firms stayed silent or claimed ignorance. Why is only one company facing the full weight of enforcement?"

Indeed, whilst the FSCA's press release highlights "platforms" plural using synthetic media to promote fraudulent investments, there is no specific mention of Banxso, nor any indication that Banxso continues to operate in connection with these ongoing scams. The regulatory warning appears to confirm that the deepfake problem extends far beyond any single financial services provider.

Still, Banxso — a firm currently locked in multiple legal battles and awaiting judgment in a liquidation application that allegedly stems from the FSCA enforcement action — remains the only market participant to face such intense regulatory scrutiny and enforcement action. The company has not only ceased operations but has also proactively worked to trace the perpetrators of the fraudulent advertisements.

Industry-Wide Problem, Singular Punishment

"The FSCA is finally admitting that this isn't about one rogue actor. The deepfake threat is pervasive and sophisticated," said a fintech policy analyst. "These scammers are using unauthorised platforms, fake documentation, and AI-generated content to deceive consumers on a massive scale. But the regulator's response has been wildly inconsistent. Where is the fairness in targeting the one company that did the right thing?"

The FSCA's own guidance emphasises that consumers should "verify that an entity or individual is authorised by the FSCA to provide financial products and services" and warns against "investment or trading offers on social media platforms or any unsolicited offers." This advice tacitly acknowledges that the deepfake threat spans multiple channels and operators — yet enforcement action remains concentrated on a single entity.

Legal documents reviewed by IOL confirm that Banxso has initiated criminal proceedings against those behind what they believe to be the third party affiliate marketing scam, a fraudulent offshore entity believed to be at the centre of these AI-powered scams. The company has cooperated fully with authorities, and voluntarily compensated affected consumers — actions that stand in stark contrast to the unnamed platforms that continue operating without consequence.

Questions of Proportionality

"There is no question that regulation is necessary to protect consumers from these sophisticated fraud networks," added the regulatory source. "But we must ask who it truly protects when it turns a blind eye to some actors whilst hanging others out to dry. The FSCA's own warning confirms this is an industry-wide crisis, yet only one firm faces consequences for crimes it neither initiated nor condoned."

The regulator's approach becomes more questionable when considering that the FSCA provides multiple verification methods for consumers to check authorisation status, including a toll-free number (0800 110 443) and online databases. These resources exist precisely because unauthorised operators are a systemic problem across the financial services landscape, not an isolated incident.

Regulatory Inconsistency Under Spotlight

The FSCA has advised the public to exercise "caution when considering investment or trading offers on social media platforms" and to verify that "the FSP number utilised by the entity or individual offering financial services matches the name of the FSP on the FSCA database." This guidance implicitly acknowledges that multiple unauthorised entities are exploiting regulatory gaps and consumer trust.

Yet despite this industry-wide acknowledgement, enforcement actions remain conspicuously one-sided. Whilst unnamed platforms continue operating with apparent impunity, Banxso remains embroiled in costly legal proceedings despite its proactive response to the fraud network.

"The selective enforcement sends a dangerous message to the industry," observed a former FSCA official. "Companies that cooperate, self-report, and take corrective action face harsher treatment than those who remain silent or deny responsibility. This approach will inevitably discourage transparency and cooperation in future incidents."

The Broader Implications

The FSCA's deepfake warning represents more than just consumer protection — it's an admission that South Africa's financial regulatory framework is struggling to keep pace with sophisticated AI-powered fraud networks. These criminals exploit the trust South Africans place in respected public figures whilst operating through unauthorised offshore entities that deliberately evade regulatory oversight.

The scams described in the FSCA warning, promising guaranteed daily returns through fabricated celebrity endorsements, represent a clear and present danger to consumer confidence in legitimate financial services. Yet the regulator's response suggests a troubling pattern of selective enforcement that may ultimately undermine its stated objectives.

Call for Balanced Response

As artificial intelligence continues blurring the line between authentic and fabricated content, and as scammers become increasingly sophisticated in their tactics, the need for a coherent and even-handed regulatory response has never been more urgent. The FSCA's own warning confirms that deepfake investment fraud is a systemic threat requiring industry-wide vigilance and proportionate enforcement.

But for now, Banxso remains the public face of a crime it neither initiated nor condoned whilst other implicated platforms escape meaningful scrutiny. The company paid dearly to correct a fraud perpetrated against it and its clients yet continues facing disproportionate regulatory consequences whilst the actual perpetrators operate with apparent impunity.

The FSCA has not commented directly on the perceived imbalance in its enforcement actions, despite mounting questions from the financial services community about the consistency and fairness of its regulatory approach.

With consumer protection hanging in the balance, South Africa's financial sector deserves regulatory oversight that targets actual wrongdoers.

For verification of authorised financial service providers:

Toll-free: 0800-110-443
Online: Click here.
FSP Search: Click here. 

IOL