AI-driven scams on the rise despite a drop in overall financial crime

The South African Banking Risk Information Centre (SABRIC) has unveiled its Annual Crime Statistics for 2024, revealing a substantial 18 percent decrease in financial crime losses, from R3.3 billion in 2023 to R2.7 billion in 2024.

SABRIC said this positive trend is a testament to the growing efficacy of the banking industry's enhanced prevention and detection strategies.

However, while losses have diminished, the landscape of financial crime is evolving rapidly. The report warns of a burgeoning menace: the use of artificial intelligence (AI) in scams that can easily deceive even the most vigilant consumer.

 SABRIC CEO, Andre Wentzel, said, "Criminals are leveraging AI to create scams that appear more legitimate and convincing." He elaborated on the implications of this technology, citing examples such as flawless phishing emails, AI-generated WhatsApp messages, and alarmingly realistic voice-cloned deepfakes that mimic individuals and banking officials. Wentzel cautioned that as these technological advancements continue, real-time deepfake audio and video could become commonplace in fraud schemes by 2025.

Unsurprisingly, digital banking fraud has emerged as the dominant mode of financial crime, accounting for 65.3 percent of reported incidents in 2024. The volume of these cases skyrocketed, nearly doubling from 31,612 in 2023 to an alarming 64,000 in the past year, with losses increasing from R1 billion to over R1.4 billion. This surge in fraud is primarily due to social engineering tactics that exploit human error rather than technical vulnerabilities in banking platforms.

Beyond digital fraud, other crime categories have revealed noteworthy trends. For instance, the incidence of ATM attacks fell by 18 percent, leading to a remarkable 44 percent reduction in cash losses. Furthermore, associated robberies experienced a drastic drop of 35 percent, with losses to clients down by an impressive 64 percent. These improvements can be credited to the collaborative efforts of an industry-wide task team focused on diminishing the occurrence of ATM bombings.

Despite a decrease in overall financial crime, card-related fraud remains a critical concern, particularly through Card Not Present (CNP) transactions, which constitute 85.6 percent of gross fraud losses on South African-restricted credit cards. Cases involving lost and stolen cards accounted for 8.2 percent, with false applications contributing a further 2.9 percent. The prevalence of counterfeit card fraud is also alarming, with 64.4 percent of such incidents occurring on counterfeit credit cards and 63.1 percent on counterfeit debit cards, particularly at toll plazas and service stations.

In light of these findings, SABRIC has reaffirmed its commitment to bolstering consumer education and awareness initiatives, enhancing collaboration across the banking industry, and investing in cutting-edge technology to protect the financial sector. Wentzel underscored the necessity of ongoing vigilance and cooperation among banks, regulators, law enforcement, and civil society, declaring, "Together, we can stay ahead of an ever-changing criminal landscape."