Fraud : Governor Addison instructs banks to enhance staff due diligence during recruitment

As part of measures to reduce fraud causes among bank workers, Governor of the Bank of Ghana (BoG) Dr Ernest Addison has instructed the management of banks to enhance due diligence during recruitment.

Dr Addison said that fraud prevention and detection remain at the heart of BoG’s efforts at maintaining the financial integrity and stability of the banking system.

Referring to the latest 2023 Fraud Report published by the Bank of Ghana, Dr Addison said that while banks reported a total count of 969 fraud cases which shows a 17% drop from the count of 1,163 cases in 2022, 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 Gh¢63 million compared to Gh¢52 million in 2022, he said.

“More worrying is the increase in the number of staff involved in fraud. The number of staff involved in fraudulent activities in Banks and SDIs rose from 188 in 2022 to 274 in 2023, representing an increase of 46%. It further emerged that out of the 274 cases of fraud recorded involving staff in 2023, 211 (77%) were involved in cash theft (cash suppression), as compared to 140 (66%) staff involved in 2022.

“This means that while banks and SDIs are putting in place measures to detect and prevent fraud from outsiders, their own staff are increasingly perpetuating fraud.”

He stressed “The BoG is obviously concerned about this growing trend and mandates Banks and SDIs to strengthen their internal controls and enhance staff due diligence during recruitment, as well as reinforcing continuous in-house staff training on professional conduct,” Speaking during the Annual General Meeting (AGM) by the Ghana Association of Bankers in Accra on Thursday, September 19.

Regarding the performance of the banking sector, Dr Addison said that in the first half of 2024, the performance pointed to continued recovery from the impact of the Domestic Dept Exchange Programme (DDEP).

He said the total banking sector assets grew by 33.3 percent to Gh¢323.1 billion at end-June 2024, relative to 21.2 percent growth at end-June 2023. Profitability, liquidity, and efficiency indicators also improved over the period.

The Capital Adequacy Ratio (CAR), which is a measure of how much capital a bank has available, reported as a percentage of a bank’s risk-weighted credit exposures, adjusted for reliefs, remained unchanged at 14.3 percent, between June 2023 and June 2024. Without reliefs, the CAR was reported at 10.6 percent in June 2024, higher than the 7.4 percent recorded in June 2023.

Despite improvements in the sector’s performance, Dr Addison said,  elevated credit risks pose threats to the recovery process.

The industry’s Non Performing Loan (NPL) ratio was 24.1 percent in June 2024, up from 18.7 percent in June 2023. The consistent rebound in profits, adherence to recapitalization plans, and enforcement of strict credit underwriting standards are expected to help ensure that banks remain on the path to full recovery and resilience.

He said “This enhanced performance of the banking sector, amid the obvious challenges, were made possible in part through the unrelenting partnership of GAB with the Bank, especially during the difficult DDEP process. It is my hope that this AGM offers a rare opportunity to reflect on the recent developments in the banking sector, strategize to consolidate the gains made, and aim to sustain confidence in the industry for economic growth.”