Collaboration, not only among financial institutions, but also among sectors that provide digital services, is the most effective means of combating the growth of financial scamming taking place in all countries.

This was the message from a range of financial services and regulatory experts, with regulator Financial Sector Conduct Authority (FSCA) head of banks and payment providers Sindiswa Makhubalo emphasising that no bank, regulator or consumer agency could deal with the scourge of digital financial scams alone.

The strength of the measures implemented to prevent scamming and fraud depend on how effectively participants can share intelligence, she said during a conference hosted by industry organisation the Banking Association of South Africa, in Sandton, on December 4.

“We are speaking to the Information Regulator because we need a centralised repository for this data to be able to share the information immediately. We ask you to help us put it together,” she requested of attending financial services professionals.

South Africa's Information Regulator was established in terms of the Protection of Personal Information Act to protect personal information of citizens.

The FSCA was engaging with the Information Regulator to establish a means to share information while facilitating effective information exchange and adhering to the Act's prescripts, she said.

The FSCA, as regulator, saw the full picture of rising fraud and sophisticated scams, and bank and consumer losses, as well as the gaps that criminals are quick to exploit.

However, there was exceptional talent in South Africa's financial services industry and the FSCA could see the collective will in the industry to battle financial fraud and scams, Makhubalo added.

The FSCA has launched a project and started engaging with banks to develop an effective risk framework and then evaluate strengths and gaps in creating a robust response.

“However, the project is not where the issue is. This is a national issue and we need to pull together and talk. We need to continue to collaborate to disrupt digital fraud by moving beyond the FSCA and banks to include telecommunications service providers,” said Makhubalo.

The theme of collaboration across sectors that support digital financial transacting to combat fraud and scamming was mentioned by all speakers during the meeting.

Industry organisation Australian Banking Association head of future policy Nicholas Giurietto noted that most scams did not start within the domain of banks and financial services providers.

About 30% of scams detected in Australia, similar to other countries, start with short text messages or phone calls, with the rest originating from social media platforms and emails, and other channels.

“What makes scamming difficult to combat effectively is that business is organised in silos, with banks talking to other banks and telecommunications services providers (telcos) talking to other telcos.

“However, the experience of scam victims cuts horizontally across all these industries and ends with money being moved from the victim's bank account to another bank account, or a cryptocurrency exchange or through money remittance services providers. The scamming process goes through all these key communications and financial technology platforms,” he explained.

Further, as the scam process did not start with banks, by the time it came to processing payments, the victim has already been scammed into believing that he or she was making a good investment or making a legitimate payment for a traffic fine, for example.

“Banks must play their role in protecting consumers from scams. However, even if the payments system could be made invulnerable to scams, scammers will move to using cryptocurrency or non-bank remittance services providers,” he illustrated.

Australia's financial services industry has started considering how other sectors need to play their role in combating scamming, he added.

However, prior to this, it aimed to ensure that its banking system had measures in place to combat scamming as best it could. All Australian banks signed the Scam Safe Accord in November 2023, in which they invested in payments-verification systems to bolster confidence that payments were being made to legitimate bank accounts.

Banks in Australia also built capacity to share data and exchange of bad-actor information among banks, and developed the capacity to request and process the tracing of potential scam accounts more rapidly than before.

The banks also automated the process of registering scam alerts from communications from their clients and to prioritise these over normal service support queries, he said.

Further, Australia's banking sector has also invested in biometric controls and other security layers to make the theft of personal and financial information more difficult for scammers, and has also simultaneously invested in systems to warn consumers of potential scams.

Its banking sector has also built delays into the payments process to suspected scam accounts and, importantly, has put limits in place of how much funds could be transferred through high-risk channels, Giurietto said.

Further, the country's banking sector was engaging with government and regulators to lift the capabilities of other sectors to take up their share of responsibility to combat fraud and scamming, he noted.

To this end, Australia established a national anti-scam centre in which telcos, social media platforms, banks and law enforcement participated to find weaknesses in the system and remove some of them, he said.

For example, companies that wanted to use bulk short-messages to communicate with customers had to register with the relevant regulator to ensure the messages came from a legitimate source, said Giurietto.

This approach has started to make a difference, although it has not solved the problem. From a loss of $3-billion in 2023, the value of money lost through scams declined to $2.7-billion in 2024 and further to about $2.2-billion this year.

Early in 2025, Australia also legislated a scam-prevention framework, which was the first attempt to create a legislative framework to tackle scams by placing obligations on social media platforms, telcos and banks to be legally required to do their part in reducing the scam ecosystem, he added.

ANTI-SCAMMING IN SOUTH AFRICA
Banking industry organisation the South African Banking Risk Information Centre (Sabric), as an initial proof of concept, established an anti-scam centre in September, in which all its member banks deputised various experts to collaborate on a response to the growth of fraud and scamming, said Sabric CEO André Wentzel.

The objective of the anti-scam centre is to preserve and prevent money from moving, as soon as a bank is certain that it is dealing with a scam.

“One of the first major impacts this collaboration had was when a R9-million transaction was identified as related to a scam and then ended up on a local cryptocurrency exchange.

“[Sabric threat management and stakeholder engagement head] Gregory Singh directly contacted the CEO of the cryptocurrency exchange, and the efforts of the banks, [reconciliation and payments services company] PayInc and the cryptocurrency exchange managed to preserve and recover R7-million of this amount,” said Wentzel.

The anti-scam centre had a checkpoint mid-September and again in October to evaluate whether the proof of concept was relevant. The success rate showed the need to continue throughout the Christmas period, and then continue with the next steps in the evolution of the centre, Wentzel said.

Of the almost 1 500 cases this centre dealt with during this time and the exposure of nearly R150-million, R41-million was preserved through the direct intervention of this anti-scam centre. The preservation rate of about 26% was already double that prior to this collaboration, he pointed out.

October was an incredible month for the centre, as the preservation rate improved to about 40%, he added.

Sabric members would hold a meeting on December 5 to discuss formalising running this centre over weekends and after-hours, he reported.

“We then need to consider how we get to the point where Australia and Malaysia are, such that we have a national fraud utility, or national anti-scam utility. Our regulator [the FSCA] and the South African Reserve Bank (SARB) are driving this narrative,” he said.

The SARB had met with the Sabric board on December 1 and expressed the need to scale-up the proof of concept; not as a Sabric project, but as a national utility, he added.

“The centre is no longer a proof-of-concept but is operational and of great value. Our idea is that the anti-scam centre could morph into such an institution, or that we can plug our expertise and experiences into such an institution,” said Wentzel.