Combating financial fraud is a shared responsibility
Technology is a double-edged sword since it facilitates our lives and allows skilled fraudsters to commit financial fraud.
Professional fraudsters use the latest technologies to hone their skills, using inexpensive and readily available devices to commit financial fraud.
Financial fraud is defined as any act involving deceit to obtain a direct or indirect financial benefit by the perpetrator or by others with his help, causing a loss to the deceived party.
Crowe Global reported that financial fraud is costing businesses and individuals worldwide $5.127 trillion annually, or 5.3 percent of the global gross domestic product.
It is believed that the evolution of digital financial transactions has contributed significantly to the spread of financial fraud worldwide as users are negligent in protecting their banking information, such as a password.
Also, conducting financial transactions through an open and public network has contributed significantly to the increase in financial fraud because of the weak security of such networks, which facilitates misappropriation.
The situation in Saudi Arabia is no different than the rest of the world, especially since the Kingdom is shifting to digital financial transactions and payments as the main objective of the Financial Sector Development Program to reach non-cash transactions of 70 percent of all transactions by 2030.
Saudi individuals have reported 13,308 cases of financial fraud over a four-year period, linked to stolen banking cards and leniency in protecting their banking information, such as a password.
Saudi Central Bank, also known as SAMA, has recently announced a notable increase in fraudulent websites and social media accounts. Also, it has observed persistent recurrence of financial fraud incidents such as social engineering scams.
Such scams use a technique that deceives consumers by conning them to believe that they are dealing with official and trusted entities. Such disguise makes the gullible customer reveal banking records, such as passwords and other verification codes.
SAMA has instructed all commercial banks operating in the Kingdom to implement several measures against financial fraud and protect banking consumers.
Thanks to its efforts, these measures are bringing stability to the financial sector and bolstering confidence within the financial system.
One of SAMA’s most crucial instructions is to freeze the funds of a suspicious account. This move would allow banks to react and deal promptly with financial fraud before the funds are transferred to a third party or received by the fraudster.
I believe that preventing financial fraud and other similar financial crimes is a complex issue and a very challenging goal to achieve in today’s volatile landscape. It is simply because fraudsters are constantly developing, updating, and upgrading their fraudulent methods and techniques through social engineering and artificial intelligence.
However, combating financial fraud requires collective efforts from all levels of society. Therefore, it is a shared responsibility among stakeholders, individuals, the security establishment and financial institutions such as banks and central banks.
If individuals protect their financial records and avoid disclosing their personal information to strangers and unauthorized parties that will significantly reduce financial fraud in the Kingdom and elsewhere.
Also, unifying the anti-fraud efforts and placing them under one umbrella will help handle financial fraud cases instantly, reduce costs, and improve efficiency and quality, especially now that more than one party controls them. Such handling not only causes dispersal efforts but also causes loss of time and the inability to recover funds and arrest the perpetrators with the required speed.
• Talat Zaki Hafiz is an economist and financial analyst. Twitter: @TalatHafiz