South Africa’s failure to strengthen policies and foster collaboration is hindering efforts to combat identity fraud and could jeopardise its bid to be removed from the Financial Action Task Force’s (FATF) grey list by June 2025.
The FATF, a global watchdog combating crime and terrorism, greylisted South Africa in February 2023 and instructed the country to address eight key risk areas via 22 action items.
While South Africa has addressed 16 of these, critical gaps remain. These include the lack of transparency in company and trust ownership, inadequate enforcement of sanctions and slow action on prosecuting financial crimes.
Biometric solutions provider iiDENTIFii emphasises the need for a collective approach to combat cyber crime, especially given the country’s greylisting. Initiatives like the Cyber-security Hub and the Cybercrimes Act of 2021 are steps forward, but remain fragmented.
Spike in ID fraud
A report by the South African Fraud Prevention Services (SAFPS) found identity theft spiked 400% from April 2023 to April 2024, affecting industries like banking. Fraud cases, particularly those involving false identities, are escalating. iiDENTIFii’s research reveals only 24.5% of businesses believe their identity verification processes are effective.
SAFPS notes that out of the 8 521 formal cases opened at the Ombudsman for Banking Services in 2023, 43.47% were categorised as fraud.
iiDENTIFii says this is part of a rising trend in scams where fraudsters use false identities or intercept the secure identification process to steal funds and data.
The company’s co-founder and chief strategy officer, Lance Fanaroff, says according to iiDENTIFii’s inaugural Identity Index, only 24.5% of businesses believe their identity verification processes are effective, which demonstrates a lack of confidence in current cyber security measures among businesses.
The index also illustrates how companies of all sizes are investing in digital identity to combat cyber crime threats.
The report’s co-author and CEO of World Wide Worx, Arthur Goldstuck, says: “Despite the trend towards investing in identity verification solutions, there are still some significant barriers to implementation, with 31% of companies citing regulatory compliance and 23% citing user acceptance as the most substantial barriers.”
iiDENTIFii advocates for a unified stance against cyber crime, stressing that effective identity authentication and collaboration across sectors is crucial to mitigating fraud and protecting sensitive data.
Gur Geva, co-founder and CEO of iiDENTIFii, says: “In our experience, secure identity is the first line of defence in combating cyber crime. Criminals can only access data and funds if they have successfully breached an organisation’s secure login and authentication processes. This requires a falsified or stolen identity.”
South African companies are working in silos as they implement cyber crime prevention and ID verification solutions, says Geva. “As a result, they miss the opportunity to share insights about local cyber threats and collaborate on effective protection strategies.”
Despite efforts to strengthen financial sector cyber security, regulatory compliance and user acceptance remain barriers to widespread implementation.
Cyber crime prevention is not a one-entity responsibility, says Geva, who adds that comprehensive protection against threats requires a unified stance and collaborative approach.
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