African countries are witnessing a significant increase in KYC (Know Your Customer) related fraud, including in the cryptocurrencies sector, a recent H1 2023 statistic has shown.
According to the internal statistics shared with BitKE by the user verification platform, SumSub:
- Fraud cases within South Africa’s cryptocurrency sector surged by 25% during Q2 2023 demonstrating the growing sophistication of fraudsters in exploiting the booming crypto market
- Kenya experienced more than a doubling of crypto fraud cases, highlighting the rising challenges faced by the industry
- Tanzania witnessed a remarkable 250% increase in crypto fraud and a significant 150% growth in fintech-related fraud
- Nigeria reported a 59% rise in IT services fraud and a 46% increase in fintech-related fraud
“Africa’s rapidly evolving digital landscape has opened new doors for innovation, but it has also become a hotbed for evolving fraud tactics,” says the SumSub report.
This finding in the cryptocurrency sector correlates with a different H1 2023 study by KYC verification firm, SmileID, which discovered that crypto makes up the highest fraud rates of any industry in Africa.
Going deeper into SumSub’s analysis:
- A novel threat emerged in 2023 as deepfake fraud surfaced, accounting for 0.6% of all fraud cases in Kenya and 2.2% in South Africa. This technique involves the creation of lifelike personas using authentic individuals’ documents, posing a unique challenge for verification providers.
- South Africa and Kenya experienced an alarming surge in forced verification cases, constituting 6% and 7% of all fraud instances in 2023, respectively. Forced verification occurs when individuals are subjected to verification procedures against their will, potentially indicating illicit activities.
- Edited ID Cards accounted for 41% of all fraud cases in Tanzania, involving manipulated legitimate documents.
- Nigeria reported a concerning 61% of fraud instances attributed to forged ID Cards, highlighting the prevalence of counterfeit documents.
- South Africa grappled with 18% of fraud cases due to visual deception during Liveness checks, with fraudsters presenting images of phone screens or owner photographs from identity documents to cameras.
Sumsub’s analysis also reveals that the most widely used documents for verification purposes were:
- ID cards (62% of checks)
- Driver’s licenses (22%)
- Passports (10%)
- Residence permits (5%)
As a result of the increasing cyber-security threat, SumSub, which has over 2,000 clients across several industries including Binance, Mercuryo, Bybit, Huobi, in the crypto/fintech industries has decided to strengthen its presence in Africa.
“The rapid digital transformation across the continent creates significant opportunities for seamless user onboarding and robust fraud prevention. SumSub has been a trusted partner for global firms, enabling efficient verification processes while ensuring compliance and thwarting fraud,” said Hannes Bezuidenhout, SumSub VP of Sales for the African region.
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