Digital fraud surges as AI reshapes financial crime in South Africa
Phangela Group CEO Christopher Thornhill said criminals were exploiting South Africa’s high connectivity and still-developing regulatory frameworks to conduct AI-assisted scams at scale.
“The speed and sophistication of these scams are outpacing the systems designed to stop them,” Thornhill said.
The Democratic Alliance recently called for the appointment of a national cyber commissioner to combat AI-driven banking fraud. Meanwhile, the Financial Sector Conduct Authority (FSCA) has issued warnings about deepfake and impersonation scams using AI-generated audio and video.
Fraud has evolved beyond stolen credentials and compromised systems, now focusing on digital manipulation and social engineering. Voice clones, realistic videos and synthetic identities are increasingly used to infiltrate banking, insurance and digital platforms.
Digital-banking fraud accounted for over 65% of financial crime incidents in 2024, with insurance-claim manipulation emerging as a new threat.
The World Economic Forum’s Global Risks Report 2024 identified misinformation and disinformation, much of it AI-driven, as the most significant short-term global risk.
Phangela said it had begun implementing multi-layered digital intelligence frameworks across several financial and insurance clients, combining behavioural analytics, biometric verification and AI-based anomaly detection.
Thornhill added that while regulators such as the FSCA and South African Reserve Bank were reviewing oversight frameworks, the pace of criminal innovation remained faster than regulation could adapt.
“Right now, the criminals have a visa to travel the world, but the regulation designed to stop them doesn’t yet have a passport to leave the country,” Thornhill said.