CASH SCAM

 

Despite commercial banks filtering counterfeit notes from the formal financial system, a crisis of fake currency is raging through the informal economy, new data suggests.

The central bank's recent Banking Supervision Report reveals a startling reality: between January 2020 and February 2024, a total of 10,653 counterfeit notes with a face value exceeding P1.3 million were reported.

However, commercial banks detected 2.2 percent of these fake notes and 97.8 percent of all counterfeit cases occurred outside the protected banking channels, pointing directly to a severe and unaddressed problem in the informal sector.

“The data underscores that the majority of counterfeiting activity occurs outside formal banking channels,” the report states, a finding that exposes street vendors, taxi drivers, small-scale traders, and market shoppers as the primary victims.

The Bank of Botswana (BoB) report highlights that individuals and businesses, operating largely in cash, lack the sophisticated defenses of the banking industry.

Meanwhile, the central bank confirmed that commercial banks are well-shielded, using advanced counting machines, automated teller machines that reject suspicious notes, and sophisticated monitoring systems.

The informal economy’s vulnerability remains a concern to the reserve bank and calls for vigilance.

“While counterfeit crime remains a concern, the banking industry’s vigilance ensures that fake notes rarely infiltrate the formal financial system,” said BoB.

This protection stands in stark contrast to the informal sector, where a fake note cannot be reported or exchanged, resulting in a pure, unrecoverable loss for the person who accepts it.

The findings suggest that the over P1.3 million in reported counterfeit currency is likely just a fraction of the real total, with the vast majority of losses being absorbed silently by the most vulnerable participants in the cash-based economy.

Analysts have indicated that existence of counterfeit on the market erodes trust in the national currency.

Bank Gaborone said counterfeit currency continues to pose a significant threat to financial stability, hence the bank has intensified efforts to curb the circulation of fake notes and preserve public confidence in the nation’s banking system.

“Safeguarding the integrity of our financial system is not just a compliance matter — it’s a responsibility we take very seriously,” said Chief Operating Officer at Bank Gaborone, Kagiso Tlhase.

“Our investment in technology and continuous staff training reflects our unwavering commitment to protecting our customers and supporting national efforts against financial crime,” he added.