Introduction
The growth of e-commerce, online payments, and FinTech innovations has revolutionized cross-border payments, especially in Africa. Traditionally, cross-border payments—transactions in which money is sent from a sender in one country to a recipient in another—were processed through established channels like SWIFT bank transfers and money transfer operators. Today, however, FinTech companies are leveraging mobile-based technologies and Africa’s high mobile penetration to deliver faster, more cost-effective, and inclusive payment solutions, allowing even rural and unbanked populations across Africa to access remittances and conduct international transactions through mobile payment apps.
In 2022, cross-border remittances to Sub-Saharan Africa reached approximately $53 billion, with $52 billion in 2023, and are projected to grow by 1.5% in 2024. Remittances are a crucial financial lifeline for households and a key source of foreign exchange for African governments. Beyond this, cross-border payments are indispensable for facilitating wholesale and retail payments, fostering international trade, and driving economic growth across the continent. However, despite their numerous benefits, cross-border payments have also been identified as a key facilitator of money laundering and other financial crimes in the region. According to INTERPOL[i], the region has become a hub for online financial crimes; West Africa in particular, remains a significant source of online financial fraud and scams both within the continent and internationally.
Why Criminals Exploit Cross-Border Payments for Financial Crime
The global nature of cross-border payments, with their high volume, scale, and complexity, makes them susceptible to exploitation for financial crimes. With the ability to open accounts anytime and anywhere and execute cross-border transactions almost instantaneously, criminals can swiftly and discreetly launder illicit funds on a global scale. The intricate nature of cross-border payments, often involving multiple institutions across jurisdictions, creates a fragmented payment chain that criminals exploit to obscure fund origins, break audit trails of illicit proceeds, and complicate efforts to trace and recover stolen assets.
Cross-border payments have been used to facilitate various forms of crime, such as sanctions evasion, by employing non-sanctioned third-party intermediaries to process transactions. Even low-value cross-border payments are at risk of misuse, potentially for financing terrorism. In regions like West and Central Africa[ii], remittance channels have been exploited to fund terrorism by blending legal and illegal remittances with Islamic donations. Groups like Black Axe, exploit fintech innovations to move proceeds of cybercrime, wildlife trafficking, and human trafficking globally.
Factors Driving Online Financial Fraud and Scams in Africa’s Cross-Border Payment Systems
While this problem is general, certain prevailing conditions in Africa amplify this vulnerability and make the region more susceptible to financial crime, factors such as
- Weak and inconsistent implementation and enforcement of anti-money laundering and counter-terrorism financing (AML/CTF) laws and regulations.
- Widespread poverty, large youth population, and high unemployment rates drive many young people in the region toward financial crime as a means of survival.
- With easy access to smart mobile phones, internet connectivity, social media, and messaging platforms, tech-savvy youth are using these tools to engage in financial crimes.
- Weak and poorly resourced legal systems, coupled with corrupt law enforcement agents, hinder efforts to combat financial crimes.
- The knowledge gap between tech-savvy youth and older law enforcement agents—who often lack technical expertise in cryptocurrency and cybercrime—further complicates efforts to combat and recover assets tied to these crimes.
- The prevalence of less mature fintech businesses, which often lack the resources and expertise to implement robust compliance and security controls, makes them more susceptible to cyberattacks and targets for money laundering activities.
Together, these challenges and the increasingly interconnected nature of cross-border financial systems create fertile ground for illicit activities in the region.
Common Online Financial Fraud & Scam Typologies in Africa’s Cross-Border Payment Systems
Interpol research [iii] and crime investigations into online scams in Africa, particularly in West and Southern Africa, highlight several prevalent online financial scams and frauds. These include business email compromise (BEC), romance scams, investment fraud, “pig butchering” schemes, account takeovers, SIM swapping, and advance-payment fraud. The report[iv] shows that among the broad category of online scams, member countries in the region identified business email compromise (BEC) as one of the most significant threats across Africa, in terms of both the volume of the attacks and their impact, with businesses being the primary targets of BEC attacks.
Online Frauds nd Scams Explained
Business Email Compromise (BEC) is a type of fraud where perpetrators send emails posing as clients or suppliers, instructing victims to transfer funds to fraudulent accounts. They often spoof email addresses or use spear-phishing and social engineering to trick victims into revealing confidential information, which allows them to carry out BEC schemes.
Online Romance Scams involve scammers faking romantic relationships or friendships to steal money, often targeting older adults seeking companionship. They create fake social media profiles or send misleading messages, pretending to be in a genuine relationship to build trust, then manipulate victims into sending money by fabricating emergencies or financial needs.
Online Investment Frauds or Scams occur when fraudsters mislead victims with false information about legitimate or fictitious investment schemes, often promising high returns with little or no risk, and then cut off all contact after receiving payment.
A Pig Butchering Scam combines romance and investment fraud, often involving cryptocurrency. Scammers build fake romantic relationships to lure victims into investing in fraudulent schemes. Once the investment grows large, the scammers withdraw the funds and disappear, leaving victims with significant financial and emotional losses.
Account Takeover (ATO) is a type of identity theft where criminals gain access to online accounts, such as a bank, email, or social media, using stolen credentials. This often involves phishing, SIM swap fraud, or exploiting weak security practices to steal personal information, resulting in significant financial and data losses for the victim.
Telephone, Email, and Social Media Scams involve criminals contacting victims via mobile devices, email, or social media platforms posing as relatives or friends to manipulate victims’ emotions to extract payments or gain access to their financial accounts. Organized crime groups also exploit social media to target specific demographics with fake job offers or “easy money” schemes to recruit young adults as money mules or as scam centre agents. In April 2024, Zambian police arrested 77 individuals at a Chinese gang scam call centre in Zambia, where young Zambians were used as scam agents to contact victims via mobile devices to carry out online scams.
Here are more real-life examples of online financial scams facilitated through Africa’s cross-border payment system:
Case Example: Ramon Abbas – A Notorious Online Scammer from Nigeria
Ramon Abbas (Hushpuppi), is a notorious Nigerian scammer, considered by the FBI to be one of the world’s most high-profile fraudsters. Abbas employed tactics such as identity theft and sophisticated cyber techniques to carry out his scams. His criminal network spanned internationally, with accomplices in Kenya, Nigeria, and the US, showcasing a well-organized operation. Abbas orchestrated a BEC scheme that diverted large sums of money through intercepted emails. In one instance, he attempted to reroute £100 million from a Premier League football club and £200 million from a UK firm to a Mexican bank account. The scam was thwarted when UK banks blocked the transactions. In another case, Abbas impersonated a New York banker to deceive a Qatari businessperson seeking a $15 million loan for a school project, fraudulently obtaining over a million dollars from him. He was eventually apprehended and sentenced for money laundering in 2020.
Case Example: Mona Faiz Montrage – An Infamous Romance Scammer from Ghana
Mona Faiz Montrage (Hajia4Real) is a Ghanaian romance scammer. Between 2013 and 2019, she played a central role in a romance scam ring that defrauded victims of over $2 million, receiving fraudulent funds from approximately 40 victims. The FBI describes her activities as a textbook example of a romance scam combined with elements of pig butchering. She created and used fake online personas to form false romantic relationships with older and vulnerable individuals, primarily in the U.S. Once trust was established, she manipulated victims into wiring significant cross-border transfers under various false pretenses. Her strategies included soliciting funds for non-existent business ventures, resolving fabricated emergencies, transporting gold abroad, addressing fake FBI investigations, fulfilling fictitious family obligations, and financing a fake tribal marriage. In May 2023, Montrage admitted to conspiring to receive illicit funds and laundering money from romance fraud. She was sentenced to one year in prison in the U.S.
Crypto-Based Money Laundering and other Financial Crimes
Cryptocurrencies, as cross-border payment instruments, are vulnerable to financial crime due to their decentralization, pseudonymity, light regulation, and global accessibility, making illegal crypto transactions more difficult to trace. While most online scammers still use fiat currencies, research from Chainalysis shows a growing shift toward cryptocurrency as adoption rises. Although crypto usage in Africa remains smaller than in other regions, it is rapidly growing, with Nigeria, South Africa, and Kenya leading the way. Notably, Nigeria ranks second globally in the Chainalysis Global Adoption Index.
The rise of crypto payments in Africa, especially stablecoins, is driven by lower fees, faster settlements, reduced volatility, and a young, tech-savvy population. While crypto has the potential to transform cross-border payments and remittances, inconsistent regulations present challenges. Many African governments are cautious about embracing cryptocurrencies due to security concerns, and the uneven regulatory landscape creates loopholes for criminal misuse.
Criminals often convert illicit funds into cryptocurrencies, particularly privacy coins, to move them across borders undetected. They use intermediary services like personal wallets, mixers, instant exchangers, and DeFi platforms to obscure fund origins. By splitting, mixing, and redistributing crypto across multiple addresses, criminals sever on-chain links, making it difficult to trace sources or connect them to illegal activities.
Below is a real-life example of cryptocurrency-related financial crime.
Case Example: Niselio Barros Garcia Jr. – Money Launderer and Co-Conspirator in Nigerian Scam Operations
Niselio Barros Garcia Jr. is a professional money launderer from Florida, who facilitated the transfer of scam proceeds from American consumers and businesses to co-conspirators in Nigeria. Garcia provided his co-conspirators with bank accounts for a fee, enabling them to receive money from various fraudulent schemes. Once he received the illicit funds, he used a cryptocurrency exchange to disguise the transactions and transfer the money in Bitcoin to accomplices in Nigeria. He was recruited by a Nigerian living in the U.S. who connected him with scammers based in Nigeria. On January 29, 2024, he pleaded guilty to laundering over $2.3 million obtained through business email compromise (BEC) and romance scams.
Safeguarding the Cross-Border Payments Systems
To safeguard the cross-border payments ecosystem from financial crime, participants—including banks, fintechs, money transfer services, crypto-asset service providers (CASPs), and other payment service providers—must comply with international and local AML/CFT laws and regulations. The FATF Recommendations set global AML/CFT standards, requiring participants to be licensed and monitored for compliance. While specific regulations vary by country, all participants are required to implement measures such as customer due diligence (CDD), record-keeping, suspicious transaction reporting (STR), internal controls, and staff training.
Participants must adhere to FATF Recommendation 16 (Wire Transfer Regulation or the Travel Rule) to share payer and payee information in cross-border transactions to help trace funds and prevent illicit activities. Implementing the ISO 20022 standard is also essential for enhancing data richness and transparency across borders, fostering interoperability, and enabling real-time AML/CFT checks. Participants must also comply with data protection laws, tax transparency codes, and sanctions regulations. Additionally, PSPs, depending on their location and the services they provide, may be required to comply with the EU Revised Payment Services Directive (PSD2).
Conclusion
In conclusion, here are key AML/CTF and financial crime tips for payment participants:
Business-Wide Risk Assessments
Conduct a business-wide risk assessment, aligned with national risk assessments, to identify and understand the financial crime risks the firm faces. Use this assessment to develop risk-based controls, regularly monitor new threats, and adapt controls to business growth and regulatory changes.
Policy & Procedures
Develop an AML/CTF policy that demonstrates the firm’s commitment to addressing financial crime risks and provides detailed procedures to guide staff in meeting their legal and regulatory obligations. The policy should align with all applicable local financial crime laws and regulations, incorporate industry best practices, and be tailored to the firm’s specific risk profile.
KYC & CDD Compliance
Implement robust KYC measures to verify customer identities, including beneficial owners, before account opening or processing transactions. Use digital ID solutions to automate verification and streamline onboarding, aiding in crime prevention and customer acquisition. Enhance security with biometrics, such as facial recognition, fingerprint scanning, and MFA, to mitigate sophisticated identity impersonation and fraud schemes, including AI-generated deepfakes and 3D facial masks that fraudsters use to evade facial recognition systems and steal identities.
Ongoing Monitoring and Suspicious Transaction Reporting (STR)
Monitor transactions and client activities using automated systems or manual processes to detect fraud and suspicious activities, tailoring monitoring systems to the firm’s risk profile. As ML/TF laws, sanctions lists, and fraud typologies evolve, firms must regularly update systems to remain effective.
With the rise in digital payments and online fraud, firms should adopt AI, machine learning, and graph analytics for real-time fraud detection. Unlike traditional systems, AI-driven solutions analyze vast, unstructured data, detect complex patterns, and forecast risks, helping firms stay ahead of emerging threats.
Firms handling global transactions and screening names and transactions against multiple sanctions lists can leverage machine learning algorithms to compare key attributes such as names, dates of birth, and nationalities. Natural Language Processing (NLP) can help understand the context and nuances of names. This approach reduces the high volume of false positive alerts associated with traditional screening methods, improving overall compliance workflows.
Ultimately, the future of cross-border payments in Africa depends on balancing innovation with strong regulation. Governments must strengthen oversight, while businesses should focus on achieving tangible outcomes in the fight against financial crime, rather than merely meeting technical compliance standards. Collaboration among regulators, financial institutions, fintech companies, and international partners is key to creating a secure, transparent ecosystem. By harnessing fintech, digital assets, and cross-border payments, Africa can drive trade, expand financial inclusion, and promote sustainable economic growth.
How we can help
Our mission at Opsel Compliance is to support businesses to meet their AML and financial crime compliance needs. Whether you are a traditional bank or non-bank payment service provider (fintech, money services business, small authorized payment institution, or an electronic payments institution), we offer comprehensive support to help you:
- Design robust anti-money laundering and financial crime programs
- Identify and address gaps in your existing compliance framework
- Conduct independent audits to assess program effectiveness
- Provide customized training to enhance your team’s AML expertise
With a commitment to excellence and a tailored approach, we are here to help you navigate the complexities of financial crime compliance confidently and effectively.
Contact: info@opselcompliance.com Tel +447950377849
This article is written by Nana Mantey, Founder & AML/Financial Crime Consultant at Opsel
References
[i] INTERPOL Global Financial Fraud Assessment, May 2024, p. 10
[ii] FATF. Terrorist Financing in West and Central Africa, October 2016, p. 16
[iii] INTERPOL Global Financial Fraud Assessment, May 2024, p. 10-14.
[iv] Interpol. African Cyberthreat Assessment Report 2024 Outlook by the African Cybercrime Operations Desk, 3rd edition, pp. 17-23.
[v] Project Fastt, World Bank Group. Fraud Risks in Fast Payments, October 2023, p. 7.
