- Consumers are increasingly being drawn into mule account schemes that result in frozen accounts and fraud listings.
- Fraudulent credit applications using altered documents are rising and triggering serious consequences.
- Most complaints are resolved in favour of banks, with institutions acting within legal and regulatory frameworks.
The National Financial Ombud Scheme (NFO) South Africa has raised alarm over a sharp increase in complaints linked to the misuse of personal bank accounts, warning that what often begins as a seemingly harmless side hustle is ending in severe financial consequences for consumers.
The Banking Division has identified a growing pattern in which individuals allow third parties to use their bank accounts to receive and transfer money in exchange for small payments. These arrangements are increasingly being flagged as fraudulent activity, leaving account holders exposed to frozen funds, account closures, and long-term reputational damage within the financial system.
Nerosha Maseti, Lead Ombud for the Banking and Credit Division, warned, “What begins as a harmless side hustle can end with frozen accounts, fraud listings, and a ruined financial future.”
Maseti said in 2025 the NFO finalised 8 325 cases, with 8 percent involving account closures or restrictions due to suspected fraud, reflecting an increase of 300 cases compared to 2024. Of these, 73 percent involved account freezes, while 16 percent resulted in fraud listings with the Southern African Fraud Prevention Service. The remaining matters involved unilateral closures and related actions by banks.
How mule accounts are trapping consumers
The case that landed on the NFO’s desk looked, at first glance, like many others. A woman was introduced by a friend to a supposed cryptocurrency trader and persuaded to open multiple bank accounts to receive payments. She transferred the funds as instructed, believing she was part of a legitimate arrangement. She was not.
Her experience reflects a much wider pattern. South Africa is one of the largest crypto markets on the continent, with surveys suggesting as many as one in ten adults hold digital assets. That growth has created fertile ground for fraud. Criminals have increasingly turned to cryptocurrency-linked schemes to recruit ordinary people as unwitting money mules, using their personal bank accounts to receive, move, and conceal illicit funds, often under the guise of trading opportunities or easy income.
The Financial Sector Conduct Authority (FSCA) has previously warned that such schemes instruct members of the public to make payments into bank accounts held by multiple third parties, with mule accounts used to obscure the money trail. Globally, scams have become one of the most lucrative forms of illicit activity in crypto, and South Africa has not been insulated from that trend.
In the NFO case, the bank identified the account activity as suspicious and froze the accounts. When the customer failed to provide a credible explanation for the transactions, the NFO’s investigation concluded that the accounts displayed the hallmarks of mule accounts used to move or conceal funds linked to unlawful activity.
Maseti said, “Account holders remain responsible for all transactions conducted through their accounts, regardless of third-party involvement.”
Banks are legally required to act where fraud is suspected, including freezing accounts without prior notice.
Fraudulent credit applications increase risk exposure
Alongside account misuse, the NFO has identified a rise in fraudulent credit applications involving altered documents such as payslips or proof of address. These practices are being used to mislead banks into granting loans that would otherwise not be approved.
In one matter, a consumer was listed with the Southern African Fraud Prevention Service after submitting falsified payslips in support of a vehicle finance application. The investigation revealed that the supposed salary payments reflected on his bank statements were, in fact, transfers between his own accounts, deliberately structured to create the illusion of income.
Maseti said, “Banks must follow the correct procedure when closing accounts, base decisions on fair reasons, and, where appropriate, give customers sufficiently detailed explanations.”
Banks prevail in most disputes
The NFO’s data shows that 77 percent of complaints are resolved in favour of banks, compared to 23 percent in favour of consumers. This reflects the ability of financial institutions to demonstrate compliance with legal requirements and internal procedures when taking action against suspicious accounts.
Maseti said, “Banks may also act immediately, freezing or closing accounts without prior notice, particularly where fraud or unlawful activity is suspected.”
These measures align with obligations under financial crime legislation and regulatory standards issued by the FSCA. Consumers may also be listed with the Southern African Fraud Prevention Service for up to 10 years, severely limiting access to financial services and even employment opportunities.
Banks are further required to report suspicious activity to the Financial Intelligence Centre, which may lead to criminal investigation by the South African Police Service for offences such as money laundering.
Who is most affected
The NFO has identified clear vulnerability patterns in these complaints. Most cases involve individuals earning below R80 000 annually, indicating that financially vulnerable consumers are disproportionately affected.
Geographically, Gauteng records the highest number of complaints, followed by KwaZulu-Natal and the Western Cape. Gender data shows that 61 percent of complaints come from male consumers, compared to 39 percent from female complainants.
Clear warning to consumers
Maseti said, “Failure to follow these precautions may result in account freezes, closures, fraud listings, and long-term financial exclusion.”
Consumers are urged to avoid allowing third parties to use their accounts, to be cautious of schemes promising easy money, and to ensure that all banking activity aligns with the intended purpose of their accounts. Accurate and honest information must also be provided when applying for credit.
Maseti added, “While these punitive measures may appear severe, they are essential to combat financial crime and protect the integrity of South Africa’s financial system.”
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