Discover the alarming trends in South Africa's financial sector as the NFO Banking Division reveals the rise of mule accounts and fraudulent credit applications, and learn how to safeguard your finances.
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What may start out as a seemingly harmless “side hustle” can quickly spiral into serious financial consequences,including frozen bank accounts, fraud listings, and long-term damage to one’s financial standing.
The Banking Division of the National Financial Ombud Scheme South Africa (NFO) has raised concern over a sharp increase in complaints linked to the misuse of personal bank accounts. This growing trend is fast becoming one of the most significant risks facing South Africa’s financial sector.
According to Nerosha Maseti, lead ombud for the NFO’s Banking and Credit Division, there has been a notable rise in cases where ordinary consumers are drawn into scams or informal financial arrangements. These often involve individuals allowing third parties to use their personal bank accounts to receive and transfer funds, typically in exchange for small financial rewards.
While such arrangements may appear low-risk, the consequences can be severe.
Maseti revealed that in 2025, the NFO finalised 8,325 cases. Of these, 8% involved account closures or restrictions due to suspected fraud, an increase of 300 cases compared to 2024. The majority of these incidents (73%) related to account freezes, followed by 16% involving fraud listings by the Southern African Fraud Prevention Service (SAFPS). The remaining cases included unilateral account closures and other related actions.
One recent complaint highlights the risks involved. A consumer, introduced by a friend to a purported cryptocurrency trader, was encouraged to open multiple bank accounts to receive payments from the trader’s clients. She then transferred the funds as instructed.
However, the bank flagged the transactions as suspicious. When she was unable to provide a credible explanation for the activity, her accounts were frozen.
An investigation by the NFO found that the accounts exhibited characteristics of so-called “mule accounts”, accounts used, either knowingly or unknowingly, to receive, transfer, or conceal funds linked to fraudulent or unlawful activities.
Banks are legally obligated to act when fraud is suspected. Importantly, account holders remain fully responsible for all transactions conducted through their accounts, even where third parties are involved.
In addition to account misuse, the NFO has identified a concerning increase in fraudulent documentation submitted in credit applications. Some consumers have been found to alter payslips or proof of address in an attempt to secure loans.
In one such case, a customer was listed by the SAFPS after submitting falsified payslips in support of a vehicle finance application. The NFO’s investigation revealed that the “salary” deposits reflected in his bank statements were not from an employer, but rather transfers between his own accounts, a deliberate attempt to misrepresent his income.
Maseti emphasises that banks are legally and contractually entitled to terminate relationships with customers under such circumstances. Most banking terms and conditions include provisions allowing for this action.
“Termination must follow the correct procedure, be based on fair reasons, and, where appropriate, customers must be given sufficiently detailed explanations.”
She says recent data from the NFO shows that 77% of complaints were resolved in favour of banks, compared to 23% in favour of consumers. This suggests that banks are generally able to demonstrate compliance with required procedures and provide adequate justification for their decisions.
“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 the Conduct Standard for Banks issued by the Financial Sector Conduct Authority.
“Consumers may be listed with the SAFPS for up to 10 years, restricting access to financial services and even employment opportunities. Banks must also report suspicious activity to the Financial Intelligence Centre, which may lead to South African Police Service prosecution for serious charges such as money laundering,” Maseti says.
The NFO’s data highlights several vulnerability indicators:
Income: Complaints disproportionately affect lower-income consumers, particularly those earning below R80,000 annually.
Geography: The highest number of complaints originates from Gauteng, followed by KwaZulu-Natal and the Western Cape.
Gender: Male consumers account for 61% of complaints, compared to 39% from female consumers.
The NFO has issued a strong warning to consumers:
Never allow third parties to use your bank account.
Avoid “easy money” schemes or investments that require the use of your personal account.
Ensure that all account activity aligns with the intended purpose of the account.
Always provide honest, accurate, and up-to-date information when applying for credit.
“Failure to follow these precautions may result in account freezes, closures, fraud listings, and long-term financial exclusion. While these punitive measures may appear severe, they are essential to combat financial crime and protect the integrity of South Africa’s financial system,” Maseti says.
PERSONAL FINANCE