How Bank Account Checks Are Helping South Africa Fight Payroll Fraud

Payroll fraud continues to drain billions from South African companies and the public sector, with new evidence showing that frequent checks on employee bank account details remain one of the most effective tools for detection. The Public Servants Association reports that ghost employees are costing the state nearly R4 billion, while the Chartered Institute of Payroll Professionals estimates that South African businesses lose at least R100 million annually to payroll-related fraud.

Industry experts warn that payroll fraud is often simple in execution but difficult to spot in organisations with large workforces. Fraudsters typically manipulate employee records, create ghost staff profiles, or alter the details of former employees. These alterations usually involve changes to banking details made before or after payroll runs, which can go unnoticed without targeted verification.

Yolande Schoültz, founder of YSchoültz Attorneys, says bank account changes are the most consistent indicator of fraud. “For payroll fraud to work, money must be redirected. That always begins with altered banking details,” she explains.

Monthly checks on new employees, terminated staff, and contractors can quickly reveal irregularities. Missing bank confirmation letters, repeated bank account numbers appearing across different employee profiles, or updated banking details for individuals who no longer work for the organisation are among the red flags frequently associated with fraudulent activity.

Despite the simplicity of these checks, many organisations fail to carry them out consistently. Experts attribute this to outdated payroll systems and unclear structures between HR and finance. In many cases, payroll units operate in isolation, using software that lacks remote access, real-time reporting, and modern oversight features.

Sandra Crous, Managing Director of Deel Local Payroll, says updated systems can significantly reduce fraud opportunities. “If leadership can log in remotely and generate reports without going through payroll staff, the isolation disappears. Regular reviews of bank detail changes will expose and discourage fraudulent activity,” she notes.

Analysts are urging organisations to conduct monthly spot checks, supported by quarterly or biannual audits focused specifically on banking detail changes. They argue that even basic verification processes can dramatically strengthen internal controls, reduce financial losses, and curb the widespread issue of ghost employees.

As payroll fraud continues to undermine financial stability and public trust, South African companies and government institutions are being encouraged to modernise payroll systems, strengthen oversight, and adopt stricter verification measures to protect their operations.