How The Srd Grant System Has Been Defrauded

The SRD grant was introduced during the Covid pandemic to assist people in dire need. About nine-million of these R370 grants are paid out monthly now. It is potentially the basis for a universal basic income grant.

Activist Israel Nkuna has for years been warning of fraudulent applications for the SRD grant, and that these fraudulent applications have been squeezing out legitimate applicants by using their ID numbers without permission. GroundUp too has reported this problem. Then in October we published an article by Stellenbosch University students who discovered a massive number of fraudulent applications for the SRD grant, and evidence that at least some of these fraudulent applications were succeeding.

Since then it has become clearer to us how the SRD grant system has been defrauded at scale. It involves six steps.

First, obtain ID numbers and their associated names from one of the various large leaks of South African data.

Second, open improperly verified accounts with Shoprite or TymeBank, or possibly some other banks as well. This could be done on a laptop or phone without leaving one's home. Shoprite and TymeBank have in recent months tightened up their bank account application processes, so fraudsters can no longer continue to do this.

Third, obtain improperly verified sim cards. This is easily done by simply going to a local dodgy cellphone shop. But until recently it could even be done entirely online by registering free electronic SIM cards through me you mobile. This too has since been stopped.

Fourth, use the ID number, telephone number and bank account obtained in the first three steps to apply for an SRD grant.

Fifth, wait for the grant to be paid into the account opened in step two. As far as we can tell every month SASSA sends ID numbers of applicants to the banks, SARS and NSFAS to check if applicants pass the means test. If the applicant isn't paying income tax, doesn't receive money from NSFAS and has income to their bank account less than R625 per month, the grant is paid.

Sixth, launder the SRD money by transferring it out of the bank account. There are various ways to do this, which we do not describe here.

Doing the above for one SRD grant is not worth the effort. But a determined fraudster or group of fraudsters could make dozens or even hundreds of applications a day. At one point it was possible to carry out the entire process described above using only a laptop. It would also be possible to write a computer program to automate the process, but such sophistication would be unnecessary: going to a shop to buy sim cards and manually making lots of applications would be very profitable.