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Banks’ Customers Exposed to Fraud as Insiders Mine Data for Fraudsters

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The pervasive electronic banking fraud in the banking sector is leaving in its wake losses and crisis of confidence in the financial industry, according to investigation by Nigeria CommunicationsWeek.

 

In fact, some of the most significant risks to banks are self-serving or criminal acts carried out by some insiders; and when these insiders use their technical knowledge to alter or disable security controls, it can be even more difficult to detect abuse.

 

But it becomes more dangerous when insiders conspire with criminals outside, showing that depositors money in the banks are not safe.

 

For instance, fraudsters now inundate banks’ customers with SMSes to authenticate accounts with banks.

 

The preciseness of the messages with accompanying data show they could only have gotten the details from insiders in the banks.

 

How it Works

Fraudsters send message to customer’s phone claiming that the customer made a mistake while filling his or her account opening forms with a bank.

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Armed with customer data, they usually follow up with a call asking if the customer got a text and if the customer registered his or her BVN with the bank.

 

The fraudster will now reel out your personal biodata and ask the customer to confirm the details.

 

If the customer is cooperative, the fraudster will send him or her a text with a code and ask him or her to have his or her ATM card close.

 

Once, they get your digits on your ATM, the customer’s fund is good as gone.

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Investigations showed that a group of bank employees are helping these fraudsters with information about account owners and potential targets.

 

Only recently, the Nigeria Deposit Insurance Corporation (NDIC) decried the increase in fraud cases attributed to internal abuse by staff of banks.

 

Curiously, most of the fraud were internet, ATM-related.

 

Earlier, the Central Bank Nigeria (CBN) Financial Stability Report (FSR) had revealed that the value of fraudulent activities in the Nigerian banking sector rose to N5.52 billion at the end of the 2017 financial year, while the value of 2016 fraud was N4.12 billion.

 

As punishment, the proposal by Jones Onyereri, chairman of the house of representatives’ committee on banking and currency, for a fine of N20 million per day for infractions like insider abuse should be revisited.

Nigeria CommunicationsWeek believes that technology makes life more exciting and helps improve the lives of people around Nigeria and indeed the world. So since 2007, we have devoted our energy to independent reportage of technology and how they affect lives.

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E-Financial

Diamond Bank’s Managers to Lose Jobs over Access Bank Acquisition

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Diamond Bank Plc’s acquisition by Access Bank will come at a heavy cost to the Diamond Bank management team, especially on job security.

 

The management team is likely to be disbanded.

 

“You cannot have two managing directors of a bank, domestic and foreign operations and even chief financial officers in one bank. One has to give way and the Diamond Bank staff will be the casualties. The Diamond Bank management team should know that their jobs are gone,” Richard Obire, a former chief at Diamond Bank said.

 

According to him, Access Bank is a very ambitious lender and that is one of the characteristics of its management team.

 

Obire said: “They want to be big, and perhaps, the biggest bank in Nigeria and that was presented to them on a platter of gold by the Diamond Bank opportunity. Diamond Bank is now a small bank compared to its peers. It is now a tier-3 bank. I do not know the terms of the transaction but they will lose their brand name.

 

“It is the reality of business. Diamond Bank has such a brilliant brand name and customer base and these are what Access Bank will inherit. The name Diamond Bank is gone forever and the next will be integration, which will lead to exit of the bank’s management team.”

 

An industry source told The Nation that Access Bank’s decision to acquire Diamond followed a presentation made to it last week by its financial advisers in London, which showed huge strengths inherent in Diamond Bank.

 

The board of Diamond Bank Plc yesterday finally announced its merger with Access Bank Plc.

 

Both banks recently denied The Nation’s exclusive report of November 12 on any merger plans.

 

In the report, this paper exclusively said: “It was gathered that both financial institutions have reached an agreement in broad terms on the acquisition. What is left is the valuation of assets, with a view to determining the level of compensation and systems’ integration, the sources said, pleading not to be named because they are not allowed to talk to the media on the matter.

 

“It was learnt that the development leading to the impending acquisition was triggered by Diamond Bank directors who approached Access Bank for intervention in a bid to stave off a possible regulatory intervention that could lead to the withdrawal of the lender’s operating licence in the light of the bank’s depleting capital adequacy ratio on account of a huge  Non Performing Loans (NPLs) portfolio put at over N150 billion.”

 

Uzoma Dozie, Diamond Bank’s chief executive officer said  the potential merger of the two banks would create Nigeria and Africa’s largest retail bank by customers.

 

He added that the transaction to be completed in the first half of 2019 was in the best interest of all stakeholders.

 

Dozie said the completion of the merger was subject to certain shareholder and regulatory approvals.

 

He said: “The proposed merger would involve Access Bank acquiring the entire issued share capital of Diamond Bank in exchange for a combination of cash and shares in Access Bank via a Scheme of Merger.

“Based on the agreement reached by the boards of the two financial institutions, Diamond Bank shareholders will receive a consideration of N3.13 per share, comprising N1 per share in cash.”

 

Dozie also said the transaction would include the allotment of two new Access Bank ordinary shares for every seven Diamond Bank ordinary shares held as at the implementation date.

 

“The offer represents a premium of 260 per cent to the closing market price of 87k per share of Diamond Bank on the Nigerian Stock Exchange (NSE) as of Dec. 13, 2018, the date of the final binding offer,” Dozie said.

 

He said the bank’s shares would be absorbed into Access Bank at the completion of the merger and Diamond Bank would cease to exist under Nigerian law.

 

“The current listing of Diamond Bank’s shares on the NSE and the listing of Diamond Bank’s global depositary receipts on the London Stock Exchange will be cancelled, upon the merger becoming effective.

 

“The board of Diamond Bank believes that the proposed combination of the two operations provides an exciting prospect for all stakeholders in both businesses,” he said.

 

Herbert Wigwe , Access Bank chief executive officer said: “Access Bank has a strong track record of acquisition and integration and has a clear growth strategy.

 

“Access Bank and Diamond Bank have complementary operations and similar values, and a merger with Diamond Bank with its leadership in digital and mobile-led retail banking.

 

“This could accelerate our strategy as a significant corporate and retail bank in Nigeria and a Pan-African financial services champion.”

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Okonkwo, Fidelity Bank MD Faces Alleged $153m Money Laundering Charge

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Mr. Nnamdi Okonkwo

A Federal high court sitting in Lagos, Southwest Nigeria has adjourned till 14 January 2019 for the arraignment of Nnamdi Okonkwo, managing director of Fidelity Bank Plc, for allegedly laundering the sum $153,310,000 while Diezani Allison-Madueke, former Petroleum Mminister and one Ben Otti that supposed be arraigned with him was alleged to be at large.

 

Others to be arraigned alongside the former bank boss are Dauda Lawal, Lanre Adesanya and Stanley Lawson.

 

However when the matter was mentioned today, Economic and Financial Crime Commission (EFCC), prosecutor Barrister Rotimi Oyedepo  told the court that Nnamdi Okonkwo and Dauda Lawal were present in court while Lanre Adesanya and Stanley Lawson were absent.

Consequently, he urged the court to issue a bench warrant against the defendants who were absent to enable the prosecution get them to attend trial.

 

The counsel representing the absentee defendants, Mr Ademola Adesina urged the court not issue bench warrant because their absence is not deliberate as the two of them are abroad for medical treatment and once they are through they will come to court.

 

He then asked the judge that the case be adjourned.

 

The two senior advocates, Dr Hassan Liman and Ishaka Dikko appearing for the second defendant Dauda Lawal told the court that they are worried about the liberty of their client, as there is fear that he may be arrested after leaving the court premises therefore need the assurance of the prosecution that his right will not be violated.

 

Other two senior Advocates Mr Paul Erokoro and Dr Dapo Olanipekun appearing for Nnamdi Okonkwo also exercise the same fear but in his response Mr Oyedepo urge the defence lawyers to give undertaking that they are going to produce the defendants next adjourned date.

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The presiding Judge Muslim Hassan, while adjourning till 14th of January, 2019 for the arraignment of the defendants ordered that the right of the defendants should not be tampered with.

 

In a 14 count charge filed before the court by EFCC prosecutor Mr Rotimi Oyedepo, it was alleged that Nnamdi Okonkwo, Dauda Lawal ,Lanre Adesanya, Stanley Lawson and (Dieziani Alison Madueke  and Ben Otti now at) large between 2014 and 2015 in Nigeria within the jurisdiction of the court conspired amongst themselves to conceal in Fidelity Bank Plc the total sum of $153,310,000 which sum they reasonably ought to know forms part of unlawful activity to wit: corruption and thereby committed an offence contrary to section 18(a) 15(2) (a) of the money laundering (prohibition)  Act2011as amended and punishable under section 15(3) of the same Act.

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CBN Orders Banks to Report Fraud or Face Sanctions

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The Central Bank of Nigeria (CBN) has warned banks in the country to enhance their reporting on fraud related cases in accordance to its directives, adding that it would no longer condone failure to do so.

 

Mr. Sam Okojere, director, Payment System Management Department at CBN, said: “Consequently, banks must generate fraud data by reporting incidents, analyse these data and handle it in such a way that the information generated will help in understanding and addressing customer needs.

 

“A system where participants fail to report fraud as captured by the relevant CBN directive will no longer be condoned.

 

“We must also pay attention to risk management and embark on aggressive fraud awareness campaigns in the days ahead in order to boost customers’ confidence.”

Godwin Emefiele, CBN Gov.

Continuing, Okejere added: “As a nation, we are under siege from cybercriminals who are leveraging the power of the internet to commit fraud and crime on an unprecedented scale, costing our economy millions if not billions each year.

 

“It has thus become necessary to review and strengthen the existing rules, and enact new regulations to stem these problems. In addition, banks must begin to evolve with the speed of Financial Technology (FINTECH) players, who are quick at developing financial solutions that are driving the financial sector.

 

“Taming fraud will continue to be a focus for the forum, as we know the impact fraud has in diminishing trust which is an essential ingredient in building an internationally recognised and nationally utilised payments system.”

 

On the African collaboration and the establishment of a continental body to fight electronic fraud, Okejere said: “The steering committee of your forum met in October and one of the important discussions was the Establishment of an Africa new liaison.

 

“The forum was invited to make presentation to the Africa Union (AU) on prospects of establishing an AeFF and this proposal was well received. I will also agree that this idea is coming at a good time, as it was recently revealed that a new fraud scheme termed ‘ATM Cash out’ had emerged where fraudsters insert a malware to corrupt ATM systems and illegally authorises withdrawals that often run into losses of millions of dollars.”

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