Fraudsters Overwhelm Banking Operations, Nigerians Cry Out

Nigerians are worried that the activities of fraudsters in banks across the country may have overwhelmed banking operations despite efforts at curbing them.

Gen Yakubu Gowon, former Head of State, and chairman of the recent first extra ordinary fellowship investiture of the Charted Institute of Bankers of Nigeria (CIBN), called for urgent action by banks and government to stem the tide.

Gowon said the Nigerian banking and finance industry has in recent time been plagued with frauds and unethical practices.

“No day passes without reports of frauds and other unethical practices in the industry. This constitutes a big threat to the values of trust and professionalism which ought to be the basic principles of the banking industry. I am imploring the government, banks and security agencies to further beam their searchlights in the direction of fraudsters who make banking difficult”, Gowon said.

Over the years, technology has helped banks in the country improve efficiencies as they churn out one form of innovations or the other with huge contribution to bottom line.

However, just as banks are making money through technology, banks’ customers are daily losing billions of naira, no thanks to technological innovations and upgrade by fraudsters.

Daily Independent reported that latest developments have shown that technology, which has given banks so much leverage among themselves, seems not enough to curtail cases of internet fraud in the banking system.

The rising cases of bank fraud in Nigeria are assuming an alarming proportion and, in the process, causing genuine worries to policy makers and bank regulators.

There are indications that despite efforts by the authorities to curb the menace and clean up the system, the banking sector is still under heavy burden of fraud cases.

For instance, in the first six months of 2018, a report by the Central Bank of Nigeria (CBN), recorded 20,768 cases that gulped N19.77 billion were recorded, but the actual loss by banks under the same period was N12.06 billion.

According to the report, there were 20,768 reported cases of fraud and forgery (attempted and successful), valued at N19.77 billion in the review period, compared with 16,762 cases, involving N5.52 billion and $ 0.12 million in the corresponding period of 2017.

“The actual loss by banks to fraud and forgery, however, amounted to N12.06 billion, compared with the N0.78 billion and $0.03 million, suffered in the first half of 2017.

“The reported fraud and forgery incidences were perpetrated by both bank staff and non-bank culprits. The cases involved armed robbery attacks, fraudulent ATM withdrawals, draft defalcation, illegal funds transfer, pilfering of cash, stealing, suppression and conversion of customers’ deposits,” it added.

The report revealed that fraud and forgery incidences were perpetrated by both bank staff and non-bank people.

In the period under review, the actual loss by banks to fraud and forgery amounted to N12.06 billion, compared with the N0.78 billion and $0.03 million, suffered in the first half of 2017.

The report also shows that the number of fraud related cases increased by 4,006 compared to 16,762 cases involving N5.52 billion and $ 0.12 million in the corresponding period of 2017.

According to the Nigeria Deposit Insurance Corporation (NDIC), the number of fraud cases attributed to internal abuse by staff of banks increased from 231 in 2016 to 320 in 2017.

Mr. Mohammed Ibrahim, head, Communications and Public Affairs of NDIC, said the figure was in the organisation’s recent report on off-site supervision of the Deposit Money Banks.

“The report relied on a total of 286 responses received from 26 banks during the period and there were 22 NIL monthly responses from the banks as at year ended December 31, 2017

“The 286 responses received from banks in 2017 cited 26,182 cases of fraud and forgeries which is 56.30 per cent higher compared to 16,751 cases reported in 2016.

“Similarly, the amount involved in the fraudulent activities documented increased by N3.33 billion from the N8.68 billion reported in 2016 to N12.01 billion in 2017 or 38 per cent.

Cybercrime experts blame the rising incidences of insider-related fraud cases in banks on poverty and weak internal control measures in banks.

They also accuse banks of inadequate rendition of returns on instances of fraud, forgeries, and cases involving members of their staff who were either dismissed or had their appointments terminated on grounds of fraudulent activities.

Dr Victoria Enape, Pro-tem President, Chartered Institute of Forensic and Investigative Auditors of Nigeria (CIFIAN) said training had become necessary going by the global acknowledgment of corruption in most government and financial institution and its (corruption) rejection by the United Nation (UN), World Bank and International Monetary Fund (IMF).

“Government at all levels are losing billions of Naira every day and most of these criminal cases bordering on fraud, corruption and cyber-crimes are partly because there are no forensic and investigative auditors in Nigeria to prevent fraud from taking place.

“The place of training of forensic and investigative auditors cannot be over emphasised because the whole world has embraced this current trend years ago which has assisted them in the fight against fraud,” Enape said.