Customers are still concerned about the safety of their deposits despite the 85.13 per cent dip in fraud in the country’s banking sector in Q1, 2023, writes SAMI OLATUNJI

In January this year, a Twitter user: (@a_ma_ka) narrated how over N4m was moved out of her bank account. According to her, on January 9, 2023, around 8.43 pm, she got a debit alert of N3.7m and within minutes later, she got another debit of N222,900. While she was still wondering about what was happening, she was debited another N102,000.

She was not the only one. Another Twitter user: (@Fashionjuel1) said her life savings were wiped off in 15 minutes. Recently, there have been several cases of customers losing their money to fraud in the banking sector. The global adoption of e-payment platforms as the preferred means of payment has necessitated the upsurge of e-fraud in Nigeria.

 Fraud cases in the banking sector

A new report by FITC revealed that bank customers in Nigeria lost N472m to fraud in the first quarter of 2023. It was also disclosed that there was a total of 12,553 cases of fraud recorded within this period. FITC’s institutional members are members of the Nigerian Banker’s Committee, which comprises the Central Bank of Nigeria, the Nigeria Deposit Insurance Corporation and all licensed banks in Nigeria.

The report showed a decline in losses compared to what was lost to fraudulent banking activities in Q4, 2022. According to FITC, a total of N3.18bn was lost to fraudsters across banking platforms in Q4, 2022, which meant that the losses declined by 85.13 per cent in Q1, 2023.

The FITC report also revealed that there was a 79.44 per cent decrease in the value of fraud cases to N2.59bn in Q1, 2023 from N12.58bn in the previous quarter.

The total number of fraud cases reported in Q1, 2023 also declined by 14.07 per cent.

According to the report, a total of 12,553 cases were reported in the first quarter of this year compared with 14,609 cases recorded in the preceding quarter.

It was also noted that fraud occurred mostly through mobile, computer/web, and PoS, which was consistent with the trend from the previous quarter.

The report read, “For Q1 2023 under review, an analysis of the magnitude-based ranking of fraud categories shows that mobile fraud has the highest ranking which accounts for N1.1bn (42.72 per cent), and this is followed by the computer/web fraud category at N646m (24.99 per cent). This was followed by PoS fraud at N450m (17.41 per cent) and fraudulent withdrawals at N139m (5.36 per cent).”

It also revealed that mobile fraud accounted for 34.07 per cent at N161m followed by computer/web fraud accounting for 27.69 per cent at N130m and fraudulent withdrawals representing 24.72 per cent at N116m.

The PUNCH also reported that about 56.52 per cent of businesses suffered fraud and theft during the cash scarcity caused by the naira redesign policy of the Central Bank of Nigeria.

This was according to a report by SBM Intelligence, titled ‘Strapped: Impact of the Cash Scarcity on Individuals and Businesses’.

Bank staffers’ role

The FITC report noted that there was an increase in cases of fraud committed by bank staff, from 38 cases in Q4, 2022 to 72 cases in Q1, 2023.

The report stated, “Staff involvement increased to 72 cases in Q1 2023 from 38 cases in Q4, 2022 representing an 89.47 per cent increase. Additionally, there were 124 cases that were not specified and six cases of collusion.

It was also noted that deposit money institutions reported that 15 employees were sacked due to their involvement in fraudulent activities in Q1, 2023, representing a 25 per cent decrease from the value reported in Q4, 2022, where 12 bank staff had their employment terminated for similar reasons.

In June 2022, The PUNCH reported the continued trial of three former workers with the First Bank of Nigeria facing attempted fraud charges before a Lagos State Special Offences Court, Ikeja.

The defendants, Ozioma Ugorji, 35; Ugwu Emeka, 32; and Obike Chukwuka, 38, were arraigned by the Economic and Financial Crime Commission for allegedly attempting to steal N20bn from the bank.

The PUNCH learnt that the defendants conspired to tap into the bank’s server to grant access to a syndicate.

They were, however, apprehended by the EFCC on March 6, 2021, following an intelligence report.

In June this year, four men were arraigned at the Yaba Magistrate Court for allegedly defrauding their employer, Think Finance Microfinance Bank, of N150m in the FESTAC Town area of Lagos State.

The defendants include the company’s Head of Risk Management, Ojimi Ayodeji; the Loan Officers, Isaac Eddy, Joseph Setonji and Juwon Irinyemi.

The prosecutor, Thomas Nurudeen, told the court that the defendants employed by the firm were put in charge of giving loans to people for business purposes, but they conspired and used fake names to borrow money from the firm to the tune of N150m, which they shared among themselves without interest and never paid back.

Nurudeen stated that the defendants committed the offences between 2019 and December 2022 at the Think Finance Microfinance bank located at FESTAC Town.

The PUNCH  reported that Access Bank, GTB and Fidelity Bank recorded 26,877 fraud cases in the first six months of this year, according to analyses of their financial reports for the first half of 2022.

This was a 56.45 per cent decrease from the 61,715 fraud cases that were recorded by the banks between June and December 2021.

In line with Section 5.1.2 (L) of the CBN Code of Corporate Governance, the Guaranty Trust Holding Company and subsidiary companies reported 15,004 fraud incidences in the period under review.

The bank reported that N1.55bn and $50,700 were involved in these cases, with N158.37m recorded as actual/expected loss.

Similarly, Access Bank Plc reported N1.2bn as fraud losses for the period. The bank recorded 10,706 fraud attempts in the first half of 2022.

About 7,104 attempts were successful while 3,602 were unsuccessful. The sum of N12.55bn was involved in these attempts.

According to the bank, 7,928 electronic/USSD fraud cases were recorded in the period under review, with 849 successful attempts.

Fraudulent transfer/withdrawals/reactivation of accounts had the most amounts involved, with successful attempts worth N9.48bn made and actual loss worth N1.08bn.

Other successful and unsuccessful fraud attempts fell under the following categories: cash theft/ suppression/pilferage/dry posting, among others.

Fidelity Bank PLC recorded 1,167 fraud incidents in the period under review. The amount involved was N471.01m and $8,367, but the actual loss was N4.90m and $2,400.

CBN’s efforts

The PUNCH recently reported that at least 6,047 Bank Verification Numbers of bank customers have been placed under the Central Bank of Nigeria watch list for fraudulent transactions.

This was contained in the CBN Financial Stability June 2022 report.

The report stated that the total number of watch-listed BVNs for fraud rose by 13.09 per cent from 5,347 in December 2021 to 6,047 in June 2022.

The CBN Director of the Payments System Management Department, Musa Jimoh, speaking at the Nigeria Electronic Fraud Forum meeting recently, said the apex bank was able to barricade the payment infrastructure and the finance system against criminal activities.

He added, “We have actually tamed down the incidence of fraud. We have recovered so many lost funds and we are putting formidable systems around our payment infrastructure and financial system infrastructure such that fraudsters cannot penetrate.

“In terms of percentage, it is between 30 and 35 per cent decline in incidences of fraud. Remember, there are attempts and they are successful ones.  The number of attempts is high, which means that they have been attempting, but they are not successful and some are successful and so money was taken away.

“And in terms of recovery, we also recovered high numbers in terms of the percentage of the monies recovered because of the different initiatives and systems that have been put in place to checkmate all those fraudsters and to track wherever the money is taken into.”

 Experts react

The President of Bank Customers Association of Nigeria, Dr Uju Ogunbunka, urged banks to educate their members of staff and create protective measures that would discourage fraud.

He also asked bank customers to be careful when they engage in transactions, urging them to manage their accounts discreetly.

Commenting, ICT expert and Senior Partner of e86 Limited, Olugbenga Odeyemi, recently said several fraud cases needed insiders from banks.

He stated, “Some of the hacking and fraud cases that we have seen happened not because of the lack of security on the banks’ electronic platforms, but because of poverty, greed, and sometimes the lack of education on the part of the customers.

“Other than asking banks to invest more in the security of their platforms, it is equally important that banks spend more resources on educating their customers.”

According to Odeyemi, several fraud cases could not have happened without the help of insiders in some of the banks.

“I think Nigerian banks should spend more money on the welfare of their staff members while making appropriate changes to their internal processes, starting from their hiring processes,” he counselled.

The Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Dr Muda Yusuf, recently urged the CBN to introduce sanctions and eliminate policies that promote corruption.

He said, “I think what they can do is to activate sanctions on anyone found wanting. Aside from the tracking, there must be evidence. And once there is evidence, they should close in on anyone they find. Cyber fraud is the biggest threat in the banking industry.

“The CBN should also refrain from policies that would encourage corruption. One of such policies is the foreign exchange policy. When you have multiple windows and a wide margin between the official rate and the parallel market, it creates a lot of corruption. That is something the CBN needs to look into. And all these intervention funds.”

He also noted that the apex bank should encourage banks to put in place structures that would address the challenge of fraud in the banking system.

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