The Over N9 Billion Fraud In Banks

The Over N9 Billion Fraud In Banks

OpenLife Nigeria reports that in an article titled: Fraud and Fraudulent Practices in Nigeria Banking, by Owolabi, S. A of the Accounting Department, Babcock University, Nigeria, major causes of fraudulent practices in the Nigerian Banking Industry were thoroughly examined and sectionalized into perspectives.

According to the research work, major fraudulent activities radiate round presentation of forged cheques, granting of unauthorized loans and credit, posting of fictitious credits, fraudulent transfers/withdrawals, cheque and cash defalcation, loss of money to armed robbers and outright theft of money.

The work also examined the level of employees’ involvement in the fraudulent practices.

Owolabi categorized workers into supervisors and manager carrying the lead in number and amount of loss involved in this evil act; officers, Accountants and Executive Assistants, clerks and cashiers, Typists Technicians and stenographer, massagers, Drivers, Cleaners, Security and Temporary staff.

The major concern, according to Owolabi, is the level of involvement of temporary workers, if left unchecked it may became a big threat.

However and in recent years, Nigeria’s banking industry has become plagued by a shattering wave of financial heists, leaving millions of hard-earned naira in the hands of criminals.

These brazen acts have not only exposed the vulnerabilities of the country’s banking system but have also left ordinary Nigerians reeling from a debilitating lack of justice.

As the nation grapples with the far-reaching consequences of these incidents, citizens are growing increasingly frustrated over the persistent failure of authorities to investigate, arrest, and prosecute the criminals responsible for this criminal act.

Instances of sophisticated financial fraud in Nigeria have grown alarmingly commonplace, undermining public trust in the banking sector, as cyber-criminals continue to exploit loopholes in the country’s outdated security systems, targeting unsuspecting individuals, banks, and even government agencies.

The impact of these security breaches extends beyond financial losses. Many residents are now fearful of conducting online transactions or even using their banking apps for fear of falling victim to cybercriminals. This cautious approach has disrupted daily activities and added unnecessary stress to their lives.

For instance, recently, a report by the Financial Institutions Training Centre, FITC, on Fraud and Forgeries in Nigerian banks for Q2’23, revealed that Deposit money banks in Nigeria have experienced a sharp rise in fraud cases and amount of money lost in the second quarter of 2023, Q2’23.

The latest report also shows that number of insider involvement rose astronomically. The total amount involved in the fraud cases during the period rose to N9.75 billion, up by a whopping 276.98 per cent from N2.58 billion in the preceding quarter, Q1’23.

The total losses to the incident amounted to N5.79 billion during the period, representing a staggering 1,125 per cent rise compared with N472 million lost in the first quarter (Q1’23).

The report read in part: “During the second quarter of 2023, there were 11,679 reported cases, showing a 6.96 per cent decrease compared to the 12,553 cases in the first quarter.

However, the data indicates a significant increase in the total amount involved in fraud cases. The amount rose from N2.59 billion in the previous quarter to N9.75 billion in Q2, representing a 276.98 per cent increase.

“Additionally, the amount lost also saw a substantial rise, increasing from N472 million in Q1 2023 to N5.79 billion in Q2 2023, which corresponds to an 1125.03 per cent increase. This increase might be attributed to the fact that banks were liable for the losses incurred and had to make refunds to customers.”

It further stated: “In Q2 2023, there was a 6.40 percent decrease in outsider involvement in fraud cases, with the number dropping from 12,351 cases in the previous quarter to 11,561 cases. However, staff involvement in fraud increased by 22.22 per cent, rising from 72 cases in Q1 2023 to 88 cases in Q2 2023.

Conversely, the number of terminated appointments related to fraudulent activities decreased by 26.67 per cent, going from 15 cases in Q1 2023 to 11 cases in Q2 2023.”

The consequences of these heists are far-reaching, affecting not only Nigeria’s economy but also its citizens who rely on the stability of the banking system to safeguard their livelihoods.

Families, businesses, and government organizations have all fallen victim to these cyberattacks, resulting in personal bankruptcy, job losses, and failed investments. The victims are left in utter despair, their pleas for justice falling on deaf ears.

Many Nigerians said after the criminal activities on their bank accounts, they have not been able to recover after efforts to call the bank and security agencies to action proved abortive.

In like manner, many have reported unauthorized transactions, loss of savings, and an overwhelming sense of insecurity as they navigate the digital landscape of modern banking.

Nigerians tell experiences

Mrs. Chika Okonkwo, a small business owner in Abuja, shared her harrowing experience, stating, “I woke up one day to find that my entire life savings had disappeared from my bank account. It was devastating.

The bank claimed it was due to a cyber attack, but how could this happen in this day and age? We deserve better security measures to protect our hard-earned money.”

A similar sentiment was echoed by Mr. Tunde Adekunle, a civil servant, who stated, “The recent wave of cyberattacks on Nigerian banks has eroded trust in our banking system.

We depend on these institutions to safeguard our finances, and their failure to do so is unacceptable. The government and regulatory bodies must take concrete steps to strengthen security protocols and hold banks accountable for any lapses.”

Another small business owner, Abigail Harry, said: “Somehow, I misplaced my ATM at the market. I returned very late from the market at about past 4pm. So, when I got home I discovered that the ATM couldn’t be found so I decided that the following day,

I would go to the bank to get another one. Before then, I had called my bank and told them about the issue and promised that the ATM had been blocked.

“To my greatest surprise when I was getting ready to go to bed, I received a debit alert of 500,000 naira, I almost had a heart attack. I just began to cry.

In a short time again I got a debit alert of 200 thousand naira, I was restless all through the night. In the morning I got a debit alert of 50 thousand naira three times, I rushed to the bank and if you see how reluctant those people were. I cried and begged but nothing was done.

I was always visiting the bank but they kept turning me around. I even went to the police but nothing good came out of it.”

Also narrating, a father of three children, Obinma Ugo, said: “Life has been hell since April. Things just changed suddenly after all my money which was about 3million was wiped away from my account.

I misplaced my ATM and before I knew it, money started leaving. I was dumbstruck. This was happening even after I had blocked the ATM. All efforts to get the bank to action yielded no results.”

Poor Security Measures

Experts spawning economists, financial analysts, bankers, and lecturers have expressed their deep worries about the country’s poorly secured banking system.

They said that the perpetrators of these audacious crimes have deftly capitalized on the inadequacies and antiquated technology that wields a stranglehold on Nigeria’s banking system.

They voiced their apprehensions regarding the inadequate protection against cyber threats in Nigeria’s banking system.

An economist and Founder of Nigeria Today, NT, Dr. Adebola Williams, emphasized the importance of proactive measures against cyber threats.

He asserted: “The banking sector is the backbone of our economy. Any weakness or breach in the system can have severe consequences.

It is crucial for banks to invest in cutting-edge technology, collaborate with cybersecurity experts, and constantly update their security frameworks to stay ahead of potential attacks.”

Beyond cyber threats, experts also highlight other critical weaknesses in Nigeria’s banking system, such as fraudulent activities and weak risk management practices.

Instances of internal fraud, where bank employees collude with external actors, have been on the rise in recent years, jeopardizing customers’ trust and the sector’s integrity.

Dr. Fatima Mohammed, a lecturer at City College Abuja emphasized the need for comprehensive risk management strategies.

She stated: “The banking system must prioritize the detection and prevention of fraudulent activities to maintain the confidence of customers and investors.

This requires strengthening internal control mechanisms, introducing rigorous background checks, and implementing regular audits to identify potential loopholes.”

Responding to the concerns, Mr. Victor Gideon, a financial analyst, said: “The pervasive insecurity in Nigeria’s banking system and the subsequent lack of investigations and arrests have left millions of Nigerians reeling in despair.

“The nation’s economy suffers as hard-earned funds are siphoned away, while citizens face tremendous financial and emotional burdens. But amidst this turmoil, there is hope.

The collective voice of Nigerians demanding justice and a secure banking system grows stronger every day, putting pressure on authorities and financial institutions to respond and enact meaningful change.

“Only through concerted efforts and reforms can Nigeria hope to regain the confidence and trust of its citizens and create a banking system that safeguards the wealth and aspirations of its people.”

They, however, warned that Nigerian banks must adopt robust cybersecurity measures, including continuous monitoring, regular security audits, and employee training, to safeguard customers’ financial information.

Demand for change

Nigerians across the country including Civil Society Organisations, CSOs, are calling for immediate and thorough investigations into these crimes, urging the government and financial institutions to strengthen security measures and invest in modern technology.

A school proprietress, Precious Foundational School, Precious Ukanwa, said: “If Government and Banks can not protect our monies from criminals, they should shut down. It’s about time! We can’t keep living in fear of our hard-earned money being stolen.

The government and banks need to prioritize strengthening security measures to ensure our accounts are safe.
“I can’t believe we have to beg for basic security measures.

The Federal government and banks are responsible for protecting our money – it’s their job! We demand immediate action to stop theft and restore trust in our banking system.”

Also speaking, Founder Coalition of Good Governance Ebube Henry, said: “The increasing cases of theft are alarming and unacceptable. We need a robust security system in place to prevent unauthorized access to our accounts. This is not just a plea, it’s a necessity for our financial security!”

“As if economic challenges weren’t enough, we now have to worry about theft as well. We need the Federal government to step up and work closely with banks to enhance fraud prevention mechanisms. Our financial stability depends on it! Nigerians are tired of being victims of financial crimes.

“The government and banks must invest in advanced technologies and training programs to safeguard our accounts. It’s high time we see concrete action to protect our money.

We can’t keep relying on outdated security measures while thieves continue to find new ways to access our funds. It’s time for the Federal government and banks to collaborate and implement advanced security systems that can effectively deter theft and ensure the safety of our finances.”

An Abuja-based corps member, Ebuka Ukanwa, said: “The vulnerable state of our banking security is hurting the economy and hindering progress. The Federal government and banks need to urgently address this issue by allocating resources, upgrading infrastructure, and implementing stricter security measures.

“Nigerian citizens deserve peace of mind when it comes to their finances. We urge the government and banks to proactively invest in cybersecurity infrastructure, conduct regular audits, and establish stronger protocols to prevent theft. It’s frustrating to see the same patterns of theft repeating over and over.

The Federal government and banks need to adopt a proactive approach to address this issue once and for all. Our financial well-being depends on it, and we demand immediate action.”

A financial analyst, Enoch Uche, said: “I must emphasize the importance of robust cybersecurity systems. Banks need to stay ahead of ever-evolving threats by continually upgrading their security infrastructure. With the increasing use of digital banking and online transactions, this becomes even more crucial.

Utilizing advanced encryption and authentication techniques, as well as implementing multi-factor authentication, will significantly enhance the security of customers’ money.

“Additionally, banks should develop comprehensive fraud detection mechanisms. Utilizing artificial intelligence and machine learning algorithms can assist in identifying suspicious activities and preventing fraudulent transactions.

Regular monitoring of customer accounts and immediate reporting of any irregularities is essential in maintaining the trust and confidence of banking customers.

“Furthermore, educating customers about potential risks and measures to protect their money is vital. Banks should offer comprehensive financial literacy programs to help customers understand common scams and how to safeguard their accounts.

Educating individuals on password security, phishing attacks, and other digital threats will empower them to be proactive in protecting their money.”