10 August 2018

Nigeria: Banks' Customers Lose Fortunes As Insiders Mine Data for Fraudsters

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.

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.

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.


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