Nigeria: Curbing Malpractices in Banks

Nigeria's Naira currency (file photo).
28 July 2020
editorial

The authorities could do more to contain the menace

Recent figures from the Nigerian Electronic Fraud Forum (NEFF) reveal that no fewer than 63,895 bank customers lost a total of N3.6billion to cyber fraud in 2017 and 2018. Of these figures, the mobile channel recorded the highest volume and value estimated at 11,492 and N598.8 million respectively, according to the Director of Payments System Management Department at the Central Bank of Nigeria (CBN), Sam Okojere, who chairs NEFF. To compound the challenge, the Nigeria Deposit Insurance Corporation (NDIC) has also revealed a spike in internal fraud cases perpetrated by staff of banks.

In perpetrating their internal abuse, unscrupulous bankers connive with outsiders to defraud unsuspecting customers by helping fraudsters to open fake accounts into which victims are deceived to make deposits. Mohammed Ibrahim, head, Communications and Public Affairs of the NDIC said the corporation's report was drawn from off-site supervision of the deposit money banks (DMBs). According to him, 286 responses from banks in 2017 showed that 26,182 cases of fraud and forgeries were 56.30 per cent higher than 16,751 cases reported in 2016.

Furthermore, he said the amount involved in documented fraudulent activities increased by N3.3 billion from the N8.7 billion reported in 2016 to N12 billion in 2017 or 38 per cent. Ibrahim also said internet/online-banking and ATM/card-related fraud-cases that were reported amounted to 24,266 or 92.68 per cent of all the reported cases, culminating in N1.51 billion or 63.66 per cent losses in the banking sector in 2017.

What is particularly irksome in these unwholesome acts is the level of negligence and carefree attitude by the management of the various banks involved. Ordinarily, especially in this age, you expect every bank to have a sound database with effective platforms for tracing fraudsters. But such is the level of criminal negligence that some unscrupulous bank employees now open fraudulent accounts for their cronies within the system without being detected. With that, it becomes easy for criminals masquerading as bankers to provide information to their co-conspirators, leading to online/internet fraud.

Meanwhile, one of the platforms for fighting online fraud is bank verification number (BVN). But several months after the expiration of the deadline given by Central Bank of Nigeria (CBN) to banks for the issuance of BVN, many accounts are not yet linked with any verification number. It should also be noted that the level of fraudulent cases and magnitude of losses in banks would ultimately exceed the discoveries of NDIC as the corporation's findings were only predicated on reported cases whereas there are obviously many cases of fraud that are not reported as victims mourn in silence.

Against this backdrop, the magnitude of losses recorded by bank customers, according to NDIC, to the tune of N3.3billion in 2017, should be a wake-up call to the Economic and Financial Crimes Commission (EFCC) to beam its searchlight into bank operations with a view to flushing out criminal elements and put paid to their nefarious acts. Otherwise, the government's bid to promote e-payment and entrench a robust cashless economy will fail to achieve optimal result.

If the federal government is indeed committed to fighting financial crimes, it must take decisive steps to end internal robbery going on in the banks by reading the riot acts to them that they should either clean up their systems or face adequate sanctions. The government must also have the courage to shut down any account that is not linked to BVN while giving innocent owners the platforms to apply through their banks. This will go a long way in entrenching sanity in banking operations and restore citizens' confidence in banks.

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