If lenders and industry authorities don’t take immediate action, staff involvement in bank fraud incidents will continue to rise, delivering a terrifying message about the unguaranteed safety of depositors’ money.
It is no longer a surprise that the use of electronic payment systems as a practical method of payment has increased the frequency of cyberattacks and e-fraud in Nigerian banks.
However, current information suggests that a sizable portion of these illegal activities occurring in banks are either carried out or enabled by insiders, which has increased customer apprehension.
According to a recent study by the Financial Institutions Training Centre (FITC), there was a rise in bank employee fraud instances, going from 38 cases in Q4 2022 to 72 cases in Q1 2023.
According to the report, staff engagement grew by 89.47 percent, from 38 cases in Q4 2022 to 72 cases in Q1 2023. In addition, there were 124 incidents that were unspecified and six cases of collaboration.
Additionally, it was highlighted that deposit money institutions reported that 15 workers were fired in Q1 2023 as a result of their engagement in fraudulent activities, which is a 25% decrease from the number recorded in Q4 2022, when 12 bank employees were fired for same reasons.
Three former First Bank of Nigeria employees were being tried for attempted fraud before the Lagos State Special Offences Court in Ikeja, according to reports from June 2022.
The Economic and Financial Crime Commission (EFCC) arraigned the defendants, according to The Punch, for allegedly attempting to steal N20 billion from the bank. They allegedly planned to hack the bank’s server to provide a syndicate access, however on March 6, 2021, the EFCC arrested them as a result of an intelligence report.
The Zone 2 Police Command in Lagos State announced the arrest of two members of a group connected to the hacking of no less than 1000 bank accounts in Nigeria at the beginning of this month.
A petition from the United Bank for Africa (UBA) led to the arrest of the suspects at their hideout in Ijebu Ode, Ogun State, according to the command’s spokeswoman, SP Hauwa Idris-Adamu. The culprits were known for hacking into local banks.
The declaration stated: “On May 8, 2023, United Bank for Africa petitioned the Assistant Inspector General of Police stating that there are some syndicates that specialize in internet fraud of various banks in Nigeria, particularly United Bank for Africa, in which they hack into customers’ accounts and move their money.
“In response to the petition, the AIG dispatched a team of detectives from the Zonal Monitoring Unit. Using cutting-edge equipment, they sprang into action and located the two suspects, Yusuf Ademola, 40, and Adesina Abiodun, 50, at their hiding place in Ijebu Ode, Ogun State.
The suspects admitted to the crime, admitting that they operate numerous syndicates throughout Nigeria and that they utilize software to hack into their clients’ accounts and steal their money secretly from whichever bank they choose. The way these fraudsters operate, though, is to have the bank alert and phone number associated with a customer’s BVN for quick money transfers.
fraud wave
According to a report by the Nigeria Inter-Bank Settlement System (NIBSS), Nigerian banks lost N3.5 billion between July and September 2020 due to fraud-related incidents, a 534 percent rise over the same period in 2019, when it was N552 million.
According to the Industry Fraud Report, web transactions accounted for the majority of fraudulent instances (35.5% of all cases), while phone transactions resulted in a loss of N410 million (11.7%).
The NIBSS reports that the online and mobile media have become feasible platforms for exponential fraudulent gains since the year 2020.
But according to the most recent FITC data, fraud cost Nigerian bank customers N472 million in the first quarter of 2023. Additionally, it was revealed that 12,553 fraud incidents in total were reported throughout this time.
In comparison to the losses caused by fraudulent banking operations in Q4, 2022, the report revealed a decrease in losses. According to FITC, fraudsters stole a total of N3.18 billion from financial systems in Q4 2022; this meant that losses dropped by 85.13 percent in Q1 2023.
According to analysis of their financial reports for the first half of 2022, Access Bank, Guarantee Trust (GTB), and Fidelity Bank reported 26,877 fraud instances in the first half of last year. In comparison to the 61,715 fraud instances that the banks reported between June and December 2021, this represented a 56.45% decline.
59% of Nigerians have experienced e-banking fraud recently, according to the fifth annual edition of the 2022 Consumer Digital Banking Satisfaction Index survey by Pan-African credit rating firm, Agusto & Co.
According to the study, more than half of bank customers who participated in the survey said they had experienced fraud through digital banking platforms, which they used for services like money transfers, account opening/balance checks, loan applications, bill payment, airtime and data top-up, among others.
A Twitter user (@a_ma_ka) described how more than N4 million was removed from her bank account in January of this year. She claims that on January 9, 2023, at 8:43 p.m., she received a debit alert for N3.7 million, and a few minutes later, she received another debit notice for N222,900. She received another N102,000 debit although she was still unsure of what was going on. Another Twitter user, @Fashionjuel1, reported that her life savings were lost in just 15 minutes.
being cautious
Olalekan Oladehinde, a cyber security expert, argued that although attention has been focused on sophisticated methods of defrauding customers online, some elderly and less educated people are being defrauded in simple ways, such as imposters posing as bank staff, phone theft, among other things.
Customers should always deactivate abandoned phone numbers connected to accounts, he said, either by visiting the bank branch that is the closest to them to do so or by deleting abandoned phone numbers connected to accounts.
Olugbenga Odeyemi, a senior partner at e86 Limited and an ICT expert, believes that some fraud incidents would not have occurred without the assistance of insiders in some of the banks.
He declared, “Some of the hacking and fraud cases that we have observed occurred not because of a lack of protection on the electronic banking platforms of the banks, but rather because of poverty, greed, and occasionally a lack of understanding on the part of the clients.
“Banks should educate their consumers more, in addition to increasing their platform security investment, according to the report.
“I believe that Nigerian banks should invest more funds in the wellbeing of their employees while also making necessary adjustments to their internal procedures, beginning with the hiring procedures.”
According to research, users in Nigeria now frequently use their names, initials, dates of birth, or even their phone numbers as passwords. However, hackers can quickly exploit weak passwords and gain unauthorized access to user accounts thanks to contemporary technologies.
Experts have advised using complex password combinations that are distinct from one’s initials, date of birth, or even phone number in order to safeguard oneself.
However, FITC recommended banks to further strengthen their internal control mechanisms for increased efficiency in detecting fraud activities and, ultimately, fraud prevention in a report on fraud-related transactions in the first and second quarters of 2022.
Barricading
The Central Bank of Nigeria has at least 6,047 client Bank Verification Numbers on a watch list for fraudulent transactions, according to the CBN Financial Stability June 2022 report. According to the data, the overall number of BVNs on watch lists for fraud increased by 13.09% from 5,347 in December 2021 to 6,047 in June 2022.
The CBN Director of the Payments System Management Department, Musa Jimoh, claimed recently at a meeting of the Nigeria Electronic Fraud Forum that the apex bank was able to protect the financial system and payment infrastructure against criminal activity.
We have actually reduced the incidents of fraud, he continued. We have successfully found a great deal of lost money, and we are erecting strong defenses around our banking and payment infrastructure to prevent fraud.
“The incidence of fraud has decreased by between 30% and 35%, in terms of percentage. Keep in mind that there have been successful attempts. Since there have been numerous efforts, it is clear that they have been making an effort, but many have failed and some have succeeded in making money disappear.
“And in terms of recovery, we also recovered high figures in terms of the proportion of funds recovered because of the many initiatives and procedures that have been put in place to checkmate all those scammers and to follow where the money is taken into,” the statement continued.
