Banks suffer fraud cases worth N16.5bn in three years

The banking sector recorded 31,736 fraud cases involving the sum of N16.5bn between January 2014 and December 2016, figures obtained by Maritime First from the Central Bank of Nigeria have revealed.

The fraud statistics are contained in the Nigerian Electronic Fraud Report, which was prepared by the Banking and Systems Payment Department of the CBN.

The frauds were perpetrated through various payment channels in the banking sector such as Across the Counter, Automated Teller Machines, cheques and electronic-commerce platforms.

Others are Internet banking, mobile banking, Point-of-Sale and web transactions.

The report stated that in the last three years, there had been more attempts in the number of fraud cases, adding that the development might be linked to the economic hardship being experienced in the country.

For instance, the report stated that the volume of fraud cases rose by 635.3 per cent from 1,461 incidents in 2014 to 10,743 in 2015.

Between 2015 and 2016, the report stated that the incidents of fraud rose by 81.8 per cent from 10,743 to 19,532 cases.

Cumulatively, the incidence of fraud rose by 1,236 per cent during the three-year period.

In monetary terms, an analysis of the report showed that while there had been an increase in fraud volume, the rate of increase could not be achieved financially.

For instance, the report stated that in 2014, out of the total transaction value of N43.85tn in the banking sector, about N7.75bn was fraud-related.

However, it noted that while the transaction volume rose from N43.85tn in 2014 to N48.93tn in 2015, the amount involved in fraud-related transactions declined by N3.38bn or 43.6 per cent from N7.75bn to N4.37bn.

Between 2015 and 2016, the report stated that while the value of financial transactions rose significantly from N48.93tn to N64.18tn, the amount of fraud involved during the period dropped marginally from N4.37bn to N4.36bn.

The report read in part, “Although, values of the year 2016 are almost same with those of 2015, the difference in its volume when compared to 2015 suggests more success in curbing fraud.

“More attempts in volume can be seen over a period of three years, and the rate is expected to increase significantly if the current recession is to be taken into consideration.

“The current economic recession has and will always drive persons deeper into fraudulent activities.”

In terms of payment channels from which the frauds were perpetrated, the report stated that in 2014, fraudulent transactions conducted through the ATM were 491 cases; Internet banking, 287 cases; and web channels, 218 cases, were the top three.

In 2015, there were 5,133 ATM fraud incidents; PoS, 1,853 cases; and web, 1,463 cases, accounting for the top three most used channels to perpetrate fraudulent transactions.

In 2016, ATM with 9,522 cases; mobile, 3,832; and web channels, 2,677, were the three most used channels.

In the meantime, reflecting   uptick in economic activities buoyed by improved   foreign exchange inflow courtesy of oil price rebound and increased foreign investment inflow occasioned by new foreign exchange policy of the Central Bank of Nigeria, CBN, investors’   fortunes on the Nigeria Stock Exchange   (NSE) soared by whopping   N2.2 trillion in the first half of the year (H1’17).