- 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 our correspondent 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.
The report added, “Apparently, ATM and web channels have consistently appeared in the top three channels used to perpetrate fraudulent transactions for three years running.
“This is something we have to look at collectively in the industry as it can be deduced that ATM channel has been the focal point for fraudsters in the last three years.
“The emergence of mobile channel in this category cannot be extraneous to the various financial products and services we have these days, which ride on mobile platforms.”
Speaking on the increasing rate of frauds in the banking system, financial analysts called on the CBN and the Nigerian Deposit Insurance Corporation to step up their regulatory oversights, adding that sensitive positions in banks should not be given to those who were not members of relevant professional bodies.
Those that spoke to our correspondent in separate telephone interviews are the Head, Banking and Finance Department, Nasarawa State University, Keffi, Uche Uwaleke; and a former Managing Director Unity Bank Plc, Mr. Rislanudeen Muhammed.
Uwaleke, an Associate Professor of Finance, said the value system in the country, which celebrates wealth with no questions asked as to the source, needed to be changed.
He said, “There is also a justice system that is very slow and, therefore, fails to act as a deterrent to fraud. Equally are lapses in internal control systems of banks, which are circumvented by fraudulent staff sometimes with the connivance of auditors.
“Furthermore, the flip side of electronic banking is the level of sophistication associated with bank frauds and the specialist skills required in detecting such. So, it is not a surprise that the level of bank frauds is on the rise. Worse still, banking in Nigeria has become an all-comers affair where anybody who can bring deposits is employed.”
As a way forward, he suggested that the control systems in banks should be strengthened.
“Only professionals who belong to bodies that self-regulate their members, such as the Chartered Institute of Bankers of Nigeria, should be assigned to sensitive positions in the banks,” he added.
Muhammed said since bank frauds were a threat to the stability of the financial sector, both the CBN and the NDIC should step up strategies for tackling the menace.
He said, “Recent elevated risk in fraud cases will naturally impact negatively on the individual bank’s loan loss provision, other known losses as well as profitability and capital adequacy ratios.
“The risk of under capitalisation will also impact negatively on solvency ratios. This underscores the imperative for strengthening internal control as well as risk management divisions in banks.
“The Central Bank of Nigeria should ensure compliance by banks of having internal control officers in each branch. This ensures that fraud cases are dealt with timely and proactively rather than reactively or after the fact.”
He stated that in situations where fraud cases were at the corporate level, the chief internal control officers were duty bound to report directly to the regulators as provided by the law.
NAIC Pays N1.7bn Claims to Farmers
The Nigerian Agricultural Insurance Corporation (NAIC) said it paid a total of N1.7 billion claims to over 5,000 farmers in the past two years.
NAIC, which is the only federal government owned insurance company authorised to offer agric insurance services to farmers at subsidised rate, said a breakdown of the paid claims showed that it paid N856 million to insured farmers in 2019 and N848 million in 2020.
Commenting on the development, NAIC Managing Director, Mrs. Folashade Joseph, said the claims were paid to the farmers to cover losses incurred in the course of doing business.
Joseph, enjoined agricultural investors and lending institutions to continue to partner NAIC by taking agricultural insurance cover that will enable them remain firm in business despite unforeseen circumstances from weather conditions and other risks in order to realise the food security agenda of President Muhammadu Buhari.
She said the above-mentioned amount was shared among five million farmers who suffered various setbacks in their farms as a result of natural course.
According to her, the NAIC Agric Insurance Scheme was launched in 1987 by federal government to restore the confidence and productivity of Nigerian farmers who suffered losses as a result of natural disaster such as flood, drought, pest and diseases.
The NAIC boss explained that the essence of the sensitisation campaign embarked by the corporation was to let the farmers know and understand exactly what NAIC does, the importance of insurance, and make them understand how insurance works, how they can access NAIC products and services, how to process their claims, as well as what insurance stands to do for them.
“Agribusiness is evolving fast and so many risks are being thrown up, many new participants are coming into the business of agriculture, and the risks are on the increase if you look at them across the value chain, there is no so many participants so we need to keep sensitising the farmers and let them know we are serving them, and we need to know from them how to serve them,” she explained.
Speaking further, she said, “our assurance to farmers is that when they are insured and they suffer losses covered by any of the policies they purchased, including natural disasters and whatever, they will get paid for their losses, and that is the purpose of insurance and setting up NAIC.
“Our motor is ‘Plowing the Farmer Back to Business, Plowing the Farmers into Prosperity’, and we settle claims.”
She said NAIC currently deals with thousands of farmers (Small, Medium, and Large scale farmers) across the country, adding that the corporation serves farmers with investment as little as N100, 000, and at the same time serves multinational farmers.
UBA Organises Capacity Building Forum
As part of its commitment to support the growth and sustainability of micro, small and medium-scale enterprises (MSME) in the continent, the United Bank for Africa (UBA) Plc, is set to organise the next edition of its UBA Business Series.
The UBA Business Series which is a monthly event, is an MSME Workshop as well as a capacity building initiative of the bank where business leaders and professionals share well-researched insights on best practices for running successful businesses, especially in the face of the difficult operating environment that dominates the African business landscape.
Through this initiative, UBA has been assisting with essential tips to help businesses re-examine their models and strategies and ensure that they stay afloat and remain thriving, a statement from the bank explained.
The topic for the next edition of the series is, “Managing Performance for Business Growth,” and it will be held today, via Microsoft Teams.
At this session, the Managing Director, Secure ID Limited, Mrs Kofo Akinkugbe, will be sharing useful tips and insights on the key strategies of performance management to boost business growth.
Akinkugbe is the founder of SecureID Nigeria, a MasterCard, VISA and Verve certified Smartcard Personalization Bureau and Digital Technology company. She currently serves as the Managing Director/CEO, Secure Card Manufacturing, – a Smartcard manufacturing plant producing high security identity cards and documents for the Banking, Telecoms and Public sectors across Africa and beyond.
UBA’s Head, SME Banking, Sampson Aneke said of Akinkugbe, “with her vast experience garnered over the years from various sectors, she will help business owners understand how performance management strategies can be effectively implemented to ensure business growth.”
He emphasised UBA’s commitment and deep passion for small businesses, which according to him, remains the engine of any developing economy adding, “We know small businesses are the backbone of the economy in every country. In many climes, businesses with fewer than 100 employees account for 98.2 per cent of all businesses. This no doubt captures the importance of SMEs to a thriving economy which is why UBA is committed to seeing them flourish.”
CBN to Extend Credit Risk Management System to OFIs
In an effort to curb growing bad debt, the Central Bank of Nigeria has said it will extend its Credit Risk Management System to Other Financial Institutions (OFIs) operating in Nigeria to protect them from bad debtors.
According to the apex bank, this is important following the successful implementation of the credit risk system in other lending institutions operating in Nigeria.
The bank disclosed this in a circular titled ‘Credit Risk Management System: Commencement of enrolment of all Development Finance Institutions, Microfinance Banks, Primary Mortgage Banks and Finance Companies’ and signed by Kelvin Amugo, the Director, Financial Policy and Regulation Department, on Monday.
In part, the circular read, “As part of efforts to promote a safe and sound financial system in Nigeria, the CBN introduced the CRMS to improve credit risk management in commercial, merchant and non-interest banks as well as to prevent predatory borrowers from undermining the banking system.
“With the successful implementation of the CRMS in deposit money banks, it has become expedient to commence the enrolment of Other Financial Institutions on the CTMS platform.
“Accordingly, all DFIs, MfBs, PMBs and FCs are required to report all credit facilities (principal and interest) to the CRMs and to update same on monthly basis.
“OFIs shall note the Bank Verification Numbers and Tax Identification Numbers are the only basis for regulatory renditions”.
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