Bank Fraud Cases Soar in Nigeria, With Estimated N14 Billion Lost

In the realm of Nigeria’s financial sector, a disconcerting surge in bank fraud cases has rattled stakeholders and raised significant concerns about the country’s security of financial transactions.

Recent reports indicate an alarming spike in fraudulent activities within the banking industry, culminating in an estimated loss of approximately N14 billion over the past ten months.

This stark reality highlights the need for proactive measures to counter the escalating threat.

The issue of fraud has become so pronounced that even banking institutions, typically shrouded in secrecy, are openly acknowledging that their systems have been compromised, resulting in substantial monetary losses.

The majority of these cases have been discreetly reported to the Economic and Financial Crimes Commission (EFCC), with financial institutions opting to bypass the traditional route of alerting financial regulators.

The high likelihood of recouping lost funds through EFCC’s intervention is cited as one of the primary reasons for this choice.

In 2022, the EFCC announced a 70.5% increase in convictions, securing a total of 3,785 successful prosecutions across all its commands. This signified a 98.93% success rate in prosecution with the commission recovering substantial amounts in multiple currencies.

However, there remains a notable disparity between the number of convictions and the actual occurrences of fraud. For instance, data from the Financial Institutions Training Centre (FITC) reported 67,878 cases of fraud in just the first two quarters of 2022.

The most prevalent forms of fraud included mobile fraud, computer/web fraud, and Point of Sale (PoS) related fraud.

The situation has further deteriorated in 2023 with a considerable surge in the amount of money involved in fraud cases. The latest data indicates a significant 276.98% increase in the total amount of funds involved in these cases during the second quarter, compared to the previous quarter.

In response to this burgeoning crisis, industry experts and stakeholders are advocating for a comprehensive and multi-stakeholder approach.

There is a call for improved information sharing, expedited investigations, and secure channels for reporting fraud.

With Nigeria’s financial landscape becoming increasingly digital, stringent measures to counter these malicious activities are essential for the health and security of the nation’s financial system.

While the EFCC continues to play a pivotal role in prosecuting these fraudsters, calls for enhanced collaboration between the Central Bank of Nigeria, commercial banks, fintech companies, and law enforcement agencies are on the rise.

The goal is to develop a framework that allows easier and more efficient fraud reporting and robust consequence management to act as a deterrent to potential fraudsters.