According to a fraud statistics contained in the Nigerian Electronic Fraud Report, prepared by the Banking and Systems Payment Department of the Central Bank of Nigeria (CBN), Nigerian banks lost some N16.5 billion in 31,736 fraud cases between January 2014 and December 2016.
The frauds were perpetrated through various payment channels in the banking sector such as Across the Counter, Automated Teller Machines (ATMs), 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. The volume of fraud cases rose by 635.3 per cent from 1,461 incidents in 2014 to 10,743 in 2015 and between 2015 and 2016 the it rose by 81.8 per cent from 10,743 to 19,532 cases. The incidence of fraud in these banks rose by 1,236 per cent during the three-year period .
In monetary terms, the analysis showed that while there had been an increase in fraud volume in the banks, the rate of increase could not be achieved financially. The report said that in 2014, out of the total transaction value of N43.85tn in the banking sector, about N7.75bn was fraud-related.
However, 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 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. “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”, the report stated.
In terms of payment channels from which the frauds were perpetrated 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 further explained that , ATM and web channels have consistently appeared in the top three channels used to perpetrate fraudulent transactions for three years running, which calls for serious attention in the industry as it can be deduced that ATM channels have 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 around these days, which ride on mobile platforms.
Commenting on the increasing rate of frauds in the banking system,some financial analysts called on the CBN and the Nigerian Deposit Insurance Corporation(NDIC) 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.