• Wednesday, November 29, 2023
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Nigeria’s banking sector loses ₦9.5 billion to electronic fraud

Nigeria’s banking sector loses ₦9.5 billion to electronic fraud

The Nigeria Inter-Bank Settlement System (NIBSS) reported a loss of approximately N9.5 billion in the banking sector in 2023. Premier Owoih, the Managing Director of NIBSS, disclosed this during the third-quarter meeting of the Nigeria Electronic Fraud Forum (NeFF) held in Lagos.

Addressing the escalating issue of electronic fraud within the nation’s financial landscape, particularly in the realm of online gaming, Temidayo Adekanye, NIBSS Chief Risk Officer, expressed grave concerns. He highlighted the role of the Central Bank of Nigeria’s (CBN) cashless strategy in contributing to the surge of electronic fraud within the banking sector.

Adekanye said, “Recently, we had the cashless policies from CBN, which was incurring a dramatic increase in the volume of transactions in the industry which variably was the impact of the volume of fraud in the industry itself.”

He further revealed, “The increased efficiency has also meant that fraud has dramatically increased across the industry. For Q1 2023, the total fraud reported through the industry forum portal was at N5.1 billion.”

Drawing attention to the gravity of the situation, Adekanye provided a comparative analysis of e-fraud data spanning several years, underscoring the rapid escalation of the issue.

Read also: Nigerian, associates jailed in U.S for $2.6M fraud

“In the MD’s words, ‘For fraud trends over the last five years, in 2019, we’re looking at about N3 billion and currently 2023, we are looking at about N9.5 billion to date. Fraud losses have increased dramatically over the last five years.”

Continuing, Adekanye said, “So, as you can see also from the current perspective, from January to July 2023, there has been a slight jump between June and July, a 39 percent increase with 8,649 with the actual fraud losses in July 2023, we’re looking at N1.2 billion which is a 54 percent increase over the period. Now as you can see from January in general, we recorded about N2.7 billion in actual fraud losses.”

Identifying the key tools employed by cybercriminals, Adekanye pointed to betting platforms, wallet accounts, and point-of-sale (POS) agents as the most efficient avenues for their activities, often operating in ways that are difficult to trace, BusinessInsider reported.

Given the nationwide e-fraud recovery rate of approximately 5 percent, he emphasised the urgency of enhancing authentication and identification protocols for POS agents, cryptocurrency accounts, sports betting accounts, and other susceptible entities.

Also, Musa Jimoh, the NeFF Chair and the Director of Payment System Management at the CBN, stressed the need to combat cybercriminals due to their capacity to disrupt the entire financial system.

Read also: U.S SEC chair says crypto still speculative, rife with fraud

Jimoh advocated for heightened awareness and education, stating that “as more individuals engage with the financial system and transaction volumes surge, the opportunities for exploitation by criminals also increase.”