Nigerian bank branches lost N5.5bn to fraud highest in 5yrs

Nigeria’s bank branch sector, in the second quarter (2) of 2023 reported an N5.5 billion loss, accounting for its highest loss to fraud activities in five (5) years, a recent report on fraud and forgery in Nigerian banks shows.

This amount reflects a 1,275 percent increase from the N405 million lost to fraudulent activities by the bank branch sector reported in the second quarter of 2018.

According to the report published by the Financial Institutions Training Centre (FITC), a total of 71 returns on cases of fraud and forgery were received from 24 banks in Q2.

Data reveals a significant 276.9 percent increase in the total amount involved in fraud cases in Q2’23 compared to the first quarter of 2023, with a total sum of N9.75 billion, while the amount lost in the process was N5.79 billion in Q2.

FITC disclosed that these deposit money institutions reported the termination of eleven (11) employees due to their involvement in fraudulent activities.

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Experts say employees within the bank who have access to sensitive information and transaction systems can sometimes collude with external fraudsters or carry out fraudulent activities themselves. This can involve unauthorized transactions, forging documents, or manipulating accounts.

The financial body noted that “Considering the increasing instances of employees engaging in fraudulent activities, banks should exercise heightened vigilance when hiring new staff or contracting outsourcing firms for employment purposes.” it said.

To address these issues, Nigerian banks need to invest in robust cybersecurity measures, implement effective fraud detection systems, enhance customer education efforts, strengthen regulatory oversight, and promote a culture of ethics and transparency within their institutions.

However, FITC recommends that reward and acknowledgement of employees who have demonstrated exceptional integrity in situations where they could have acted otherwise should be encouraged.

“Recognising and rewarding such individuals sends a positive message to other staff members, motivating them to strive for recognition and rewards through their own ethical conduct, it said.