E-fraud is fast becoming a potent threat to the Nigerian banking industry. There is an upsurge of electronic fraud despite the many efforts to check cybercrime in the country. It has become necessary to review and streng§then existing rules and enact new laws to stem the problem.
The Central Bank of Nigeria underscored the seriousness of this matter recently when it reported a N2.19 billion loss by the country’s commercial banks to e-fraud in the 2016 fiscal year.
There were 19,531 recorded cases in 2016, compared with 10,743 in 2015. This is an 82 percent increase in e-fraud cases between 2015 and 2016. The figure may even be higher.
The figure contained in the Nigeria Electronic Fraud Forum Annual Report unveiled last week by the CBN Governor, Godwin Emefiele, during a stakeholders’ workshop on cybercrime, showed different segments of the banks where the frauds were committed, and the value of losses recorded.
A breakdown revealed that across the counter transactions accounted for the highest with a total value of N511.07 million. This was followed by Automated Teller Machine (ATM) transactions with N464.5m; Internet banking N320.66m and mobile banking transactions, N235.17m. Other losses came from e-commerce transactions, N132.25m; web transactions, N83.77m; cheques, N4.55m; kiosks, N10.19m; and others, N190.97m.
The report noted that, “based on trend and human perception, it is believed that fraud rates increase towards the end of the year due to festivities…and the need for people to get more money.” Nonetheless, the report stated that fraud can happen at any time, and therefore, called for “preventive and detective strategies”.
From all indications, the extant preventive and detective strategies were not sufficient to prevent the e-fraud cases. For instance, between 2000 and 2014, Nigerian banks lost a hefty N199bn, largely due to inappropriate and reckless management of customers’ data, according to a security assessment carried out by Easy Solution Limited, a global e-fraud protection firm.
The report, which was released in 2015, also said that e-fraudsters had invaded the “Nigerian banking environment, deploying over 185 fake mobile applications on websites of 15 banks, with which they are extracting customers’ personal and financial information with intent to steal.”
It is unclear if the appropriate authorities in the banking industry took adequate measures in response to this alert. The report further revealed that the institutions would face what it called “defacement attacks” on their websites. Other methods of attacks, the report disclosed, would include e-mails spamming, targeting both banks’ and customers’ e-mails with the intent to steal financial data.
Also, in February, 2015, Deloitte warned that phishing and insider dealings continue to pose the biggest cyber threats to the Nigerian banking industry, especially as crude oil prices continue to fall in the global market. In addition, the Nigeria Interbank Settlement System (NIBSS) e-payment Fraud Landscape Report once reported an 85 percent success in fraud attempts, identifying ATM transactions as the most vulnerable to e-fraud. The report, which was released in May, 2015, was likely not given much attention. There is no denying the serious threats that these developments pose to the stability of our banking sector. It is, therefore, high time the banks and the regulatory authorities began to take warnings such as the ones issued on e-fraud seriously, and take necessary measures to avert it.
Only recently, internet broadband service providers warned bank customers that app stores are full of fake apps claiming to come from banks, and that once a customer downloads and enters his or her financial information, including credit/debit cards details and personal identity number (PIN), he or she may a victim of e-fraudsters .
Though the coming of e-banking has made it possible to conduct financial transactions online with much ease, especially in this era of cashless policy, it has been subjected to abuse, with rising incidence of cyber crimes. More enlightenment is needed on how to reduce cybercrime and e-banking fraud, which if not effectively checked, could reduce public confidence in the banking industry.
We welcome the Nigeria e-Fraud Forum (NeFF) set up by the CBN for information sharing and knowledge exchange among key stakeholders to find a proactive approach to limiting e-fraud cases. It is now necessary for the National Assembly to review the Cybercrime (Prohibition and Prevention) Act 2015 to stiffen the punishment for e-fraud.
This is because the protection of information infrastructure in the delivery of financial services is critical all over the world. Persons who attempt to compromise it should, therefore, be visited with stiff and sufficiently deterrent sanctions to discourage other like-minded persons from such criminal acts . Nothing should be left to chance.