The recent reported increase in the number of fraud and robbery cases in Nigerian banks is worrisome. According to statistics from the Central Bank of Nigeria (CBN) and Nigeria Deposit Insurance Corporation (NDIC), such fraudulent practices rose from 16,762 recorded cases in the first half of 2017 to 20,768 in the corresponding period of 2018. More worrisome is the involvement of bank workers in most of the financial malfeasance cases.
Also, unsuccessful attempted fraud and forgery cases within the same period of six months, according to the report, stood at N7.99billion. These cases included armed robbery attacks, sometimes aided by insider information, fraudulent Automated Teller Machine (ATM) withdrawals, illegal funds transfer, pilfering of cash, outright stealing, suppression and conversion of customers’ deposits.
It has been predicted that such cases for the 2019 financial year might surpass those for 2017 and 2018. In its own report, the NDIC said the amount involved in the fraudulent activities increased from the N8.68billion reported in 2016 to N12.01billion in 2017. We deplore the rising cases of fraudulent practices in the banks and also condemn the involvement of some bank workers in the despicable conduct. Since some of the workers in the banks connive with criminals to perpetrate such heinous financial crimes, we urge the banks to do thorough background checks on people before employing them. The police and the Department of State Security can help the banks in doing such exercise.
The recent bursting of a syndicate by the Lagos State Rapid Response Squad over a failed transfer of N25 million from a new generation bank and $220,000 from an international account shows the enormity of the problem. Preliminary investigations showed that the syndicate worked with some bank workers. The police report revealed that some of the fraudsters collaborate with workers in the banks to obtain relevant information that will enable them perpetrate the crimes using cloned SIM cards and Bank Verification Numbers (BVN) of their victims for online transfers. There is no doubt that the advent of internet has made such fraudulent activities easy to perpetrate. For instance, a staff of a bank was recently arrested by the operatives of the Economic and Financial Crimes Commission (EFCC), Benin Zone, over alleged stealing of N18.9 million from his employer. The suspect reportedly perpetrated the crime using ATM gallery keys entrusted to his care. His arrest was made possible by information from the bank’s CCTV. Similar cases of fraudulent practices have been reported across the country using forged Treasury Bills Certificate as well as obtaining loan facility using a customer’s fixed deposit as collateral.
These are, indeed, worrisome trends in the banking industry that call for concerted efforts by the CBN, the banks and the workers to curb. There is urgent need for banks to invest in new technological security systems to secure customers’ deposits. It is also apparent that these fraudulent practices have become possible because banks’ systems might have been compromised by unscrupulous employees. We urge the banks to train and retrain those that operate these systems so that they can be ahead of the fraudsters and rise to the challenge. As those that they deal more directly with money than any other professional group, bank workers must be professional and upright in the discharge of their duties. Therefore, the increase in fraud and robbery cases in banks will no longer be tolerated. Available information showed that the number of fraud cases attributed to insider abuse increased exponentially from 16,751 in 2016 to 26,132 in 2017. The amount of losses rose to N3.3billion from the N8.68billion reported in 2016. The figure increased to N2.37billion in 2017. In 2015, fraud and forgeries reported to have been facilitated by insiders increased by 36.42 per cent, representing 12,279 cases. ATM- related cases constituted most of the cases.
We urge the banks to collaborate with the Bankers Committee to address the problems of conflict of interest and other unethical conducts of insider abuse. Banks should investigate all corruption cases, especially complaints on tampering of high-profile customers’ deposits. Beyond that, all factors that breed corruption in the banking industry must be addressed. These include poor corporate governance, lack of effective sanctions against offenders among others.