Curbing fraud/robbery cases in banks

The rising cases of fraud and armed robbery in the banking sector must be checked. Recent statistics by the Central Bank of Nigeria (CBN) revealed that losses recorded by commercial banks from armed robbery cases and other criminal activities by members of staff and others rose to N12 billion in six months, between January and June, 2018. The amount is N6.48 billion higher than what was recorded in 2017. This calls for urgent tightening of internal controls of the banks as well as strict supervision by the regulatory authorities.

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According to the Financial Stability Report (FSR) of the CBN, unsuccessful attempted fraud and forgery cases within the same period of six months stood at N7.99 billion. The apex bank which described the increase as staggering said that reported cases in the first half of the financial year were 20,768 as against 16,762 in the corresponding period of 2017. These cases included armed robbery attacks and fraudulent Automated Teller Machine withdrawals, illegal funds transfer, pilfering of cash, stealing, suppression and conversion of customers’ deposits.

Undoubtedly, these are worrisome trends in the banking industry. Banks should invest more in technology and ensure that their technical systems are protected and secure. It appears that some of the technical systems of the banks have been compromised by unscrupulous members of staff and non-staff members.

Some reported fraud cases are made possible by banks’ personnel. Last week, the Police authorities in Abuja paraded a former bank staff that fraudulently broke into the bank’s ATM and carted away N24 million. The suspect claimed that he committed the fraud because he was dismissed by his employers without payment of his entitlements.

We urge the banks to address the rising security challenges in the sector. The success of any bank depends partly on its customers’ confidence. Bank workers should always bear in mind that they deal more directly with money than any other professional group.

The rise in fraud and armed robbery cases in the banks is alarming. For instance, in 2016 and 2017 financial year, the value of fraudulent activities in the banking industry rose to N4.12 billion and N5.52 billion respectively. Before the CBN report, the Nigeria Deposit Insurance Corporation (NDIC) had decried the rising fraudulent activities in the banking sector, in particular, the ones assisted by or perpetrated by bank staff. The number of fraud cases attributed to insider abuse increased to 320 in 2017, from 231 in 2016. The NDIC report relied on 286 responses received from 26 banks during the period. According to the report, there were 26,132 cases of fraud and forgeries from the 286 responses received from the banks in 2017.

This represents 56.30 per cent compared to the 16,751cases reported in 2016. The amount of losses in the fraudulent activities documented rose to N3.3 billion from the N8.68 billion reported in 2016. The figure increased to N2.37 billion last year. Also, in 2015, the reported cases of fraud and forgeries mainly through insider facilitation, increased by 36.42 percent, representing 12,279 cases. In all the fraud cases, ATM-related fraud is said to constitute most of the losses. This calls for increased vigilance and improvement in regulatory/supervisory oversight.

Based on the CBN and NDIC reports, the banks should address these problems forthwith. The Bankers Committee should be of immense assistance in this regard.

Conflict of interest and unethical conducts often arise when employees have inside information to access customers’ deposits. Banks should regularly conduct checks on high profile customers’ deposits based on complaints. This measure will be effective in checking bank frauds.

The CBN and NDIC should frontally address corruption in the banks. There should no room for unethical practices in the sector. The regulatory authorities must diligently supervise the banks.