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NDIC Investigates Banks As Insider Fraud Rises By 38%



With fraud cases perpetrated by bankers increasing by 38 per cent, the Nigeria Deposit Insurance Corporation (NDIC) has said it will start investigating some banks for the inadequate rendition of returns to the Corporation on insider fraud.

The NDIC, in a statement issued yesterday, said some banks had under reported instances of fraud, forgeries and cases involving members of their staff who were either dismissed or had their appointments terminated on grounds of fraudulent activities.

It noted that an off-site supervision of the deposit money banks in the country revealed that the number of fraud cases attributed to internal abuse by staff of banks increased by 38.53 per cent from 231 in 2016, to 320 in 2017, much above the figure reported for the previous year.

on 35 and 36 of the NDIC Act No. 16 of 2006 (as amended) requires all deposit money banks to submit monthly information/returns on fraud and forgeries to the Corporation.

According to the NDIC report, the supervision relied on a total of 286 responses received from 26 banks during the period. It noted: “There were 22 nil monthly responses from the banks as at year ended 31st December, 2017.

“The 286 responses received from banks in 2017 cited 26,182 cases of fraud and forgeries which is 56.30 per cent higher compared to 16,751 cases reported in 2016. Similarly, the amount involved in the fraudulent activities documented increased by N3.33 billion from the N8.68 billion reported in 2016 to N12.01 billion in 2017 or 38 per cent.

“However, the Expected/Actual loss slightly-decreased by N24.42 million or 1.03 per cent from N2.39 billion in 2016 to N2.37 billion in 2017. Internet/Online-banking and ATM/Card-related fraud-types reported constituted 24,266 or 92.68 per cent of all the reported cases, resulting in N1.51 billion or 63.66 per cent of losses in the Industry in 2017”.

The report also documented other miscellaneous crimes such as fraudulent transfers/withdrawals, cash suppression, unauthorized credits, fraudulent conversion of cheques, diversion of customer deposits, diversion of bank charges, presentation of forged or stolen-cheques, among others.

The 22 Licensed Commercial Banks and 4 Merchant banks rendered 286 Returns on Dismissed/Terminated staff as a result of fraud and forgeries during the year under review.

Out of the 26,182 fraud cases reported by the 26 Licensed Banks, 320 cases were attributable to internal collaboration by bank staff. A total of 320 bank employees had their appointments either terminated or were summarily dismissed in 2017, as against 231 in 2016.

The report further stated, “That represented an increase of 38.53 per cent in the total number of fraud cases reported in 2017. However, the losses arising from the reported cases decreased from N760 million in 2016 to N682 million or about 11.43 per cent in 2017.

“The Corporation attributes the improvement to additional internal control measures adopted by the banks in the wake of the proactive corrective measures taken to ensure their compliance with good corporate governance principles.

“However, despite the Fidelity Insurance Cover taken by banks to address fraud perpetrated by staff, there is still need for the banks to further enhance their internal control and security measures, as the rising trend of E-Channels (Online banking & Card-related) fraud and forgeries in the Industry remains a serious cause for concern to the Corporation”.



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