Report Calls for Stronger AI Oversight to Curb Financial Crime

Banks, fintech companies and regulators have been urged to strengthen oversight of artificial intelligence (AI) as cybercriminals increasingly deploy the technology to perpetrate sophisticated financial crimes.

The call is contained in a new report titled The Compliance Reckoning: Regulating Financial Services in the Age of AI, released by Adhere in partnership with TechCabal.

According to the report, financial institutions must move beyond adopting AI tools and instead establish robust governance frameworks capable of detecting, preventing and responding to increasingly complex cyber threats.

It recommended continuous transaction monitoring, enhanced customer risk profiling, stronger model governance and greater collaboration among banks, fintech operators and regulators as critical measures for safeguarding Nigeria’s financial system.

The report warned that AI is rapidly transforming the nature of financial crime by enabling fraudsters to automate phishing campaigns, create convincing fake identities, bypass traditional verification systems and execute highly targeted attacks at scale.

Although Nigeria recorded a decline in reported digital payment fraud losses from N52.26 billion in 2024 to N25.85 billion in 2025, the report cautioned that the figures should not be interpreted as a reduction in risk.

It noted that while reported fraud cases dropped by about 31 per cent, overall fraud losses remain approximately 350 per cent higher than they were in 2020, suggesting that criminals are carrying out fewer but more sophisticated and higher-value attacks.

Commenting on the findings, Group Managing Director of Smartcomply, the parent company of Adhere, Gbemisola Osunrinde, said financial institutions must prioritise resilient governance structures over simply acquiring advanced technology.

“The fall in reported fraud is welcome, but it is also a warning. When reporting drops faster than fraud, the risk does not leave the system; it leaves the record. What this report shows is that the next eighteen months will be decided by architecture, not by tools,” she said.

The report observed that Nigeria’s digital payments ecosystem now processes more than 10 billion real-time transactions annually, making it one of Africa’s largest digital finance markets. However, it noted that fraud prevention capabilities have struggled to keep pace with the sector’s rapid expansion.

It also highlighted Nigeria’s weak fraud protection ranking, placing the country 110th out of 112 countries, while estimating a cybersecurity workforce shortage of about 90 per cent.

According to the report, regulators are responding by tightening compliance requirements. It noted that the Central Bank of Nigeria (CBN) introduced 17 regulatory measures over the past 14 months covering cybersecurity, anti-money laundering and data protection, with six carrying compliance deadlines between March 2026 and March 2028.

The report further cited the N15.42 billion regulatory fine imposed on a leading commercial bank in 2025 as evidence that compliance failures are increasingly being treated as systemic risks capable of undermining financial stability.

It stressed that stronger information sharing among financial institutions, regulators and law enforcement agencies would be essential to combating the next generation of AI-enabled financial crime.

“The institutions that come through the next eighteen months intact will not be the ones with the best AI tools. They will be the ones with the architecture around them,” the report stated.

The findings were unveiled at the Adhere Compliance Frontline Forum 2026, themed The Trust Frontier, held in Lagos.

The event brought together compliance executives, fraud investigators, regulators, law enforcement agencies and payment service providers to discuss strategies for strengthening the financial sector’s resilience against AI-driven cyber threats.