The rising cases of bank fraud in Nigeria is assuming an alarming proportion and, in the process, causing genuine worry to policy makers and bank regulators. There are indications that despite efforts by the authorities to curb the menace and clean up the system, the sector, according to a report by the Central Bank of Nigeria (CBN), recorded 20,768 cases that gulped N19.77 billion in the first six months of 2018.
The report revealed that fraud and forgery incidences were perpetrated by both bank staff and non-bank people. In the period under review, the actual loss by banks to fraud and forgery amounted to N12.06 billion, compared with the N0.78 billion and $0.03 million, suffered in the first half of 2017.
The report also shows that the number of fraud related cases increased by 4,006 compared to 16,762 cases involving N5.52 billion and $ 0.12 million in the corresponding period of 2017.
CBN, in the report, averred that the cases involved armed robbery attacks, fraudulent Automated Teller Machines (ATM) withdrawals, defalcation, illegal funds transfer, pilfering of cash, stealing, suppression and conversion of customers’ deposits.
The matter has become so serious that the Economic and Financial Crimes Commission, EFCC, had to step in the stave off the obvious damage it is capable of doing to the integrity of the financial system. In one of the cases, the anti-graft agency arraigned the promoters of Sanfill Nigeria Ltd on a two-count charge of obtaining by false pretence to the tune of N15,300,000.
One Mr Okeke was alleged to have fraudulently used his company to hack into the account of Chams Nigeria Ltd and moved the said sum into his company, Sanfill Nigeria Ltd.
Experts blame the rising incidences of insider-related fraud cases in banks on poverty and weak internal control measures in banks. They also accuse banks of inadequate rendition of returns on 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 attributed the development to ineffectiveness of banks and lack of electronic fraud awareness by bank customers. If the banks have solid internal control measures, they would be alerted if there is any breach in the accounts of customers.
Fraud occurs because of the weaknesses, lapses and ineffectiveness in the banking system’s control measures. However, it will not be correct to blame it on a lack of efforts by the banks to curtail this menace. With these attacks on depositors’ funds by criminals, what is required of banks, in the opinion of this newspaper, is for them to step up their efforts in curbing the menace. While it may be impossible to totally eradicate fraud from the banking sector, it can and should be reduced to the barest minimum.
It is imperative, in our view, that the Deposit Money Banks (DMBs) should intensify all activities geared towards curtailing the malaise. Part of this ought to be an enhanced investment in human resource development and technology acquisition. Also, they must continue, relentlessly, the enlightenment of their customers on how to stay safe with their deposits. Still, we think that the regulators, the Central Bank of Nigeria (CBN) and the Nigerian Deposit Insurance Corporation (NDIC), have a key role to play in putting in place stringent measures that will curb any unethical tendency in banks.
In fairness to the regulators, they have, on a consistent basis, come up with pronouncements particularly in the area of electronic banking to put the DMBs on their toes often to no avail.
It is, therefore, safe to conjecture that the weakest link in any system that will cause things like fraud to occur is the human element. With this, it becomes inexorable that frauds will take place if the workers decide to make themselves willing tools in the hands of the criminally- minded.
To mitigate this flaw, it is pertinent that the banks carry out proper integrity checks on their prospective employees, especially those being recruited into sensitive positions. The increasingly ebbing moral tone in the society makes this decidedly essential.
The increase in the use of mobile phones for financial transactions and online purchases, has also raised the level of fraud in the industry. If the banks decide to do the needful in this direction, it will be germane to suggest the adoption of stronger and more refined technologies. The challenge the banks are having, we dare say, is that they are not flexible. It takes them a lifetime to move, probably because they spend millions of naira to adopt and install a system.