The FITC’s Q2 2024 report on fraud and forgeries in Nigerian banks shows a concerning picture. This is are the rising number of financial crimes in banks. The report collated data from 28 deposit money institutions. The data revealed a disturbing surge in both the volume and value of fraud cases.
Key Findings
- Increase in Fraud Cases: The second quarter saw a total of 11,532 reported fraud cases, a slight increase from the 11,472 cases in Q1 2024.
- Alarming Rise in Fraud Value: The total amount involved in fraud cases skyrocketed by a staggering 1,784.94%, escalating from ₦2.9 billion in Q1 to approximately ₦56.3 billion in Q2. The actual losses due to fraud also saw a massive jump of 8,993.04%, rising from ₦468.49 million in Q1 to ₦42.6 billion in Q2.
- Prevalence of Digital Fraud: Computer/web fraud, mobile fraud, and POS-related fraud continued to be the most prevalent types of fraud, highlighting the growing threat of digital financial crime.
- Significant Impact on Bank Branches: Bank branches bore the brunt of the fraud, accounting for a substantial 95.63% of the overall fraud amount, with a total loss of around ₦54 billion.
- Rise in Outsider Involvement: Outsider involvement in fraud cases increased by 5.20% compared to the previous quarter.
- Increase in Staff Involvement: Staff involvement in fraud also saw a concerning rise of 23.40%. Consequently, 49 staff appointments were terminated in Q2 2024, a significant increase from the 35 terminations in Q1.
What can be done to mitigate fraud and forgeries in Nigerian banks
Key recommendations from the report include:
- Strengthened Monitoring and Auditing: Implementing AI-driven tools, conducting regular internal audits, and using automated monitoring systems.
- Stricter Access Controls: Limiting access to sensitive data, implementing multi-factor authentication, and using role-based access controls.
- Reinforced Ethics and Compliance Training: Ensuring employees understand the consequences of fraudulent activities.
- Technological Advancements: Investing in advanced fraud detection systems, adopting near-real-time reconciliation processes, and using automated tools to compare settlement files with transaction data.
- Leveraging AI and Machine Learning: Implementing AI and machine learning algorithms to detect patterns indicative of fraudulent activity.
- Enhanced Data Security: Implementing robust encryption and tokenization strategies to protect sensitive data.
- Continuous Staff Training: Providing ongoing fraud prevention training for bank employees, focusing on the latest fraud tactics.
- Data Analytics and Strategy Reviews: Leveraging data analytics to identify patterns in fraud and conducting regular reviews of fraud prevention strategies.
- Customer Education and Protection: Launching awareness campaigns and providing educational resources to empower customers to protect themselves and report suspicious activities.
Conclusion:
The FITC report serves as a stark reminder of the escalating threat of fraud in the Nigerian banking sector. It underscores the critical need for financial institutions to proactively adopt robust fraud prevention and detection measures to safeguard their assets and protect their customers. Implementing the recommended strategies and leveraging technology, banks can strengthen their defenses against fraud and contribute to a more secure financial ecosystem.
This article has been generated from Financial Institutions Training Centre (FITC) – Nigeria. You can read the full report here.
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