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Fraud

The various efforts put in place to check fraud in the Nigerian banking sector may not be yielding the needed results as the level of fraud in the sector continues to rise. In 2014, banks lost a total of N6.21 billion to fraudsters. According to figures made available by Nigerian Inter Bank Settlement System (NIBSS), there were 1,461 reported cases of fraud in 2014.

This shows a 77 per cent rise in reported fraud cases compared to 822 cases that were reported in 2013. Although attempted fraud value had dropped significantly by 59 per cent, from N19.14 billion in 2013 to N7.75 billion last year, the value of actual loss was up from N485.19 million to N6.21 billion in 2014.

The latest figure suggests that the fraudsters are having a field day as 80 per cent of attempted fraud in 2014 was actually lost to the fraudsters as against three per cent of attempted fraud that succeeded in 2013.

Figures reveal an increasing trend in the use of point of sale terminals (PoS) for fraud as the volume of fraud perpetrated through the channel rose by 8,200 per cent from just two reported cases in 2013 to 166 cases at the end of December, last year. Automated Teller Machines (ATMs) continued to be the preferred channel for fraudsters with 491 reported cases, followed by internet banking which had 287 reported cases.

While the volume of reported fraud cases through web and e-commerce transactions rose to 218 and 114 respectively, conmen are moving away from the old fashioned cheques as reported cases of fraud through the use of cheques dropped by 27 per cent to 11 per cent last year.

During the recently held Nigeria Electronic Fraud Forum (NEFF), Olufemi Fadairo, head, Information System Security stressed the need for banks as well as their customers to increase the level of security as the use of electronic banking increases. According to him, there is the need for more security measures in handling payment cards by individuals as well as improved security practices by the banks to help minimise fraud rates in the country. Noting that in only 41 of the 1,461 fraud cases were suspects apprehended, Fadairo stressed the need for more work in improving the apprehension rate.

He said that the low number of apprehended suspects “is due to some constraints such as the law/legal context that is not clearly defined when it comes to financial and cyber crimes carried out using electronic platforms.”

While calling for collaboration between law enforcement agents and the financial industry, he emphasised the need for collaboration among financial institutions in dealing with the fraudsters.

Also speaking at the forum, Executive Director at First City Monument Bank (FCMB), Nath Ude urged banks in the country to further increase information sharing in terms of fraud cases.

The chairman of NEFF and director, Banking and Payment System at the Central Bank of Nigeria (CBN), Dipo Fatokun noted that while the level of collaboration among the banks was on the increase, there was the need for more information sharing process.

By Pita Ochai

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