EFCC Takes Action as Fraudsters Steal N52.26 Billion From Nigerian Banks
- Notwithstanding the ongoing attempts to strengthen security measures, Nigerian banks made a shocking N52.26 billion fraud loss in 2024
- Fraudulent practices like identity theft, account manipulation, and insider cooperation continue to pose a severe threat to the banking sector
- To prevent these unlawful activities and retrieve stolen money, NIBSS and the EFCC successfully recovered N1.74 billion
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Legit.ng journalist Zainab Iwayemi has 5-year-experience covering the Economy, Technology, and Capital Market.
Despite continuous efforts to improve security systems, Nigerian banks reported a startling N52.26 billion loss to fraud in 2024, a situation that highlights the increasing sophistication of financial crimes.
Source: Getty Images
According to the most recent report from the Nigeria Inter-Bank Settlement System (NIBSS), the banking industry is still seriously threatened by fraudulent activities such as insider collusion, account manipulation, and identity theft.
However, NIBSS and the Economic and Financial Crimes Commission (EFCC) were able to effectively recover N1.74 billion to stop these illegal actions and reclaim stolen cash.
The research focuses on instances where scammers took advantage of systemic flaws, such as opening accounts using identities they had stolen, manipulating Bank Verification Numbers (BVNs), and transferring funds without authorization through compromised bank employees.
The report details attempted and successful fraud actions as well as associated indicators found by regional financial institutions or authorities.
The main system in charge of settling interbank transactions in Nigeria is called NIBSS.
Additionally, the NIBSS platform links Payment Service Providers (PSPs), Switches, Mobile Money Operators (MMOs), and Deposit Money Banks (DMBs).
Within a certain time frame, the NIBSS Industry Fraud Desk gathers, examines, and disseminates reports on all reported fraud instances.
The bank specifically disclosed that scammers used stolen identities to open accounts with elderly and young people, and that almost N400 million in fraud earnings were put into these accounts before being spent.
The investigation also noted that two minors' Bank Verification Numbers (BVNs) were registered by compromised bank employees, resulting in the transfer of more than N1 billion across two accounts.
Giving insights, NIBSS said,
“The accounts were operated by an individual from Asia whose selfie was used for verification, with locations showing as Hong Kong in at least three financial institutions.”
However, the report did not disclose the names of these institutions.
The report said,
“On July 30, 2024, a corporate account for an oil and gas company was opened using doctored documents and a registered company number picked from the internet. Supporting documents were also fabricated to open the accounts.
“A total of N335 million from fraud proceeds was received on the same day the account was opened. The funds were then transferred to unlicensed Bureau De Change (BDC) operators in July 2024.”
The entire amount of the funds throughout the reviewed period was N1.735 billion.
The report further said,
“NIBSS, in collaboration with law enforcement, managed to recover all the funds, and an account officer was found with incriminating documents by the Economic and Financial Crimes Commission (EFCC).”
Additionally, according to NIBSS, Nigerian financial institutions lost N52.26 billion to fraud in the reviewed year, which is a substantial rise of N34.59 billion over the N17.67 billion lost in 2023.
The most recent research claims that throughout the last five years, the amount lost to fraud has risen by 196%, coinciding with the expansion of financial activities in the digital payments industry.
The amount lost to fraud increased by 350 percent, from N11.61 billion to N52.26 billion, during the same period, even though the recorded yearly fraud count fell by 31 percent, from 101,624 in 2020 to 70,111 in 2024.
Source: Getty Images
Experts responded to the situation by calling for more stringent identification verification in order to stop fake account openings.
In order to prevent compromised employees from abusing the banking system, they added, there needs to be greater control of BVN registration.
Nigerian banks lose N42.33 billion in 6 months
Legit.ng reported that Nigerian banks have reported a whopping N42.33 billion in fraud losses in the first six months of 2024, with increases recorded in multiple channels.
Data from the Financial Institutions Training Centre disclosed in its first and second quarter reports on Fraud and Forgeries that the losses revealed an alarming trend.
Most importantly, fraud in bank branches spiked 31%, hitting N42.2 billion in the second quarter of this year, relative to N133.9 million recorded in the previous quarter.
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Source: Legit.ng
