24 banks lose N5.7b to frauds in Q2 amid rising digital crimes


•FITC urged Nigerian banks to strengthen their security protocols

Financial institutions, especially commercial banks in the country have lost N5.7 billion to fraud as in the second quarter of this year.
According to FITC in its Q2 Fraud and Forgeries Report, a total of 11,679 cases were reported and when compared to 12,553 cases recorded in Q1, a 6.96 percent decrease is noted.

FITC, a not-for-profit professional organisation, has the Central Bank of Nigeria (CBN), Nigeria Deposit Insurance Corporation (NDIC) and all licensed banks in Nigeria as members. It reported that the frauds were reported by 24 banks that filed returns on fraud cases for the period.

The data for the first quarter of 2023 indicated that mobile fraud, computer/web fraud, and POS-related frauds were the three most prevalent
types of fraud, continuing the trend observed in the first quarter of 2023.

The data revealed a significant 276.98 percent increase in the total amount involved in fraud cases during Q2 2023 compared to the previous quarter.

FITC noted that the sum increased from N2.58 billion to N9.75 billion. Likewise, for the amount lost, there was a substantial increase of 1125.03 per cent from N472 million in Q1 2023 to N5.79 billion in Q2 2023.

The report said in Q2 2023, there was a 6.4 per cent decrease in outsider involvement in fraud cases, with the number dropping from 12,351 cases in the previous quarter to 11,561 cases. However, it observed that staff involvement in fraud increased by 22.22 per cent, rising from 72 cases in Q1 to 88 cases in Q2 2023.

Conversely, the number of terminated appointments related to fraudulent activities decreased by 26.67 per cent, going from 15 cases in Q1 to 11 cases in Q2.

In the review of Q2 2023, an analysis of the magnitude-based ranking of fraud categories reveals that Fraudulent Loans had the highest ranking, accounting for N6.03 billion (61.81 percent) of the total amount.

It was followed by the Computer/Web fraud category at N1.47 billion (15.10 percent). Mobile Fraud came next at N751 million (7.7 percent), and fraudulent withdrawals amounted to N663 million (6.79 percent).

According to the data on the total amount lost to frauds in the first quarter of 2023, FITC explained that Fraudulent Loans accounted for the highest loss at 94.35 percent, with a value of N5.46 billion. Mobile Fraud represented 3.39 percent of the total, amounting to N196 million, while Computer/Web fraud withdrawals accounted for 1.03 per cent, totaling N59.5 million.

Meanwhile, considering the rise in the total amount involved in fraud cases and the amount lost, FITC urged Nigerian banks to strengthen their security protocols and systems to prevent unauthorized access to customer accounts and sensitive information.

According to the organisation, this may involve incorporating measures such as multi-factor authentication, implementing strong encryption techniques, and ensuring regular security updates are in place.

“Also, banks should utilize advanced fraud detection systems and technologies that can analyze patterns, identify anomalies, and detect suspicious activities in real-time. These systems which employ Artificial intelligence (AI) and Machine Learning (ML) can help identify potential fraud incidents and trigger alerts for further investigation.”

“It is also important to perform regular audits of internal systems, processes, and controls to identify any vulnerabilities or weaknesses that could be exploited by fraudsters and bank staff,” FITC advised.

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