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Nigeria Central Switch records N64tr electronic deals

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Central Bank of Nigeria

Lost N2.19B to fraud
As the Nigeria Electronic Fraud Forum (NeFF) meets to review the 2015 Cybercrime Act, the Central Bank of Nigeria (CBN), the banker of last resort, has charged stakeholders to come up with workable policies to enhance the efficiency of electronic transaction, with a view to reducing fraud.NeFF was instituted to check the rising incidence of e-fraud on account of the adoption of e-payment channels in the financial sector, in line with global trends in e-payment development with the view to ensuring customer satisfaction.

Last year, e-transactions through the Nigeria Central Switch (NCS), which permits the connections for such transactions harvested about N64 trillion, signifying the country’s steady adoption of the cashless policy, introduced about four years ago.

This comes as a whopping N2.19 billion was lost to fraudsters, who infiltrated the cyberspace during the period under review.The introduction of the cashless policy is part of measures to check graft in the system as well as to reduce the cost of cash management by the apex bank in the country.

However, the reality is that although there is the Cybercrime Act 2015, in Nigeria to protect users of e-payment models, but most of the fraudsters caught during the period could not be effectively prosecuted. This is because the Act as presently constituted, is according to stakeholders and experts “nebulous and redundant.”

All these revelations were made in Abuja on Wednesday, at the inaugural stakeholders’ workshop on cybercrime organised by NeFF with the theme: “Tackling Challenges under the Cybercrime Act.”

The Deputy Governor, Operations, CBN, Adebayo Adelabu, also the Chairman of NeFF, regretted that as the Forum was upgrading the system to make it simpler and safer for users; the fraudsters too were innovating and attacking users. This led to the losses recorded, thus making a review of the Act, to protect the electronic payment system.

According to him, “The value of fraud reported in 2016 compared to previous years, attests to the fact that fraudsters do not grow weary. The more products and services that are rolled out without proper risk and impact analysis, the easier for the bad guys to perpetrate more fraud effortlessly. The determination and commitment of these unscrupulous elements cannot be underrated within the financial sector. The financial industry needs to ensure that more regulations and inter- industry collaboration are put in place to curb this trend.

“The industry recorded about 82 per cent increase in the reported case when compared to 2015, and over 1200 per cent when compared to 2014. Despite the 82 per cent increase, in the reported fraud cases, with an estimated N2.19 billion loss to fraud, the industry was able to reduce fraud by 2.7 when compared to the 2015 figure. Comparing the attempted fraud against the actual loss, the industry was able to salvage 49.7 per cent of the total amount attempted by these fraudsters within the year.

“These figures informed us that there are attempts on yearly basis with different innovation tricks or modus operandi to take advantage of the system,” Adelabu noted, adding that looking ahead, the financial industry must collaborate to ensure a wider gap exists between the attempted fraud and actual loss.
A breakdown of the payment channels through which the fraud were perpetrated indicated that the highest volume of N511.1 million was across the counter; N464.5 million through ATMs; N320.6 million through internet banking; and N253.3 million through point of sales (POS).

Others were N235.1 million through mobile payment; N132.2 million through e-Commerce; N 4.5 million through cheques; and N10.1 million through kiosks with the rest constituting N190.9million.

Addressing stakeholders at the review session, the CBN Governor, Godwin Emefiele, said the review of the Cybercrime Act became imperative more than before, as a result of the resurgence to new trends in cyber attacks, and the introduction of new payment instruments, which are yet to be recognised as legal tenders.

His words: “There is no gainsaying the fact that the importance of technology to all human endeavours in general and financial services industry in particular, cannot be over emphasised. The use of Information and Communication Technology (ICT) has revolutionised the way financial services are created, offered, and delivered. We have all witnessed how such developments in electronic payment such as the ATM, POS, Mobile Money, Internet Payment, etc. have continuously eroded the significance of physical locations for financial institutions.”

He noted that the greater the use of the Internet and electronic channels, the more the challenges “in the manner of exposures and vulnerabilities.”“It is inescapable therefore that firm and appropriate legal frameworks must be put in place, supported with sound and effective law enforcement, and enhanced technical and institutional capabilities to effectively protect these networks, and secure the systems and infrastructure from all forms of cybercrimes.”

Emefiele told the stakeholders.
He further noted that the global financial services industry is further challenged by the advent and wide acceptance of virtual and crypto currencies such as Bitcoin, based on the Blockchain Technology; Financial Technology (Fintech); and the development of artificial intelligence and robotics.

However, he said there are no alternatives to the wholesome adoption of technology by the industry; to ensure that the technology and processes adopted remain safe, secure and functional at all times.

As a result, the protection of information infrastructure utilised in the delivery of financial services is considered critical all over the world, and for which Nigeria enacted the Cybercrime (Prohibition and Prevention) Act was enacted in 2015.Emefiele described the theme: “A Changing Payments Ecosystem: The Security Challenge,” as being in sync with trending global developments, as challenges in securing the payment systems mount.



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