Compliance and fraud prevention leaders have warned that despite a decline in reported fraud losses in Nigeria, financial institutions remain exposed to increasingly sophisticated AI-enabled threats that could reshape the country’s financial services landscape over the next 18 months.

The warning was contained in a new industry report, The Compliance Reckoning: Regulating Financial Services in the Age of AI, unveiled by AI compliance and fraud platform Adhere in partnership with TechCabal at the Adhere Compliance Frontline Forum 2026, themed The Trust Frontier.

According to the report, reported digital payment fraud losses in Nigeria declined from N52.26 billion in 2024 to N25.85 billion in 2025. However, it noted that the decline masks a more concerning trend, with fraud losses rising by about 350 per cent since 2020, even as the number of reported cases fell by approximately 31 per cent.

The report attributed the shift to increasingly targeted and sophisticated attacks, which have become fewer in number but significantly more costly per incident.

Globally, the report estimates financial fraud losses reached $442 billion in 2025, with AI-enhanced fraud proving about 4.5 times more profitable than traditional fraud methods. While Nigeria processes more than 10 billion real-time transactions annually, the report ranks the country 110th out of 112 countries for fraud protection and estimates a cybersecurity workforce gap of about 90 per cent.

It also highlighted an increasingly stringent regulatory environment, noting that the Central Bank of Nigeria (CBN) introduced 17 regulatory actions within 14 months covering cybersecurity, data protection and anti-money laundering (AML) compliance. Six of the measures carry implementation deadlines between March 2026 and March 2028.

The report further referenced a N15.42 billion regulatory fine imposed on a leading commercial bank in 2025, arguing that regulatory breaches now threaten not only financial performance but also institutions’ relationships with international correspondent banks.

According to the report, financial institutions that successfully navigate the evolving regulatory and fraud landscape will be those that build robust compliance architectures anchored on proactive fraud detection, comprehensive customer risk profiling, effective AI model governance and stronger industry collaboration, rather than relying solely on AI tools.

The forum brought together regulators, law enforcement agencies, financial institutions and technology providers to discuss emerging fraud risks and compliance strategies.

Assistant Inspector General (AIG) of Police, Uche Henry Ifeanyi, delivered the keynote address on financial crime enforcement, while panel sessions featured representatives from the Nigeria Inter-Bank Settlement System (NIBSS), the Economic and Financial Crimes Commission (EFCC), the Nigeria Police Force Cybercrime Laboratory, Paystack, PAYAZA, ChamsSwitch, Utila, Seerbit, Hydrogen Payment Services, Novac Payments, Odua Investment, Fastspeed Technologies, Vertiv, Rack Centre and Seequre.

The event was organised by Adhere in collaboration with TechCabal as research and media partner and supported by the Cyber Security Experts Association of Nigeria (CSEAN).

Speaking at the forum, Group Managing Director, Smartcomply, Gbemisola Osunrinde, said the reduction in reported fraud should not be interpreted as a decline in underlying risks.

“The fall in reported fraud is welcome, but it is also a warning. When reporting drops faster than fraud, the risk does not leave the system; it leaves the record. What this report shows is that the next eighteen months will be decided by architecture, not by tools. We built Adhere so that a bank or a fintech can meet the CBN’s mandates and still see, transaction by transaction, what a quarterly review would miss,” she said.

Adhere is an AI-powered compliance and fraud management platform for African financial institutions. The company said it serves more than 1,000 organisations, is ISO 27001 certified, aligns with the Nigeria Data Protection Act and is a Mastercard Engage partner. It is a member of the Smartcomply Group.