Banking fraud increases 539% in one year

The banking industry lost N15.15 billion to cases of fraud last year, indicating an increase of 539 percent when compared to the N2.37 billion lost in 2017.

Also, the total amount involved in fraud in the year under review stood at N38.93 billion compared to N12.01 billion in 2017.

The data were contained in the 2018 report of the Nigeria Deposit Insurance Corporation (NDIC), which was posted on its website Wednesday.

The report said a total of 37,817 fraud cases were reported in 2018, compared to 26,182 in 2017.

NDIC attributed the increase in fraudulent cases to “the increase in the sophistication of fraud-related techniques such as hacking, cybercrime as well as increase in IT-related products and usage, fraudulent withdrawals and unauthorised credit.”

According to the report, Internet and technology-based sources of fraud have the highest frequency, accounting for 59.2 percent of fraud cases and 42.83 percent of the actual total loss suffered.

The number of ATM/card-related fraud cases, however, declined from 16,397 in 2017 to 10,063 in 2018.

The report said: “That may be attributed to improved security features of the card as well as security awareness on the part of users.”

But web-based fraud cases, however, increased from 7,869 in 2017 to 12,343 in 2018, the report noted.

Notably, some of the fraud and forgery cases had staff involvement with a total of 899 staff involved in fraud and forgery cases in 2018 compared to 320 in 2017.

The report stated that the number of temporary staff involved in fraud was 394, accounting for 43.83 per cent of the total number of staff involved in frauds.

This was followed by officers and executive assistants’ cadre with 206 or 22.91 per cent . Supervisors and managers accounted for 119 or 13.24 per cent of the total fraud cases.

NDIC said the number of temporary staff involved in fraud and forgery cases had consistently been on the increase.

“The DMBs (Deposit Money Banks) and regulators need to address the problem of contract/temporary staff in terms of welfare and permanent employment in view of the risk their current status poses to banks operations. Furthermore, banks should strengthen their internal controls and validate their recruitment process,” it added.

The corporation also stated that it made a cumulative payments amounting to N116.258 billion to depositors, creditors and shareholders as at December 31, 2018.

Providing a breakdown of the payments, NDIC said it perfected payments of insured and uninsured deposits of N108.641 billion, N2.973 billion and N70.53 million to depositors of defunct DMBs, MFBs and PMBs, respectively.

Also, it made payments of N1.272 billion to creditors and N3.30 billion to shareholders of banks in-liquidation.
In addition, it disbursed N4.83 million to 338 depositors of 18 closed DMBs.