By Emmanuel Nduka
A new report has revealed that commercial banks in Nigeria lost a total sum of N42.6 billion to fraud and forgeries over a three-month period from April to June this year.
According to the report, the amount lost in the second quarter of 2024 alone exceeded the total amount lost to fraud by the banks throughout the entire year of 2023.
In 2023, commercial banks lost a total of N9.4 billion.
This was revealed by the Financial Institutions Training Centre (FITC) in its Q2 2024 Fraud and Forgeries report released on Saturday, highlighting a surge in fraudulent activities across banking platforms.
The FITC report is based on returns on fraud and forgery cases received from 28 deposit money institutions in the country.
According to the FITC report, 80 of such returns were received in the quarter under review. It said that 26 reports were submitted in April, while twenty-seven 27 reports were received in both May and June.
A breakdown of FITC’s data showed that the Q2 loss shows an 8,993 per cent increase in loss when compared with the N468.4 million lost in Q1 2024.
This also represents a 637 per cent increase when compared with the N5.7 billion loss recorded in Q2 2023.
The FITC said ‘miscellaneous and other fraud’ types constituted the largest loss, representing 96.46 per cent of the total amount lost, with a value of N41.14 billion.
This was followed by losses from fraudulent withdrawals and computer/web fraud, amounting to approximately N781.2 million and N400.7 million, respectively.
The report adds that there was a staggering 1,784 per cent increase in the total amount involved in fraud cases from Q1 to Q2 2024, with the sum escalating from N2.9 billion to approximately N56.3 billion in Q2.
During the second quarter of 2024, fraudulent activities were carried out through various channels, including ATMs, online platforms like web and mobile banking, bank branches, and point-of-sale terminals.
Among instruments used, card fraud recorded a significant decrease, declining by 47.66 per cent from 21,469 in Q1 to 11,237 in Q2.
In contrast, fraudulent activity involving cheques and cash increased by 36.67 per cent and 9.09 per cent, respectively, with cheques surging from 30 cases in Q1 to 41 cases in Q2, while the use of cash rose from 209 in the first quarter of 2024 to 228 in the second quarter of 2024.
The increase via cash is likely to be fuelled by the demand for cash ransom for kidnapped citizens by bandits.
Further analysis of the data shows a significant rise in the amount lost across all channels, except for mobile fraud, which recorded a decline.
In terms of magnitude, losses through bank branch-related channels rose by 31,497 per cent to a value of N42.2 billion in Q2 from N133.9 million in Q1 2024.
Additionally, computer/web frauds also saw a monumental increase of 1,560 per cent, with losses growing from N24 million to N400.8 million.
However, there was no indication of the amount lost due to ATM-related fraud, while mobile fraud recorded a decline in the amount lost from the previous quarter, decreasing by 59 per cent from N216.4 million in Q1 to N88.7 million in Q2 2024.
With the staggering increase in losses to fraud, the FITC advised the banks to enhance their monitoring and auditing procedures.
According to the Centre, deposit money institutions can utilize AI-driven tools that flag unusual entries or patterns to implement continuous and automated monitoring systems that can detect anomalies or discrepancies in settlement files.
Additionally, regular unannounced internal audits focusing specifically on settlement processes can be conducted to identify and address any irregularities promptly.
“Access controls should also be strengthened by limiting access to settlement files to only a small, vetted group of authorized personnel given the appropriate clearance and are regularly trained on the latest security protocols.
“The implementation of multi-factor authentication and role-based access controls can aid the reduction of the risk of unauthorised changes to settlement files,” the FITC noted.
