Fraud soars in Nigerian banks to highest level in five years

The number of fraud cases in Nigerian commercial banks rose in 2021 by nearly half to the highest level in five years.

By December that year, the country recorded 211,713 frauds and forgeries in commercial banks, up 45% from 146,183 the previous year, according to latest regulatory records.

“The number of fraud cases stood at 211,713 at end-December 2021, indicating a 44.8 per cent increase when compared with the 146,183 cases recorded at end-December 2020,” the Nigeria Depositor Insurance Corporation, which insures bank depositors’ money, said in its latest report seen by Pluboard.

Nigerian depositors frequently lose money to fraudsters through the banking system and customers say authorities have not done much to deal with the problem.

Banks often blame their clients who they argue failed to protect sensitive information. They take action only on the instruction of a court.

The NDIC said it has introduced, alongside the Central Bank of Nigeria, “targeted policy to ensure that banks strengthen their internal control processes through strong risk management practices to prevent loss of funds and maintain customer confidence in the financial sector.”

Channels used

The figures for 2022 fraud cases have not been released by the corporation yet. But the trend between 2017 and 2021 show substantial rise in banking fraud and how customers lost money.

Reported fraud rose from a little above 26,000 in 2017 to nearly 53,000 in 2019. It tripled to over 146,000 the next year before reaching the highest level in 2021.

The NDIC said the total amount lost rose to N7.19 billion from N5.33 billion in 2020.

Frauds perpetrated in Euros had 100% success rate, resulting in the loss of €474,000, the report said.

Electronic channels accounted for 88.74% of total fraud cases. Amongst them, ATM/card-related fraud had the highest frequency, accounting for 25.43% to total cases, followed by mobile banking and web-based fraud cases.

“The increasing reliance on electronic platforms for carrying out transactions may have contributed immensely to the rise in frauds and forgeries cases via these channels,” the NDIC said.