Address upsurge of fraud in banks

Activities of fraudsters now pose a grave danger to the health and survival of Nigeria’s banking sector. And, given the ease and mastery with which the masterminds of these acts undertake their craft, the regulators of this sector must up their game or have themselves to blame.

Within two years covering the second quarter of 2021 and the corresponding period in 2023, the banking sector lost N82 billion to fraudsters, according to a report released by the Financial Institutions Training Centre. Within that period, the banks sacked 110 staff members, including top executives and other workers in connection with these fraud-related activities. This upsurge in fraud in the banks is quite frightening and requires urgent attention.

These are not just ordinary figures. They represent in some cases people’s life savings, amounts meant for projects and business transactions. In fact, in some instances, such losses led to sudden deaths of the victims, some of whom could not bear such reports.

Given the strategic position of the banking sector in an economy, this development must be viewed with utmost concern by all stakeholders, including the banks themselves and their regulators. For the banks, this indicates a major wake-up call to their jobs and also shows how prone to fraud the banks have become.

We at Daily Trust make this call in full knowledge of the fact that banking is one of the sectors that should have the highest ethical values in any country. It is the lifeblood of the economy that must not be toyed with. This is why the regulatory agencies should get up now and do their jobs proactively.

The concerned regulators, especially the NFIU, EFCC, CBN, and others should rise up to the task of monitoring the banks.  It is important for the bank’s books to be monitored with a view to nipping in the bud such plans, when they are still in the planning stages. 

A lot of banking services now show hitches and as this happens, customers are forced to look for help. Some of these happen as a result of the failure – or refusal- by a bank to upgrade its Apps or services.  This development forces customers to seek help, which sometimes lands them in trouble as they end up being duped or defrauded.

Factors that contribute to this upsurge in fraud include the work of insiders, who engage in different practices against their customers, including withholding cash meant to be lodged into bank accounts, and the relentless “research and development” programmes of the fraudsters, which appears to place them ahead of the regulators. As it is now, banks – and perhaps the regulators also- are struggling to catch up with these gangs.

The really worrisome aspect of the burgeoning frauds is the ease with which these fraudsters circumvent the various measures put in place by the regulatory authorities to protect bank depositors. One such measure was the introduction of the Bank Verification Number in 2014 by the CBN. This unique number for bank account holders is expected to provide them with security, but the fraudulent gangs have also devised several means of circumventing this measure to dupe unsuspecting bank account holders. Ironically, the BVN has become one of the major means through which bank customers are defrauded.

In some cases, the process starts with the help of insiders, who disclose customers’ BVN to their external collaborators. In other cases, it happens when a customer carelessly exposes his or her bank details.  The BVN is structured in such a way that access to it gives these gangs information related to all the accounts linked to a given number, the customer’s phone number, date of birth, and others. Armed with the details, they are able to programme the account for online transactions.

Since all the technologies involved in these activities are still evolving, we call on all stakeholders to ensure that they are always steps ahead of criminals. They must ensure that technology used is upgraded periodically. Furthermore, the recruitment process of bank staff should be reviewed so as to ensure that all those they take are of good character with traceable guarantors. Also, sensitive jobs in the banks should not be left to contract staff, whose loyalty cannot be fully guaranteed. And anyone caught should be made to face the full wrath of the law to serve as a deterrent to others.    Banks management and regulators must take decisive steps to prevent loss of faith in the banking system.

All measures must be taken to protect customers’ hard-earned money in the banking system.