Deposit money banks in Nigeria have reported a significant surge in instances of fraud and the corresponding financial losses during the second quarter of 2023 (Q2’23). This is reflected in the most recent report, which also highlights a notable increase in insider involvement.
According to the latest report released by the Financial Institutions Training Centre (FITC), fraud cases in Q2’23 saw a staggering rise to a total of N9.75 billion, marking a substantial increase of 276.98 percent from N2.58 billion in the preceding quarter, Q1’23. The overall losses attributed to these incidents during this period amounted to N5.79 billion, representing a remarkable surge of 1,125 percent compared to N472 million lost in the previous quarter, Q1’23.
The FITC report further reveals that these losses were incurred by 24 banks that reported incidents of fraud during this period. Notably, the involvement of external parties in these fraud cases decreased by 6.4 percent, while staff engagement in fraudulent activities increased by 22.2 percent within the same period.
The FITC, which is owned by the Banker’s Committee, comprising entities like the Central Bank of Nigeria (CBN), Nigeria Deposit Insurance Corporation (NDIC), licensed banks, and discount houses, aims to enhance knowledge solutions and capacity-building initiatives for Nigeria’s financial services sector.
The report highlighted that fraudulent loans were the leading cause of loss, accounting for a significant 94.35 percent with a value of N5.46 billion. Mobile fraud followed, contributing to 3.39 percent of the total loss, equivalent to N196 million.
Incidents of computer/web (internet) fraud were minimal, constituting only 1 percent of the total losses at N59.5 million during the period.
The report emphasized: “During the second quarter of 2023, there were 11,679 reported cases, showing a 6.96 percent decrease compared to the 12,553 cases in the first quarter. However, the data indicates a significant increase in the total amount involved in fraud cases. The amount rose from N2.59 billion in the previous quarter to N9.75 billion in Q2, representing a 276.98 percent increase.
“Additionally, the amount lost also saw a substantial rise, increasing from N472 million in Q1 2023 to N5.79 billion in Q2 2023, which corresponds to an 1125.03 percent increase. This increase might be attributed to the fact that banks were liable for the losses incurred and had to make refunds to customers.”
Furthermore, the report indicated that while outsider involvement in fraud cases decreased by 6.40 percent, with the number dropping from 12,351 cases in the previous quarter to 11,561 cases, staff involvement in fraud increased by 22.22 percent, rising from 72 cases in Q1 2023 to 88 cases in Q2 2023. Terminated appointments related to fraudulent activities decreased by 26.67 percent, going from 15 cases in Q1 2023 to 11 cases in Q2 2023.
The Association of Senior Staff of Banks, Insurance Institutions, and Financial Institutions (ASSBIFI) expressed concern over the escalating cases of staff involvement in fraud and attributed this trend to casualization of workers and other forms of non-pensionable employment practices in the financial sector.
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