How Nigerian banks lost N199bn to e-fraud in 13 years

Bank customer engaged in an e-transaction.

Bank customer engaged in an e-transaction.

16 March 2015, Lagos – Nigerian banks lost a total of N199 billion to electronic related fraud between 2000 and 2014, mostly due to inappropriate and reckless management of customers’ data.

Executive Director Operations, First City Monument Bank, FCMB, Mr. Nath Ude, disclosed this while presenting a keynote address at the Nigeria Electronic Fraud Forum in Lagos.

Ude said incidence of fraud has become very rampant and presents serious consequences for the financial industry in Nigeria.

Speaking on ‘e-fraud and insider abuse’ Ude noted that these frauds result most times from inappropriate or reckless handling of customers’ data.

According to him, “Banking is built on trust. Customers’ data is an asset to banks and to retain the customers’ trust, banks need to protect these assets. Fraudsters are succeeding because banks have not paid enough attention to strategies that could minimise these incidents.”

He added that most electronic fraud is from insiders even from unexpected sources including dedicated employees.

He said banks could curb insider abuse by watching out for warning signs like employees living above their means, frequent manipulation of data by employees and continuous, excessive use and abuse of privileged and systems account. In this way, he explained, “banks will be able to combat electronic fraud by filtering out predatory employees, reviewing upwards, the required reliability status for all staff who need privileged roles to work as well as deploying appropriate prevention and detection technologies like CCTV monitoring and access cards with authorisations.”

In his own presentation, Head, Information Systems Security, Nigeria Interbank Settlement Scheme, NIBSS, Olufemi Fadairo presented a statistics revealing the prevalent of electronic related fraud in Nigeria’s financial system.

Fadairo said financial fraudsters are increasingly adopting sophisticated techniques in the approach and that stakeholders in the industry have to collaborate more and think ahead and creatively if e-fraud must be successfully tackled.

He said that a total of 1,461 cases of fraud were reported in 2014. Out of these, attempted fraud estimated at N7 billion was recorded which led to actual loss value of over N6 billion.

He also disclosed that internet and ATMs remain the most popular channels for e-fraud while Point of Sales, PoS terminals has been discovered to be the preferred channel of cash out for fraudsters.

Fadairo also disclosed that out of the reported cases, only 41 perpetrators were apprehended while 1, 420 perpetrators eluded the authorities.

In all, he said, the fraud rate rose to 80 per cent in 2014 from 3 per cent in 2013.
*Jonah Nwokpoku – Vanguard

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