Nigerian Banks Lost Over N42 bn to Fraud Q2– Report

Fraud and forgeries activities perpetrated across banking platforms in Nigeria surged to a N42.6 billion loss in the second quarter (Q2) of the year.

The Financial Institutions Training Centre (FITC) revealed this in its Q2 2024 Fraud and Forgeries report released on Saturday, September 14.

The report indicates that fraud activities heightened in the banking system in the quarter under review when compared to the N468.4 million lost in the first quarter of this year and N9.4 billion lost in the whole of 2023.

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According to FITC, the report is based on returns on fraud and forgery cases received from 28 deposit money institutions in the country.

A breakdown of the categories of fraud shows that miscellaneous and other fraud constituted the largest loss, representing 96.46 per cent or N41.14 billion of the total loss.

This was followed by N781.2 million and N400.7 million lost to fraudulent withdrawals and computer/web fraud, respectively.

The research firm stated that during the review quarter, fraudulent activities were carried out through various channels, including automated teller machines, web and mobile banking, bank branches, and point-of-sale terminals.

While card frauds declined, forgery activities through cheques and cash increased.

The report also shows that fraud recorded through bank branch-related channels rose by 31,497 per cent to N42.2 billion compared to N133.9 million in the first quarter.

This was followed by computer/web frauds which increased 1,560 per cent to N400.8 million from N24 million.

There is a need for banks to enhance their monitoring and auditing procedures, FITC said, advising the banks to utilise Artificial Intelligence-driven tools that flag unusual entries or patterns to implement continuous and automated monitoring systems that can detect anomalies or discrepancies in settlement files.

It also urged the banks to carry out regular unannounced internal audits focusing specifically on settlement processes 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 (MFA) and role-based access controls (RBAC) can aid the reduction of the risk of unauthorized changes to settlement files,” FITC stated.

FCMB Group Plc, the parent company of First City Monument Bank, in January was reported to have lost nearly N1 billion in the financial year that ended December 31, 202,3 and that fraud activities are mostly perpetrated by persons within the banks.