In the second quarter of 2023, Nigerian banks faced a significant setback, reporting a staggering N5.5 billion loss due to fraudulent activities.
This represents the highest loss to fraud in the past five years, as indicated by a recent report focusing on fraud and forgery within Nigerian banks.
Fraud losses surge by 1,275% compared to 2018
This financial blow is a remarkable surge of 1,275 percent from the N405 million lost to fraudulent schemes by the bank branch sector during the same period in 2018.
The data, sourced from the Financial Institutions Training Centre (FITC), highlights 71 instances of fraud and forgery across 24 banks during Q2.
Comparing the second quarter of 2023 to the preceding one, the figures are even more alarming. The total sum involved in fraud cases skyrocketed by 276.9 percent, reaching N9.75 billion, whereas the losses incurred stood at N5.79 billion in Q2.
FITC’s findings further disclosed that numerous deposit money institutions took the step of terminating eleven employees involved in fraudulent activities.
The root of this issue often lies within the bank’s internal personnel who possess access to sensitive data and transaction systems.
These employees sometimes collaborate with external fraudsters or undertake fraudulent activities independently, engaging in unauthorized transactions, document forgery, or account manipulation.
In light of the escalating instances of employee-related fraud, FITC emphasized the necessity for banks to exercise extreme caution when recruiting new personnel or when dealing with outsourcing firms for staffing purposes.
It underscored the importance of robust cybersecurity measures, effective fraud detection systems, customer education initiatives, stringent regulatory oversight, and the establishment of a culture built on ethics and transparency.
In an effort to counteract these challenges, FITC put forth the recommendation that employees demonstrating exceptional integrity, especially when faced with opportunities for misconduct, should be acknowledged and rewarded.
This practice can send a positive message to other staff members, motivating them to uphold ethical conduct and strive for recognition through their actions.