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Bank Fraud: N28 billion Lost To Fraudsters in 2011, Figures Expected To Rise

By on November 29, 2012

A study conducted by the Nigerian Deposit Insurance Corporation has shown that the Nigerian banking sector recorded N28.4bn to cases of fraud and forgeries last year.

Expectations are that the figures will rise hence there was an increase of 33.4 per cent in the N21.29bn recorded in 2010.

According to the report signed by the Chairman of the board of the NDIC, Dr. Hassan Adamu, and the Managing Director, Mr. Umaru Ibrahim the frequency of occurrence has shown that they have been an increase of 53.5 per cent against the 2010 figures.

It said the N28.4bn fraud was lost to a total number of 2,352 cases and about N4.07bn was lost by the Deposit Money Banks alone.

The report says, “A total of 2,352 fraud cases involving the sum of N28.4bn with expected contingent loss of about N4.071bn were reported by DMBs in 2011.

“That was an increase of 53.5 per cent in 2011 over the number of reported fraud cases of 1,532 in 2010.

“The increase of 53.5 per cent in the number of attempted or successful fraud and forgeries cases as reported in 2011 over the preceding year could be attributed to rising fraud cases through Internet banking and suppression of customer deposits.”

The report has also shown a 33.4 per cent increase of frauds and forgeries from N21.29bn to N28.4bn, in 2010 and 2011 respectively.

The report however failed to disclose identities of the banks and the number of fraud experienced.

Automated Teller Machine frauds and fraudulent transfers/withdrawals accounted for the largest number of cases for both 2010 and 2011.

“There were also rising fraud cases through internet banking and suppression of customer deposits,” the report adds.

In a breakdown, the report stated that during the 2010 and 2011 period, 331 fraudulence transfer cases were recorded, 738 cases of ATM frauds, 280 cases of forged cheques, 240 cases of outright theft, non-dispensing of money 112 cases, 108 cases for Internet fraud and suppression of customer deposit 219 cases.

The report says, “Of the 2352 cases reported during the year under review, 498 were attributed to staff participation which showed an increase of 141 from 357 cases reported in 2010.

“Despite the increase; the losses resulting there from declined by 62.3 per cent from N6.43bn in 2010 to N2.42bn in 2011.

“The reduction was as a result of better and improved security and internal control measures put in place by the banks for transactions involving large sums of money.

“The highest number of staff involved in cases of fraud and forgeries was from the clerks and cashier status as had been the case in the preceding years with the lowest being the typists, technician and stenographers.”

The NDIC said fraudulent cases are categorised by institutional/ endogenous causes and environmental/exogenous causes.

Institutional causes, it said were “those that are attributed to the internal domain of the organisation such as poor accounting and weak internal control systems, poor management, inexperienced staff and ineffective supervision of subordinates, uncompetitive remuneration, and perceived sense of inequity in reward and overstretching of staff.”

The report also says, “Environmental causes are those that can be directly traced to the bank’s operating environment and they include undue societal demands, low moral values, slow and tortuous legal process, lack of effective deterrent, and the reluctance of banks to report fraud cases due to the negative publicity it could attract for their image”.

With the figures expected to rise this year, the NDIC called on all banks to employ measures that will strengthen their operational risk management frameworks both internally and externally, adding that they should also endeavour to investigate their applicants before employing them.

“Banks should also endeavour to fully comply with guidelines, rules and regulations on good corporate governance in order to take control of the situation,” it added.

One Comment

  1. Jon Gilchrist

    January 7, 2013 at 4:01 pm

    As a cheque printing company we receive many attempts by individuals to place orders for fraudulent cheques. I just wish the police had more power to prosecute for attempted cheque fraud. They seem to have no power if someone tries to place a fraud order..

    Jon
    http://www.chequesnow.ca