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CBN to protect banks from Internet frauds, cybercrimes

By on March 17, 2013

The Central Bank of Nigeria has announced its plans to protect banks from Internet frauds and other cybercrimes.

Central Bank’s Director, Banking Supervision, Mrs. Olatokunbo Martins, said this while delivering a keynote speech at the first annual Conference on Audit and Regulatory Examination of Banking Technologies recently in Lagos.

According to her, figures involved in global cybercrimes were ‘quite alarming’, stressing that each technology adopted by a bank present unique risks that raise safety and soundness concern.

She said, “In banks, you employ so many technology-driven products and the banks embrace new financial, operational and compliance risk as you adopt these new technologies.

“As you are aware, very soon, we won’t just be requiring you to make capital charge for your credit, you will also be required to make capital credit for your operational risks. IT risk is a major operational risk.

“Currently, you will say that the major risk comes from credit, but some will also tell you that a significant part of credit risk is operational. If you say that operational risk is a failure of people, processes and system, even the credit risk, a major part of it is interwoven with credit risk.”

Speaking further, Martins added that, the banking industry should be Basel 11 compliant by 2014 and this will bring about enhanced capital bumpers while protecting the banks and making them more resilient.

She said, “Today, information technology has evidently impacted banking tremendously, even redefining the nature of banking and banking relationships. Banks are truly enjoying all the technological novelties with potential for expanding their products, services, customer base and responding to regulation, and above all, improve their profitability.

“However, it is important not to lose sight of the fact that technology comes with great risk. Technology poses risk to the safety and soundness of financial institutions, to the public interest and to the larger economy.”

Speaking in the same vein, the Chairman, Audit Committee Institute, Nigeria, Mr. Christian Ekeigwe, warned that with the nature of cybercrime, a single incident could pull down a strong bank.

“This conference will focus attention on the key issues of banking technology risks, how auditors must audit them to assurance and the proposition that technology risks contributed, insidiously, to the distress in the industry,” Ekeigwe added.