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CBN harps on risks of electronic fraud

By on November 20, 2015

The Central Bank of Nigeria (CBN) has alerted on security risks of electronic fraud in the country, but explained that it has beefed up security measures on online transactions, in order to reduce electronic fraud.
CBN said the security measures have helped in no small measure to reduce online fraud in Nigeria, just as it revealed that about 1, 420 suspected perpetrators of various kinds of electronic frauds in the nation’s financial services sector, evaded arrest last year.

Speaking at a conference on fraud, organised by the E-Payment Providers Association of Nigeria (E-PPAN) in Lagos, the Director, Banking and Payments System Department of CBN, Mr. Dipo Fatokun, said the conference was designed to expose all types of electronic fraud, with the intention to mitigate them in good time.

This year’s edition of the E-PPAN’s e-fraud conference explored areas to strengthen collaborative efforts between the law enforcement agencies, regulators and the payment industry in the fight against electronic fraud, and also to define the roles of the merchants, consumers and the payment providers in the fight against fraud.

According to Fatokun , a review of trends across the globe indicated that fraud is still largely driven by domestic transactions, and advocated the need to create an industry body to handle e-fraud issues in the country.

He said card-non-present (CNP) fraud poses the biggest threat in Europe, debit card frauds leads in America while in Nigeria, Point of Sales (POS) fraud leads in view of POS growth for cashless policy.

However, he noted that frauds initiated externally has become a major threat, as investment in fraud prevention technology is directed more at web, online and CNP frauds

“With the booming e-Commerce business in Nigeria, online fraud is an emerging threat while the upsurge of domestic POS/Automated Teller Machine (ATM) must be tackled. We therefore must evolve a fraud management approach that addresses internal challenges with robust capacity to manage international threats,” he said.

While noting that arrest and prosecution of electronic fraudsters is critical to deter people from indulging in electronic frauds, he said the apex bank had started an initiative with the police to strengthen collaboration and build capacity within the law enforcement unit to be able to arrest more culprits.

“It is good news that the Inspector-General of Police has acceded to our request for a card fraud unit within the Nigerian Police Force (NPF). This is essential considering the low suspect apprehension rate achieved last year,” he said.
Citing a report from by the Nigeria Interbank Settlements System (NIBSS), Fatokun said of 1,461 suspected e-fraudsters last year, only 41 of them were apprehended by the police.

“This means that about 1,420 suspects could not be nabbed by the law enforcement agents,” he said.

He said N6.8 billion was lost by various banks and their customers, following the inability of the police to arrest the 1,420 suspects.

Fatokun who called for more collaboration between the police and the banks, listed the critical pillars of effective collaboration in the industry to include robust legal framework, top management commitment, informed users, security-alert and uncompromised banks’ management and staff, shared industry fraud management institution, effective prosecutorial capacity, commitment of law enforcement and international engagement.

Executive Secretary and Chief Executive Officer of E-PPAN, Mrs. Regha Onajite, said electronic fraud was no longer a new crime but that the ways in which electronic payment fraudsters operate have evolved significantly in recent years, which she said, must be addressed through the development of a new holistic industry fraud management institution that wooing allow concerted efforts to be made towards mitigating fraud menace.
She advocated the creation of a body to be christened the ‘Nigeria Baking Risk Information Centre (NIBRIC)’ similar to the South African Banking Risk Information Centre (SABRIC).

According to Onajite, “In order to significantly reduce fraud, it is essential to formulate a solid and comprehensive approach. One of our main approaches over the years has therefore been to advocate for a collaborative approach in fighting fraud.”

Other stakeholders at the forum who all supported the idea of NIBRIC, said if fraudsters collaborate to defraud electronically, it would be a lost war if the stakeholders in the e-payment industry fail to collaborate to combat the menace.
“We must find strength in unity to combat electronic fraud. Security is a service; service to all is service to self. The CBN is leading the charge and will continue to collaborate across industry and disciplines to ensure that electronic fraud is put at bay in Nigeria,” Fatokun added.

 

[ThisDay]