- FCMB, Skye Bank top list of 7,000 cases with CBN
- Banks’ internal control systems weak – Experts
The incidences of fraud and forgery cases in the Nigerian banking sector, which were reported by depositors, rose in value by over 106 per cent in 2016, investigations by The Point have revealed. From 1,777 cases, valued at N78.7 billion recorded in 2015, a staggering 7,000 fraud cases, valued at about N150 billion, were perpetrated on customers’ accounts across the banks and reported to the Central Bank of Nigeria for investigation and resolution as at the close of business in December, 2016.
The figures, obtained from an impeccable source at the CBN, reflected an increment in fraud value of over N71 billion in the year under review alone. The categories of complaints captured under the fraud/forgery cases include fraudulent withdrawals, excess charges, illegal conversion of deposits, identity theft, dishonoured guarantees and cheques, among others.
Top on the list of banks and/or financial institutions with high incidences of complaints are First City Monument Bank, Skye Bank and GTBank. The development comes in spite of the anti-fraud solution and several Compliance Examinations introduced and conducted by the apex bank to reduce fraud and enhance the safety of the Nigerian financial system.
Findings suggest that the initiatives have had little or no impact in reducing the activities of internet fraudsters or discouraging greedy bank officials, who take advantage of the carefree attitude of some bank customers to perpetrate the crimes.
This is because the fraudsters have continued to devise new means of beating the apex bank and the internal control units of financial institutions to perpetrate their nefarious acts.
For instance, the number of reported cases of attempted or successful fraud and/or forgery in the banking industry increased from 3,852 cases, valued at N10.7 billion in 2009 to 5,960 cases, involving N33.3 billion, as at the end of 2010. Also, by the end of 2014, while the complaints fell to 1,215, the worth jumped to N65 billion.
In 2015, it rose to 1,777 complaints, involving about N78.7 billion. The source, however, disclosed that the cases were at different stages of resolution, as the CBN had conducted CE for the banks during the year under review to ascertain the level of compliance with anti-fraud policies, guidelines and directives.
“The findings of the exercise were communicated to the respective banks for corrective action. The funds involved must be returned, if they were as a result of the banks’ shortcomings,” he said. If implemented to the letter, the directive of the CBN may give some level of comfort to victims of the frauds, most of who believe that the illegal dealings could not have been done without the connivance of some staff members of the banks.
BANKS HAVE WEAK INTERNAL CONTROL UNITS – Experts
Analysts have, however, blamed the development on the weak internal control units of most of the commercial banks across the country. To some forensic accountants, the financial institutions are laid back in adopting new technology to beat the fraudsters, who always devise various means to beat the anti-fraud control technology of the banks, where there is any.
Some of the accountants disclosed that they were currently handling different fraud cases involving commercial banks in various high courts across major cities in the country. One of them, Dr. Folu Daniels, told our correspondent that he had written several petitions to Deposit Money Banks and the CBN, on behalf of his clients, based on forgery and illegal charges, among others, worth over N1 trillion, and after waiting for months without any response or resolution, he took the cases to court.
He said, “In one of the cases, my client opened an account with GTBank, requested for an Automated Teller Machine card and was asked to come a few days later. Three days later, she received an alert that a sum of over N200, 000 was debited from her account, claiming she had bought some items online using an ATM card she had not collected.
“When she stormed her branch, she was informed someone had signed and picked the card on her behalf. She was dumbfounded and filed a complaint to the headquarters of the bank and Apex bank, which have not been replied till now, after one year. This is just one out of hundreds of cases I have in court.
Though, I understand it might take a while to get justice, I am optimistic that my clients will be refunded with interest.” For the Managing Director, Infinity Consult, Mr. Toye Esho, the new employment system adopted by most banks in recruiting their employees, has contributed in no small measure to the different fraud cases witnessed over the years, especially in 2016.
Due to the effect of the current economic recession facing most businesses, he alleged that most banks had changed their employment system, as they now employed more unqualified people, who lacked basic training to handle sensitive assignments.
Esho, an auditor, who retired as an Assistant General Manager in one of the new generation banks, with its headquarters along Broad Street, Lagos, alleged that employment of staff had, in some cases, been turned to family affairs and was no longer based on merit.
According to him, most managers in charge of recruiting staff invariably try to dominate their operations by appointing their relations or friends to key sensitive positions, instead of employing professionally qualified candidates.
“The purpose of the senior staff that employs his relative or friends’ relative in most cases is to create a conducive avenue and atmosphere to commit or defraud the bank easily, because they know that their relations are capable of covering them in case of any loophole discovered,” he disclosed.
BANKS ARE CAREFREE – EFCC
The nation’s anti-graft agency, the Economic and Financial Crimes Commission, has accused some commercial banks of lackadaisical attitude towards curbing the activities of fraudsters in their institutions.
Deputy Chief Detective Superintendent, Ibrahim Shazali, attributed the menace to lack of adequate legislative support, poor corporate governance, and underdeveloped Information Technology infrastructure, which hinders successful investigation of electronic transactions in Nigeria.
He stated that it had become clear to global financial and business leaders that cybercrime was not merely a technology issue, but was at the heart of it, and could only be successfully minimised by careful consideration of current electronic transaction processes, supervision, awareness dissemination and delegation.
Emefiele To curb fraud/forgery or reduce it to the barest level, “it is necessary to determine where exactly we need to focus our energies. It is not enough to have the tools to fight the problem, we must also know where and how to use them,” he said.
Shazali added, “Banks must ensure that their in-house ‘know your customer’ procedures and processes are consistent across all their platforms, to ensure uniformity of information and allow for easier detection of identity duplication and/ or theft, and possible fraudulent activities by customers.
The Bank Verification Number initiative by the CBN is particularly encouraging in this regard.” However, calls made and text messages sent to the mobile numbers of spokespersons of GTBank and Skye Bank, Mr. Meksley Nwagboh and Mr. Rasheed Bolarinwa respectively, in respect of the complaints, were not replied.
