The Economic and Financial Crimes Commission (EFCC) has raised alarm over the increasing involvement of banks in financial crimes in Nigeria, attributing about 70 percent of such crimes to the banking sector.
The Chairman of EFCC, Ola Olukayode, made this disclosure during the 2023 Annual Retreat and General Meeting of the Association of Chief Audit Executives of Banks in Nigeria (ACAEBIN) held in Abuja.
Olukayode, represented by EFCC’s Director of Internal Audit, Idowu Apejoye, said that the banking sector had become a breeding ground for fraudulent activities, posing significant challenges to the commission. He identified various forms of banking fraud, including the outright misappropriation of customers’ deposits, unauthorized loan approvals, forgery, hacking, ATM fraud, and conspiracy.
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The EFCC chairman highlighted the disturbing trend of collaboration between insiders and outsiders in perpetrating financial crimes, which compromises the integrity of the banking system. He stressed the urgent need for collaborative efforts by relevant authorities and banking professionals to prevent and address fraudulent practices within the sector.
He said, “Broadly speaking, banking fraud in Nigeria is both inside and outside related. The inside-related fraud comprises outright selling of customers’ deposits, authorizing loan facilities, forgery, and several other kinds of unhealthy and criminal practices.
“The outsider-related ones include hacking, ATM fraud, and conspiracy, among others. And then the absurd one is when both collaborate, that is collaboration among the bankers and the outsider.
“That one is the one that is really absurd because when you do that, that means you are selling out the system. It is estimated that about 70 percent of financial crimes in Nigeria are traceable to the banking sector, this scenario is disturbing and unacceptable,” he said.
To curb these anomalies, Olukayode urged ACAEBIN to ensure strict adherence to accounting standards, including proper reconciliation of accounts on a monthly basis. He emphasized the importance of monitoring financial activities, conducting periodic reviews, and implementing stringent checks to mitigate fraudulent activities effectively.
In response, Prince Akamadu, Chairman of ACAEBIN, acknowledged the gravity of the situation and pledged the association’s commitment to implementing EFCC’s recommendations. He emphasized the importance of introspection within the banking industry to assess their roles in sanitizing the system and addressing challenges, particularly in the foreign exchange (FX) market.
“That is part of the reason why we are having this retreat, to ask ourselves, to do an introspection and ask ourselves, given our position in the banking industry, or the executives of banks in Nigeria, are we doing enough?
“Have we done enough? What more can we do to help in sanitizing the system? Are there things the banks could do to help in sanitizing the FX in this country?”
“By the end of this retreat, we are expected to come up with a communique and we hope to address some of the issues, one way or the other, that will address the role of banks in FX challenges in this industry,” he said.
Akamadu outlined the objectives of the retreat, which included devising strategies to enhance banks’ contributions to tackling FX challenges in Nigeria. He reiterated the banking industry’s dedication to combatting fraudulent activities, highlighting efforts in implementing robust Know Your Customer (KYC) mechanisms.
While acknowledging the significant strides made by banks in KYC compliance, Akamadu emphasized the need for continuous efforts to identify and address potential loopholes in the system. He assured the EFCC chairman of the association’s commitment to collaborating with relevant stakeholders to achieve positive outcomes in combating financial crimes.
However, stakeholders have noted the EFCC’s indictment of banks for their involvement in financial crimes to underscore the need for concerted efforts to strengthen regulatory oversight and enhance transparency within the banking sector. They also hailed the collaboration between EFCC and ACAEBIN, describing it as a reflection of a collective determination to safeguard the integrity of Nigeria’s financial system and promote sustainable economic growth.