Nigerian banks have reportedly terminated the employment of 49 employees between April and June 2024, over involvement in fraudulent activities, according to the Financial Institutions Training Centre (FITC).
This was revealed in the FITC recently released second quarter (Q2) 2024 fraud and forgeries report. The report highlights a 40% increase in employee dismissals, compared to the 35 terminations in Q1 2024.
In Q2 2024, banks witnessed a dramatic increase in fraud-related losses, with the total amount lost skyrocketing by 9004.82% compared to the first quarter. This highlights significant shifts in fraud activity and staff involvement. In Q1 2024, banks reported a total of 11,472 fraud cases involving N2.99 billion, with actual losses amounting to N468.4 million.
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However, by Q2 2024, the total number of fraud cases rose slightly to 11,532, but the total amount involved surged by 1784.64%, reaching N56.32 billion. The total amount lost to fraud in Q2 climbed to an alarming N42.65 billion, a sharp contrast to Q1 losses. In terms of outsider involvement, the number of external participants increased marginally by 5.20%, from 10,397 cases in Q1 to 10,938 cases in Q2 2024. Meanwhile, insider involvement-specifically bank staff, rose by 23.40%, with 58 employees implicated in Q2 compared to 47 in Q1.
According to FITC, miscellaneous and other fraud types accounted for 96.46% of the total losses, amounting to N41.14 billion. Fraudulent withdrawals and computer/web fraud were responsible for N781.2 million and N400.7 million, respectively. The financial impact of these fraud cases is significant, with the total amount involved in the cases reaching N1,253,394,990.66.
This includes the following breakdown:
Tellering Fraud: N177,009,908.54 (0.31%)
Forged Cheques with Forged Signatures: N326,673,410.00 (0.58%)
Computer/Web Fraud: N1,253,394,990.66 (2.23%)
The actual and expected losses from the reported cases are also detailed:
Tellering Fraud resulted in an actual loss of N23,538,942.15. Computer/Web Fraud had the highest expected loss of N400,784,701.93, representing 32% of the total amount involved.
In response to these alarming figures, FITC recommended that banks enhance their use of technology to curb fraudulent activities. They advised strengthening access controls by limiting access to sensitive files to a small group of vetted personnel with proper clearance and regular security training.
Additionally, multi-factor authentication (MFA) and role-based access controls (RBAC) were suggested to mitigate the risk of unauthorized changes to settlement files. FITC also emphasized the importance of comprehensive fraud prevention training for all employees, particularly in emerging areas like card-related and web-based fraud.
Notably, with Artificial Intelligence playing a crucial role in the financial sector, deposit money institutions are advised to leverage Al and machine learning algorithms to identify patterns indicative of fraudulent activity, allowing for early detection and proactive prevention. Implementing advanced encryption and tokenization strategies is also essential to protect sensitive data, particularly during transactions on POS systems and web platforms.
The FITC report underscores the growing need for banks to intensify fraud prevention efforts, leveraging technology and enhancing internal controls to curb the rising tide of financial fraud.