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Nigeria: 320 Bank Employees Defraud Customers in 2017

By Dipo Olowookere

The number of employees of banks operating in Nigeria involved in malpractices in the financial sector increased in 2017 to 320 from 231 in 2016, a new report by the Nigeria Deposit Insurance Corporation (NDIC) has revealed.

Head of Communications and Public Affairs Unit of NDIC, Mr Mohammed Kudu Ibrahim, in a statement, lamented that the cases of fraud in the banking industry was rising and a panel would be set up to probe the affected banks.

According to him, the number of cases rose by 56.3 percent last year to 26,132 compared with 16,751 recorded in 2016, resulting in the loss of N2.37 billion during the period under review.

He said in 2017, some banks failed to file returns reporting their officials involved in the fraudulent practices to NDIC.

Mr Ibrahim said Sections 35 and 36 of the NDIC Act No. 16 of 2006 (as amended) requires all Deposit Money Banks (DMBs) to submit monthly information/returns on forgeries and other forms of fraud to the corporation.

According to him, the planned investigation followed the discovery from the corporation’s most recent report on its off-site supervision of the DMBs that the number of fraud cases attributed to internal abuse by staff of banks increased 38.53 percent above the figure reported for the previous year.

He said the report relied on a total of 286 responses received from 26 banks during the period under review.

“The 286 responses received from banks in 2017 cited 26,182 cases of fraud and forgeries which is 56.30% higher compared to 16,751 cases reported in 2016.

“Similarly, the amount involved in the fraudulent activities documented increased by N3.33 billion from the N8.68 billion reported in 2016 to N12.01 billion in 2017 or 38%.

“However, the Expected/Actual loss slightly decreased by N24.42 million or 1.03% from N2.39 billion in 2016 to N2.37 billion in 2017,” Mr Ibrahim said.

On fraudulent activities in the online-banking and ATM/card-related fraud-types, Ibrahim said it constituted 24,266 or 92.68% of all the reported cases, resulting in N1.51 billion or 63.66% loss in the industry in 2017.

The report also documented other miscellaneous crimes such as fraudulent transfers/withdrawals, cash suppression, unauthorised credits, fraudulent conversion of cheques, diversion of customer deposits, diversion of bank charges, presentation of forged or stolen cheques, among others.

The 22 licensed commercial banks and four merchant banks rendered 286 returns on dismissed/terminated staff as a result of fraud and forgeries during the year under review. Out of the 26,182 fraud cases reported by the 26 licensed banks, 320 cases were attributable to internal collaboration by bank staff.

However, the losses arising from the reported cases decreased from N760 million in 2016 to N682 million or about 11.43% in 2017. The corporation attributed the improvement to additional internal control measures adopted by the banks in the wake of the proactive corrective measures taken to ensure their compliance with good corporate governance principles.

But the report said despite the fidelity insurance cover taken by banks to address fraud perpetrated by staff, they still needed to enhance their internal control and security measures, as the rising trend of e-channels (online banking & card-related) fraud and forgeries in the industry remained a serious cause for concern to the corporation.

Dipo Olowookere is a journalist based in Nigeria that has passion for reporting business news stories. At his leisure time, he watches football and supports 3SC of Ibadan.

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