Among the various channels of electronic banking and payment transactions, the Automated Teller Machines (ATMs) and the Web channels have consistently appeared in top three channels used to perpetrate fraud in the last three years.
Data from the Nigerian Electronic Fraud Forum (NeFF) shows that 2015 had the ATM, PoS, and the Web as the top channels for fraudulent transactions perpetrated in the industry. In 2016 and 2017, ATM, Mobile, and Web were the three most used.
In terms of value, the year 2015 and 2016 had Across the Counter as the channel with the highest attempts from fraudsters, while ATM and internet banking followed closely. In 2017 the ATM channel took the lead, with Mobile following behind.
NeFF stated in its 2017 annual report that ATM channel has been the focal point for fraudsters in the last four years.
The sudden growth of the Mobile and Web channels in 2016 and 2017 should be closely monitored and measures put in place to check and reduce fraud occurrence within these channels, NeFF report stated.
“It is sad to note that there has been a little increase in electronic fraud especially in recent times. It has therefore become necessary to review and strengthen the existing rules and enact new regulations to steer the problem”, Dipo Fatokun, Director, Banking and Payment System, Central Bank of Nigeria (CBN) said.
In 2017, a total of 946 unique individuals were beneficiaries of fraudulent transactions consummated through the ATM, Across The Counter, e-commerce, Internet banking and Mobile channels.
The unique individual count was derived from the overall fraud reported on the industry anti-fraud portal. The beneficiaries of fraudulent transaction in 2016 had only 217 Bank Verification Number (BVN) sent to the Nigeria Inter-Bank Settlement System (NIBSS) for watch-listing, representing roughly 21 percent of the total number. However, 2017 had about 47 percent sent for watch-listing, with a total number of 447 BVNs.
The CBN in collaboration with NIBSS recently released a Framework on local Watch-list for the Nigerian banking system in order to address the increasing incidence of fraud/forgeries and other unethical practices.
Additionally, the CBN on October 2017 stated that a watch-listed customer shall not be allowed access to credit facility or guarantee credit facilities as part of penalties for being involved in fraudulent activity.
The Watch-list comprises a database of bank customers’ identified by their BVNs, who have been involved in confirmed fraudulent activity in the banking industry in Nigeria.
The CBN stated in a regulatory framework for BVN operations and Watch-List for the Nigerian Banking Industry stated that penalties shall apply to any bank that fails to enlist individuals confirmed to be involved in fraudulent activity, as well as stakeholders who fail to perform its stipulated responsibilities.
Tracing the 946 unique individuals to other banks revealed a total of 2,304 account numbers. This implies that these 946 unique individuals have a total of 2,304 account numbers in the industry. Out of the many accounts linked to these unique individuals, it was confirmed that 1,994 accounts were active, which represents 86 percent of the total number of accounts.
Analysing the unique individuals based on age variables, customers with the age range of 18-25 years committed more fraud by 42.1 percent.
In terms of gender, the report revealed that more male benefited from frauds in 2017, the females were not left behind as 73 percent of these unique individuals were male, while the female represents 27 percent.
In 2017, a total of 646 fraud cases were reported by Other Financial Institutions (OFIs), which represented 634 percent increase in reported fraud volume when compared with 2016.
The attempted fraud value stood at N104.7 million which was about 107 percent increase when compare to N50.5 million reported in 2016.
The actual loss value reported in 2017 was N101.2 million, representing a 481 percent increase compared to N17.4 million lost in 2016. OFIs was able to salvage only 3.4 of the fraud attempt.
“We should keep up the speed, the passion and we shouldn’t rest on our oars. Just that the moment that we come out with something new, the first step they are thinking of- new ways, innovative ways exploiting new phones and stealing our money. We should also keep up the pace and think of how we can mitigate every avenue that a fraudster will have to commit fraud”, said Tokunbo Martins, CBN director, Other Financial Institution department.
