Nigerian Banks Suffer N6.03 Billion ($7.8 million) Losses in 2023 Due to Rising Fraud

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By  Milcah  Tanimu

In the first half of 2023, Nigerian banks have faced significant financial losses, totaling N6.03 billion ($7.8 million), owing to a surge in fraudulent activities. A report titled “Reports of Fraud and Forgeries in Nigerian Banks (Quarter 2, 2023)” by the Financial Institutions Training Centre (FITC), a Nigerian bankers committee, shed light on the alarming increase in fraud incidents affecting the country’s banking sector.

The analysis revealed that mobile fraud, computer/web fraud, and point-of-sale (POS) fraud contributed to a total of 24,232 reported instances of fraud in the first half of 2023. This substantial rise in fraudulent activities led to the loss of N12.33 billion ($15.9 million) during the review period. The report examined data from 24 deposit money institutions, which collectively submitted 71 reports detailing incidents of fraud and forgery in the second quarter of 2023.

The most prominent types of fraud in the first quarter were computer/web fraud, POS fraud, and mobile fraud, a trend that continued into the second quarter. However, the second quarter saw a 276.98% increase in the total amount involved in fraud cases compared to the previous quarter, escalating from N2.58 billion to N9.75 billion. Additionally, the amount lost due to fraudulent activities surged by 1125.03%, jumping from N472 million in Q1 2023 to N5.79 billion in Q2 2023.

The report highlighted that fraudulent activities involving staff increased by 22.22% from Q1 to Q2 2023, while outsider involvement decreased by 6.40%. In the first half of the year, 26 appointments were canceled due to fraudulent behavior. Furthermore, fraudulent loans led to a loss of N6.03 billion in the second quarter of 2023.

FITC urged Nigerian banks to strengthen their security processes and systems to prevent unauthorized access to client accounts and sensitive information. The avenues for fraud encompassed various channels such as ATMs, internet services (web and mobile banking), bank branches, and point-of-sale terminals.

The surge in fraudulent activities emphasizes the urgent need for enhanced cybersecurity measures within Nigeria’s banking sector to protect both financial institutions and their customers from these harmful activities.

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