Nigerian Banks Lose N42bn To Fraud In Q2 2024

Smaller fraud cases, bigger cash targets. In Nigeria, fraudsters may be starting to “think small” in their approach.

The Financial Institutions Training Centre (FITC), a Nigerian financial training and research centre, has reported a significant rise in fraud losses across the country’s banking sector in Q2 2024.

In its recently released Fraud and Forgeries Report, FITC reported that fraud cases in Nigerian banks increased only slightly in Q2 2024, with 11,532 incidents compared to Q1’s 11,472. Yet, there was a massive jump in the amount lost to fraud from ₦468 million ($283,000) in Q1 2024 to ₦42.6 billion ($25.7 million) in Q2 2024.

Fraud has been a recurring problem in the Nigerian banking sector. When separate Q1 reports from both FITC and Nigeria Interbank Settlement Scheme (NIBSS), the country’s payments switch, showed that fraud cases slowed in Q1, there was a sense that the country was finally on track to cure this broken part of the system.

Another area of growing concern is the involvement of banking staff. Banking insiders were involved in 58 of these fraud cases, and about 49 staff appointments were terminated in Q2 2024; most of these involved fraudulent withdrawals and two cash theft cases.

Nigeria’s central bank has been hard at work implementing stricter know-your-customer (KYC) policies for fintechs and digital banks.

Yet, digital channels like computer/web, mobile banking, and POS terminals remain top three targets for fraud, with cases in these areas steadily rising.

Though the Central Bank’s regulatory efforts have made progress, insider involvement and digital vulnerabilities continue to plague the banking sector, undermining efforts to curb fraud completely.

 

Tech Cabal