Nigerian Banks Hit by ₦42.6bn Fraud Losses in Three Months – Report

Nigerian commercial banks experienced a staggering loss of ₦42.6 billion to fraud and forgeries between April and June 2024, according to a recent report.

This amount, lost in the second quarter of 2024 alone, surpasses the total losses from fraud in all of 2023, when banks reported ₦9.4 billion in losses. The data was revealed in the Q2 2024 Fraud and Forgeries Report by the Financial Institutions Training Centre (FITC), highlighting a sharp rise in fraudulent activities across banking platforms.

The report is based on fraud and forgery cases reported by 28 deposit money institutions in the country. FITC stated that 80 reports of fraud were received during this quarter, with 26 cases submitted in April and 27 cases each in May and June.

A closer look at FITC’s data revealed an alarming 8,993% increase in losses compared to ₦468.4 million reported in Q1 2024. Additionally, the Q2 2024 figures represent a 637% jump from the ₦5.7 billion lost in the same period in 2023.

Fraud categorized under ‘miscellaneous and other’ was the leading cause of losses, accounting for 96.46% of the total sum, with ₦41.14 billion lost. This was followed by fraudulent withdrawals and computer/web fraud, with losses amounting to ₦781.2 million and ₦400.7 million, respectively.

The report also highlighted a sharp rise in the total value involved in fraud cases, with an increase of 1,784% from ₦2.9 billion in Q1 to approximately ₦56.3 billion in Q2 2024.

Fraudulent activities during the second quarter were executed through multiple channels, including ATMs, online platforms (such as web and mobile banking), bank branches, and point-of-sale (POS) terminals. However, card fraud incidents showed a significant decline, dropping by 47.66% from 21,469 in Q1 to 11,237 in Q2.

Conversely, cheque and cash-related fraud saw increases of 36.67% and 9.09%, respectively. Cheque-related fraud rose from 30 cases in Q1 to 41 in Q2, while cash-related fraud climbed from 209 cases in Q1 to 228 in Q2. The uptick in cash fraud is likely linked to the rise in ransom demands for kidnapped victims.

In terms of financial loss, most channels saw significant increases, except for mobile fraud, which decreased. Bank branch-related fraud skyrocketed by 31,497%, with losses reaching ₦42.2 billion in Q2, up from ₦133.9 million in Q1. Computer/web fraud also saw a 1,560% increase, rising from ₦24 million to ₦400.8 million. However, there was no data on ATM-related fraud losses, and mobile fraud saw a 59% decline, dropping from ₦216.4 million in Q1 to ₦88.7 million in Q2.

In response to the alarming rise in fraud losses, FITC has urged banks to bolster their monitoring and auditing processes. The centre recommended that deposit money institutions adopt AI-driven tools to flag unusual transactions and implement continuous, automated systems capable of detecting anomalies in settlement files.

FITC also advised banks to conduct regular, unannounced internal audits focusing on settlement processes and to strengthen access controls. By limiting access to sensitive files and implementing multi-factor authentication, banks can reduce the risk of unauthorized changes to critical financial records.