In its latest report on banking fraud and forgeries, the Financial Institutions Training Centre (FITC) has revealed that Nigerian bank customers lost a total of N472 million to fraudsters in the first quarter of 2023. A total of 12,553 cases of banking fraud were also reported in the quarter, representing a 14.07% decrease compared to the preceding quarter, which recorded 14,609 cases.
The report indicates a decline in both the number of cases and the amount lost compared to the previous quarter. FITC’s institutional members are members of the Nigerian Banker’s Committee, which comprises the Central Bank of Nigeria, the Nigeria Deposit Insurance Corporation and all licensed banks in Nigeria.
Its report explained that the Q1 2023 numbers reveal that of all the fraud activities, mobile fraud, computer/web fraud and POS-related fraud were the top three frauds with the highest number of occurrences. This is consistent with the trend from the previous quarter.
It also noted that staff involvement increased to 72 cases in Q1 2023 from 38 cases in Q4 2022 representing a 89.47 per cent increase. Also, there was a total of 124 unspecified cases and 6 collusion cases.
The report also revealed that there was a 79.44% decrease in the total amount involved in fraud cases in Q1 2023 compared to the previous quarter. The sum decreased from N12.58 billion to N2.59 billion. There was a decrease from the N3.18 billion in Q4 2022 to N472 million in Q1 2023 in total amount lost to fraud and this is an 85.13 percent decrease.
While the total amount lost to fraud is N472 million, it is important to note that this figure is different from the total amount involved in the fraud cases which stands at N2.59 billion. This means of the N2.59 billion involved, the banking authorities were able to recover about N2.12 billion while N472 million was not recovered.
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Fraudsters target mobile and online banking
The top three channels used by fraudsters in Q1 2023 were mobile fraud, computer/web fraud, and point-of-sale (PoS) fraud. Mobile fraud accounted for the highest amount involved in fraud cases, amounting to N1.1 billion and representing 42.72% of the total. This was followed by computer/web fraud at N646 million representing 24.99%, and PoS fraud at N450 million representing 17.41%. Fraudulent withdrawals accounted for N139 million (5.36%).
The data also revealed that mobile fraud constituted 34.07% of the total amount lost, equivalent to N161 million.
“For Q1 2023 under review, an analysis of the magnitude-based ranking of fraud categories shows that Mobile Fraud has the highest ranking which accounts for N1.1 billion (42.72%), and this is followed by the Computer/Web fraud category at N646 million (24.99%). This was followed by POS Fraud at N450 million (17.41%) and fraudulent withdrawals at N139 million (5.36%),”
FITC report
From the total amount lost in Q1 2023, the data also reveals that mobile fraud accounts for 34.07% at N161 million followed by Computer/web fraud accounting for 27.69% at N130 million and Fraudulent withdrawals representing 24.72% at N116 million.
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Banks need to strengthen internal controls
The FITC said that the overall decrease in fraud cases and losses was commendable, but that banks needed to continue to strengthen their internal control measures and sensitize customers on how to protect themselves. The organization recommended that banks invest in advanced fraud detection technologies, such as machine learning algorithms and artificial intelligence tools, to identify and flag suspicious transactions and patterns.
“Banks should invest in modern fraud detection technologies such as machine learning algorithms and artificial intelligence (AI) tools that can identify and flag suspicious transactions and patterns. Additionally, regular risk assessments can help identify potential vulnerabilities and threats to the banking system,” it advised.”
Additionally, regular risk assessments were encouraged to identify potential vulnerabilities and threats to the banking system. This should include identifying emerging trends in fraud and updating risk management strategies accordingly. For an effective risk assessment procedure, there is need to equip teams with risk assessment training programmes and refresher programmes such as those offered by FITC.
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