Following its pledge to eradicate fraud, the Central Bank of Nigeria (CBN) has directed the Nigeria Inter-Bank Settlement System (NIBSS) to debit the settlement accounts of commercial banks that receive fraudulent proceeds. This stems from the regulator’s commitment to curb fraudulent activities across the Nigerian financial sector.
The new rule is part of the CBN’s efforts to hold banks and fintechs accountable for lapses in their transaction monitoring systems. It stipulated that banks that fail to screen incoming transactions or detect fraudulent activity adequately will face instant debits once that activity is reported.
Effective from January 2025, the instruction represents a shift towards equipping transparency and accountability which seeks to make banks strengthen their fraud detection measures and reduce such activities.

Also, the directive will prompt banks and fintechs to improve their Know Your Customer (KYC) which the CBN has stressed to be a significant aspect of securing Nigeria’s financial system.
“What this means is that banks and fintechs are now responsible for the money that comes to them. This has always been the foundation of KYC, not just in Nigeria, but in every financial jurisdiction in the world,” said Adedeji Olowe, founder of Lendsqr.
According to reports, the rule has been unofficially in place since December 2024 when a major bank lost ₦7 billion to fraud. NIBSS reportedly debited the settlement accounts of the fintech that received some of the proceeds of the funds without explanation.
In the wake of fraud incidents, the new CBN directive is expected to bring about significant changes within Nigeria’s financial sector, where financial institutions will be expected to monitor transactions and safeguard the financial system.
Similar Read: Hackers stole N53.4bn from Nigerian banks in 9 months as fraud rises by 65%.
Fraud in Nigerian Banks – statistics
According to a November 2024 Fraud and Forgery report by the Financial Institutions Training Centre (FITC), Nigerian banks lost N53.4 billion in nine months to hackers. This revealed the weak hands of the bank operators against cyber criminals.
During the first three quarters of 2024, the N53.4 billion stolen in the first nine months of this year was N44 billion more than the N9.4 billion that was stolen during the same period last year, representing a whopping 468 per cent increase over a year.
The report showed that cybercriminals stole N468.4 million during the first quarter. The figure skyrocketed by 9037.5 per cent to N42.8 billion in the second quarter. The third quarter of 2024 witnessed a slowing down, with Nigerian banks losing N10.1 billion in the quarter, representing a decline of 76.4 per cent.


Along with the increasing amounts of funds stolen by hackers, the FITC report also revealed that the number of fraud cases reported by Nigerian banks rose by 65 per cent.
Between July and September alone, hackers attempted to steal N115.9 billion. This is up from N56.6 billion attempted in the previous quarter, representing a 104.8 per cent increase.
Most financial institutions avoid reporting fraud incidents for fear of suffering reputational harm in a low-trust market. A NIBSS report revealed that only 60 of 163 financial institutions in Nigeria reported fraud cases in 2023.
A 2024 report by Business Day revealed that financial institutions ranging from commercial banks, fintech companies, and network service providers accounted for losses totaling over ₦1.1 trillion between 2017 and 2023. This is due to various cyber threats such as hacking, ransomware, and malware attacks.
From a loss of ₦2.37 billion in 2017 to a loss of N300 billion in 2023, Nigerian financial institutions have experienced rising figures twice within these periods. Since 2017, there has been a rise in financial loss due to cyber-attacks with ₦15 billion in 2018 and ₦230.8 billion in 2019.
With the CBN’s directive taking effect, its impact on reducing fraud in Nigeria’s financial sector will serve as a critical test for the Nigerian financial institution.
CBN’s commitment to an improved financial sector
As part of its efforts to ensure a viable and responsive financial system, the CBN sanctioned nine commercial banks with a total of N1.35bn for cash unavailability at their Automated Teller Machines (ATM) during the Yuletide.


In line with its earlier released cash distribution guidelines for commercial banks in a bid to ensure cash availability during the festive period, the apex bank slammed N150m on each of the deposit banks after various spot checks revealed the fault actions.
Among the commercial banks that flaunt the apex bank guideline include Fidelity Bank Plc, First Bank Plc, Keystone Bank Plc, Union Bank Plc, and Globus Bank Plc. Others are Providus Bank Plc, Zenith Bank Plc, United Bank for Africa Plc, and Sterling Bank Plc.
The CBN noted that the regulator will remain hell-bent on imposing further sanctions on any other financial institution that violates its cash circulation guidelines. It added that it is collaborating with diverse security agencies to combat illegal cash sales and ensure POS operators’ compliance with the daily withdrawal limit of N1.2m it earlier mandated.