Fraud in the Nigerian financial sector surged by nearly 200% in five years- NIBSS report

Nigeria’s financial sector suffered a N52.26 billion loss due to fraud in 2024. This amounts to a 196% surge over the past five years, per the latest Nigeria Inter-Bank Settlement System (NIBSS) Fraud Report released today. 

The report paints a grim picture of escalating financial crime in the country. Fraudsters reportedly stole about N400 million through accounts opened with stolen identities, targeting vulnerable senior citizens and exploiting system vulnerabilities across the industry.

The NIBSS report also reveals that the N52.26 billion lost in 2024 marks a dramatic increase from N17.67 billion in 2023, a jump of N34.59 billion in a single year. 

Over the past five years, the amount lost to fraud has surged by 350%, rising from N11.61 billion in 2020 to the current figure. However, there was a 31% decline in the number of reported fraud incidents, dropping from 101,624 in 2020 to 70,111 in 2024. 

This paradox underscores a chilling reality. While fewer incidents are occurring, the financial impact of each successful fraud is growing exponentially, fueled by sophisticated tactics and security gaps.

Fraudsters used stolen IDs to defraud senior citizens 

A particularly alarming trend highlighted in the report is the rampant use of stolen identities, especially those of senior citizens, to open fraudulent accounts. 

In 2024 alone, fraudsters siphoned N400 million through such accounts, dissipating funds rapidly after transfer. One case involved an individual from Asia, whose selfie was used for verification, operating accounts linked to Hong Kong across at least three undisclosed financial institutions. This cross-border element adds a layer of complexity to Nigeria’s fight against financial crime, raising questions about the adequacy of current identity verification processes.

The report also details a high-profile incident on July 30, 2024, where a corporate account for an oil and gas company was opened using doctored documents and a fabricated company number sourced online. On the same day, N335 million in fraud proceeds flooded the account, only to be swiftly transferred to unlicensed Bureau De Change (BDC) operators. 

Swift action by NIBSS and law enforcement led to the full recovery of these funds, with the Economic and Financial Crimes Commission (EFCC) uncovering incriminating documents in the possession of an account officer. This success story, however, is a rare bright spot in an otherwise troubling landscape.

Further exposing internal vulnerabilities. The report documents over N1 billion moved through two accounts tied to minors whose Bank Verification Numbers (BVNs) were registered by compromised bank staff. In one instance, an enterprise account opened for a minor received N495.3 million, which was quickly drawn down. In another, a bakery enterprise account linked to a second minor’s BVN saw N507 million transferred and subsequently moved out.

The implicated bank agent has been reported to authorities, and NIBSS is engaging the involved bank to address staff complicit. A stark reminder that insider threats remain a critical weak link in this fight.

Despite the rising losses, the ratio of fraud value to total transaction value offers hope. Over five years, this figure dropped from 0.0053% in 2020 to 0.0022% in 2023, before ticking up to 0.0040% in 2024. Yet, a 338% spike in attempted fraud between 2023 and 2024 signals growing aggression from fraudsters, exploiting system vulnerability, particularly in Q2 and Q3 before a decline in Q4. NIBSS attributes this volatility to inadequate safeguards at certain institutions, urging a sector-wide overhaul.

Demographically, individuals aged 40 and above remain prime targets, a trend consistent with 2023 when 80,658 unique customers fell victim, down 4% from 84,130 in 2022. 

This persistent focus on older adults highlights a need for targeted education and protection, as fraudsters exploit their trust and limited digital literacy. NIBSS stresses that while the decline in victim numbers is notable, it does not lessen the urgency of the issue.

The financial industry now faces a clarion call to action. NIBSS, which connects Deposit Money Banks, Mobile Money Operators, Switches, and Payment Service Providers, emphasizes that regulations require urgent review and reinforcement to curb fraud and boost recovery rates. Collaborative efforts between financial institutions, regulators, and law enforcement are deemed essential to stem the tide.

As Nigeria’s digital payments sector grows, so does its exposure to sophisticated crime. The NIBSS Fraud Report serves as both a wake-up call and a roadmap, urging vigilance and innovation to safeguard a financial ecosystem under siege. With losses mounting and fraudsters evolving, the stakes have never been higher.