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Banks hiding fraud cases from regulators —NDIC

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By Emma Ujah, Abuja Bureau Chief & Babajide Komolafe

ABUJA—Deposit Money Banks in the country are hiding cases of fraud from industry regulators, Nigeria Deposit Insurance Corporations, NDIC, revealed this in a statement, yesterday.

Head, Communications and Public Affairs, NDIC, Mr. Mohammed Ibrahim, disclosed this in a statement, saying: “The NDIC is to investigate some banks for the inadequate rendition of returns to the corporation on instances of fraud, forgeries and cases involving members of their staff who were either dismissed or had their appointments terminated on grounds of fraudulent activities.

“Sections 35 and 36 of the NDIC Act No. 16 of 2006 (as amended) requires all Deposit Money Banks, DMBs, to submit monthly information/returns on fraud and forgeries to the Corporation.

“The NDIC made the decision in the light of the most recent report from its Off-Site Supervision of the DMBs, which revealed the number of fraud cases attributed to internal abuse by staff of banks increased from 231 in 2016, to 320 in 2017, or 38.53 percent above the figure reported for the previous year.

“The report relied on a total of 286 responses received from 26 banks during the period. There were 22 NIL monthly responses from the banks as at year ended December 31, 2017.

“The 286 responses received from banks in 2017 cited 26,182 cases of fraud and forgeries which is 56.30 percent higher compared to 16,751 cases reported in 2016.

“Similarly, the amount involved in the fraudulent activities documented increased by N3.33 billion from the N8.68 billion reported in 2016 to N12.01 billion in 2017 or 38 per cent. However, the expected/actual loss slightly-decreased by N24.42 million or 1.03 percent from N2.39 billion in 2016 to N 2.37 billion in 2017.”

Meanwhile, the NDIC has said banks lost N2.37 billion to fraud and forgeries in 2017, while they sacked 320 staff for their involvement.

It said electronic frauds, including online/Internet and ATM/card related frauds, accounted for 92 percent or  N1.5 billion of the losses suffered by the banks.

It said incidences of fraud and forgeries rose by 56.3 per cent to 26,182 cases  in 2017 from 16,751 cases in 2016, while the amount involved  increased by 38 per cent to N12 billion from N8.68 billion in 2016

The corporation also disclosed that the number of banks’ staff sacked for involvement in fraud and forgeries increased  by 38.53 per cent to 320 in 2017 from 231 in 2016.

Ibrahim stated: “Internet/online-banking and ATM/card-related fraud-types reported constituted 24,266 or 92.68 percent of all the reported cases, resulting in N1.51 billion or 63.66 percent of losses in the industry in 2017.

“The report also documented other miscellaneous crimes such as fraudulent transfers/withdrawals, cash suppression, unauthorised credits, fraudulent conversion of cheques, diversion of customer deposits, diversion of bank charges, presentation of forged or stolen-cheques among others.”

“The 22 licensed commercial Banks and 4 Merchant banks rendered 286 Returns on Dismissed/Terminated staff as a result of fraud and forgeries during the year under review. Out of the 26,182 fraud cases reported by the 26 licensed banks, 320 cases were attributable to internal collaboration by bank staff. A total of 320 bank employees had their appointments either terminated or were summarily dismissed in 2017, as against 231 in 2016. That represented an increase of 38.53 percent in the total number of fraud cases reported in 2017. However, the losses arising from the reported cases decreased from ¦ 760 million in 2016 to ¦ 682 million or about 11.43 percent in 2017.

“The Corporation attributes the improvement to additional internal control measures adopted by the banks in the wake of the proactive corrective measures taken to ensure their compliance with good corporate governance principles.

“However, despite the Fidelity Insurance Cover taken by banks to address fraud perpetrated by staff, there is still need for the banks to further enhance their internal control and security measures, as the rising trend of E-Channels (Online banking & Card-related) fraud and forgeries in the Industry remains a serious cause for concern to the Corporation.”



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