Nigerian Banks Lose N6bn To e-fraud In 2014, 118% Increase From Previous Year

The value of reported electronic fraud by Deposit Money Banks (DMB) has risen to 1181.1 per cent, translating  into N6.2 billion in 2014 from N485.2 million in 2013.

This indicates the rising level of sophistication of electronic fraud in the financial services sector.

A breakdown of fraud showed that in 2014, Automated Teller Machines (ATMs) were the major victim of fraudulent activities in terms of volume as it experienced the highest number of fraudulent transactions.

However, internet banking accounted for a loss of about N3.2 billion to fraudulent transactions in terms of value.

These were contained in a report presented by Olufemi Fadamo, Head, Information System Security, Nigeria Inter-Bank Settlement System (NIBSS), at the Nigeria Electronic Fraud Forum (NeFF) meeting organised by FirstBank of Nigeria limited and FCMB Plc.

The report revealed that in 2013, there were quite a substantial amount of fraudulent transactions in terms of volume on internet banking and web based transactions. Also, across the counter accounted for almost N16 billion of the attempted fraud which is the bulk of fraud witnessed in 2013.

Meanwhile, the Central Bank of Nigeria (CBN) has recommended the setting up of an independent Nigeria Banking Risk Information Centre (NIBRIC).

Dipo Fatokun, Chairman of NeFF, said this should be owned by the banks but CBN should orchestrate it. This centre should be not-for-profit and be wholly dedicated to managing banking risk with special focus on fraud.

He said the first phase of NIBRIC should be commercial crime and the immediate setting up of a forensic laboratory and a Security Operation Centre (SOC).  

Fatokun, who is also the director, banking and payments system department, CBN, said there had been some improvement in the e-fraud reduction driven by issuance of circulars such as two factor   authentication for internal banking processes and Maker/Checker control structure  for  all  payment  platforms. 

“The forum has observed that most of the fraud that has been made in the bank has insider leg, which we call insider abuse. The circulars have helped in reducing the volume and the value of fraud,” he said.

NeFF was originally created by the CBN to design strategies towards combating electronic fraud.

However, across all payment channels in the financial industry, including electronic and non-electronic based platform, Nigeria has experienced a massive rise in the volume and value of transactions processed yearly.

Consequently, in 2014, the central switch (NIBSS) processed over 100 million transactions of volume with a corresponding value of over N40 trillion. Additionally, the volume of transactions grew by over 50 per cent between 2013 and 2014 with its value grown by 28 per cent.

Source:
Tribune Newspaper