The latest report from the Financial Institutions Training Centre (FITC) reveals that the total amount of money lost to fraudulent activities across payment channels in Nigeria reached its lowest level in at least 10 quarters (30 months) during the first quarter of 2023.
According to the report, the losses decreased by 85.2 percent to N472.3 million in Q1, compared to N3.18 billion in the previous quarter. Additionally, the amount involved in fraud cases reduced by 79.4 percent to N2.6 billion.
The report highlighted a significant decrease in the total number of reported fraudulent cases and the amount lost due to fraudulent activities in the Nigerian banking system during the reviewed quarter. However, it emphasized that the prevalence of fraudulent activities remains a significant concern.
The report also noted an 89.5 percent increase in the participation of bank employees in fraudulent activities during Q1, with the number rising from 38 staff to 72 staff. Conversely, outsider involvement in fraudulent activities decreased by 8.1 percent, with the number declining from 13,436 outsiders in the previous quarter to 12,351 in Q1.
In terms of specific fraud types, the report revealed that mobile fraud, computer/web fraud, and Point of Sales-related fraud were the top three categories with the highest number of occurrences. Mobile fraud accounted for 34.1 percent at N161 million, followed by computer/web fraud at 27.7 percent and N130 million, and fraudulent withdrawals at 24.7 percent and N116 million.
Stakeholders in the digital industry raised concerns about the growing cyber security threats associated with fraud activities, which could hinder financial inclusion efforts. Assane Gueye, a professor at Carnegie Mellon University Africa, emphasized the need for secure technologies that protect data and privacy while aligning with people’s reality, ensuring that these technologies bring more benefits than harm.
The authors of the FITC report recommended Nigerian banks to establish robust internal control systems capable of detecting and preventing fraudulent activities. They emphasized the importance of segregation of duties, regular transaction reviews and reconciliation, and limited access to sensitive data. The report also suggested that banks invest in modern fraud detection technologies, such as machine learning algorithms and artificial intelligence tools, to identify and flag suspicious transactions and patterns.
