Bank fraud: Rising insider connivance heightens depositors’ fears
Picture used for illustration. Credit: Yahoo


Increasing involvement of staff in incidences of bank fraud is sending a frightening signal of unguaranteed safety of depositors’ money unless drastic steps are taken by both the lenders and industry regulators.

It is no longer news that the adoption of electronic payment platforms as a convenient means of payment has increased the rate of e-fraud and cyber-attacks in Nigerian banks.

But the customers are getting more apprehensive with recent developments suggesting that significant number of these illicit practices taking place in the banks are perpetrated or facilitated by insiders.

A new report by Financial Institutions Training Centre (FITC), revealed that there was an increase in cases of fraud committed by bank staff, from 38 cases in Q4, 2022 to 72 cases in Q1, 2023.

The report stated, “Staff involvement increased to 72 cases in Q1 2023 from 38 cases in Q4, 2022 representing an 89.47 per cent increase. Additionally, there were 124 cases that were not specified and six cases of collusion.”

It was also noted that deposit money institutions reported that 15 employees were sacked due to their involvement in fraudulent activities in Q1, 2023, representing a 25 per cent decrease from the value reported in Q4, 2022, where 12 bank staff were disengaged for similar reasons.

In June 2022, there were reports of continued trial of three former workers with the First Bank of Nigeria facing attempted fraud charges before a Lagos State Special Offences Court, Ikeja.

According to The Punch, the defendants were arraigned by the Economic and Financial Crime Commission (EFCC) for allegedly attempting to steal N20bn from the bank. They were said to have conspired to tap into the bank’s server to grant access to a syndicate, but were apprehended by the EFCC on March 6, 2021, following an intelligence report.

Early this month, the Zone 2 Police Command in Lagos State confirmed the arrest of two members of a syndicate linked to the hacking of no fewer than 1000 bank accounts in Nigeria.

The spokesperson for the command, SP Hauwa Idris-Adamu, in a statement said the suspects, who specialised in hacking local banks, were nabbed at their hideout in Ijebu Ode, Ogun State, following a petition by the United Bank for Africa (UBA).

The statement read, “On May 8, 2023, a petition was submitted by United Bank for Africa to the Assistant Inspector General of Police that there are some syndicates that specialise in internet fraud of various banks in Nigeria, most especially United Bank for Africa, in which they hack into customers’ accounts and move their monies.

“Based on the petition, the AIG raised a team of detectives from the Zonal Monitoring Unit, who swung into action with the aid of modern technology, and two suspects, Yusuf Ademola, 40, and Adesina Abiodun, 50, were tracked down at their hideout in Ijebu Ode, Ogun State.

“The suspects confessed to the crime that they have many syndicates all over Nigeria and that they use software to hack into customers’ accounts and move their money undetected from any bank they wish. However, the modus operandi of these fraudsters is to have a customer’s BVN linked phone number and bank alert for easy transfer of the money.”

Fraud spree

Nigerian banks lost N3.5 billion between July and September 2020 to fraud-related incidences, representing a 534-per cent increase from the same period in 2019, when it was N552 million, according to a report by the Nigeria Inter-Bank Settlement System (NIBSS)

The Industry Fraud Report found that the highest number of fraudulent cases (35.5% of the total) were committed on the web channel while transactions done over phones were responsible for a loss of N410 million (11.7%).

According to the NIBSS, the trend from the beginning of 2020 has been that the web and mobile channels are viable mediums for exponential fraudulent gains.

However, the new FITC report revealed that bank customers in Nigeria lost N472m to fraud in the first quarter of 2023. It was also disclosed that there was a total of 12,553 cases of fraud recorded within this period.

The report showed a decline in losses compared to what was lost to fraudulent banking activities in Q4, 2022. According to FITC, a total of N3.18bn was lost to fraudsters across banking platforms in Q4, 2022, which meant that the losses declined by 85.13 per cent in Q1, 2023.

Access Bank, Guarantee Trust (GTB) and Fidelity Bank recorded 26,877 fraud cases in the first six months of last year, according to analyses of their financial reports for the first half of 2022. This was a 56.45 per cent decrease from the 61,715 fraud cases that were recorded by the banks between June and December 2021.

The fifth annual edition of the 2022 Consumer Digital Banking Satisfaction Index report by Pan-African credit rating agency, Agusto & Co., also discovered that 59% of Nigerians have fallen victim to e-banking fraud in recent years.

The research stated that more than half of bank customers who partook in the survey indicated that they were defrauded through digital banking platforms, which they used for services such as funds transfer, account opening/account balance check, loan application, bills payment, airtime and data top-up, among others.

In January this year, a Twitter user: (@a_ma_ka) narrated how over N4m was moved out of her bank account. According to her, on January 9, 2023, around 8.43 pm, she got a debit alert of N3.7m and within minutes later, she got another debit of N222,900. While she was still wondering about what was happening, she was debited another N102,000. Similarly, another Twitter user: (@Fashionjuel1) said her life savings were wiped off in 15 minutes.

Playing safe

A cyber security expert, Olalekan Oladehinde, argued that while attention has been paid to sophisticated ways of defrauding customers through the internet, some elderly and not-too-lettered individuals are being defrauded in simple ways such as imposters posing as bank staff, phone theft among others.

He said it is always important for customers to deactivate abandoned phone numbers linked to accounts by visiting the closest branch of their banks to deactivate such numbers or by removing abandoned phone numbers linked to accounts.

For ICT expert and Senior Partner of e86 Limited, Olugbenga Odeyemi, several fraud cases could not have happened without the help of insiders in some of the banks.

He said, “Some of the hacking and fraud cases that we have seen happened not because of the lack of security on the banks’ electronic platforms, but because of poverty, greed, and sometimes the lack of education on the part of the customers.

“Other than asking banks to invest more in the security of their platforms, it is equally important that banks spend more resources on educating their customers.

“I think Nigerian banks should spend more money on the welfare of their staff members while making appropriate changes to their internal processes, starting from their hiring processes”.

Findings have revealed that a user’s name, initials, date of birth or even phone numbers are commonly used as passwords in Nigeria nowadays. But with modern technologies at their disposal, hackers can easily exploit weak passwords and obtain unauthorised access to user accounts.

Experts have warned that in order to protect themselves, people should use difficult password combinations that are different from their recognisable initials, date of birth, or even phone numbers.

However, FITC, in a report on fraud-related transactions in the first and second quarters of 2022, urged banks to further strengthen their internal control measures for improved efficiency in pre-empting fraud activities and ultimate prevention of fraud.


According to the CBN Financial Stability June 2022 report, at least 6,047 Bank Verification Numbers of customers have been placed under the Central Bank of Nigeria watch list for fraudulent transactions. The report stated that the total number of watch-listed BVNs for fraud rose by 13.09 per cent from 5,347 in December 2021 to 6,047 in June 2022.

Speaking at the Nigeria Electronic Fraud Forum meeting recently, the CBN Director of the Payments System Management Department, Musa Jimoh, said the apex bank was able to barricade the payment infrastructure and the finance system against criminal activities.

He added, “We have actually tamed down the incidences of fraud. We have recovered so many lost funds and we are putting formidable systems around our payment infrastructure and financial system infrastructure such that fraudsters cannot penetrate.

“In terms of percentage, it is between 30 and 35 per cent decline in incidences of fraud. Remember, there are attempts and they are successful ones. The number of attempts is high, which means that they have been attempting, but they are not successful and some are successful and so money was taken away.

“And in terms of recovery, we also recovered high numbers in terms of the percentage of the monies recovered because of the different initiatives and systems that have been put in place to checkmate all those fraudsters and to track wherever the money is taken into.”

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