Nigerians lost at least N816 million to fraudulent withdrawals in the first half of 2024 and bank staff were directly responsible for it or colluding with outsiders in half of the cases, FIJ can report.

This data was pulled from the quarterly fraud and forgeries report published by the Financial Institutions Training Centre (FITC), a firm that specialises in financial consulting and research in Nigeria.

In the first quarter, fraudulent withdrawals accounted for about N34.8 million lost across 12 cases. This was out of a total of approximately N468 million lost across more than 11,000 fraud cases reported in the same time frame.

However, the losses from fraudulent withdrawals spiked between April and June. About N781 million was lost across 60 cases during this period. For context, fraudulent withdrawals were the second-highest cause of financial losses, trailing only miscellaneous frauds in the second quarter.

Out of the 72 total cases of fraudulent withdrawals in both quarters, 31 were committed by bank staff alone. In another 5 cases, bank staff colluded with outsiders. Summarily, 36 out of 72 fraud cases leading to losses of about N816 million (fraudulent withdrawals) in the first half of the year involved bank employees.

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POS FRAUDS ON THE RISE

In the second quarter, Point of Sale (PoS) fraud was one of the most common types of fraud reported. 3,533 PoS fraud cases sweeping N5.6 million were reported in that quarter. PoS frauds ranked just below mobile phone and computer/web frauds, out of the 10 monitored fraud types.

In Q1, the situation was not much better. PoS frauds accounted for 3,518 cases out of the 11,472 reported in the first quarter.

FIJ has documented several PoS fraud cases. One major incident involved Ifi Alexander, who lost N1 million after attempting to withdraw N20,000 via a PoS terminal in 2022.

Another case involved Olusegun Fatunmbi, who lost N191,200 from his Polaris Bank account after his debit card was trapped in an ATM.

PoS-focused regulations have not enjoyed robust implementations yet, due to its recent introduction. But in 2024, the Central Bank of Nigeria (CBN) introduced new rules to combat PoS fraud.

The CBN recently mandated all PoS transactions to be routed through licensed Payment Terminal Service Aggregators (PTSAs) like NIBSS and UPSL. According to the apex bank, this type of routing will improve security and tracking.

LIMITED REFUNDS, MINIMAL CONSEQUENCES

FITC reports show that, overall, there have been 23,004 cases of fraud and forgeries in financial institutions in the first six months of 2024. These fraud cases have cost banks and their customers at least N43.1 billion.

Bank staff were involved in 169 out of these over 23,000 cases, either directly or through collusion. The data also suggests that financial institutions have been slow to take action.

FITC reported just 155 cases of refunds or resolutions in the same period. In Q1, only 75 refunds were recorded across 24 financial institutions. Q2 showed a slight improvement, with 80 refunds from 28 banks. Most importantly, only 84 bank employees were dismissed over these six months.

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In June, FIJ reported that N1.3 million was stolen from a Zenith Bank account after an Ecobank ATM trapped the account holder’s card. Similarly, in May, a civil servant in Abia State lost N350,000 from their First Bank account in a suspicious case.

In August, FIJ reported another incident involving Amina Mudasir, who accused a Zenith Bank employee of mishandling her complaint after N227,000 disappeared from her account when her card got stuck at the ATM.

These examples hint at the extent of bank staff complicity in fraud cases. It remains unclear how deeply insider fraud runs in Nigeria’s banking sector. Customers, however, have started to suspect bank staff involvement.