Deposit money banks in Nigeria have reported a significant surge in fraud incidents and financial losses during the second quarter of 2023 (Q2’23). Disturbingly, the latest data also highlights a substantial increase in instances of insider involvement.
In this alarming report, the total amount implicated in fraudulent activities during this period skyrocketed to N9.75 billion, marking an astounding surge of 276.98% from the preceding quarter’s N2.58 billion in Q1’23.
Concurrently, the cumulative losses linked to these criminal activities soared to N5.79 billion for the same timeframe, representing an astonishing escalation of 1,125%. This is in stark contrast to the N472 million recorded as losses during the first quarter of 2023 (Q1’23).
These troubling revelations emerged from the Financial Institutions Training Centre’s (FITC) recently released report on Fraud and Forgeries in Nigerian banks for Q2’23.
FITC further highlighted that the losses were incurred by 24 banks that filed reports detailing fraud cases for the period. The report also noted a 6.4% reduction in outsider involvement in the fraud cases, coupled with a 22.2% rise in staff involvement within the same timeframe.
Owned by the Banker’s Committee, which includes institutions such as the Central Bank of Nigeria (CBN), the Nigeria Deposit Insurance Corporation (NDIC), licensed banks, and discount houses in Nigeria, FITC aims to provide innovative knowledge solutions and capacity-building programs to bolster the resources of Nigeria’s financial services sector.
According to the FITC report, the primary source of losses, accounting for 94.35% of the total, was fraudulent loans amounting to N5.46 billion. Following this, mobile fraud constituted 3.39% of the total losses, equivalent to N196 million.
Computer and web-based (internet) fraud, however, made up a marginal 1% of the total losses, reaching N59.5 million for the period.
The report stated: “In Q2 2023, there were 11,679 reported cases, showing a 6.96 per cent decrease compared to the 12,553 cases in the first quarter. However, the data indicates a significant increase in the total amount involved in fraud cases. The amount rose from N2.59 billion in the previous quarter to N9.75 billion in Q2, representing a 276.98 per cent increase.”
“Additionally, the amount lost also saw a substantial rise, increasing from N472 million in Q1 2023 to N5.79 billion in Q2 2023, which corresponds to an 1125.03 per cent increase. This increase might be attributed to the fact that banks were liable for the losses incurred and had to make refunds to customers.”
The report also noted changes in the patterns of involvement, suggesting a more complex picture and potential systemic issues at play.