- The Financial Institutions Training Centre (FITC) reported that Nigerian banks lost N42.6 billion to fraud in Q2 2024
- The Q2 2024 loss marks an 8,993% increase compared to Q1 2024 and a 637% rise from Q2 2023 losses
- FITC recommended that banks enhance security by adopting AI-driven monitoring systems and conducting unannounced internal audits to detect irregularities
A surge in fraudulent activities across banking platforms in Nigeria led to a loss of N42.6 billion by Nigerian banks in three months between April and June this year.
This was revealed by the Financial Institutions Training Centre (FITC) in its Q2 2024 Fraud and Forgeries report just released.
In 2023, Nigerian banks lost N9.4 billion to fraud, but the amount lost in just Q2 2024 alone reflects a dramatic surge. Compared to Q1 2024, when the loss was N468.4 million, the Q2 losses represent an 8,993% increase. This is also a 637% rise from the N5.7 billion lost in the second quarter of 2023.
According to the report, the most significant contributor to these losses was "miscellaneous and other fraud," accounting for 96.46% of the total loss, equivalent to N41.14 billion. Other significant losses came from fraudulent withdrawals, which amounted to N781.2 million, and computer/web fraud, which totalled approximately N400.7 million.
The report highlighted a massive 1,784% increase in the total amount involved in fraud cases from Q1 to Q2 2024, with the value escalating from N2.9 billion to approximately N56.3 billion. These fraudulent activities were conducted through various channels, including ATMs, online platforms like mobile and web banking, bank branches, and point-of-sale (POS) terminals. Notably, card fraud incidents saw a decline of 47.66%, dropping from 21,469 in Q1 to 11,237 in Q2. Conversely, fraudulent activities involving cheques and cash rose by 36.67% and 9.09%, respectively.
Further analysis revealed a significant loss increase across nearly all channels, except for mobile fraud, which saw a 59% decline from N216.4 million in Q1 to N88.7 million in Q2. Bank branch-related fraud saw the most substantial rise, with losses jumping 31,497% from N133.9 million in Q1 to N42.2 billion in Q2. Computer/web fraud also increased by 1,560%, with losses growing from N24 million to N400.8 million.
In response to the alarming rise in fraud, the FITC urged banks to enhance their monitoring and auditing systems. The Centre recommended using AI-driven tools for continuous and automated monitoring of unusual patterns or anomalies in settlement files.
“Access controls should also be strengthened by limiting access to settlement files to only a small, vetted group of authorised personnel given the appropriate clearance and are regularly trained on the latest security protocols.
“The implementation of multi-factor authentication (MFA) and role-based access controls (RBAC) can aid the reduction of the risk of unauthorised changes to settlement files,” FITC stated.
The centre also advised conducting regular, unannounced internal audits focusing on settlement processes to detect irregularities. Strengthening access controls, implementing multi-factor authentication (MFA), and using role-based access controls (RBAC) were also suggested to mitigate the risks of unauthorised access or changes to critical banking files.
5 common scams every Nigerian should be aware of
Meanwhile, in an earlier report, TheRadar highlighted 5 common scams in Nigeria that have become a prevalent issue that affects many Nigerians daily. These frauds are often carried out through simple but cunning methods and often range from small-scale financial fraud to petty online fraud.
They include multimedia messages from unknown senders, impersonation of family members, one-time passwords (OTP), POS scams, and customer support scams.