At least 6,047 Bank Verification Numbers of bank customers have been placed under the Central Bank of Nigeria watch list for fraudulent transactions, The PUNCH has learnt.
This was contained in the CBN Financial Stability June 2022 report published in December 2022.
The report also noted that 11,871 BVNs have been watch-listed as deceased persons this year.
The report disclosed that the apex bank conducted an assessment of 28 banks and the Nigerian Interbank Settlement System to ascertain compliance with the Regulatory Framework for BVN Operations and Watch-List for the Nigerian Banking Industry in the review period.
It noted that the assessment revealed some infractions and regulatory actions were taken.
The report further noted that there were 2.72 million enrolled in the first half of this year, bringing the total number of enrolled BVNs to 54.65 million.
In the report, it was also stated that the number of BVN-linked accounts was 130.57 million out of 148.46 million active accounts.
The report read in part, “Also, 2,722,518 BVNs were enrolled, bringing total BVN enrolment to 54,651,086, reflecting an increase of 5.24 per cent over 51,928,568 enrolments at end-December 2021.
“The number of accounts linked with BVNs was 130,569,656 out of 148,462,947 active customer accounts, while the number of watch-listed BVNs associated with fraud and deceased persons stood at 6,047 and 11,871, respectively.”
Based on the report, 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.
The PUNCH had reported recently that four Nigerian deposit money banks lost a total of N1.77bn to fraudulent activities involving the banks’ employees and consumers in 2021.
Banks’ cases
This was contained in the 2021 financial statements of the banks, which included Access Bank Plc, Guaranty Trust Bank Plc, First Monument City Bank, and Wema Bank.
According to their financial statements, WEMA and GTB incurred the biggest losses as a result of fraud within the period under review, as they lost N670.73 and N511.9m respectively.
For Wema Bank, the cost of fraud rose by N27.46m, year on year, as the loss incurred in 2020 was N643.277.
In the case of GTB, the fraud losses almost tripled in 2021. At N511.9m, the losses the bank incurred due to fraudulent activities rose by N337.5m from N174.40m recorded in 2020.
GTB also disclosed that it recorded 15,204 cases of fraud and forgeries in 2021 involving N1.2bn.
Access Bank revealed that while it lost N502m to fraud in 2021, third parties lost about N1.98bn.
The bank also said that it recorded a total of 17,697 cases of fraud in 2021, majorly comprising electronic fraud/USSD (17,911), cash theft/ suppression/pilferage/dry posting (33), fraudulent transfer/withdrawals/reactivation of account (16), and armed robbery (6).
During the review period, FCMB’s losses as a result of fraud climbed from N59.03m to N89.8m.
The PUNCH also reported that Access Bank, GTB and Fidelity Bank recorded 26,877 fraud cases in the first six months of this 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.
In line with Section 5.1.2 (L) of the CBN Code of Corporate Governance, the Guaranty Trust Holding Company and subsidiary companies reported 15,004 fraud incidences in the period under review.
The bank reported that N1.55bn and $50,700 were involved in these cases, with N158.37m recorded as actual/expected loss.
Similarly, Access Bank Plc reported N1.2bn as fraud losses for the period. The bank recorded 10,706 fraud attempts in the first half of 2022.
About 7,104 attempts were successful while 3,602 were unsuccessful. The sum of N12.55bn was involved in these attempts
According to the bank, 7,928 electronic/USSD fraud cases were recorded in the period under review, with 849 successful attempts.
Fraudulent transfer/withdrawals/reactivation of accounts had the most amounts involved, with successful attempts worth N9.48bn made and actual loss worth N1.08bn.
Other successful and unsuccessful fraud attempts fell under the following categories: cash theft/ suppression/pilferage/dry posting, among others.
Fidelity Bank PLC recorded 1,167 fraud incidents in the period under review. The amount involved was N471.01m and $8,367 but actual loss was N4.90m and $2,400.
According to the Nigeria Interbank Settlement System, Nigeria’s has one of the most advanced electronic payment capabilities in the world. It said the increase in transaction processing speed and available channels had also created an avenue for fraudulent transactions to thrive.
In its ‘NIBSS Insight: Fraud in the Nigeria Financial Services’ report, it said, “Statistically, even a 1 per cent successful fraud rate would result in 100,000 successful fraudulent transactions daily.
“This would directly impact customer’s faith in the entire system and could significantly impact our financial inclusion drive as well as the CBN cashless policy.”
Speaking on its fraud risk management, GTCO said, “Causal analysis of key fraud and forgeries incidents (over the counter or cybercrimes) identified in the Group or prevalent in local and global business environments are carried out and reported.
“Likely and unlikely loss estimations are also determined in the process as input in the OpRisk capital calculation process. The focus in fraud risk management is to ensure that processes for preventing, deterring, detecting fraud and forgeries incidents, and sanctioning offenders are effective.”
CBN’s efforts
Recently, the CBN said its current cash withdrawal limit policy would help in tackling electronic fraud.
The CBN Director of the Payments System Management Department, Musa Jimoh, made this known on Saturday in Lagos.
He also disclosed that as electronic payments continued to gain traction, while fraudulent transactions in 2022 reduced by 35 per cent compared to last year.
Speaking at the Nigeria Electronic Fraud Forum meeting, Jimoh said the new policy would prevent criminals from defrauding innocent people.
Speaking on the progress the CBN and NEFF have made in reducing e-fraud, the apex bank official said it was able to barricade the payment infrastructure and the finance system against criminal activities.
He added, “We have actually tamed down the incidence 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 to 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.”
Experts react
The Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Dr Muda Yusuf, urged the CBN to introduce sanctions and eliminate policies that promote corruption.
He said, “I think what they can do is to activate sanctions on anyone found wanting. Aside from the tracking, there must be evidence. And once there is evidence, they should close in on anyone they find. Cyber fraud is the biggest threat in the banking industry.
“The CBN should also refrain from policies that would encourage corruption. One of such policies is the foreign exchange policy. When you have multiple windows and a wide margin between the official rate and the parallel market, it creates a lot of corruption. That is something the CBN needs to look into. And all these intervention funds.”
He also noted that certain measures should be in place in the banking system that would not provide an opportunity for fraud.
A development economist, Dr Aliyu Ilias, commended the CBN but noted that other agencies like the Economic and Financial Crimes Commission and the Nigerian Financial Intelligence Unit should be empowered to fight crime.
He said, “The CBN has done well. It shows they are cautious and putting people on their toes. However, it is a global crime, and these fraudulent people are very sophisticated. It is not just the responsibility of the CBN to combat fraud. EFCC, NFIU, and the Police should be empowered to do the work. We can’t stop fraud completely; we only have to increase our level of monitoring it. The EFCC and NFIU need to be more strengthened and sophisticated in handling fraud.”
A cybersecurity expert, Olugbenga Odeyemi, advised banks to adopt sophisticated measures to mitigate current cyber threats and intensify their efforts in educating customers on ways to avoid falling prey to fraudulent actors.
Odeyemi said, “I think there is a gap in the education of customers on what to do and what not to do. Times are hard, and those into crimes are inventing new ways to move forward.
“So, banks, especially the central bank, need to be steps ahead of those in financial crimes. They should think ahead and come up with certain measures that would mitigate cyber fraud and attacks, and ensure that their customers are well educated on how not to become prey.”
He also urged banks to hire qualified cybersecurity personnel to monitor their ICT space.
