Banking fraud losses in Nigeria have surged to 52.3 billion naira in 2024, up from 11.6 billion naira in 2020. This increase coincides with a 3.8% GDP growth, spurred by a stronger digital payments sector. Criminal tactics have evolved, with a focus on exploiting identities of vulnerable individuals. Investigations are ongoing, and Nigeria’s regulatory landscape faces scrutiny due to its classification as a “grey list” country.
A recent analysis by the Nigeria Inter-Bank Settlement System (NIBSS) revealed a significant increase in banking fraud losses in Nigeria, which have surged nearly threefold in the last five years. In 2024, fraud incidents were estimated to have cost 52.3 billion naira ($34.8 million), compared to just 11.6 billion naira in 2020. Notably, fraudsters attempted to illegally obtain 86.4 billion naira during this period.
This alarming trend surfaced alongside Nigeria’s fourth-quarter GDP growth of 3.8%, the highest in three years, predominantly driven by advancements in the services sector, including finance and insurance. Nigeria’s digital payments system is recognized as one of Africa’s most robust, with tech startups raising around $400 million in 2024. Recent currency reforms and a cash shortage have further accelerated the shift towards digital financial services.
NIBSS attributed the rise in fraud to an increase in digital transactions, stating, “The amount lost to fraud has increased over the past five years along with the growth of financial transactions in the digital payments sector.” Fraud tactics have evolved, with criminals converting illicit funds into gift cards and creating accounts using stolen identities of vulnerable individuals, including seniors and minors.
The report highlighted that 400 million naira was deposited into accounts opened using the identities of elderly citizens. While some stolen funds have been recovered, investigations into bank employees involved in the fraud are ongoing. Furthermore, Nigeria remains on the “grey list” due to deficiencies in anti-money laundering and counter-terrorism financing measures, alongside nations like South Sudan and Bulgaria.
Additionally, Nigeria’s Economic and Financial Crimes Commission (EFCC) has detained numerous foreigners linked to internet fraud, including 792 suspect arrests in December in Lagos. Among these, 192 suspects were identified as foreign nationals, with 148 being Chinese. The EFCC indicated that foreign criminal networks often partner with Nigerians to execute phishing scams targeting victims primarily in Western countries.
In an effort to better reflect economic activities, Nigeria’s statistical agency plans to integrate illicit and concealed economic transactions into its GDP calculations. This initiative is part of a broader strategy to enhance economic transparency.
The significant rise in banking fraud losses in Nigeria highlights the pressing need for enhanced cybersecurity measures in the financial sector. NIBSS’s report underscores the vulnerabilities presented by increased digital transactions, warranting immediate attention from regulatory bodies and financial institutions. The collaborative efforts between local authorities and international partners are crucial to combatting this growing threat effectively.
Original Source: newscentral.africa
