Nigeria’s financial sector recorded a staggering N52.26 billion loss due to fraud in 2024, reflecting a 196% increase over the past five years, according to the latest Nigeria Inter-Bank Settlement System (NIBSS) Fraud Report.
The report underscores the rising financial crime wave in Nigeria, with fraud losses surging from N11.61 billion in 2020 to N52.26 billion in 2024—a 350% increase. The escalation highlights vulnerabilities in the banking sector, despite a 31% decline in reported fraud incidents.
The Bigger Picture:
- In 2023, fraud-related losses stood at N17.67 billion, marking a sharp N34.59 billion jump in just one year.
- The total number of reported fraud incidents declined from 101,624 in 2020 to 70,111 in 2024.
- The financial impact per fraud case has significantly increased due to more sophisticated tactics.
The NIBSS report highlights several alarming trends, including identity fraud, insider threats, and cross-border financial crimes:
- Stolen Identities: Fraudsters exploited stolen identities, particularly of senior citizens, to open fraudulent accounts. N400 million was stolen through these accounts in 2024 alone.
- Corporate Fraud: On July 30, 2024, an oil and gas company’s corporate account was created using forged documents. Fraudsters funneled N335 million into the account, later transferring the funds to unlicensed Bureau De Change (BDC) operators. Swift intervention by NIBSS and the Economic and Financial Crimes Commission (EFCC) led to full fund recovery.
- Insider Threats: Internal vulnerabilities were exposed when N1 billion was funneled through accounts linked to minors. A compromised bank staff member registered their Bank Verification Numbers (BVNs), allowing fraudulent transactions. One account received N495.3 million, while another bakery enterprise account saw N507 million transferred and quickly withdrawn.
NIBSS emphasizes that financial institutions must reinforce security measures to prevent fraud. “Despite the decline in fraud incidents, the financial losses have skyrocketed, demanding urgent regulatory and technological intervention,” a spokesperson from NIBSS stated.
What can be done?
- Regulatory Reforms: NIBSS is calling for an urgent review of financial regulations to enhance fraud detection and prevention mechanisms.
- Collaboration: Stronger partnerships between financial institutions, regulators, and law enforcement agencies are necessary to combat emerging fraud tactics.
- Public Awareness: The report highlights the need for increased education on financial fraud, particularly for individuals aged 40 and above, who remain prime targets for scammers.
As Nigeria’s digital payments sector expands, so does the threat of financial crime. The latest NIBSS Fraud Report serves as a critical warning, urging banks and regulators to tighten security frameworks. With fraudsters evolving their tactics, the financial industry must act swiftly to mitigate risks and protect consumers from escalating financial threats.
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