Amid growing concerns about the surge in electronic fraud within Nigeria’s financial sector, the Nigeria Inter-Bank Settlement System (NIBSS) has revealed that banks in the country have collectively suffered losses of approximately N9.5 billion in 2023.
Speaking at the Nigeria Electronic Fraud Forum’s (NeFF) third-quarter meeting in Lagos, Premier Owoih, Managing Director of NIBSS, expressed alarm over the escalating electronic fraud incidents, specifically highlighting the significant impact on the online gambling industry.
Owoih, who was represented by Temidayo Adekanye, NIBSS Chief Risk Officer, attributed the rise in e-fraud to the apex bank’s cashless policy, implemented to enhance transaction efficiency.
The cashless policy, which was instituted by the Central Bank of Nigeria (CBN), has led to a marked increase in transaction volumes across the financial industry. However, Owoih noted that this boost in efficiency has inadvertently resulted in a surge in fraudulent activities within the sector.
For the first quarter of 2023 alone, the total reported fraud cases through the industry forum portal amounted to N5.1 billion. Owoih emphasized that this trend is a reflection of the growing challenge posed by cybercriminals in the financial ecosystem.
Comparing e-fraud data from the last five years to 2023, Owoih underlined the severity of the issue and its potential threat to financial stability. He revealed that fraud losses have risen dramatically over the years, with losses reaching N9.5 billion in the current year.
Diving into the specifics, Owoih disclosed that fraudulent activities exhibited a notable uptick in July 2023, recording a 39% increase compared to June. With 8,649 actual fraud cases reported in July, the losses amounted to N1.2 billion, indicating a substantial 54% surge over the period. From January to July, the total losses due to fraud stood at approximately N2.7 billion.
The NIBSS Chief Risk Officer further identified the most effective avenues for cybercriminals, citing betting platforms, wallet accounts, and Point of Sale (POS) agents. These platforms, according to Adekanye, offer cybercriminals nearly untraceable methods to carry out fraudulent activities.
Adekanye called for intensified verification and identification procedures for POS agents, cryptocurrency accounts, and sports betting accounts. He stressed that the recovery rate of e-fraud across these mediums remains low, hovering around 5% nationally.
Musa Jimoh, Chair of NeFF and Director of Payment System Management at the CBN, echoed concerns over the rise of cybercriminal activities. He emphasized the urgent need for enhanced education and awareness to combat cyber threats. As more individuals enter the financial system and transaction volumes surge, vulnerability to cybercrime increases, leaving the financial system susceptible to potential collapse.
Jimoh urged financial institutions to bolster cybersecurity education, acknowledging that the battle against cybercriminals is paramount to safeguarding the integrity of the financial industry.