Combating Fraud in Banking Industry

Dike Onwuamaeze writes on efforts by banks to protect customers from the activities of fraudsters in the financial system who are on the prowl

Many years ago, most transactions were carried out with both parties meeting physically. Money and goods were exchanged directly and everyone went their way. It was hard to attempt to swindle anyone.

However, we are now in the digital age and the world has evolved.
People can now order and pay for goods and services from the comfort of their homes. Both parties – buyer and seller – don’t even have to meet for transactions to be carried out.

Thanks to online banking, paying for goods and services is much easier than ever before. This technological evolution, however, has increased the number of fraudsters lurking in the shadows, eager to hoodwink unsuspecting people and rob them of their monies.

In recent times, the activities of fraudsters have increased and the banking sector is grappling with efforts to tackle this menace headlong.

The Director, Payment System Management at the Central Bank of Nigeria (CBN), Sam Okojere, had at the Access Bank Anti-Fraud Week forum held in Lagos last year, assured that the apex bank would come out with guidelines for the operation of financial technology (FinTech) companies and payment service banks (PSBs) in order to prevent fraud and make the financial system safer for all.

In order to realise this, the CBN recently unveiled the regulatory framework for sandbox operations that will help control how new tech-based financial products/services are launched into the Nigerian market.

In a 16-paged circular that was sent to all deposit money banks and fintech firms the CBN had explained that the regulatory sandbox would serve as, “a formal process for firms to conduct live tests of new, innovative products, services, delivery channels, or business models in a controlled environment, with regulatory oversight subject to appropriate conditions and safeguards.”

This is also intended to make it possible for the apex bank to adequately keep up with the latest innovations by banks and fintechs, whilst ultimately engendering a reliable, safe, and efficient payment system in the country.

Okojere had said: “A new BVN guideline should be coming out any moment from now. When the exposure draft is released, I will encourage you to make a suggestion regarding your area of concern.

“The risk-based supervision framework that will actually take care of Fintechs and PSBs is in the offing, very soon there will be a very clear guideline on that,” Okojere said.

Also, the Group Managing Director/CEO, Access Bank Plc, Herbert Wigwe, had said the workshop was the bank’s avenue of reaching out to members of the community on issues around fraud, risk and cybersecurity through close engagement.

In Nigeria, he said customers are culturally not attuned to security issues around digital transactions, even well-educated people run the risk of falling victim to social engineering and identity theft traps.

“We must go beyond educating customers on the protection of crucial information to actual data protection and integrity amongst operators and stakeholders,” Wigwe said.

“I am a great believer in collaboration to solve problems. Our collaborative efforts in data protection and customer education are required in countering security threats in Digital payments,” he said further.

In line with this, the CBN and the Bankers’ Committee recently launched a cyber-security and fraud awareness campaign, called ‘Moni Sense,’ to educate members of the public on the benefits of protecting their bank and other related transaction details.

The group stressed that as the year gradually comes to an end, comprehensive fraud and cyber security awareness was important in ensuring members of the public are informed on their role in protecting their banking information from fraudulent activities.

Earlier in April this year, the CBN also issued a fraud alert about the activities of cyber-criminals who are taking advantage of the current coronavirus pandemic to defraud citizens.

CBN’s Director of Corporate Communications, Isaac Okoroafor, said that cyber-criminals are taking advantage of COVID-19 pandemic to defraud citizens, steal sensitive information, or gain unauthorised access to computers or mobile devices using different techniques.

The apex bank admitted that the trend is not peculiar to Nigeria, as there has been a rise in COVID-19 related cyber-criminal activities all over the world. However, it is the priority of the apex bank to ensure that Nigerian bank customers are made aware of the current trend to prevent them from falling victims.

Access Bank’s Effort

Access Bank Plc has been proactive in ensuring that its customers are safe from fraudulent activities as it asked customers to be on the lookout for fraudsters who are using new scam methods to rip people off by preying on the distress that comes with the nation-wide lockdown.

The bank said fraudsters contact their potential victim either via mail, phone call or text to request for sensitive banking details with the promise of crediting their account, after which they proceed to withdraw the money in the victim’s bank account.

It added that they often come under the guise of government officials, social advocates and false NGOs allocated to share the relief fund that was promised by the government. This, unfortunately, is a fraudulent scheme and given the current state of affairs, an easy scam to fall for.

According to the Executive Director of Retail Banking, Access Bank, Victor Etuokwu, “Access Bank is imploring its customers to be wary of any message, demanding their personal or bank details. Customers must remember that the Bank will never ask for their BVN, full card PAN, PIN, mobile app activation code, OTP or password as most of this information is readily available to the Bank via its database. Any call, email and text message, claiming to be from Access Bank and demanding for any of these details is certainly a scam.

“Also, customers are advised to refrain from sharing user-generated codes when migrating from the old mobile applications to the Access More app. With knowledge of this pin, these fraudsters can gain entry to your bank app, and from there have access to the money in your account,” he added.

Because of the peculiar nature of the lockdown situation, people are exposed to all sorts of threats including financial ones that may sometimes come in different and unusual formats. As a result of this, Etuokwu noted that everyone should remain vigilant at all times and report all suspicious activities to the appropriate authorities.

New game

The bank, a few weeks ago, also identified that the Nigerian banking industry is currently witnessing increased regulatory scrutiny due to the impact of COVID-19, and customers have not been spared from the whims of fraudsters.
To this end, the bank urged customers to remain vigilant and beware of the common tricks used by fraudsters to rob them of their monies.

Etuokwu expressed concern about the growing number of fraud cases being reported. He implored customers to take more responsibility in safeguarding their funds and offered reassurance of the bank’s commitment to providing information relevant to identifying and fending off fraudsters.

“Over the last few months, the number of reported fraud cases has spiked considerably. This is not unexpected as the current economic hardships experienced due to COVID-19 have caused many to be vulnerable.

“However, this trend has become very disturbing, while we urge customers to become more aware of the tactics employed by fraudsters. Access Bank will continue to educate customers on how to avoid falling victims as well as deploy resources to ensure the security of customers’ funds.” Etuokwu said
“The bank has identified smishing, phishing, social engineering, and identity theft as the most common methods used by fraudsters. To aid the fight against this common enemy, we have put more power in the hands of our customers, through the *901*911# USSD code.

“We have provided a platform through which customers can immediately deactivate their USSD profile by dialling *901*911# from any phone in the event their mobile devices get lost or stolen,” he added.

Through the years, Access Bank said it remains committed to educating its customers, informing and protecting them from fraudsters.

The bank has created dedicated pages on its official website that constantly educate customers on the schemes and tricks employed by fraudsters.

Responding to queries made by customers saying the fraudsters approached them disguising as the bank’s staff, Etuokwu added that, “Customers should be on alert as the bank will never ask for personal information such PIN, BVN, 16-digit card number, CVV, Password, OTP or Authentication Code for the mobile banking app. We urge our customers to ignore such calls, text messages or emails.”

Summarily, however talented a fraudster is, their real power is the access that customers give them. It is unknown to many that no fraudster can withdraw money from an individual’s account using only the BVN or account number. Hence, the recent panic by many on social media highlights the need for continuous customer education.

Access Bank has advised that customers should not enter their card details in an unsecured Website, never reply an email or text requesting for their card details, protect their PIN, check their bank statements often, amongst others.

Financial analysts and security experts believe that banks and security agencies such as the anti-fraud department of the Nigerian Police, the Economic and Financial Crime Commission (EFCC) work together to tame fraud monsters.

Stephen Iloba, a Lagos based financial expert, is of the opinion that all hands must be on deck before fraud and fraudulent activities in banks are tamed.

He said, “Banks alone cannot fight this battle. The battle can only be won if all stakeholders like the CBN, the Police and EFCC work together with banks. The fintech space should also be involved.”