Electronic Fraudsters Steal N9.5bn from Banks, Payment Systems in 7 Months

*CBN calls for enhanced collaboration to stem the tide

* Releases fresh guidelines for forex sale by BDCs

Nume Ekeghe

The Director of Payment Systems Management of the Central Bank of Nigeria (CBN), Musa Jimoh, who doubles as the Chairman of Nigeria Electronic Fraud Forum (NeFF), yesterday disclosed that accumulated Electronic Fraud (E-Fraud) within the banking sector and payment systems network has led to a loss of N9.5 billion so far in 2023.

Jimoh, who was speaking at the Q3 2023 general meeting of NeFF in Lagos, where stakeholders converged to discuss “New Strategies for Combating E-Fraud in a cashless Environment”, called for enhanced collaboration within the payment systems’ ecosystem to curtail the rise in E-Fraud.
Jimoh said: “We are gathered to see how we can secure our environment, how we can secure our digital environment, and how we can secure cyberspace. We all keep our money in electronic form.

“Today, we are here to continue that conversation to look at new strategies by which we can combat E-fraud. If we don’t combat the cyber criminals, they will take us down and disrupt the entire system. So, we all need to work together to see how we can make life extremely difficult for cybercriminals.
“We need to look at new ways, new techniques, and more efficient manners by which we can improve and guard against the banking and payment infrastructure and educate ourselves on how we can safeguard our bank credentials or tokens and all the information that the banks have provided to us to safeguard. The more information we have about what they’re doing, the more we are protected.

“The objective is to have zero fraud, but you know, this is a gradual process because as you’re building techniques, they’re also exploiting other areas. As more people come into the financial sector, as more transactions happen, people are vulnerable and so we need enlightenment, education. We will continue to push it, which is why it’s going to be a very long journey.

“But I know that with the kind of enlightenment and the push by the bankers’ committee, and other stakeholders, a lot of Nigerians will be well educated to know that they have to keep all the accounting details very secret and therefore we anticipate that the incidence of fraud we taper down almost to zero.”
In giving insights into E-fraud data in 2023, the Managing Director of Nigeria Inter-Bank Settlement System (NIBSS), Premier Oiwoh noted that the industry in 2023 recorded its highest actual loss value of N2.7 billion in January while June 2023 had the lowest value of over N800 million.

He added that the highest fraud count in the last six months was recorded in May 2023 with 11,716 records while the lowest count was in June 2023 with 6,240.
Represented by the Chief Risk Officer, NIBBS, Temidayo Adekanye, he said: “Recently, we had the cashless policies from CBN, which was incurring a dramatic increase in the volume of transactions in the industry which variably has the impact of the volume of fraud in the industry itself. Now, the increase and efficiency have also meant that fraud has dramatically increased across the industry. For Q1 2023, the total fraud reported through the industry forum portal was at N5.1 billion.

“For fraud trends over the last five years, in 2019, we’re looking at about N3 billion and currently 2023, we are looking at about N9.5 billion to date. Fraud losses have increased dramatically over the last five years.”
He further stated that in recent periods, scammers have developed a method to redirect funds via betting platforms and wallet accounts, resulting in minimal success rates for recovering those funds through these avenues due to insufficient identifications.

Adekanye said: “What we see most is the fact that the primary channels are the betting platforms. So once the money hits the betting platform or a wallet account or in some cases, POS agents, once it is cashed out, it is a black hole. There is no way you can recover that money. We’re talking about potentially 5 per cent recovery rates across the industry. So, we all have to identify those betting and wallets accounts, POS agents, cryptocurrency accounts, and in some cases purchases.”

Also, the CBN Director, accompanied by the Managing Director Fidelity Bank, Nneka Onyeali-Ikpe, and other stakeholders unveiled the NeFF official website to aid collaboration and information sharing to curtail E-fraud.
Onyeali-Ikpe said the gradual escalation of E-Fraud is beginning to erode customers’ trust in the financial system. She emphasised the need for a swift and decisive approach to address E-fraud within the financial sector.

She said: “As technology continues to advance at an unprecedented pace, our reliance on digital transactions have grown exponentially. However, with the rise of these digital interactions, the threat of E-fraud has become a significant challenge affecting individuals, businesses, and the industry. The data we have from the NiBBS is that the volume of electronic payment transactions in Nigeria increased by 298 per cent Year-on-Year.

“The banking industry lost a total of N14.3 billion to electronic fraud in 2022 up from N12.7 billion in 2021. As Q1 2023 is about today it’s N5 billion and then the problem here is that the trend so far shows that if this continues unchecked, it would rise to N20 billion for the full year.
“E-fraud has permeated multiple industries, spanning from banking and finance to e-commerce and beyond. These cybercriminals leverage advanced methods to exploit vulnerabilities, gaining unauthorised access to crucial data and funds. The repercussions of e-fraud are not limited to financial losses; they also extend to eroding trust and eroding brand reputation.”

CBN Releases Fresh Guidelines for Forex Sale By BDCs

The Central Bank of Nigeria (CBN) has released fresh operational mechanisms for the sale of forex by Bureau De Change (BDCs) operators within the country.
“The spread on buying and selling by BDC Operators shall be within an allowable limit of -2.5% to +2.5% of the Nigerian Foreign Exchange market window weighted average rate of the previous day,” the CBN said in a statement uploaded to its website yesterday.

It added: “Mandatory rendition by BDC Operators of the statutory periodic reports (daily, weekly, monthly, quarterly and yearly) on the Financial Institution Forex Rendition System (FIFX) which has been upgraded to meet individual Operator’s requirements.
“Operators are to note that with effect from the date of this circular, non-rendition of returns would attract sanctions which may include withdrawal of operating license. Where Operators do not have any transaction within the period, they are- expected to render nil returns. Please be guided accordingly and ensure compliance.”

The new leadership at the CBN, in an effort to stabilise the foreign exchange market has asked the BDCs to be guided and stick to the new guidelines.
The apex bank did not state expressly if it would resume the sale of dollars to the BDCs.
According to the CBN website, there are 5,687 licenced BDCs in the country.