NDIC probes banks over N12bn fraud

*320 bankers dismissed
*On-line, card-related fraud cause for concern
By Chika Otuchikere
For allowing massive fraud put at N12billion to occur within a year in their organisation, the Nigeria Deposit Insurance Corporation (NDIC), has gone on the offensive against the affected banks.
The NDIC was shocked when it unearthed 26,182 cases of fraud and forgeries which involved a��12.01billion in 2017, within the countrya�� banking system.
More shocking to the industry regulators was that the figure of fraud cases last year was higher than the figure of 2016.
Even though, the affected banks have dismissed 320 bank officials that were involved in the fraud, the NDIC is not satisfied that enough had been done by the financial institutions to stem the slide.
Consequently, it had resolved to dig deeper into cases and impose adequate sanctions on the banks.
The corporation is also investigating the banks for the inadequate rendering of returns to it on instances of the fraud, forgeries, and cases involving their dismissed staff or those whose appointments were terminated in respect of fraudulent activities.
NDICa��s Head of Communication and Public Affairs, Mohammed Kudu Ibrahim, made this known in a statement accessed by The AUTHORITY. He said that the probe was in accordance with Section 35 and 36 of the NDIC Act, No. 16 of 2006 (as amended), which requires all Deposit Money Banks (DMBs) to submit monthly information/returns on fraud and forgeries to the Corporation.
According to Ibrahim, the NDIC made the decision following a recent report from its Off-Site Supervision of the DMBs which revealed that the number of fraud cases attributed to internal abuse by officials of banks increased from 231 in 2016, to 320 in 2017, or 38.53% above the figure reported for the previous year.
“The report relied on a total of 286 responses received from 26 banks during the period.
There were 22 nil monthly responses from the banks as at year ended 31st December, 2017.
a�?The 286 responses received from banks in 2017 cited 26,182 cases of fraud and forgeries which is 56.30% higher compared to 16,751 cases reported in 2016.
“Similarly, the amount involved in the fraudulent activities documented increased by a��3.33 billion from the a��8.68 billion reported in 2016 to a��12.01 billion in 2017 or 38%. a�?However, the Expected/Actual loss slightly-decreased by a��24.42 million or 1.03% from a��2.39 billion in 2016 to a��2.37 billion in 2017.
a�?Internet/Online-banking and ATM/Card-related fraud-types reported constituted 24,266 or 92.68% of all the reported cases, resulting in a��1.51 billion or 63.66% of losses in the Industry in 2017”, he said.
The NDIC also uncovered that Internet/Online-banking and ATM/Card-related fraud-types reported, constituted 24,266 or 92.68% of all the reported cases, resulting in a��1.51 billion or 63.66% of losses in the Industry in 2017.
Other miscellaneous crimes such as fraudulent transfers/withdrawals, cash suppression, unauthorized credits, fraudulent conversion of cheques, diversion of customer deposits, diversion of bank charges, presentation of forged or stolen-cheques among others, were reported and documented.
“The 22 Licensed Commercial Banks and 4 Merchant banks rendered 286 Returns on Dismissed/Terminated staff as a result of fraud and forgeries during the year under review.
a�?Out of the 26,182 fraud cases reported by the 26 Licensed Banks, 320 cases were linked to internal collaboration by bank staff.
“A total of 320 bank employees had their appointments either terminated or were summarily dismissed in 2017, as against 231 in 2016. That represented an increase of 38.53% in the total number of fraud cases reported in 2017.
a�?However, the losses arising from the reported cases decreased from a��760 million in 2016 to a��682 million or about 11.43% in 2017,” NDIC stated.
The corporation attributed the decrease to additional internal control measures adopted by the banks in the wake of the proactive corrective measures taken to ensure their compliance with good corporate governance principles.
It noted that despite the Fidelity Insurance Cover taken by banks to address fraud perpetrated by their staff, there is still need for the banks to further enhance their internal control and security measures, as the rising trend of E-Channels (Online banking and Card-related) fraud and forgeries in the industry remain a serious cause for concern to the NDIC.