NIBSS Urges Increased Vigilance as Fraudsters Exploit System Weaknesses
Banks and financial institutions in Nigeria have suffered a staggering N52.3 billion loss due to fraudulent activities over the past five years, according to the latest Fraud Report released by the Nigeria Inter-Bank Settlement System (NIBSS).
The report highlights that despite a decline in yearly fraud counts—dropping by 31% from 101,624 cases in 2020 to 70,111 in 2024—the financial losses incurred have skyrocketed by 350%, rising from N11.61 billion in 2020 to N52.26 billion in 2024. The surge is attributed to the increasing adoption of digital transactions, which has inadvertently provided more opportunities for cybercriminals.
Growing Threats and System Vulnerabilities
NIBSS revealed that while the ratio of total reported fraud value to transaction value initially decreased from 0.0053% in 2020 to 0.0022% in 2023, it surged again to 0.0040% in 2024. The report noted that attempted fraud and actual losses between 2023 and 2024 spiked by 338% and 195%, respectively, with major incidents linked to system vulnerabilities in financial institutions.
Quarterly analysis showed that fraud attempts and losses peaked in Q2 and Q3 of 2024 before declining in Q4. However, NIBSS warned that this decline should not lead to complacency, urging banks to bolster their security measures and remain proactive in combating fraud.
Targeted Demographics and Identity Theft
The report identified individuals aged 40 and above as the primary targets of fraudsters, a trend consistent with previous years. Notably, fraudsters stole an estimated N400 million by opening accounts using stolen identities, particularly those of senior citizens. These illicitly opened accounts were then used to siphon and launder fraudulent proceeds.
Call for Regulatory Strengthening
To mitigate future risks, NIBSS recommended stricter verification protocols for all accounts, especially those involved in high-value transactions. It advised that dormant or inactive accounts should have a zero-transaction limit, while savings accounts without customer-induced transactions for over a month should also be restricted. Additionally, the organization urged financial institutions to implement enterprise fraud management systems to detect and halt suspicious activities in real time.
NIBSS emphasized the need for continuous consumer education, particularly for individuals over 40, to prevent falling victim to fraud. It also called for a review and reinforcement of existing regulations to enhance fraud recovery and protection mechanisms.
As digital transactions continue to expand, the report underscores the importance of collaborative efforts among financial institutions, regulators, and consumers in tackling the growing menace of fraud in Nigeria’s financial sector.
