Increase In Bank Fraud

A recent report of the Central Bank of Nigeria (CBN) indicates that a total of 741 cases of attempted fraud and forgery, involving N5.4 billion, $35,406 and 150 Euros, were reported by banks to regulatory authorities during the first six months of 2007

THE fraud and forgery incidents, according to the report signified a 24.1 per cent increase over the 597 cases reported during the corresponding period for 2006.

CBN, which disclosed this in its “Half-Year Report for 2007”, said 438 fraud and forgery cases were successfully executed during the period, resulting in the loss of N1.4 billion, $13, 938 and 150 Euros.
THIS is not the first time the apex bank will report cases of bank fraud in the country. Up to 295 cases of fraud and forgery involving N1.2 billion, $455, 549 and 10, 000 pound sterling were successfully executed in the corresponding period of 2006. What this implies is that there seems to be an increase in bank fraud in the country and it gives us room for concern.

ALTHOUGH, the CBN attributed the development to the weaknesses in the internal control systems of the banks and the delay to fully integrate their systems and processes, The NIGERIAN OBSERVER believes that any bank worth its salt needs a clear financial system that can stand the machination of fraudsters who seem to abound in the country.

BESIDES, we are disturbed that despite the instruction by the CBN to commercial banks to monitor and in fact report deposits in excess of one million naira to security agents; it seems such guidelines are observed more in the breach. The reasons adduced for this state of affairs is that many banks appear desperate to shore up their millionaire customers’ base, throwing caution and ethics to the winds. In the process, a lot of wrongdoings happen both on the part of the banks and customers.

WE are also concerned that the bank frauds are perpetrated in the face of the war on graft embarked upon by the Federal Government. It does seem that the Independent Corrupt Practices and other related offences Commission (ICPC) Economic and Financial Crimes Commission (EFCC) as well as the Nigeria Police have not risen up to the occasion of bank frauds in the country. We fear that if this ugly trend is allowed to continue, it could send a wrong signal to the investor community whose investments and support the country direly needs to meet its ambitious dream of becoming one of the 20 biggest economies by 2020.

IT is our contention therefore that the Nigeria Police and the anti-graft agencies must brace up to the challenge of curbing bank frauds in 2008 and beyond. The CBN on its part needs to enforce its various regulations that are tailored towards strengthening the commercial banks to minimize fraud in the system.

WE recall that as at the end of June 2007, six banks were rated as sound, 16 satisfactory and three banks were rated marginal. No bank was rated unsound, which in our view is a reflection of the positive results of the consolidation exercise. The assessment contrasts with the apex bank’s position in 2006 where 10 banks were rated sound, 12 satisfactory and three marginals. This is an impressive performance which should be sustained but we urge the CBN to maintain its controls on the banks to ensure that the monies being raised from the public are sued for the growth and development of the banks and the economy. CBN must ensure that round tripping and other such sharp practices of the commercial banks are stopped.

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