Banks sack 49 employees over fraud in Q2

Nigerian deposit money banks terminated the employment of 49 staff members due to their involvement in fraudulent activities between April and June 2024.

This was contained in the Q2 2024 fraud and forgeries report published by the Financial Institutions Training Centre (FITC).

The report highlights a disturbing surge in internal misconduct, with the number of employees dismissed for fraud increasing by 40% compared to 35 employees terminated in the first quarter of 2024.

Furthermore, the report noted that 58 bank employees were implicated in a total of 11,532 fraud cases reported during the second quarter, representing a 23% rise in insider involvement compared to 47 cases in the first quarter.

Fraud involving external actors also saw an increase, with cases rising by 5.20%, from 10,397 incidents in Q1 to 10,938 in Q2 2024.

The financial toll of these fraudulent activities has also spiked alarmingly. Losses from fraud in the second quarter alone skyrocketed by over 900%, reaching a staggering N42.6 billion.

This represents a sharp contrast to the N468.4 million recorded in Q1 2024 and a staggering 637% increase compared to the N5.7 billion loss reported in Q2 2023. Notably, the amount lost in Q2 2024 exceeded the total losses of N9.4 billion suffered by Nigerian banks throughout the entire year of 2023.

An analysis of the FITC data reveals that ‘miscellaneous and other fraud types’ accounted for the vast majority of the losses, contributing 96.46% of the total amount lost, valued at N41.14 billion. Fraudulent withdrawals and computer/web-based fraud trailed behind, causing losses of approximately N781.2 million and N400.7 million, respectively.

In response to the growing threats of fraud, particularly insider involvement, the FITC has issued several recommendations to banks. The Centre urged financial institutions to harness technology to mitigate fraud risks within their systems. Specifically, banks were advised to implement stricter access controls by limiting access to sensitive settlement files to a small, thoroughly vetted group of authorized personnel who have undergone appropriate clearance and training.

The report also recommended the adoption of multi-factor authentication (MFA) and role-based access control (RBAC) to further safeguard against unauthorized changes to critical files.

Additionally, the FITC emphasised the importance of continuous fraud prevention training for all employees. This training should focus on emerging fraud techniques and key warning signs, especially as card-related and web-based fraud continue to grow.

By adopting these measures, banks are expected to bolster their defenses against the rising tide of fraud that threatens the financial sector.