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The report by the Chartered Institute of Bankers of Nigeria (CIBN) that bank workers have defrauded some banks’ customers is an eye opener. The CIBN report was the outcome of its Ethics and Professionalism Division’s investigation after 67 customers reportedly lodged complaints of fraudulent activities against some bank workers. The amount involved was put at N11.7 billion. About 53 cases were fully resolved, with a total amount of N1.7billion refunded to the petitioners.
These facts were disclosed by the Chief Executive/Registrar of CIBN, Mr. ‘Seye Awojobi, at the institution’s 2020 Annual General Meeting (AGM). According to the CIBN Registrar, there were also banks/customers-related cases which were brought from the courts to the committee for resolution. Apart from customers’ petitions on frauds, there are also complaints against poor services of banks, including excessive charges and others.
The ugly development is capable of eroding the confidence of customers in the nation’s banking sector. Interestingly, the institute has vowed to rid the sector of bad eggs. Consequently, it has deployed Professional Conduct and Ethics Certification Code approved by the Bankers’ Committee sub-committee on competency and industry standards in the sector. This notwithstanding, we believe that it should do more to restore customers’ confidence in the sector.
Those in charge of commercial banks must bear in mind that, as financial intermediaries that cater for both borrowers and lenders in the economy, their workers should, like Caesar’s wife, be above board, and abide by their professional ethics, especially in handling customers’ transactions. Fraudulent practices negate their contractual obligations and professional code of ethics. Unfortunately, fraud in the banking sector has become rampant in recent times.
Recent statistics from the Central Bank of Nigeria (CBN), and the Nigeria Insurance Deposit Corporation (NDIC), have confirmed a staggering increase in fraud involving bank workers. In 2017, reported fraud cases on customers’ deposits rose from 16,762 in the first six months, to 20,869 in the corresponding period of 2018. Last year, a report by the Nigeria Interbank Settlement System (NIBSS) revealed that banks in the country lost N3.5billion between July and September 2020 to fraud-related cases. The loss represents 534 per cent rise from the same period in 2019 when it was N552 million. Similarly, transactions done over the phone accounted for a loss of N410 million. This represents 11.7 per cent of the entire loss recorded within the three-month period covered by the NIBSS report.
A research conducted in 2020 showed that both internal and external factors contribute so much to the rising bank frauds. Banks must be circumspect before employing workers, especially those that man their information technology (IT) units.
According to the Financial Stability Report of the CBN, unsuccessful attempted fraud and forgery cases within the same period of six months stood at N7.99billion. The worrisome trends in the banking industry must be curbed forthwith. We urge banks to use technology to check the recurring frauds in the sector.
Sadly, the number of fraud cases attributed to insider abuse increased exponentially from 16,751 in 2016 to 26,132 in 2017 from 286 responses received from 24 banks. This represents over 56 per cent. The amount of losses rose to N3.3billion from the N8.68billion reported in 2016. The figure also increased to N2.37bilion in 2017. In 2015, fraud and forgeries reported to have been facilitated by insiders increased by 36.42 per cent, representing 12,279 cases. Unfortunately, Automated Teller Machines (ATM)-related cases constituted most of the frauds.
Based on the CBN and NDIC reports, we urge the banks and the Bankers Committee to address the problems of conflict of interest and other unethical conducts of insider abuse among banks’ workers. The banks should regularly investigate complaints on high-profile customers’ deposits. Besides, all factors that breed corruption in the banking industry must be holistically addressed. These include poor corporate governance and lack of effective sanctions on offenders. Let there be due diligence in the recruitment of bank workers. This will invariably stem the rise of insider abuses in most of these fraudulent activities.
