Fraudsters have taken advantage of loopholes in Nigeria’s banking system to siphon more than ₦1 billion using Bank Verification Numbers (BVNs) illegally registered for minors, according to a report by the Nigeria Inter-Bank Settlement System (NIBSS).
The report exposes the wave of financial fraud involving corrupt bank employees and agents who register BVNs for underage individuals, allowing them to open enterprise accounts used for illicit transactions.
Two significant cases mentioned in the report resulted in losses of over ₦1 billion, with stolen funds moved through multiple accounts to evade detection.
How the Fraud Was Carried Out
In one case, a compromised bank staff registered a BVN for a minor and linked it to an enterprise account. This fraudulent account later received ₦495.3 million, which was quickly withdrawn.
In a similar scheme, a banking agent registered a BVN for another underage individual and used it to open a business account under the guise of a bakery. This account was credited with ₦507 million, which was immediately transferred out before authorities could intervene.
NIBSS confirmed that one of the implicated bank staff members is under investigation, while the agent involved in the second case has been reported to law enforcement for possible prosecution.
Inside Job: The Role of Bank Officials
The report stresses how some financial institution employees played a direct role in facilitating these fraudulent activities. Regulators are currently engaging with the affected bank to assess internal complicity and enforce stricter verification measures to prevent further occurrences.
“BVN was registered for a minor I by compromised bank staff and an enterprise account was opened using the BVN. An estimated ₦495.3 million was later received into the account and drawn down.
“BVN was registered for a minor II by a compromised agent and an enterprise account of a bakery was opened with the BVN. An estimated ₦507 million was transferred into the account and moved out.
“Agent has been reported to LEA for arrest while engagement is ongoing with the bank on the role played by its staff in this fraud,” the report stated.
Surge in Fraud Despite Fewer Reported Cases
While the overall number of reported fraud incidents has dropped by 31% between 2020 and 2024, financial losses from fraudulent activities have skyrocketed by 350% within the same period. The total amount lost to fraud surged from ₦11.61 billion in 2020 to ₦52.26 billion in 2024.
Fraudsters are exploiting weaknesses in regulatory oversight, identity verification processes, and financial service intermediaries to carry out large-scale theft daily
Other Fraudulent Schemes Identified
The NIBSS report also flagged other emerging fraud trends beyond the illegal use of minors’ BVNs. One case involved fraudsters stealing the identities of senior citizens to open bank accounts, funnelling more than ₦400 million through these fraudulent accounts.
In another instance, fraudsters used falsified corporate documents to register an oil and gas company in July 2024. On the day the fraudulent account was opened, it received ₦335 million, which was swiftly transferred to unlicensed Bureau De Change (BDC) operators. Authorities were able to recover the funds following apt intervention by law enforcement.
Again, fraud proceeds are increasingly being laundered through cryptocurrency transactions disguised as gift card purchases, making it harder to track stolen funds.
To curb rising fraud cases, NIBSS has called for strict security protocols, including real-time biometric validation during BVN registration and the enforcement of an Enterprise Fraud Management System to detect and halt suspicious transactions.
The report also recommends permanently blacklisting fraudulent BVNs and ensuring that all newly opened financial accounts are profiled within 24 hours to enhance fraud detection efforts.
