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 This fraudulent account later received ₦495.3 million, which was quickly withdrawn.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.

In Q2 2024 alone, over 11,500 fraud cases were reported, involving ₦56.3 billion, marking a 1,784.94% increase in the total amount involved compared to Q1, according to the Financial Institutions Training Centre (FITC).

Total losses increased to ₦42.6 billion, an 8,993.04% increase from the preceding quarter.

Mobile, web, and POS-related fraud remain the most prevalent types, with cybercriminal activities involving external actors increasing by 5.20% and staff involvement in fraud cases rising sharply by 23.40% from Q1 to Q2 2024. 

But PalmPay is not sitting back on this. The fintech platform is rising to raise awareness of the urgent need for collective action to fight fraud and secure Nigeria’s financial systems.

PalmPay’s Initiative Against Fraud

In commemoration of the 2024 International Fraud Awareness Week, PalmPay, a leading digital financial platform in Nigeria, organised a community walk on 22 November in Lagos.

Themed “United Against Fraud: Building a Safer Future”, the initiative aimed to educate the public on fraud prevention and digital security.

Addressing participants, PalmPay’s managing director, Chika Nwosu, noted the importance of tackling fraud collaboratively:

“Fraud is more than just a crime—it is a systemic threat that undermines trust, compromises security, and disrupts progress. Its effects are far-reaching, impacting personal livelihoods and the integrity of businesses.”

He further highlighted the growing sophistication of fraudsters, leveraging vulnerabilities in digital payment platforms:

“Recent statistics from the Financial Institutions Training Centre (FITC) reveal that over 11,500 fraud cases were reported in Q2 2024—a stark reminder of the growing sophistication and persistence of these threats. These figures are more than numbers; they represent real people whose trust has been broken and whose finances have been compromised.”

Educating the Public on Fraud Prevention

During the event, PalmPay reiterated the lessons for fraud prevention, including safeguarding personal information, verifying suspicious emails, and refraining from disclosing sensitive information, even to close family members.

He stated: “You don’t need to open suspicious links. Verify them first. Once you have a suspicious email, report it and ask questions. We have built a robust system that cannot be penetrated by fraudsters, but the public must also avoid compromising their identity.”

PalmPay also stressed the importance of educating underserved communities where ATMs are frequently unavailable. According to a recent survey by the NDIC, 70% of ATMs in urban areas experience cash shortages, with rural areas facing even higher challenges.

“POS agents play a necessary role in bridging the gap in financial inclusion. While ATMs are limited by cost and location, agency banking ensures that financial services are accessible, even in remote villages.”

PalmPay Emphasises Collaboration with Stakeholders

PalmPay reiterated its focus on fraud prevention through strong collaboration with law enforcement agencies such as the EFCC and the Nigerian Police Force.

“We maintain a close relationship with all security agencies. Whenever there is an issue, we provide them with the necessary information promptly to address fraudulent activities,” Nwosu explained.

“Together, we can create an environment where individuals and businesses can thrive without fear, knowing that trust and security are at the heart of our digital world.”

PalmPay affirmed its intention to extend such campaigns nationwide, strengthening its mission to build a safer and more inclusive financial ecosystem.

FITC, a not-for-profit professional organization comprising members from the Central Bank of Nigeria (CBN), the Nigeria Deposit Insurance Corporation (NDIC), and all licensed banks in Nigeria, disclosed the figures.

The report highlighted a decline in losses compared to the previous quarter’s fraudulent banking activities. In Q4 2022, a total of N3.18 billion was lost to fraudsters across various banking platforms, indicating an 85.13% decrease in losses during Q1 2023.

Moreover, the data from FITC revealed a 79.44% reduction in the total amount involved in fraud cases during Q1 2023 compared to the preceding quarter. The sum decreased from N12.58 billion to N2.59 billion.

Additionally, the total number of fraud cases reported in Q1 2023 declined by 14.07%. The report indicated that 12,553 cases were reported in the first quarter of this year, compared to 14,609 cases recorded in the previous quarter.

The data for Q1 2023 also revealed that mobile, computer/web, and point-of-sale (PoS) transactions were the top three channels with the highest number of fraud occurrences, consistent with the previous quarter.

“An analysis of the magnitude-based ranking of fraud categories for Q1 2023 shows that Mobile Fraud has the highest ranking, accounting for N1.1 billion (42.72%), followed by the Computer/Web fraud category at N646 million (24.99%). This was followed by POS Fraud at N450 million (17.41%) and fraudulent withdrawals at N139 million (5.36%),” stated FITC in the report.

The data further indicates that mobile fraud accounted for 34.07% (N161 million) of the total amount lost in Q1 2023, while computer/web fraud represented 27.69% (N130 million), and fraudulent withdrawals accounted for 24.72% (N116 million).

According to PMDSS Arrest CBN Governor News, Emefiele was taken into custody by the DSS on Friday evening.

The arrest comes shortly after President Bola Tinubu announced the suspension of Emefiele, citing ongoing investigations and planned reforms in the financial sector.

Before his suspension, the DSS had sought an order to arrest Emefiele in a December 2022 exparte application, accusing him of financing terrorism, engaging in fraudulent activities, and committing economic crimes of national security concern.

However, the Chief Judge of the Federal High Court, Justice J.T Tsoho, declined to grant the DSS’s application, noting that such a request should have been accompanied by presidential approval due to the significant implications it would have on the Nigerian economy if the CBN governor were to be arrested and detained.

Aside from reported cases of fraud in the form of unnecessary deduction of money, failed transfers, and others, banks need to constantly educate customers on the need to also wear the security thinking cap to protect their funds. 

Even though the Central Bank of Nigeria (CBN) has taken steps to address this issue, such as creating the Nigeria Electronic Fraud Forum and adopting recommendations for the prevention of electronic fraud, fraud events continue to happen.

As a result, the CBN has pushed banks to strengthen their internal controls and security precautions and has instituted sanctions for banks that don’t adhere to rules. The Economic and Financial Crimes Commission (EFCC) was founded by the Nigerian government to look into and prosecute financial crimes, particularly bank fraud.

Importantly, banks have been investing in infrastructure to beef up their securities but customers also have key roles to play. Fraudsters frequently employ social engineering techniques, such as impersonating a reliable person or organization, to persuade people to provide their personal or financial information. 

They might ask for your code or password under the pretense of validating your identification or resolving an issue with your account while posing as a representative from a bank, government agency, or even a tech business.

Identity theft, phishing, ATM skimming, and insider fraud are a few of the frequent frauds that take place in Nigerian banks. Both clients and banks may suffer large financial losses as a result of these.

Here are some tips for you to protect your funds

Lock your sim card to prevent unauthorized transactions on your account in case your phone is stolen or lost. Yes, locking your SIM card is a smart idea to avoid fraudulent activity on your account if your phone is stolen or lost. 

By deactivating this, you may stop someone else from using your SIM card to send messages, make calls, or access mobile data, which can be expensive and could harm your personal or corporate finances.

Your card and PIN are private. Do not share them with anyone, not even any bank staff. It’s critical to maintain the privacy of your card number and PIN to guarantee the security of your account and card. Avoid writing down or keeping your PIN in your phone or wallet by memorizing it. 

Contact your financial institution right away to report the matter and take the appropriate precautions to protect your account if you believe that your card or PIN has been compromised. You better not engage in unofficial transactions with bank staff or agents.

Shield your PIN when using an ATM or POS, and do not accept help from anyone at the ATM. To safeguard your financial information from prospective fraudsters or thieves, use a PIN while using an ATM or point-of-sale (POS) equipment. Criminals can employ several techniques, including shoulder surfing, skimming, or deploying hidden cameras, to get their PIN.

Never reveal your code or password over the phone to anyone who calls and asks for them. Instead, you should ask for more information to be sure the caller is who they say they are and that the request is legitimate before disclosing any personal data. 

Before determining whether to provide any critical information, you can ask the caller to identify themselves, their company, and their contact information. You can then independently verify this information.

In conclusion, ensuring security to protect your funds is a collective responsibility. While the CBN and commercial banks continue to tighten up the loopholes, customers should also do the same. 

The menace has become so proliferated and sophisticated that Nigeria has already lost N5.5 trillion to fraud and cybercrimes in 10 years, according to Deloitte. The Nigerian Communications Commission (NCC) estimates that Nigeria loses about $500 million a year to cybercrime.

However, with the advancement of Artificial Intelligence (AI) cybercrime could be mitigated and brought to a minimum. 

Recently, ThetaRay organized a fintech event in Lagos, a gathering that had in attendance AML, risk, and compliance officers, leaders, and managers at banks and fintechs that want to utilize AI to increase efficiency and efficacy at their companies. 

Shani Golov, Regional Director, Africa, at ThetaRay, discussed the various ways Artificial Intelligence detects and prevents financial crimes such as money laundering and other criminal activity. Other experts like Obi Emetarom, CEO, Zone, and Ibijoke Oyewole, Fintech Consultant, VigiPay, also shared their expertise and knowledge about using AI to prevent financial crimes.

In an interview with TechEconomy, Shani explained that AI has the capability to detect and mitigate the unknown. “Our solution is very sophisticated. It’s dramatically reducing false positive alerts, given the ability to detect unknown cases and the lack of time to investigate. And that actually means that you do less and get more.”

AI Solutions – SONAR

ThetaRay primarily offers AI-driven transaction monitoring technology known as Sonar to help banks and fintechs grow and extend business prospects through dependable and secure international payments. 

ThetaRay’s AML solution, SONAR, uses proprietary artificial intuition machine learning methodology to analyze dozens of risk indicators associated with financial crimes. “So, our solution is actually for monitoring transactions and also for sanction screening.”

This risk-based AI approach paints a clear picture for compliance teams and enables them to detect abnormal activity within large sets of data and to effectively calculate and pinpoint transactions indicating suspicious activities.

As a result, SONAR can deliver 95% of investigation-worthy alerts. ThetaRay’s process also provides insights on customer identity where KYC information is lacking, creating risk profiles for non-customers and transparency across complex paths. 

Explaining in detail how Sonar works, she explained that the solution has the capability to learn the normal behavior of clients and detect any abnormal behavior. Shani added, “You don’t need to predefine any rule. The system has the liberty to simply detect any behavior that is not in correlation to normality.”

Partnerships 

ThetaRay has strategic partnerships with companies like Zone, VigiPay, etc. Both payment operators  partnered with ThetaRay to protect their businesses against money laundering, sanctions violations, and other risks. 

For VigiPay, the agreement will see ThetaRay implement its SONAR AML solution to shield VigiPay’s services through cloud-based transaction monitoring to detect early signs of fraud activity. 

VigiPay believes the partnership will unlock sustainable growth by ensuring regulatory compliance and consumer safety as the company continues to expand the volume and value of its processed transactions.

ThetaRay AI technology is instilling a new standard of trust into the growing world of online payments, enabling fintechs’ rapid revenue growth by opening doors to business with new financial partners worldwide.

Responding to questions on the partnership with Zone, a payment infrastructure company running on blockchain technology, Shani said, “Yes, there is an ongoing partnership, and Zone seems to be the first customer we engaged with, if I’m not wrong, and as you know, they do have a blockchain platform. 

She said Zone enables financial services through its blockchain platform. “And we are there to support their payment, to be trusted to be very safe, and to make sure they are not involved in any illegitimate activity.”

Nigeria’s National Blockchain Policy

The Nigerian government last week approved a new national blockchain policy aimed at institutionalizing blockchain technology in the country’s economy and security sectors.

Blockchain technology makes it possible to develop decentralized applications and new business models that will improve transactional transparency, supply chain security, and record-keeping efficiency across different sectors.

Reacting to this development,  Shani said, “I think we can see this happening all over the world. So as I mentioned, regulators are now putting more focus on fintechs, specifically blockchain and digital assets, which are not regulated at all.

“We will start to see tomorrow that more and more regulators will come with announcements like we saw yesterday from the government, and we are there to support them. We also work with governments in Africa. So, I think we’re very familiar with this.”

The oversubscribed equity funding round was led by San Francisco-based Base10 Partners (investors in Nubank, Plaid, and Brex), with participation from Helios Digital Ventures, Shopify, Partech, and Khosla Ventures.

Despite the growth in digital payments across Africa, most businesses still only have access to generic point-of-sale machines to support the collection of payments. These machines also typically work in isolation from the rest of the business operations, leading to a variety of inefficiencies in their business processes.

With this new funding, Nomba will deliver payment solutions that have been designed for the specific services that businesses provide, enabling them to plug gaps in their payment processes, operate more efficiently and deliver excellent customer experiences.

For example, restaurants will be able to access menus, manage inventory, receive payments, and perform other business functions all from the same hardware. For transport and logistics companies, Nomba’s solutions will enable them to directly connect their transactions to payments, creating a more seamless experience that increases sales and profitability.

Starting in Nigeria, Nomba will also deliver a range of business tools, including invoicing and order management solutions to improve efficiency and reduce cost of operations for businesses across the continent.

Since launching in 2016 as “Kudi.ai”, a chatbot integration that responds to financial requests on social apps, Nomba has evolved over the years into a profitable, omnichannel payment service provider.

The company supports more than 300,000 businesses with a wide range of payment solutions, as well as management and banking tools that enable better business processes and support business owners to be better at doing business.

The company processes $1 billion in monthly transactions, which represents a market-leading gross transaction value (GTV) for a payment service provider in Africa.

Before this funding round, Nomba had only previously raised $5 million in funding, leveraging those funds to successfully grow the business and efficiently deliver solutions that have positively impacted hundreds of thousands of businesses across Nigeria.

This new capital will enable the company to deliver more solutions for businesses in Nigeria, across Africa ,and in other markets, as the opportunities may emerge.

According to Yinka Adewale, CEO and co-founder of Nomba, “We see payment as a business model, not just a product and we want to make it easier for businesses to take advantage of all that is possible in their payment processes to support their continued growth and success.

We have a long list of products we have been working on and the funds we have raised as well as the investors that have backed us gives us a lot of confidence about what can be achieved with more effective payment solutions in the hands of business owners.”

Luci Fonseca, Partner at Base10 said, “Nomba’s track record of innovation and capital efficiency makes it one of the most exciting startups in Africa. We are thrilled to be supporting them to deliver their game-changing solutions to power growth and continued success for businesses in Nigeria and beyond.”

With the SONAR AML solution from ThetaRay, VigiPay will have access to a transaction monitoring and screening platform that can spot subtle signals of sophisticated money laundering activity.

The new technology will make it possible for VigiPay to expand transaction volumes and value services for both local and international payments while maintaining regulatory compliance and customer transaction transparency.

According to VigiPay, ThetaRay is an excellent partner in achieving this fit. Their efficiency is set to achieve a new all-time high with the addition of automated transaction screening and monitoring, allowing VigiPay to better serve its consumers.

VigiPay’s team is committed to helping clients easily access multiple countries and thereby, grow their business and excel in today’s competitive environment.

ThetaRay’s SONAR solution is based on a proprietary form of AI, artificial intelligence intuition, that replaces human bias to find anomalies outside of normal behavior, including completely new typologies.

It enables fintech and banks to implement a risk-based approach to effectively identify truly suspicious activity, including across complex, cross-border transaction paths.

The troubled businessman is scheduled to show up in front of Interpol’s Assistant Inspector General of Police at Force Headquarters in Abuja.

According to a bulletin viewed by TechEconomy, the Magistrate Court of Lagos issued the bench warrant/arrest warrant.

Ijiomah Marksman is sought after for committing N480,013 million worth of money laundering and computer fraud.

The declaration also follows a petition by Chive GPS, a dispute resolution company that provides debt recovery solutions and other strategic services in Nigeria on behalf of a client who had sent N480,013,000 into multiple bank accounts controlled by a marksman.

Part of the bulletin reads: ”We are retained by and others “Our Clients” and on whose express instruction we write to lay a criminal complaint of a well-orchestrated theft, fraud, and obtaining money by pretenses against the trio of Ijiomah Marksman, Marksman Uhunoma Trinity, and Chinmark Group herein referred to as “MARKSMAN.”

“Sometime in 2020 and 2021, MARKSMAN invaded the social media space and other mediums advertising for investment and posed as investment moguls that can manage the public’s funds for investments in real estate, hospitality, trading, and financial loans, in exchange for fixed return at a predetermined rate and duration.”

Nigeria has some of the most advanced electronic payment capabilities in the world, and while this has significantly made banking operations more effective, it also gives fraudsters more leeway to perpetrate their crimes.

There are various channels, such as cash, automated teller machines (ATMs), point of sale (PoS) devices, mobile devices, etc., through which financial crimes are carried out in collaboration with bank staff.

TechEconomy obtained a report titled “Report on Frauds and Forgeries in Nigerian Banks,” it stated that all cash theft instances reported in Q3 2022 were committed by bank employees.

In the 18-page report that was put together by the Financial Industry Transparency Council (FITC), specifically, 19,314 cases were reported in the third quarter of 2022, down from 20,195 cases observed during the same period in 2021, or 4.36 percent fewer cases overall.

According to FITC, foreigner involvement in the scams increased, rising from 14,243 in Q3, 2021 to 16,125 a year later, which was a 324.50 percent growth.

Employee involvement dramatically expanded, rising by 250% from 32 in Q3, 2021 to 112 in Q3, 2022. Within this period, 14 positions were terminated in Q3 2021, while 20 bank workers were relieved of their jobs a year later.

Cost Implication

As of the third quarter of 2022, there had been around N3.62 billion worth of fraud committed but the overall sum involved fell from N34.8 billion to N9.62 billion, a reduction of 72.34 percent.

However, the overall loss during the same period in the previous year was N857,167,293.61 (2021) as opposed to N3.62 billion in Q3, 2022, which represents an increase of 324.50%.

According to the Nigeria Inter-bank Settlement System, fraud-related transactions cost Nigerian banks an average loss of N14bn yearly.

In another report, four Nigerian deposit money banks namely, Access Bank Plc, Guaranty Trust Bank Plc, First Monument City Bank, and Wema Bank lost a total of N1.77bn to fraudulent activities involving the banks’ employees and consumers in 2021.

Banks

With 10 people conspiring, four bank employees and five outsiders were involved in 22 reports of teller fraud during the review period, totaling N121, 763,258.91 with an estimated loss of N83.5 million.

Four bank employees and 12 outsiders were involved in 36 reported forgeries of checks and signatures totaling N521, 349,800.96, but N305.4 million was lost, the FITC report said.

“8830 incidences of computer/web fraud occurred, involving 8911 outside parties and six bank employees. N305, 495,175.25 were lost in this, and N2, 621,953,247.60 were involved.”

In terms of mobile fraud, 6631 fraud cases in total were reported, with 33 bank employees and 5194 outside collaborators involved. In this case, FITC reported that N2, 669,417,856.44 was involved, and N1,222,095,081 was lost within the period under consideration. 16 bank employees were involved in 16 reported cases of cash theft totaling N569.6 million, of which N452.2 million was stolen.

However, within the period, there was no clearing fraud, illegal printing of bank papers, falsification of accounts, foreign currency fraud, cross-shooting of cheques, or kite flying.

Mitigating Financial Fraud

FITC stated that, although there has been a decrease in fraud incidents, the amount involved, and the amount lost, banks must boost their internal control systems so that fraud activities are preemptively stopped.

For the organization, the decrease in fraud incidents, amounts involved, and losses are valuable to the banking institution.

“I think there is a gap in the education of customers on what to do and what not to do.” Times are hard, and those in crime are inventing new ways to move forward, said Olugbenga Odeyemi, ICT expert and Senior Partner at e86 Limited

He advised banks to adopt sophisticated measures to mitigate current cyber threats and intensify their efforts in educating customers on ways to avoid falling prey to fraudulent actors.

“So, banks, especially the central bank, need to be steps ahead of those in financial crime.” They should think ahead and come up with certain measures that would mitigate cyber fraud and attacks and ensure that their customers are well educated on how not to become prey.”