The Nation Newspaper

Tag: Bank fraud

  • Why bank fraud is rising, by CBN

    Why bank fraud is rising, by CBN

    The Central Bank of Nigeria (CBN) has given reasons why  cases of bank fraud are on the rise. It said the vice is due to  increased transactions via e-payment.

    Speaking  at the  Nigeria Electronic Fraud Forum (NeFF) in Lagos, the CBN Director, Banking and Payment System, Dipo Fatokun, said it is natural that as the activities in a sector increases, the risks associated with such sector also increases.

    “And that is why you see that as we have higher volume of transactions via e-payment, there will be higher fraud attempts. Definitely not all of them will be successful, but there will be higher attempts at e-payment fraud,” he said.

    However, Fatokun urged banks to be proactive in  tackling fraud.

    “But one good thing about the industry is that you can always be proactive to think ahead in designing a product or service. You can think ahead and consider ways of ensuring that fraudsters do not succeed in this new product or service that you are deploying,” he said.

    He said the CBN has mandated banks to destroy Automated Teller Machine (ATM) cards trapped in the machine to reduce ATM-related fraud.

    “It is a global practice for ATMs trapped in banks to be destroyed, but in various variants. We instituted the policy because we looked at the fact that cards can be trapped at ATMs for various reasons and may be tampered with at the time it is retrieved,” he said.

    He said ATM cards can be trapped when the customer enters wrong Personal Identification Number (PIN) three times. It can also be due to the ATM itself, the nature of the programme running the ATM or the card one is holding; for instance, damaged card.

    “We asked banks to perforate ATMs because when these cards are trapped, there is a process of returning the card to the issuer bank, and this process goes through various hands, before it gets back to the owner of the cards.

    “So, the possibility of compromise is there. Somebody can say, but they don’t know your PIN? But you know that customers do transactions called card-not-present transactions, in which case you only need information on the card, not the PIN. So, anybody who has the information on your card can successfully use the information on the card to do card-not-present-transactions,” he explained.

    Fatokun said the CBN rolled out the regulation because   when a card is trapped, the issue of compromise will not be there.

    “But going forward, we are working with the banks to ensure that when these cards are trapped, not because the customer did something wrongly, and a new card is to be issued to the customer, we are discussing with them on how this could be done so that the burden will not fall only on the card holder.

    “We are also discussing with the banks to ensure that banks that are trapped can be communicated electronically between the acquirer on which the card was and the issuer of the card. So, that they do not need to physically return the cards for the banks to know that the card was trapped,” he said.

  • Bayelsa Assembly probes N25b bank fraud

    Bayelsa State House of Aasembly has commenced investigations into allegations of illegal deductions of N25b from various government accounts by banks operating in the state.

    The probe arose from an audit carried out by the House Committee on Public Accounts, to reconcile charges and deductions on government accounts from 2007 to 2012 by banks.

    Sponsoring a motion on the floor of the House on Thursday,  the member, representing Kolokuma/Opokuma constituency I, Mr. Tonye Isenah, said the investigation was following public outcry over allegations of unethical practices by banks.

    He said the fist stage of the audit revealed that the banks had fleeced their customers of N25b through illegal deductions.

    After listening to Isenah, the House, in a three-point resolution urged the commissioners for finance and justice to recover all excess charges and deductions from a list of defaulting banks.

    The House gave the commissioners a 30-day ultimatum to recover the money illegally deducted by banks from accounts of state ministries, departments and agencies.

    The lawmakers also directed the Commissioner for Finance to cooperate with the public account committee by providing it with all relevant documents to enable it investigate bank charges and deductions till date.

    Isenah, who is also the Chairman of the committee had earlier said the amount uncovered was an accumulation of excess COT, Value Added Tax (VAT), Liquidation of Temporary Overdrafts (TODs), excess facility fees, excess loan repayments and excess interest on term loans.

    He said: “This astonishing amount discovered, is only on state government’s accounts operated and managed by the Accountant General’s office, excluding accounts of state ministries, departments and agencies.

    “One wonders how much money these banks must have illegally and unethically deducted from the accounts of other arms of the government, businesses and innocent and unsuspecting individuals in the state.”

    Isenah said the committee carried out its oversight function with the assistance of the Commissioner for Finance who providing all relevant documents to facilitate the audit exercise.

    He urged the House to take pragmatic steps against the alleged fraud to ensure financial best practices and uphold government’s commitment to  transparent, ethical, professional and responsive public accounting.

    He insisted that such malpractices should not be allowed “at this period when there is scarcity of financial resources to carry-out development and people-oriented projects and programmes of the state.”

    The Speaker of the House, Mr. Konbowei Benson,  assured the people of the state that the House would address allegations of bank fraud in the state.

    He said the legislature would ensure that justice was done and compel the banks to refund all illegal deductions in line with the financial regulations.