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NDIC Probes Banks Over Non-Rendition Of Fraud Cases’ Returns

The Nigeria Deposit Insurance Corporation (NDIC) has unveiled plans to investigate some Deposit Money Banks (DMBs) for inadequate rendition of returns to the Corporation on instances of fraud and forgeries.

The Corporation, which gave this hint in a statement issued by its Head, Communications and Public Affairs, Mohammed Ibrahim, indicated that the decision was taken in the light of the most recent report from its Off-Site Supervision of the DMBs which showed increased number of fraud cases attributed to internal abuse by staff of banks.

According to the statement, the investigation will also cover cases involving bank employees who were either dismissed or had their appointments terminated on grounds of fraudulent activities.

The NDIC stated that the proposed measure was in line with the provisions of Section 35 and 36 of the NDIC Act No. 16 of 2006 (as amended) which require all Deposit Money Banks (DMBs) to submit monthly information/returns on fraud and forgeries to the Corporation.

It noted that the fraud cases increased from 231 in 2016, to 320 in 2017, representing a 38.53% rise over the 12-month period.

The report relied on a total of 286 responses received from 26 banks during the period while there were 22 nil monthly responses from the banks as at year ended 31st December, 2017.

The Corporation stated further: “The 286 responses received from banks in 2017 cited 26,182 cases of fraud and forgeries which is 56.30% higher compared to 16,751 cases reported in 2016.

“Similarly, the amount involved in the fraudulent activities documented increased by ₦3.33 billion from the ₦8.68 billion reported in 2016 to ₦12.01 billion in 2017 or 38%. However, the Expected/Actual loss slightly-decreased by ₦24.42 million or 1.03% from ₦2.39 billion in 2016 to ₦2.37 billion in 2017.

“Internet/Online-banking and ATM/Card-related fraud-types reported constituted 24,266 or 92.68% of all the reported cases, resulting in ₦1.51 billion or 63.66% of losses in the Industry in 2017.”, it added.

The report also documented other miscellaneous crimes such as fraudulent transfers/withdrawals, cash suppression, unauthorized credits, fraudulent conversion of cheques, diversion of customer deposits, diversion of bank charges, presentation of forged or stolen-cheques, among others.

Expatiating on the highlights of the report further, the Corporation stated that the 22 licensed commercial banks and four merchant banks rendered 286 Returns on Dismissed/Terminated staff as a result of fraud and forgeries during the year under review.

This is even as it disclosed that out of the 26,182 fraud cases reported by the 26 Licensed Banks, 320 cases were attributable to internal collaboration by bank staff.

“A total of 320 bank employees had their appointments either terminated or were summarily dismissed in 2017, as against 231 in 2016. That represented an increase of 38.53% in the total number of fraud cases reported in 2017. However, the losses arising from the reported cases decreased from ₦760 million in 2016 to ₦682 million or about 11.43% in 2017”, NDIC stated.

The Corporation attributed the improvement to additional internal control measures adopted by the banks in the wake of the proactive corrective measures taken to ensure their compliance with good corporate governance principles.

It also reported that despite the Fidelity Insurance Cover taken by banks to address fraud perpetrated by staff, there was still need for the banks to further enhance their internal control and security measures, as the rising trend of E-Channels (Online banking & Card-related) fraud and forgeries in the Industry remains a serious cause for concern to the Corporation.


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