Six years ago, a cashless policy became fully operational in Nigeria. The aim was to encourage electronic transactions with a view to reducing the amount of physical cash in the economy. The logic was that this would minimise the risk of cash-related crimes.
But a major downside of the policy has been pervasive electronic banking fraud (e-fraud). Although the cashless banking system was designed to foster transparency, curb corruption and drive financial inclusion, it’s threatened by the growing perpetration of fraud.
About N15.5 billion was lost to bank fraud in 2018. About 60% of the fraud was perpetrated online owing to available internet-based and tech-rated banking services.
Our research investigated dimensions of electronic fraud in Nigeria. We found three: internal fraud carried out by banking staff; external fraud carried out by ordinary Nigerians; and collaboration between fraudsters and banking staff.
We found that inefficient supervision, non-performance of oversight by regional heads of banks, and poor follow-up on customers’ addresses (Know Your Customer) accounted for the fraud that took place.
Our study provides the banking industry, banking public and investors with critical pointers on how to reduce fraud.
Our study involved collecting data as well as conducting interviews with 30 people. These included victims of bank fraud, bank customers who did not subscribe to the cashless policy and fraud detectives at the Economic and Financial Crimes Commission (EFCC).
These were the common patterns we uncovered.
Insider fraud: By insider, we mean those working with banks or those in a relationship with account holders. Here, the fraud was exclusively executed by members of staff in the banking system who exploited the strategic position they held in the system and their grasp of how it works. Banking institutions and customers were their victims.
An example we came across during our research was the case of a N90 million (US$452,261) fraud perpetrated by an account officer of a major eatery in Lagos State. The job of this account officer was to collect the eatery’s takings and deposit them at the bank. A fraud detective told us that:
As the account officer he would collect money on a daily basis and was expected to credit the company’s account. However, he would collect money on Monday and lodge it and collect on Tuesday and not lodge it. He was missing one day out. He did this continuously until he was able to rake in N90 million. At this time, when the eatery management raised the alarm on their account, he ran away and could not be found. We however used his sister to arrest him. We were only able to recover N8 million naira from him. He had used part of the money to organise his wedding, had a baby and almost completed a four-bedroom bungalow at another area in Lagos.
Bank fraud is often successful because many Nigerians don’t subscribe to transaction alerts. The eatery management trusted their account officer but did not know that he was dishonest.
Outsider fraud: These perpetrators were external to the banking system. They thrived on their internet skills and sometimes on their understanding of the victims’ routine and identity.
An example we came across was the fraudulent use of bank verification numbers (BVN). These were made compulsory by the Central Bank of Nigeria in 2014. All bank account holders had to undertake biometric registration. The intention was to ensure security and check fraud.
But fraudsters have found a way to cheat the system by sending bank customers false emails asking for their bank verification details. As one victim explained to us:
I needed to make some transactions and I headed for my bank. I had called my account officer ahead of time. On getting to the bank, I connected my computer and got a mail from a supposed same bank. I was asked to click on a link and supply my BVN details for update of my account or face service suspension on the account. I just clicked the link and supplied my details and behold, N1 million debit alert came on my phone within five minutes! I was shocked and devastated but before we could do anything they had withdrawn everything.
Collaborative fraud: This involved collaboration between bank staff and fraudsters outside the banking system. Banks and individual account holders were the victims. For example, bank staff could provide account details of customers to the collaborating fraudster.
Despite this weak governance architecture, which is still not fraud proof, bank executives reported having in place mechanisms which had limited the incidence of fraud. One was sending out information to customers who subscribed to electronic alerts. Through this, banks contact and send anti-fraud messages to their customers.
Owing to reputational risk, banks try to refrain from public prosecution of erring staff. We found that banks adopted shaming as a mechanism for instilling discipline within their organisations while attempting to ease out “bad eggs” through flagging of their images on computers and across the banking industry.
There is a need to check fraud through customer awareness and financial literacy education.
While fraudsters continue to design new ways of working on customers’ vulnerabilities, Nigerian banks need to use the Cybercrime Act to prosecute offenders as a way to boost confidence in the banking sector and deter fraud in the future.
Malawian voters defied the coronavirus pandemic on Tuesday to return to the polls for the second time in just over a year after President Peter Mutharika’s re-election was annulled in a dramatic court ruling.
The hotly-anticipated re-run was ordered by the Constitutional Court, which declared that the May 2019 vote, narrowly won by Mutharika, was fraught with “grave and widespread irregularities” including the use of correction fluid on results sheets.
It ordered new elections be held within 150 days of its February ruling.
SAFE VOTING IN MALAWI ELECTIONS
The new polling deadline coincided with the coronavirus pandemic raging across world, but that did not deter candidates who staged rallies attracting tens of thousands of supporters across the country.
The landmark verdict reverberated across African politics, for it made Malawi just the second country south of the Sahara to have presidential poll results set aside, after Kenya in 2017.
But that decision sent Mutharika into a frenzy, accusing judges of working with the opposition to steal the election through what he dubbed a “judicial coup d’etat”.
On Tuesday, he accused the opposition of inciting violence following unconfirmed reports of isolated incidents.
“It’s obvious that the opposition is doing this. This is totally unnecessary,” he told reporters after voting in Blantyre.
He claimed some of his party monitors were “chased away, some were beaten”.
“It’s obviously people that are afraid of the will of the people that are engaging in these barbaric acts. I condemn it completely.”
Tuesday’s election was practically a two-horse race between the president and Lazarus Chakwera, who lost the election by 159,000 votes.
Mutharika, who turns 80 next month, won with 38.5% of the ballots against Chakwera’s 35%, according to the now-discredited results.
Victory in the rerun will be determined by whoever garners more than 50% of the votes — a new threshold welcomed by the Public Affairs Committee, an influential quasi-religious civic group.
“This election is unique. First, this election is born out of a court ruling and second, they will follow the 50-percent-plus-one system,” the group said.
“I am happy because this re-run is the will of the people. I just hope that the best person wins,” said Peter Chadza, 26, a businessman who voted in the capital.
‘OUR DATE WITH DESTINY’
Chakwera, 65, enjoys the support of nine political parties in his bid to unseat the president.
“I believe that Malawians’ quest for justice is being answered today (and)… that rights will be respected,” said Chakwera after casting his ballot at a primary school in Lilongwe.
“This is our date with destiny and this is (the) time for the beginning of a new Malawi,” he said, expressing “confidence” the electoral commission will do what is right.
A new electoral commission was appointed on June 8, with Chifundo Kachale replacing the controversial Jane Ansah as chairman.
Kachale described the voting which ended at 1600 GMT as “generally peaceful with some unfortunate incidents but this did not disturb the process”.
He gave no details of the incidents but vowed to deliver “a credible and transparent election”.
Army chief General Peter Namathanga told reporters: “We will jealousy guard peoples’ votes. We will take measures to deter all those with ill intentions.”
In a statement, the UN called on Malawi’s “political actors and stakeholders to renew their commitment to credible and peaceful elections, while observing all preventive measures against the spread of COVID-19”.
The coronavirus pandemic has killed 11 people and infected at least 730 in the poor country of 18 million.
The electoral commission has provided hand-washing points at each of the 5 000 polling stations to guard against the spread of COVID-19.
At Malembo Primary School in the capital, voters washed their hands with soap and water before lining up to vote, but none wore face masks or kept their distance in the long queue.
“People really want to vote, whether we have coronavirus or not,” said Innocent Maguya, a 34-year-old driver, queueing up to cast his ballot.
“We would rather risk the disease than run the risk of having a president that people don’t want. We cannot stop this crucial vote because there are no face masks,” he said.
Some 6.8 million people were registered for voting, which was due to end at 1600 GMT after 12 hours.
The electoral commission has until July 3 to unveil the results, although the announcement is widely thought likely to come on today or Thursday.
Burundi's national assembly on Tuesday approved the nomination of Alain-Guillaume Bunyoni, a hardliner under US sanctions for his alleged role in political repression, as prime minister.
Bunyoni, who will fill the new position of head of government created in the 2018 constitution, was backed by an overwhelming majority in a session boycotted by the opposition.
Bunyoni is currently minister of public security and former head of the national police.
He has been under sanctions by the United States since 2015 for his role in violence against civilians and political repression that marked late president Pierre Nkurunziza's disputed third-term bid that year.
UN rights investigators have said there were likely crimes against humanity committed by state forces, citing extrajudicial executions, arbitrary arrests, disappearances, torture and sexual violence.
The turmoil left at least 1,200 dead and saw 400,000 flee the country.
Pacifique Nininahazwe, an exiled rights activist, told AFP Bunyoni's nomination was "a very bad sign ... a reinforcement of impunity and defiance of the international community".
Bunyoni's appointment comes after President Evariste Ndayishimiye was sworn in last week following the sudden death of Nkurunziza on Jun 8.
The government announced on Tuesday that Nkurunziza, who ruled the East Africa nation for 15 years, will be buried on Friday in the administrative capital Gitega.
Angola is halfway through the construction of a $77 million diamond hub that it hopes will create revenue sources beyond the sale of rough diamonds.
The hub is located in Angola’s diamond province of Lunda Sul. It will contain a main diamond-cutting facility, a diamond evaluation and training center, and smaller manufacturing plants, Sodiam, Angola’s state-owned diamond company, said last week. Sodiam also plans to set up a bourse in the hub, it announced earlier this month.
“The hub aims to bring together companies related to the mining sector, focusing not only on the diamond value chain, but also in providing adequate and necessary infrastructures for the promotion and development of related activities,” the company noted.
Sodiam will divide the hub into three main parts. A commercial area, which will be open to the public, will include banks, insurance companies, tax offices, stores, restaurants, a food court, a convention center and a training center. Meanwhile, an industrial zone will contain 26 lots of varying sizes, which will house factories and logistics platforms for the diamond industry. The third section will comprise the main cutting factory.
Sodiam expects the hub to be completed by the end of the year.
The domestic wings of the Murtala Muhammed Airport (MMA) Lagos, and Nnamdi Azikiwe Airport, Abuja have been rated 57 percent in terms of meeting the requirements of Nigeria Civil Aviation Authority (NCAA) for the commencement of operations.
This implies that if the federal government had not shifted the proposed resumption of domestic flights hitherto slated for Monday (today), it would have been practically impossible to restart operations given that there are many gaps required to be filled, Daily Trust can report.
The NCAA Director-General, Capt. Musa Nuhu had at a briefing of the Presidential Taskforce on COVID-19 on Thursday last week declared that the June 21 resumption date was no longer feasible.
Our correspondent learnt that this conclusion was reached after a virtual stakeholders' meeting held on Tuesday where all stakeholders presented their restart plan in line with the checklist provided to them by the regulatory authority.
At the meeting, it was discovered that there are still many gaps that were yet to be filled by the operators including airlines and airports managers.
However, a follow-up meeting held on Friday night gave a vivid update on the status of the industry restart plan.
According to statistics from the NCAA, air navigation service providers are 80 percent prepared; airlines were scored 75 percent in terms of preparedness; ground handlers 180 percent, and domestic airports 57 percent.
However, the Lagos airport private terminal known as the MMA2 scored 87 percent, showing readiness to resume operations.
There are five airports slated for the commencement of operations including Lagos, Abuja; Mallam Aminu Kano Airport, Kano; Port Harcourt Airport, Omagwa Rivers State and Sam Mbakwe Airport, Owerri.
It was learnt that there would be a mock exercise tomorrow or Wednesday to simulate the planned resumption of flights, while the NCAA DG is expected to present another report to the Minister of Aviation, Senator Hadi Sirika.
A new date would also be suggested for the resumption of flights with stakeholders looking at between the first or second week of July.
Aviation analyst and former Commandant, Murtala Muhammed Airport, Lagos, Group Capt. John Ojikutu (rtd) said, "If FAAN is scoring 57% with Lagos and Abuja now, we should all be worried; what this conference has shown us is that the recent NCAA audits seem to put emphasis on private airline operators than the government operators.
Credit: Daily Trust