CBN and NIBSS alarmed by rise in internet fraud

  • Banks are only interested in profits Interpol

The The worrying rate of internet fraud in the financial services sector came under the spotlight on Friday as the Central Bank of Nigeria and Nigeria’s interbank settlement system expressed concern over the growing threat.

They wondered why people who use mobile lines and bank accounts to defraud others could not be quickly apprehended and prosecuted despite the mandatory NIN-SIM link introduced by the federal government.

They therefore stressed the need for all stakeholders, especially the banks, the Nigerian Communications Commission and security agencies, to do more to address the issue.

Speaking at a webinar hosted by the Electronic Banking Industry Leaders Committee, on the topic “Digital Fraud and the Need for a National Intelligence Program”, the Payments System Director of the CBN’s Musa Jimoh said the rate of fraud in the industry has grown and perpetrators are exploiting new channels to compromise the system.

The Ministry of Communications revealed in 2017 that Nigeria was losing an estimated N127 billion a year due to internet fraud cases across all sectors of the economy. He added that the majority of the frauds were perpetrated on foreign domain names but had become popular among the millions of Nigerian internet users.

However, Jimoh assured that the apex bank is closely monitoring the financial services space to ensure that the activities of fraudsters cease.

He said: “The rate and incidence of fraud has actually increased. Other frauds are committed. Once you open a new channel, people study it and start entering it. Once the CBN issues regulations regarding the payment system, the next thing it does is see where the trade-offs lie.

“That’s why I love the theme of this event to allow us to seek national collaboration to fight cybercriminals in this country and around the world.”

He noted, however, that it would be misleading to think that the frauds were committed only by outsiders. “We are also looking at banks; we’re not going to kid ourselves that fraud is only committed by customers,” he said. “We believe that fraud can happen within banks, which is why we have introduced the dual authorization process whereby a transaction cannot start and end with one person.

“We are also asking banks to provide security and protection mechanisms around the information of their customers in their possession. The payment card industry data security standard, known as PCI DSS, has also been made mandatory, in which case each bank must secure the data provided by its customers in such a way that they cannot not be stolen.

Jimoh, who pointed out that most of the information used by fraudsters to defraud customers came from bank leaks, recounted how some people tried to scam him by texting him that he needed to replace his ATM card and that he should send information if he wanted it fixed.

“What struck me was that in the message they put another (phone) number that I could call if I wanted the problem resolved,” he noted. “The number that sent the message and the one that the person asked me to call are available and they are active numbers. I tried (calling) the numbers and they connected.

“My question is, what do we do to these people? According to the current configuration, no line can be active without the national identification number and if this phone is active in the banking sector, it has a million targets. So, we should know the owners of these lines and the need for collaboration has become very mandatory between the police, other security agencies and the Nigerian Financial Intelligence Unit.

“The NCC must also intervene because each SIM card is associated with biometric data and must be identified. We must work together to eliminate these monsters from the system. I see no reason why anyone should use a phone to commit an offense and that person’s phone or account information is still active in the system.

He said people who commit breaches in the banking system are placed on a watch list and will be made “miserable” within the financial services system.

Similarly, CBN’s Director of Risk Management, Dr. Blaise Ijebor, stressed that internet fraud was a rapidly evolving problem and the only way to tackle it was to deploy a more advanced response.

He said: “Another area where we need cooperation from banks is tracing. We must block and blacklist all accounts found to be insufficient,” adding that the perpetrators must be brought to justice in order to deter others.

NIBSS Managing Director and CEO Premier Oiwoh also called for better sharing of information and knowledge across the financial services sector to combat the threat.

Oiwoh said: “The manager (Jimoh) has raised a vital point: every line in Nigeria today is taped and those lines must be blocked. But after blocking these lines, who followed to find out who these lines were registered to, what accounts were linked to them, and what else did they do?

“From a fraud we can raise 20 questions and answering those questions would help stop the fraud as well as know how it works. The CBN and other regulators need to work and make sure the policies are there to operators. In addition, industry operators, such as banks and others within the ecosystem, must do the right thing. Police, NFIU, EFCC (Economic and Financial Crimes Commission ) and others need to play their part Fraud worries everyone.

CeBIH President Ms. Celestina Appeal noted that as online banking becomes transparent, the associated risks also increase. She noted that as stakeholders dialogue about minimizing risk exposure, fraudsters are also holding strategy sessions to devise new ways to defraud people.

She added: “Today more purchases are made through online payments. E-banking is globalized today. But as things become transparent, there will be risks. Fraudsters are also trying to expand their strategies. Every year, the financial sector records losses in the billions. According to NIBSS reports, the volume of successfully completed frauds roughly quadrupled between 2019 and 2021.

“If current trends continue, by 2030 online fraud could even overtake plastic fraud, which is the fraud we have on cards.”

Interpol hits the banks

Meanwhile, an assistant commissioner for the International Police Organization, Usman Ahmed, told the webinar that banks only want to make money and don’t want to spend money to fund investigations. He described fraud investigations as an expensive business that the police might not be able to fund on their own.

He said conversations around collaboration were important, but lamented that beyond the rhetoric at such gatherings, the quality of collaboration between agencies was poor.

He added, “To be very honest, such collaborations are highlighted in forums like this. How many institutions are willing to spend money? Nigerian banks just want to make money; they don’t want to spend money. This is my experience of almost two decades with them, having also served in the EFCC.

“They (banks) like to make money without spending money, and if fraud happens they almost always want to shift the blame for the fraud back to the customers in most cases. Unless you stand firm , banks don’t want to take responsibility, they make billions but don’t want to spend millions or thousands.

He said key stakeholders who have the funds, especially banks, should be able to develop the habit of voting huge sums for fraud investigations and tracing. “It’s the only way forward. The investigation is large and expensive. I have to be honest with you; the national police budget is insufficient. The collaboration must be real, this is the way forward and we we have to find a way to make it work,” he added.

About Meredith Campagna

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