The Economic and Financial Crimes Commission has expressed growing concern about the surge in fraudulent activities within Nigeria’s financial sector, particularly targeting the unbanked, under-served, and middle-class populations.
EFCC Chairman, Ola Olukoyede, made these remarks during a recent stakeholder engagement in Abuja. He pointed to a troubling trend of negligence by some fintech companies in implementing proper Know Your Customer protocols, which he believes is contributing to the rise in financial crimes.
According to Olukoyede, many fintech companies are failing to enforce strict KYC procedures, particularly when opening tier-one accounts. This lack of due diligence, he argued, creates vulnerabilities that fraudsters are quick to exploit.
“There is a significant issue of poor internal control within fintechs, especially among the unbanked, the under-served, and the middle-class populations,” Olukoyede said. “Fraudsters are capitalizing on these gaps, especially when tier-one accounts are opened without proper KYC verification, making it easier for them to commit fraud.”
The EFCC Chairman emphasized the importance of fintech companies revisiting their customer onboarding processes to plug these vulnerabilities. He also called for greater collaboration between fintech operators and the EFCC in the fight against financial crimes.
Olukoyede urged fintech companies to view themselves as key stakeholders in the anti-corruption effort, stressing that they must respond promptly to regulatory inquiries and work closely with the EFCC to strengthen internal controls and prevent fraud.
“Increasing collaboration with the EFCC means you see yourselves as partners in the fight against corruption. We need your active cooperation, especially when we make requests,” Olukoyede said. “By strengthening your systems and implementing better internal controls, you can reduce fraud risks within your platforms.”
The EFCC also expressed its willingness to collaborate with Moniepoint and other fintech companies to address fraud-related challenges, emphasizing the role of such partnerships in tackling financial crimes.
A recent report by the Financial Institutions Training Centre (FITC) highlights the increasing scale of fraud within Nigeria’s banking sector. Between April and June 2024, Nigerian banks lost a staggering N42.6 billion to fraud, a sharp rise from N9.4 billion lost in all of 2023.
This represents a dramatic 8,993% increase compared to the first quarter of 2024 and a 637% rise from the same period in 2023.
The majority of these losses (96.46%) were linked to miscellaneous fraud, such as fraudulent withdrawals and computer/web-based fraud. Fraud incidents through bank branches saw a remarkable 31,497% increase, while computer/web fraud grew by 1,560%. The total amount involved in fraud cases surged by 1,784%, from N2.9 billion in Q1 to N56.3 billion in Q2 2024.
These alarming figures underscore the urgency of addressing vulnerabilities within Nigeria’s financial systems and strengthening anti-fraud measures across the sector.
