By Peter OBIORA investadvocate

Nov 13 2010 16.20 GMT

Ijebu-Ode (INVESTADVOCATE)-N53 billion has been reported to have been lost by Banks through frauds associated to the Automated Teller Machine (ATM) and Electronic Transaction.

 

Dr. Uju Ogubunka, Registrar of the Chartered Institute of Bankers of Nigeria (CIBN) made this affirmation Saturday November 13 2010 at the Financial Institution Correspondence Association of Nigeria (FICAN) annual workshop held in Ijebu-Ode, Ogun State, South West Nigeria.

 

The CIBN Registrar in his presentation titled “Challenges of Image Management in Time of Banking Crisis and Regulatory Intervention” said that the figure increased from over N2.0 billion in year 2006 to N53 billion in year 2008; indicating an increase of 2,550 percent (2,550%) in the review period.

 

“From research between 2006 and 2008, the incidence of fraud in the Banking sector was over N2.0 billion to N53 billion mostly associated to ATM and e-transactions” he said.

 

Ogubunka while making a brief overview of the Banking Sector Crisis in Nigeria said the introduction of the ATM was a high risk product without adequate safeguards; which made it mostly associated to fraud in the sector.

 

According to him, the Banking Sector crisis in Nigeria dates back to the late 1940s when there was no legislation and regulations guiding the establishment and management of Banks.

 

“Many of the indigenous Banks set up then witnessed banking crisis and    failed” the CIBN Registrar said.

 

Ogubunka further affirmed that the main identified causes of Banking Sector crisis in Nigeria were lack of legislation, regulation and human capacity in terms of knowledge, experience and skills in banking.

 

He noted that various laws were enacted prompting the establishment of the Central Bank of Nigeria (CBN) in 1959 to among other reasons eliminate these problems.

 

“Unfortunately, banking crisis continued         despite legislations, regulations and         efforts at   human capital building. Over the years, since modern       banking         started in Nigeria in 1892, banking        crisis has intermittently been witnessed         with many of them resulting to liquidation of banks” Ogubunka said.

 

The CIBN Registrar also noted that the failure of 21 banks between 1930   and 1954, as well as 36 between 1994      and 2004, can be said to be worrisome.

 

As earlier reported by investadvocate in late September 2010, Identity Fraud in South Africa was estimated to be half a billion Rand (R500 million) about N10 billion.

 

Theunis Botha, Chief Executive Officer (CEO) of Nirph Digital Limited, providers of Customer Identification System (CIS) a biometric product to checkmate fraud; affirmed to investadvocate that fraud in the Nigerian Banking sector is also becoming alarming as that of South Africa.

 

He further affirmed that there is hardly a person who is out there on the streets that has not being a victim of Automated Teller Machine (ATM) fraud in places like South Africa and Nigeria.

On its part, Alexander Forbes on the extent of identity fraud and cyber-crime affirmed that in South Africa, identity fraud and theft is becoming increasingly sophisticated with hackers accessing personal details of their victims over the internet.

While Reuters says the rise of organised cyber-crime has led to a near 70 percent (70%) surge in the number of people falling victim to identity fraud.

The theme of year 2010 FICAN workshop is “Revelations from the Special Audit:  Issues and Lessons for Banking & Professional Bodies.