Internet Fraud is growing in Nigeria

Technology keeps on finding new ways to simplify our everyday lives. The simplicity of processes usually lead to wide spread adoption by many, and often, rather unfortunate, a number of people find a way to exploit these opportunities for negative gains.

Technology has made financial transactions so much easier and convenient, however, we can’t pretend not to see the room it has given for the creation of the monster; cybercrime.

An IMF Report reveals that global annual losses resulting from cyber-attacks are close to 9 percent of banks’ net income or around $100 billion. McAfee and the Centre for Strategic International Studies estimate global cost of cybercrime to be at over $600 billion in 2017, more than 20 percent higher in 2014.

There’s no doubt that cyber-attack is a global problem that financial sectors have to find a way to curtail. Nigeria is not exempted from the menace of cybercrime. Cyber-attacks have been on the steady rise since 2013.

A security assessment a few years ago revealed that internet fraudsters deployed over 185 fake mobile applications on the website of 15 banks and extracted customers’ personal and financial information to defraud them.

The Central Bank of Nigeria (CBN) half-year report 2017 also reveals that there have been 16,762 cases of fraud and forgeries involving N5.52 billion and $0.12 billion compared with 9,164 cases involving N4.36 billion in 2016.

The 2017 Nigeria Cyber Security Report reveals that the country loses about N127 billion yearly to cybercrimes. The Nigeria Deposit Insurance Corporation (NDIC) 2014 Annual Report also showed that between 2013 and 2014, fraud on e-payment systems in Nigeria’s banking industry increased by 183 percent.

Recently in May, arrested professional internet hacker in his confession revealed that Nigerian banks do not have enough cyber security which makes it easy for hackers to have access to the accounts of high profile customers. It’s resoundingly clear that CBN needs to setup quickly a cyber-security system to deal with internet fraud in the banking industry.

What CBN is doing

The apex bank has already setup the Nigerian Electronic Fraud Forum (NeFF) to promote the fight against cybercrime amongst the commercial banks with an annual event held an awards given to encourage banks to bolster their cyber security framework.

In 2015 CBN had proposed to setup an e-fraud risk information centre modeled after that of South Africa. The resource would offer insights into how internet hackers operate.

CBN seeks to learn from the experiences of the American and South African Reserve Banks and apply that knowledge in its fight against cybercrime. With the rising number of cyber-attacks, it’s high time plans for the centre were initiated.

Also, at the 20th Investiture of the President/Chairman of the Chattered Institute of Bankers of Nigeria (CIBN) council in June this year, CBN said it would partner with the body to fight internet banking fraud and other related cybercrimes.

And more recently, at the 2018 CBN-JP Morgan Chase Cyber Security conference held in Abuja, the CBN governor, Godwin Emefiele revealed that CBN is developing a Risk Based Cyber Security Framework for banks and payment services to combat internet fraud in the country.

CBN’s victory or defeat against cybercrimes will be key for the financial sector as more and transactions are carried out daily over the internet. A defeat would also have rippling consequences for the FinTech industry especially.

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