The incidence of Fraud, Forgery and Other such issues of crime within the Financial sector derive mainly from the Structure of the Sector and Economic trends.
Investment Strategist, Temitope Omosuyi, disclosed this while speaking on the release of the banking Sector report on Forgery, Fraud and Other Malpractices.
Mr Omosuyi who spoke exclusively on TVC News Business Nigeria with Kelly Egiga added that several factors have aligned to create the humongous amount of money allegedly lost by the Financial Sector to crime.
He said the development of Technology and its adoption by Financial Institutions has also helped in exposing people who have also moved away from the analogue systems of before to newer technologies.
He however said that Fraud in the Financial Sector is not limited to Nigeria alone but expressed worry on the 129 Billion Naira reported to have been lost to fraud and other crimes in the Sector.
He described as unhealthy a situation where the structure of staffing in the nations’ banking industry is tilted heavily in favour of contract staff or casual staff who have access to sensitive information and are the first to lose their jobs at the sign of any trouble.
He said having handled sensitive information and out of the sector an incentive is always there for them to get involved in fraud.
He identified Economic Downturn, Technology, Staffing and Others as factors responsible for the growing number of Fraud within the Financial Sector.
He backed the decision of the regulatory bodies to delay the release of the report on the sector, adding that it is not good for confidence in the sector and the Economy for investors to continue to hear stories of humongous level; of fraud within the Sector.
Read More Below…
“Well, like you said, it’s quite disturbing having to know that fraud or fraudulent cases in the financial system is not abating. And it’s not just limited to Nigeria. It’s not just about Nigeria. It is happening globally. And I think why it’s becoming more perverse is as a result of the adoption of technology”.
“Fine technology has come to help solve a number of problems around financial products and services delivery, but then it has opened up opportunities for more flood cases within the financial space”.
“So not just limited to the banking sector, we also have non bank financial institution. But then when you look at what is happening, the disruption in the banking sector, the impact of technology has helped in terms of bringing more people into the financial space because which is the ultimate objective of every government”.
“But then as you have more people in the system and then the people you have within the financial space are not enlightened, it will continue to open up more room for compromises and the attack on the financial institution. And if care is not taken, if we are not proactive enough, it could erode trust in the financial system”.
“I know that financial system, banking sector or every bank is built on one thing trust. If trust is eroded, banking sector will be greatly challenged. And it’s very important for everyone to trust the citizen, to trust the financial system, because a weak financial system will actually signal that economic growth, economic activities in the country will be impeded and ultimately it will negatively impact growth”.
So what I’m saying in essence is quite complex and Fraudsters are also becoming extremely innovative and evolving such that they understand the development in technology and they also capitalize on ignorance of people to just penetrate their resources and money with financial institution. Really scary.
Thank you very much. I think we have various factors, complex factors that are responsible. Some are induced by how banking operations, particularly Nigeria is structured. And one could also allude some of those problems to government and the lifestyle of people.
In addition to that, it is also cyclical. I would say maybe seasonal. So what I mean by that, I’ll start with the last point, what I mean by seasonal pattern of fraud cases. You will remember very well that 2016, the Ponzi scheme, this popular Ponzi scheme MMM became prevalent. It was all out there because people needed more money due to the recession that we saw in 2016.
So period of economic upheavals usually lead to high level of crime, not just limited to cybercrime, so crime and among other ways that people just want to get money so as to survive. So I would allude to this economic condition now that there’s a global problem affecting Nigeria, prices are high, cost of living is hitting the roof, so that is affecting the desperation at which people are out there to get money.
However, one should also look at what is happening within the banking sector. For instance, I could pick an example of the structure of bank in terms of how the employee staff, the report by NBS on the structure of staff within the banking sector. You have the casual staff, you have the permanent staff. So you observe that most staff, most of the staff strength of the bank is set to largely casual staff, or the ones you call the contract staff.
And some of this staff are within the system for 5-10, 20 years. They handle sensitive materials, sensitive resources, they have access to information that can be compromised to the fraud people.
And most of these people are not regularly promoted. In fact, some are there 5, 10 years. They have access to resources and all that, they don’t get the best reward. And they also understand that when there’s a problem in the economy and the banking system, they will be the first to be laid off. So they may want to take advantage of the information at their disposal to defraud clients and defraud the bank.
So beyond just the economic event or the state of the economy that is accentuating the problem of cyberattack crimes and all that, I think the structure of bank we should also begin to look at this law enacted that is out there to punish a startup bank whenever they defraud institutions. But I think we should look at that in terms of how to look at the structure of banks and how those people have to be well compensated.
In addition to that, if you look at cases, I’m sure we’ve had cases of prominent people in Nigeria that are listed by AMCON and a number of agencies, media houses, that they have defraud one or two banks, but today none of them, maybe most of them are not punished.
So when you think that. Yes. Mr. A. Mr. B or Mr. C did this in the past and it was not punished. Then you have to incentivize more people to actually want to go into crime or they want to go into the fraud so as to also take advantage of the weak system. So to say. Because the people that have done it in the past are not severely or most of them are not severely punished. So economic trend is a factor. The structure of bank staff is also a factor, in addition to the fact that some people that should be brought to justice are not.
Yes, I think I agree with you that the fact that the report is delayed, that is a bit concerning. But then I started on the note that financial system is built on trust. So the monetary policy authority, I mean the central bank, which is the regulator of commercial bank, will want to try as much as possible to conceal some of this information so as not to erode trust in the system.
In addition to that, an average of a financial institution would not want to actually come out there to say that, yes, I have been defrauded to the tune of S billion Naira or S trillion Naira because of the fact that it will affect the bank’s integrity and trust.
It starts to affect the bank’s valuation, which is why you see that you hardly hear that a bank staff is punished. It’s very unpopular in this part of the world, although some are punished covertly.
However, they would try as much as possible not to do that. So as not to erode the integrity of the financial system. So I really understand why some of those things are delayed. But I think the most important thing is to reduce the incidences of fraud because it can destroy in fact, it has destroyed so many lives and the economy. It can actually destroy the economy as well, because I mention that economic growth, every economy is tied to the strength and the viability of the financial system.
“So I really understand why some of these reports may be delayed. Its in a bid to also ensure that the trust in the financial system is not eroded”.
Related posts:
Global instability, Others to blame for Aviation challenges -Expert
New Report Highlights Growing Emission of CO2, Others
Poor Governance, Leadership, Others to Blame for Hygiene Issues
N1.4bn fraud: NBA president evading service of fraud charge – EFCC
IMF warns against China’s growing credit system
Growing electric vehicle adoption threatens Nigeria’s oil exports
Experts express concerns over Nigeria’s growing population
A look at the growing trend of sport betting in Nigeria
