Fraud can’t win if we unite
Despite considerable investments in fraud prevention technologies and regulatory reforms, the ever-evolving tactics of fraudsters have outpaced the industry’s fragmented defenses. While individual institutions have made strides in implementing robust measures, the lack of a unified, family-oriented approach continues to leave critical gaps, allowing fraudsters to exploit the system.
In this 2025, one undeniable truth remains: fraudsters are getting smarter, faster, and more coordinated. Unfortunately, the same cannot always be said about the financial institutions, fintechs, regulators and other stakeholders tasked with combating them. The year 2024 was riddled with fraud cases that exposed significant gaps in our defenses, highlighting the pressing need for a united approach among the Central Bank of Nigeria , Nigeria Inter-Bank Settlement System PLC , law enforcement agencies (LEAs), banks, and fintech companies.
The fight against financial fraud cannot be won in silos. It requires a collaborative effort, one where every stakeholder recognizes their role and commits to a shared strategy.
Its essential to first duly recognize and acknowledge the CBN and NIBSS have played crucial role by providing Industry Fraud Portal, notable circulars targeted at KYC-CDD-EDD improvement, introduction of administrative sanctions, establishment of dedicated department in CBN for monitoring the effectiveness of AML-CFT-CPF regime, etc.
Also, some commercial banks like Access Bank Plc , Guaranty Trust , First Bank of Nigeria Ltd. , UBA Group , Zenith Bank Plc , Sterling Bank Wema Bank Plc. , etc need to be acknowledged for being in the news in 2023 and 2024 to mention the high investment made to combat/prevent fraud and cyber attacks as well as intentional efforts in customer awareness.
Furthermore, In June 2024, Flutterwave partnered with Nigeria's Economic and Financial Crimes Commission to establish a state-of-the-art Cybercrime Research Centre; Interswitch Group upgraded its fraud detection and monitoring solutions, incorporating machine learning and artificial intelligence to identify and prevent suspicious activities more effectively; OPay In 2024, introduced a feature designed to protect users from financial fraud during large transactions; According to Fintech Futures, in October 2024, Moniepoint Group secured $110 million in Series C funding, which is expected to support further development of its digital payments and banking solutions, potentially including enhanced fraud prevention measures. QuickCheck built internal solution to filter fraudulent loan applicants; Adedeji Olowe has seen the future and advocated for subscription to Karma; According to Semafor and TechCabal, in early 2023, several Nigerian fintech companies initiated "Project Radar," a collaborative effort to create a shared blacklist of individuals involved in fraudulent activities but mutual distrust among fintech companies has hindered the full realization of such collaborative anti-fraud systems; Zach Bijesse has also launched Archer in 2024 to enhance collaborative fight against fraud.
2024: A Year of Hard Lessons
The numbers tell a story of resilience on the part of fraudsters. According to NIBSS, fraud-related losses increased by 23% in 2024, despite a slight decrease in the overall number of reported incidents. Fraudsters continue to exploit weak links in systems, often targeting vulnerabilities created by the lack of collaboration among key players in the financial ecosystem.
Notable Incidents
NB: Some institutions might have tried to manage fraud incident internally without making the news available in the public domain to preserve brand and reputation.
Fraud Thrives on Fragmentation
When financial institutions and regulators operate independently, they unintentionally strengthen fraudsters. Without real-time collaboration and shared intelligence, fraudsters can easily move from one institution to another, exploiting gaps in defenses. This fragmented approach has allowed cybercriminals to cause harm not just to individual entities but to the entire financial sector.
Why the fragmentation efforts are not working
Scenario 1: Fraudulent Transfers Across Multiple Banks
In Q2 2024, a coordinated fraud ring successfully executed fraudulent transfers across multiple banks, leveraging real-time payment systems. Despite each institution having anti-fraud measures like transaction monitoring, fraudsters exploited the lack of shared intelligence to execute their schemes.
Measures in Place:
Why It’s Not Enough:
The absence of a centralized fraud detection platform means flagged transactions are not shared in real time across institutions. Fraudsters take advantage of this gap by quickly transferring funds between accounts in different banks before detection.
Recommendation:
A unified fraud monitoring system, accessible by all stakeholders (banks, fintechs, and regulators) would allow real-time sharing of flagged transactions and immediate blocking of suspicious accounts.
Scenario 2: Mobile Money Fraud in Rural Areas
In 2024, mobile money operators reported significant losses in rural areas, where fraudsters targeted less tech-savvy users through social engineering tactics. While Mobile Money Operators (MMOs) implemented user education campaigns, the lack of a coordinated effort across the industry diluted the impact.
Measures in Place:
Why It’s Not Enough:
These measures are institution-specific and lack the scale needed to address a widespread problem. Fraudsters exploit gaps in customer education and differences in policy enforcement across operators.
Recommendation:
A joint customer education campaign, backed by the Central Bank of Nigeria (CBN), banks, MMOs, and law enforcement agencies (LEAs), can provide consistent messaging on fraud prevention and reach underserved populations more effectively.
Scenario 3: Insider Fraud in Financial Institutions
In August 2024, a fintech company reported a case of insider fraud where an employee manipulated transaction records to siphon funds over several months. While internal audits and compliance checks uncovered the fraud, the lack of collaboration with external stakeholders delayed investigation and prosecution.
Measures in Place:
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Why It’s Not Enough:
Insider fraud often spans multiple institutions, but without a collaborative framework, investigations are confined to the affected entity. This limits the ability to identify and dismantle broader fraud networks.
Recommendation:
Establishing cross-institutional task forces, including representatives from CBN, Nigeria Inter-Bank Settlement System (NIBSS), LEAs, and the affected institutions, can ensure faster resolution and broader accountability.
Scenario 4: Large-Scale Cyber Attacks
In late 2024, a coordinated cyber attack targeted the payment infrastructure of multiple financial institutions, causing disruptions and losses. While individual institutions had firewalls and security protocols in place, the lack of coordinated defense mechanisms left the ecosystem vulnerable.
Measures in Place:
Why It’s Not Enough:
Cybercriminals operate globally, targeting interconnected systems. Without joint threat intelligence and a coordinated response strategy, the sector remains exposed to systemic risks.
Recommendation:
A centralized cybersecurity command center, managed collaboratively by CBN, NIBSS, and industry players, would enable proactive threat detection and coordinated responses to large-scale attacks.
The Path Forward: A Collaborative Framework
To outpace fraudsters, we need to stop fighting fraud independently and start addressing it collectively. Here’s how:
The financial sector needs a centralized platform where stakeholders can share real-time data on fraud attempts. Such a system would enable:
2. Standardize Regulatory Frameworks
Disjointed regulations create loopholes that fraudsters exploit. A harmonized regulatory approach, led by the CBN will ensure consistent compliance standards across banks, fintechs, and other financial institutions.
3. Foster Collaborative Investigations
Law enforcement agencies, financial institutions, and regulators must work hand-in-hand to investigate and prosecute fraud cases. Shared intelligence and joint task forces can dismantle fraud networks more effectively.
4. Prioritize Customer Education
Fraudsters often rely on unsuspecting customers to bypass security systems. Coordinated awareness campaigns can educate the public on common fraud tactics, reducing the pool of potential victims.
5. Enhance Staff Training Programs
Fraud tactics evolve rapidly, and so must our defenses. Joint training initiatives across banks, fintechs, and regulatory agencies can ensure that staff are well-equipped to identify and mitigate emerging threats.
Personal Experience
With extensive experience in both direct and indirect operations and supervision of fraud management teams within commercial banks and fintechs, I realized that most people use fintechs for transactions while they still keep their funds with commercial banks. Its often seen that most frauds traced from fintechs do end up in an accounts in commercial banks and these accounts mostly belong to secondary beneficiaries who claimed innocence because they would have given value in return to the fraudsters since they are not aware its a proceed of crime. This often makes repatriation difficult and increasing cost of obtaining court orders, validation and legal defense.
NB: Let remember that collaboration is inevitable because corresponding bank services exist between commercial banks and fintechs.
A Vision for 2025
The Nigerian financial sector must adopt a “family approach” to fighting fraud. Just as family members protect one another, financial institutions, regulators, and law enforcement must act as a unified front. By pooling resources, sharing intelligence, and working collaboratively, we can significantly reduce the impact of fraud on the sector.
2025 must be the year we embrace collaboration not as an option but as a necessity. Fraudsters are evolving, but so can we together.
Join the Conversation
As an expert in fintech and commercial banking, I believe the time for action is now. Let’s come together to build a safer financial ecosystem. What steps do you think are most critical for achieving this goal? Share your thoughts in the comments below.
Together, we can make 2025 the year we turn the tide against financial fraud.
Growth | Financial Inclusion Advocate | Credit Analysis | Risk Management | Business Development | Market penetration | Micro-finance expert | SME Lending | Business Consulting .
3 周Well said, this validates the statement "Every desk should be and must be a control desk."
Credit & Risk Management
1 个月Proper KYC Ensuring necessary credit metrics Credit bureau check implementation and adaptation Irrespective of these and more , the people or team factor can't be over emphasized One of my boss used to say , if it passes A ,it must not pass B We are all gatekeepers Nice insight Oluwadamilare Oladele, FCIB