A recent report from the Financial Institutions Training Centre (FITC) indicates a 23.4% increase in insider fraud cases within Nigerian banks during Q2 2024. The FITC Fraud and Forgery report for Q3 states that 58 cases involving bank staff were reported in Q2, compared to 47 in the previous quarter. As a result, 49 employees were fired, a significant jump from 35 dismissals in Q1.
The rise in insider fraud is attributed to several factors, including inadequate monitoring systems, weak access controls and insufficient ethics training, amongst others.
Despite being limited to Nigeria, these findings raise concerns about insider fraud in other jurisdictions. In Sierra Leone, for example, Ecobank and United Bank for Africa (UBA) have come under public scrutiny due to the fact that some of the employees within these institutions were found to be involved in fraudulent withdrawals of billions of leones (in the old currency denomination) of state funds, which prompted the intervention of the ACC, Sierra Leone’s leading agency tasked with combating corruption.
FITC notes that insider fraud poses a serious threat to financial institutions in Nigeria, eroding customer trust and damaging their reputation. While these cases represent a small fraction of overall fraud incidents, their impact is magnified due to employees’ access to sensitive banking systems and information.
While the Nigerian scenario may not be identical to Sierra Leone’s, experts have argued that the incidents reported at Ecobank and UBA should serve as a wake-up call for the country’s financial sector because of the involvement of senior bank employees and the apparent lack of strong internal controls and ethical standards within the institutions.
To mitigate these risks, FITC recommends implementing AI-powered fraud detection tools, multi-factor authentication, and stricter role-based access controls.
The FITC report could be useful to Sierra Leone for the simple reason that it highlights the importance of cultivating a culture of integrity within banks, as well as regular ethics training, consistent enforcement of consequences for fraudulent behavior, and transparent communication with customers.