The Nigeria Inter-Bank Settlement System (NIBSS) has accused Nigerian banks and fintechs of flouting the Central Bank of Nigeria’s (CBN’s) daily withdrawal limit on accounts and wallets, thus allowing fraudsters to get away with huge sums of money in a day.
The NIBSS stated this in its latest fraud report where it shared how a fraudster was able to withdraw N374 million from a wallet in a day, despite the limit of N5 million withdrawal per day.
According to NIBSS, this was a breach of Section 16.0 of Know Your Customer (KYC) And Customer Due Diligence (CDD) Requirements of the CBN Regulatory Framework for Mobile Money Services in Nigeria, which stipulates daily cumulative transaction limit (outflow) for Tier 3 to be N5 million.
“There were instances of one wallet receiving an estimated N374 million and the same instantly withdrawn.
“In the same incident, seven other wallets received an estimated N438 million and the same was withdrawn.
“Maximum transfer limit on wallet/accounts increased with no historical transaction to support such increase,” NIBSS stated in the fraud report.
Gift cards as a channel for fraud proceeds
The report further revealed that funds from major fraud are transferred to accounts in financial institutions and thereafter transferred to gift cards/vouchers in other financial institutions.
- It added multiple transfers of N5 million and above are transferred to these vouchers and are instantly drawn down.
- While not mentioning the specific banks or fintechs, NIBSS said some financial institutions are notorious for these fraudulent transactions.
“The financial institutions always keep mum when inquiries of final beneficiaries are requested. Some financial institutions are notorious for this,” it stated.
Loss to fraud
According to the NIBSS report, financial institutions in Nigeria lost N52.26 billion to fraud in 2024.
This represents a significant increase of N34.59 billion compared to the N17.67 billion recorded in 2023.
The NIBSS Fraud Report documents fraud activities, whether attempted or successful, and related metrics identified by local financial institutions or agencies.
The report further revealed that the amount lost to fraud has increased by 196% over the past five years, in parallel with the growth of financial transactions in the digital payments sector.
What you should know
According to NIBSS, individuals aged 40 and above continued to be the primary targets for fraudsters in 2023, mirroring the trend observed in the previous year.
This sustained focus emphasized the need for ongoing efforts to educate and protect individuals in this demographic from fraudulent activities.
- The report noted that certain regulations need thorough examination, modification, and reinforcement to reduce the potential for fraud and increase the chances of successful recovery.
- NIBSS is the central system responsible for the settlement of inter-bank transactions within Nigeria.
- The platform connects Deposit Money Banks (DMBs), Mobile Money Operators (MMOs), Switches, and Payment Service Providers (PSPs).
