Fraudsters exploited vulnerabilities in Nigeria’s banking system to steal over N1 billion through Bank Verification Numbers (BVNs) illegally registered minors.
This is according to a new report by the Nigeria Inter-Bank Settlement System (NIBSS) on recent fraud trends in the country.
The report highlights a growing trend of financial fraud, with compromised bank officials and agents illegally registering BVNs for minors and using them to open enterprise accounts through which fraudulent transactions were carried out.
How the fraud was executed
The NIBSS report detailed two major cases where BVNs were fraudulently created for underaged individuals, leading to significant financial losses.
- In one instance, a compromised bank staff registered a BVN for a minor and proceeded to open an enterprise account linked to the fraudulent identity.
- The account later received N495.3 million, which was swiftly withdrawn.
- In another case, a corrupt banking agent enrolled a BVN for a minor and opened a business account under the name of a bakery. This fraudulent account received N507 million, which was immediately transferred out before authorities could intervene.
- The two cases alone resulted in losses exceeding N1.002 billion, with investigations showing that the funds were quickly moved through multiple accounts to avoid detection and recovery efforts.
Involvement of bank officials and agents
The report indicated that some financial institution employees played a critical role in facilitating these fraudulent activities.
A bank staff was directly implicated in one of the cases, while an agent involved in the second case has been reported to law enforcement authorities for possible prosecution.
Regulatory bodies are engaging with the affected bank to determine the extent of internal complicity and to enforce stricter verification measures to prevent further occurrences.
The report read, “BVN was registered for a minor I by compromised bank staff and an enterprise account was opened using the BVN. An estimated N495.3 million was later received into the account and drawn down.
“BVN was registered for a minor II by a compromised agent and an enterprise account of a bakery was opened with the BVN. An estimated N507 million was transferred into the account and moved out.
“Agent has been reported to LEA for arrest while engagement is ongoing with the bank on the role played by its staff in this fraud.”
A growing threat to Nigeria’s financial system
The revelations come amid a broader pattern of rising fraud cases in Nigeria’s financial sector.
- While the number of reported fraud incidents dropped by 31% between 2020 and 2024, the total financial losses due to fraud skyrocketed by 350% within the same period.
- According to NIBSS data, the amount lost to fraud surged from N11.61 billion in 2020 to N52.26 billion in 2024, highlighting how fraudsters have become more sophisticated in their operations.
- Many of these fraudulent activities exploit regulatory loopholes, weak identity verification processes, and corrupt financial service intermediaries.
Other fraud trends identified
The NIBSS report also detailed several other emerging fraud schemes beyond the misuse of BVNs for minors. One such case involved fraudsters stealing the identities of senior citizens to open bank accounts, with over N400 million funneled through these illicit accounts.
Corporate accounts have also been used for fraudulent activities. In July 2024, an oil and gas company was registered using doctored corporate documents.
The fraudulent account received N335 million on the day it was opened, with the funds quickly transferred to unlicensed Bureau De Change (BDC) operators. Authorities were, however, able to recover the funds following swift intervention by NIBSS and law enforcement agencies.
Another worrying trend involves the dissipation of fraud proceeds through cryptocurrency transactions disguised as gift cards. The report stated that financial institutions often refuse to disclose details of final beneficiaries, making it difficult to track stolen funds.
Calls for stronger regulatory measures
NIBSS has called for stricter controls to prevent similar fraud incidents in the future. Among the recommendations is the enforcement of rigorous identity verification during BVN registration, including real-time biometric validation.
- The report also emphasized the need for an Enterprise Fraud Management System that can flag and stop suspicious transactions in real-time.
- Additionally, it called for fraudulent BVNs to be permanently blacklisted to prevent further exploitation of Nigeria’s financial system.
- Authorities have also been urged to ensure that all new financial accounts are profiled within 24 hours of opening to improve fraud detection and enforcement efforts.
