The Central Bank of Nigeria (CBN) and the Nigeria Inter-Bank Settlement System (NIBSS) have expressed worry over the growing menace of Internet fraud in the financial services sector.
Speaking at the weekend at a webinar organised by the Committee of e-Banking Industry Heads, with the theme ‘Digital Fraud and the need for a national Intelligence programme’, Director of Payments System at the CBN, Musa Jimoh stated that the rate of frauds in the sector had expanded and that the perpetrators were exploiting new channels to compromise the system.
While stressing on the need for all stakeholders, especially the banks, Nigeria Communications Commission (NCC) and security agencies, to do more to address the problem, Jimoh wondered why people who use mobile lines and bank accounts to defraud others could not be swiftly apprehended and prosecuted despite the mandatory NIN-SIM linkage introduced by the Federal Government.
The Ministry of Communications had in 2017 disclosed that Nigeria loses about N127bn yearly to cases of Internet frauds across all the sectors of the economy. It added that the majority of the frauds were perpetrated on foreign domain names but had become popular among Nigeria’s millions of Internet users.
Jimoh however gave an assurance that the apex bank was closely monitoring the financial services space to ensure that the activities of the fraudsters were brought to an end.
He stated: “The rate and incidence of fraud have actually expanded. More frauds are being committed. Once you open a new channel, people study it and they begin to penetrate. Once the CBN issues a regulation around the payments system, the next thing they do is to see where the compromises are.
“That is why I like the theme of this event to enable us to seek national collaboration to fight cybercriminals in this country and across the world.”
He noted however that it would be diversionary to think frauds were committed by external persons only. “We also look at banks; we are not going to deceive ourselves that fraud is only committed by the customers,” he said. “We believe that frauds could happen within the banks, which was why we introduced the dual authorisation process whereby a transaction cannot start and end with one person.
“We also ask banks to provide security and protection mechanisms around the information of their customers in their possession. The Payment Card Industry Data Security Standard, known as PCI DSS, was also made mandatory, in which case every bank has to secure the data its customers provided in a way that they cannot be stolen.”
Jimoh, who pointed out that most of the information used by the fraudsters to defraud customers were due to the leakages in the banks, narrated how some persons attempted to defraud him by sending him a text message that he needed to replace his ATM card and that he should send some information if he wanted it fixed.
“What struck me was that, in the message, they put another (phone) number I could call if I wanted it resolved,” he noted. “The number that sent the message and the one the person asked me to call are available and these are active numbers. I tried (calling) the numbers and they connected.
“My question is, what do we do to these people? By today’s configuration, no line can be active without the National Identification Number and if that phone is active within the banking industry, it has a million targets. So, we should know the owners of those lines and the need for collaboration has become very mandatory between the police, other security agencies and the Nigerian Financial Intelligence Unit.
“The NCC also has to come in because every SIM has biometric data attached to it and should be identified. We need to collaborate so we can take these monsters out of the system. I do not see any reason why somebody should use a phone to commit an offence and that person’s phone or account information is still active within the system.”
He said people who commit infractions in the banking system were being placed on a watchlist and they would be made “miserable” within the financial services system.