Financial institutions in Nigeria lost ₦17.6 billion ($11.2 million) to fraud in 2023, according to the Nigeria Inter-Bank Settlement System’s (NIBSS) 2023 Annual Fraud Landscape report.
The report shows that the amount lost to fraud has increased every year in the past five years with significant growth between each year.
The total amount lost to fraud went from ₦2.96 billion ($1.8 million) in 2019 to ₦ 11.61 billion ($9 million) in 2022. Between 2019 and 2023, the total amount lost to fraud increased by 496% to ₦17.6 billion.
However, an analysis of some of the cases reported in the news showed that ₦82.4 billion ($52.6 million) was lost in six fraud cases.
Interestingly, NIBSS noted that not all fraud cases were reported “via the Industry Fraud Reporting Portal by the financial institutions.”
Ninety-two percent (88,112) of the 95,620 reported cases came from deposit money banks, and the remaining 8% (7,509) came from other financial institutions.
According to NIBSS, this means that only 37% of financial institutions complied with reporting fraud incidents while 63% did not. This means they are in breach of the “CBN circular on the Establishment of Industry Fraud Desks.”
Major hack and fraud cases in Nigeria between 2023 and 2024
Given that ₦82.4 billion was lost in fraud and hack cases that made the news, it is clear that financial security presents a significant difficulty for Nigerian financial institutions.
Interestingly, it is a major challenge globally.
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The 2024 Global Financial Crimes Report projected that banks could lose $442 billion in 2023 even though they are increasing investment in security.
The report said “the scale of this global financial crime epidemic is immense” and estimated that $3.1 trillion worth of illicit funds went through the global financial system in 2023.
In the same year, Nigerian financial institutions experienced some of the most scandalous fraud and hacks, leading losses in billions of naira. Here are some of the cases.
1 First Bank
Estimated loss: ₦40 billion ($29 million)
Year: 2023
This fraud case involves a First Bank employee who is currently on the run after allegedly syphoning ₦40 billion (around $29 million) into various accounts, including his wife’s.
The theft was discovered following a customer’s complaint about unauthorised transfers. An internal investigation revealed the employee’s involvement, prompting First Bank to initiate legal actions to freeze the affected accounts.
The scandal has exposed significant vulnerabilities in Nigeria’s banking system, raising concerns about internal controls and security measures.
2 Flutterwave
Estimated loss: $24 million
Year: 2023
In 2024, Flutterwave secured a court order to recover $24 million lost due to unauthorised POS transactions by merchants.
The High Court’s Mareva injunction allowed Flutterwave to reclaim funds from over 6,000 account holders across 35 banks and financial institutions, that may have spent the funds transferred during an October 2023 technical glitch.
Flutterwave insists no customer funds were lost and that it is working with the investigating authorities.
The fintech is also addressing KYC (Know Your Customer) challenges, critical for recovery efforts, highlighting the need for accurate customer information amidst rising financial fraud in Nigeria.
3 Flutterwave
Estimated loss: ₦11 billion ($7 million)
Year: 2024
In April 2024, news broke that Flutterwave experienced a security breach resulting in the unauthorised transfer of ₦11 billion ($7 million) to multiple accounts. While Flutterwave did not disclose the exact amount, insiders indicated it might be as high as ₦20 billion ($13.5 million).
The breach was discovered due to unusual account activities and involved funds being transferred through several accounts across five financial institutions to avoid detection.
Much like previous breaches, Flutterwave says no customer funds were compromised and that the case is being investigated.
4 Flutterwave
Estimated loss: ₦2.9 billion ($6.3 million)
Year: 2023
On Sunday, March 5, 2023, hackers reportedly stole ₦2.9 billion ($6.3 million) from Flutterwave. Court documents revealed that the hack occurred between January and February 2023.
The breach involved multiple unauthorised transfers across 28 commercial banks in Nigeria.
After initially denying the breach, Flutterwave said it detected the anomaly and worked with law enforcement and other financial institutions to investigate and recover the funds.
5 Flutterwave
Estimated loss: ₦450 million
Year: 2023
In April 2023, beneficiaries of a ₦2.9 billion ($6.3 million) breach involving Flutterwave reported being detained by the police.
Further reports indicated new breaches totalling ₦450 million ($677,559) involving cryptocurrency transactions. Detained individuals claimed Flutterwave had been breached multiple times since the first incident was reported on March 5, 2023.
The specifics of this new breach are still unknown, but beneficiaries and other sources assert that cryptocurrency was sold to a Chinese merchant for ₦200 million ($434,470) and ₦250 million ($543,088).
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