A stark revelation from the Nigeria Inter-Bank Settlement System (NIBSS) has cast a shadow over the integrity of Nigeria’s digital financial landscape. A recent fraud report alleges that certain banks and fintech companies are blatantly disregarding the Central Bank of Nigeria’s (CBN) stipulated daily withdrawal limits, thereby enabling fraudsters to execute large-scale heists with impunity.
The report details a disturbing case where a single digital wallet received and instantly withdrew a staggering N374 million, a figure that dwarfs the CBN’s mandated daily limit of N5 million for Tier 3 mobile money accounts. “There were instances of one wallet receiving an estimated N374 million and the same instantly withdrawn,” the NIBSS report stated, highlighting a clear breach of regulatory guidelines.
This isn’t an isolated incident. NIBSS further revealed that in the same operation, seven other wallets were used to siphon off an additional N438 million, demonstrating a systemic lapse in compliance. The report also pointed to “maximum transfer limit on wallet/accounts increased with no historical transaction to support such increase,” indicating a deliberate circumvention of established security protocols.
Human Cost of Non-Compliance
The financial implications are staggering. NIBSS reports that Nigerian financial institutions suffered a colossal N52.26 billion in fraud losses in 2024, a dramatic increase from the N17.67 billion recorded in 2023. This represents a 196% surge in fraud losses over the past five years, a figure that mirrors the rapid expansion of digital payments in the country.
Behind these numbers lie the stories of countless Nigerians, small businesses, and even larger corporations, who have fallen victim to these fraudulent activities. The emotional toll of losing hard-earned savings or business capital cannot be overstated. “The financial institutions always keep mum when inquiries of final beneficiaries are requested. Some financial institutions are notorious for this,” NIBSS stated, highlighting a frustrating lack of transparency and accountability.
The report also sheds light on the evolving tactics of fraudsters, who are increasingly using gift cards and vouchers to launder illicit funds. “Funds from major fraud are transferred to accounts in financial institutions and thereafter transferred to gift cards/vouchers in other financial institutions,” the report reveals, indicating a sophisticated network designed to obscure the trail of stolen money. This tactic mirrors global trends where gift cards are used in financial crimes due to the difficulty in tracking them.
Regulatory Gaps and the Need for Stricter Enforcement
The CBN’s KYC and Customer Due Diligence (CDD) requirements, as outlined in Section 16.0 of the Regulatory Framework for Mobile Money Services, are designed to prevent such occurrences. However, the NIBSS report suggests that these regulations are not being enforced effectively.
“This 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,” is a critical point.
The implications are profound. If financial institutions, entrusted with safeguarding public funds, are failing to adhere to basic regulatory standards, it erodes trust in the entire digital financial ecosystem. As a result, many Nigerians might revert to traditional cash transactions, hindering the nation’s push towards a cashless economy.
Read Also: Digital Fraud Surge: Nigerian Banks Lose N52 Billion in Five Years, NIBSS Reports
As a news analyst, I understand the importance of not only reporting the facts but also conveying the human impact of these events. The rise in fraud is not just a statistic; it represents the loss of livelihoods, the erosion of trust, and the potential for widespread financial instability.
To address this crisis, the CBN must take decisive action. This includes implementing stricter enforcement mechanisms, conducting thorough audits of financial institutions, and imposing hefty penalties for non-compliance. Furthermore, increased collaboration between banks, fintech companies, and law enforcement agencies is essential to identify and dismantle fraud networks.
The rapid growth of digital finance in Nigeria presents both opportunities and challenges. By addressing the vulnerabilities exposed by the NIBSS report, we can build a more secure and resilient financial ecosystem that benefits all Nigerians.
