MINIMIZATION OF BANK FRAUD IN NIGERIA : PROBLEMS AND PROSPECTS
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MINIMIZATION OF BANK FRAUD IN NIGERIA : PROBLEMS AND PROSPECTS
ABSTRACT
In summary, the goal of this research is to look at the causes of the rising prevalence of bank fraud in Nigeria, identify the consequences, and propose feasible remedies to achieve fraud-free banking in Nigeria.
As a result, the acts that constitute fraud are limitless. Forgery, on the other hand, stands out. Employees, in general, engage in deceptive behaviour. However, as compared to any known bank fraud, unskilled workers and those bank staff who now occupy top positions through experience have a lion’s share of scamming banks.
Frustration is the leading cause of fraud. However, multiple financial obligations were the impediments to promotion and reward.
The majority of the undetected frauds were perpetrated by dishonest employees.
On average, the frequency of fraud in banks is low, and a fraud would be unlikely to succeed in the absence of bank personnel.
As a result, competent monitoring is the foundation of any solution. Fraud may result in the public losing trust after a decade, although bankers resist at all times, and it has no relevance to a specific portion of the banks.
However, a circumstance in which gold watches are typically given is insufficient for fraud vigilance.
CHAPTER ONE
INTRODUCTION
1.1 STATEMENT OF THE PROBLEM
Fraud is becoming all too common in many Nigerian organisations, particularly in the banking business. Anyanwu (1993) defines bank fraud as a conscious or purposeful effort to achieve illicit financial advantage at the expense of another person who is the rightful owner of the fund.
However, Orjih (1998) warned that the increasing prevalence of frauds and forgeries in banks in recent years may pose certain challenges to the stability and survival of individual banks as well as the performance of the industry as a whole if not arrested.
So, what are the root causes of bank fraud? Could it be from the bank’s employees or customers? Could it come from both parties? Who is responsible for the occurrence of fraud? And how may the occurrence of fraud be reduced, if not eliminated?
As a result, the researcher plans to explore the reasons and incidence of bank fraud, as well as feasible strategies to reduce or avoid the occurrence of bank fraud.
1.2 THE PURPOSE OF THE STUDY
In reality, fraud cannot be completely eliminated in Nigerian banks; it can only be reduced. As a result, the researcher has witnessed the state that the country is in as a result of this dilemma.
The researcher has identified this issue as one of the issues confronting society and has determined to seek a solution. Now the question is, why do we still have fraud in our society despite all of the safeguards in place to prevent it?
Our bank has internal and external auditors, personnel transfers from one department to another, fines for fraud, and so on. Despite all of these attempts to reduce or limit fraud, we still experienced it. The question now is how to regulate this dreadful condition that society is in. So, come up with the following justifications:
To understand what bank fraud is,
To learn about the many types and natures of bank fraud in Nigeria.
to understand the elements that facilitate bank fraud
To understand the economic consequences of bank fraud.
Finally, to provide examples of ways to control bank fraud in Nigeria.
1.3 THE IMPORTANCE OF THE STUDY
Both the government and financial organisations will benefit greatly from this research.
Government: If Nigerian banks can manage fraud, the money spent by the Nigeria Deposit Insurance Co-operation (NDIC) on liquidity banks will be decreased. This is because everytime a bank liquidates in Nigeria, it leads to bank failure, which means additional expenses for the Nigeria Deposit Insurance Co-operation.
Banks would benefit from this research as well, because it vividly provided a solution to the problem of fraud in Nigeria.
Bank consumers will profit from this research as well, because it will prevent fraud in Nigeria, allowing customers’ funds to be safeguarded without putting banks in jeopardy.
Students will profit from this study work as well. The research will assist them in conducting additional investigations into the problem of bank fraud in Nigeria.
1.4 DEFINITIONS OF TERMS
The Oxford Advanced Learners’ Dictionary of contemporary English defines fraud as “criminal deception.” This definition is straightforward and succinct.
The definition provided by Hamlyn Encyclopaedic World Dictionary may provide a more elaborate meaning and explanation. This vast master dictionary defines ‘fraud’ as ‘deception,
trickery, sharp practise, or invasion of confidence, by which it is sought to obtain some unjust or dishonest advantage,…any deception, artifice, or trick’.
In other words, based on the definitions presented above, any act committed by someone with the intent of obtaining undue and non-meritorious credit to the detriment of the right recipient constitutes an act of fraud.
However, the authors believe that a ct of fraud is never committed unless the perpetrator’s intention was present at the time the doubtful plan was carried out. As a result, any illegal fraud that fails to fulfil this standard must be understood and considered as assisting and abetting fraud.
In truth, there are various ways fraud can be performed, such as when a dishonest bank manager orders one of his employees to “rock deal in the bank within two years” (so that both of them should share inter). Otherwise, the manager will notify the headquarters of the staff’s redundancy for the purpose of laying off.
If such a staff lacks comprehension and judgement after receiving his manager’s direction, he may “rock the deal” only to learn later that he is in trouble.
Where the plan leaks, the management may escape unharmed, and such a staff may not even have the confidence to mention his colleague during police interrogation.
Hardworking supervisors may deny the likelihood of this happening, but experience has shown that an illiterate and down-to-earth staff is capable of doing anything if the bosses approve. The probability of this happening is unquestionable; after all, no one person is solely responsible for cheating a bank.
As a result, bank fraud is defined as a premeditated and unlawful deceit by the perpetrator in order to acquire an unfair, disagreeable, and dishonest advantage.
However, in the eyes of a practising banker, any record made by a bank official or group of bank officials in a customer’s account that was performed, resulting in the payment of an amount by the bank to a wrong and fictitious hand,
with the intent of gaining an unjustifiable advantage over the rightful owner, is referred to as fraud. Even though bankers do not have their own lexicon, they insist that no bank fraud can succeed without a bankstaff. This acute recognition is clear, for example, in the African Continental Bank – General Managers letter, where he began, inter alia.
“On the banking scene, the industry has continued to witness an increase in the number of frauds of varying sophistication.” We at ACB have had our fair share of issues. However, no financial fraud can ever occur without the participation of some personnel within the bank.”
a) Fraud: This simply means deception, trickery, sharp practise, or breach of trust in order to get an unfair or dishonest advantage over someone.
b) NDIC: This stands for Nigeria Deposit Insurance Corporation. It is a regulatory authority that oversees all financial institutions in Nigeria and guarantees consumer deposits against bank failures.
c) Banking Industry: There are institutions that deal with financial transactions such as deposit acceptance and payment, as well as fund movement from surplus to deficit.
d) Bank Customers: Anyone who has or maintains a regular account with a commercial bank, such as a current, savings, or fixed deposit account.
e) Bank Penalties: A punishment imposed on any earning staff or worker of a bank.
f) Outcome: The result of an occurrence.
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