Detection Of Invalid Cash Transaction In Ikot Ekpene Diamond Bank

Project and Seminar Material for Computer Science and Computer Engineering

Project and Seminar Material for Computer Science and Computer Engineering

Chapter One

1.0 Introduction

Fraud encompasses a wide range of illicit practices and illegal acts involving intentional deception or misrepresentation. The Institute of Internal Auditors’ International Professional Practices Framework (IPPF) defines fraud as: “… any illegal act characterized by deceit, concealment, or violation of trust. These acts are not dependent upon the threat of violence or physical force. Frauds are perpetrated by parties and organizations to obtain money, property, or services; to avoid payment or loss of services; or to secure personal or business advantage.”

Fraud impacts organizations in several areas including financial, operational, and psychological. While the monetary loss owing to fraud is significant, the full impact of fraud on an organization can be staggering. The losses to reputation, goodwill, and customer relations can be devastating. As fraud can be perpetrated by any employee within an organization or by those from the outside, it is important to have an effective fraud management program in place to safeguard your organization’s assets and reputation.

The major method usually utilized to detect fraud in financial institutions is auditing. Auditing is the examination, by an independent accountant, of the financial data, accounting records, business documents, and other pertinent documents of an organization in order to attest to the reasonableness of its financial statements. Businesses and not-for-profit engage certified public accountants (CPAs) to perform audit examinations. Large private and public enterprises sometimes also maintain an internal audit staff to conduct audit like examinations, which often are as much concerned with operating efficiency and managerial effectiveness as with the accuracy of the accounting data. Bank requires the auditor to report any differences, particularly any ineligible expenditure against which the Bank may have disbursed, recommending actions necessary to avoid recurrences. The audit of the statement of expenditures should be included as a part of the overall audit of the project. However, the Bank requires that particular attention be paid to the internal control systems and the verification of documents relating to expenditures, not only to ascertain proper financial accountability, but also that expenditures are eligible for inclusion in the project. The Bank requires the audit of its accounts to detect fraud. To detect fraud, there is need to apply specialized software to monitor transactions that exceed set limits and that contravenes the policy of the bank.

1.1 Theoretical Background

Security is a factor that is constantly highlighted as responsible for the success or failure of E-Banking. The inadequacy of security potentially leads to financial losses, punitive measures by regulators and negative media publicity (Shah et al, 2012) therefore its importance cannot be over emphasised. In E-banking, fraud is a major contributory factor to the term security and needs to me managed closely. “Incentives for fraud increase when transactions are made in large amounts, when transactions are made anonymously or at the point of sale, when claims cannot be effectively verified at the point of sale, and when issuers of payment claims bear the costs of fraudulent transactions” (Roberds 1998). E-Banking offers most if not all these incentives, hence the need for adequate fraud prevention strategies. In 2010, most of the fraud cases were perpetuated via electronic banking systems therefore reflecting weaknesses in the internal control systems (CBN Annual Report, 2010).

1.2 Statement of the Problem

Financial services and organizations suffer yearly losses through crimes such as online banking, cheque and card fraud. These clearly indicate that criminals are exploiting e-banking mediums. Hence there is need for improved continuous improvement in security to prevent fraud and mitigate the risk of customers losing confidence in banking services. The following problems were identified as fraudulent activities in the banking sector:

  1. Carrying out cash transactions above regulatory thresholds
  2. Excess cash disbursement
  3. Unusual number of cash transfers

The consequence of these is that illegal transactions can be carried out on customer accounts without their knowledge thereby leading to loss of funds.

1.3 Aim and Objectives of the Study

The aim of the study is to develop a fraud detection system with the following objectives:

  1. Identify cash transactions just below regulatory reporting thresholds.
  2. Identify a series of cash disbursements by customer number that together exceed regulatory reporting thresholds.
  3. Identify statistically unusual numbers of cash transfers by customer or by bank account.

1.4 Significance of the Study

The significance of the study is that it will provide an effective means to detect fraud by identifying cash transactions that exceed set limits or threshold. The study will also serve as a useful reference material to other researchers seeking similar information.

1.5 Scope of the Study

This study covers the detection of invalid cash transaction in Ikot Ekpene Diamond Bank.

1.6 Organization of the Research

This research work is organized into five chapters.

  1. Chapter one is concerned with the introduction of the research study and it presents the preliminaries, theoretical background, statement of the problem, aim and objectives of the study, significance of the study, scope of the study, organization of the research and definition of terms.
  2. Chapter two focuses on the literature review, the contributions of other scholars on the subject matter is discussed.
  3. Chapter three is concerned with the system analysis and design. It presents the research methodology, analyzes the present system to identify the problems and provides information on the advantages and disadvantages of the proposed system. The system design is also presented in this chapter.
  4. Chapter four presents the system implementation and documentation. The choice of programming language, analysis of modules, choice of programming language and system requirements for implementation.
  5. Chapter five focuses on the summary, conclusion and recommendations are provided in this chapter based on the study carried out.

1.7 Definition of terms


An institution where one can place and borrow money and take care of financial affairs


Any act of deception carried out for the purpose of unfair, undeserved or unlawful gain.


To confirm or validate the correctness of something


The act of circumventing security with an alias.


The measurement and recording of the physical characteristics of an individual for use in subsequent personal identification


A set of things working together as parts of a mechanism or an interconnecting networks; a complex whole.


Is the method of banking in which the customer conducts transactions electronically via the internet.


This is a machine that allow customers to get money from their bank accounts by using a special card.

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