Frauds In Nigeria Bank; Analysis And Solutions

Project and Seminar Material for Statistics

Frauds In Nigeria Bank; Analysis And Solutions


This work is designed to examine the assessment of the role of the mass media in anti-corruption campaign. It is organized into five very instructive chapters.

Chapter one deals with the background, statement of the problems, research questions and hypotheses, assumptions and limitation of the study among other things. Chapter two is devoted to the review of relevant materials in the area of study. Chapter three contains the methodology while chapter four concentrated on data analysis and the results of the findings. Also chapter five gives a brief summary of the work.

Through these chapters, the objectives of the study was in that the researcher not only found that the mass media are indispensable but they are also powerful in their influence.


This research was done to bring to light various frauds in Nigeria banking system, having analyzed the rate and incidence of fraud, causes, forms and solutions. However, this research discussed frauds in chapter as follow

Chapter one:

Highlights on the objectives, importance of the study of the causes of frauds, analysis and solution of frauds, the statement of problem, hypothesis formations and definition of frauds.

Chapter two:

Deals on the review of literature on frauds in Nigeria banks and foreign banking system, causes of frauds the effect and preventive measures.

Chapter three:

Reveals the study area as regard to frauds in Nigeria banks, this was done by employing some sampling methods in the investigation in achieve the aim.

Chapter four:

This gives the overall view of the presentation of data and all the analysis involved using interview and questionnaire method.

Chapter five:

Discussed the summary, findings recommendation and conclusion

Chapter One


1.1 Background to the Study

The commercial world today has been devastated by random breaches of business ethics. This has resulted to rampant occurrence of white collar crimes committed mostly by top and highly educated professional personnel, these crimes are sometimes euphemistically dubbed, executive dishonesty crimes like improper waiver of interest on loans, fraudulent false accounting, falsification, computer fraud, dishonesty, classification of debts as bad debt or irrecoverable, non-disclosure of vital interest by executive, and other financial malpractices, fall into this category.

Furthermore, the government has responded by churning out laws with constant regularity in a bid to meet the challenges posed by these problems. One of such problems is the incidence of fraud in financial institutions especially Nigeria banks. This has attracted at least three major legislation in the past few years. All these relevant enactments will be examined in this project.

It is a notorious fact that frauds are mostly masterminded by insiders, at times in concert with outsiders. They are mostly discovered by tip offs from other staff who feel left out or by accident. Rarely do normal official checks reveal such earth shattering fraudulent scams that are big concern of the financial world.

Moreso, there is need to arrive at an acceptable constitution for the word “fraud” and to deepen our understanding by paying some respect to the statutory construction of financial institution like Nigeria banks.

Having dealt with the general situation of things ion our banking industries, the research work is therefore aimed at pointing out the major causes of fraud in Nigeria banks etc. effects on the Nigeria economy commercial world, individuals especially the depositors (customers of the banks) after the research must have been carried out the above, the researcher then recommended the measures to be taken in order to prevent and minimize the incidence of fraud in Nigeria banks. It should be noted that no bank, big or small is immune from fraudulent particles. However, bankers should have it as the back of their minds that dignity and hard work are not the only thing required but integrity is also required.

1.2 Objective of the Study

The objective of this study is to enable us know that for any financial institution like bank to be on the move in respect of growth ion the economy, there is need to work out possible solutions that can put a stop to fraudulent practices or bring it to a minimal level

In a nutshell, this project is designed for the following.

  1. To determine the rate and the extent of fraud in the banking industry in Nigeria.
  2. To bring to light some of the ceases of fraud in our banking sectors.
  3. To highlight on the dangers/menace of fraud in Nigeria banks
  4. To discover the likely procedure that will enable us determine fraudulent practices nad possible ways of tackling them.
  5. To examine critically the management and government measures as regards to the possible checking of fraud and preventive measures.
  6. To render some recommendations and suggest possible solutions on the best way fraud could be brought to a minimal.

1.3 Significance of the Study

The study enhances various examinations of the techniques usually employed by the fraudsters. It is structured for all classes who may want to invest in banking industry especially in Nigeria. Bad performance and incompetent discharge of duty as a result of this category’s activities (who are employed by the management) when properly examined will be a contributory to the growth in banking industry. When all measures are strictly adhered to it would go a long ways in bringing fraud to a minimal.

The research work is to enable all and sundry such as: the shareholders, the insurance companies and the management to benefit, the customers so as to rebuild and reverse the already lost confidence of the public and the parties involved in the banking industry. This will enhance rapid growth in the banking industry which will enhance rapid growth in the banking industry which will in-turn enhance the development of this nation Nigeria

1.4 Statement of the Study

The banking industry seems to be s focal point of fraudsters. It is s notorious fact that frauds are master minded by the banker, at time in concert with outsiders. It is incredible that bankers whose watch word should be “Transparent honesty” have turned to become looters and by so doing, creating fear in the minds of the public.

Newspaper pages are jain-picked with reports ob fraud cases in banking industry, however, most computer frauds cases like other frauds are not usually reported by banks and this may be due to the embarrassment it would cause the institution, the loss of public confidence as well as the difficult of prosecution of such cases.

It is estimates that not less than average amount of one million naira per working day of the financial year is made away by fraudsters. The amount lost is quite a set back to our economy. The management of these respective banks have taken cognizance of these fraud issues yet they have not worked out a permanent solutions to this problems.

It is so painful that we do not really know who is trust in the banking industry since they have failed many depositors, shareholders and a lot of non-bankers have been discouraged from banking their money because of the fear that the bank may collapse at any time. They prefer keeping their idle cash with them instead of banking with people dubious characters.

In other words, frauds frustrate the banking habit of the society. Fraud leads to stunted growth of banking industries due to great losses involved it could also hinder commercial growth fraud deteriorates any nation economy development

1.5 Hypothesis Formulation

Hypothesis is a stated assumption made about a population which must be tested and proved. Hypothesis could be classified into two major types namely.


Null hypothesis (Ho) signifies no difference or no relationship exist between two or more alternatives variable in other words, it is a hypothesis of “no effect” no difference”

Alternative/positive hypothesis (H1) is the proposition that may be accepted if the stoical null hypothesis is rejected by the sample evidence.


Ho – Null Hypothesis

Hi – Alternative hypothesis.

  1. Ho: Internal and external control system do not reduce fraudulent practice to the minimal in Nigeria banks.
    Hi: Internal and external control system reduces fraudulent practices to minimal in Nigeria banks
  2. Ho: Legal control of frauds in Nigeria financial institution especially commercial banks has no relationship with the minimization of fraudulent practices.
    Hi: Legal control of frauds in Nigeria financial institution especially commercial banks has relationship with the minimization of fraudulent practices.
  3. Ho: The introduction of information technology has no great impact on banking industry in respect of services and frauds.
    Hi: The introduction of information technology has great impact on banking industry in respect of services and frauds.
  4. Ho: Nigeria deposit insurance Decree of 1988 (NDIC) has no power to make regulations guiding specific items with respect to the day to day management of the regulated institutions like the commercial banks.
    Hi: Nigeria deposit insurance Decree of 1988 (NDIC) has power to make regulations guiding specific items with regulation to the day to day management of the regulated institutions like the commercial banks.

1.7 Definition of Terms

In explaining fraud as an element of some other officers, the criminal code ascribes it as a situation correlation with deceit. But a workable definition can be traced to the Osborne’s concise law Dictionary (6th edition). Thus fraud can be seen as the obtaining of material advantage by unfair or wrong means. This may be either by way of abuse of entrusted reasonability by convert of overt deceit. In a liberal sense fraud may be used as an umbrella term to cover almost all classes of white collar crimes known to law and business.

Fraud can also be defined as one type of irregularity. It is usually reflect to irregularities involving the use of criminal deception to obtain unjust or illegal advantages (by Okorie Onovo, ACAS, understanding Auditing and Investigation.)

Fraud can also said to be conscious premeditated action of a gang of persons with the intention of altering the truth or fact for selfish personal monetary reward. This involves the use of deceit and tricks and sometime highly intelligent or cunning methods. This action usually takes the form of signing of documents and authorizing signature outright theft. (by Adeewumi 1986)

There are so many definitions of fraud but the researcher decided to present just three definitions. All definitions seemed to be correct but the former that of that of Osborne’s concise law Dictionary (6th Edition|) contains elements of frauds appropriately and adequately for the purpose of this research work.

These two impact element are

  1. That for a fraud to take place, there must be obtaining of material advantage wrongly
  2. There must be abuse of entrusted responsibility or convert of overt deceit that means that in this case a party is exposed to losses while the other part gains

It will be of great importance to briefly mention on the occurrence of fraud to answer the question WHEN DOES FRAUD ARISE?

Fraud arises when a person in a position of trust and responsibility breaks the rule and regulations to advance his personal interest at expense of the public interest he has been entrusted to guard and promote. It also arises when a person through deceit trick or highly intelligent curing gains an advantage he could not otherwise have gained through lawful, just or normal process.

Fraud is a mater of individual choice and opportunity. As human beings the individual takes the advantage if there is opportunity and possible means of getting away with it.

Chapter Five

Summary, Conclusion and Recommendations

The problem of fraud prevention and control in the banking system is on environment task confronting owner and sure way to end menace way around the most careful planned system.

5.1 Summary

Each bank has the own mean of preventing and checking financial fraud some of those device a incorporated in the management structure of the bank or sometimes initiate by the management concerned in the cause of this research work it was discovered or revealed that fraud is inherent in all banking operation . The reason is that banks deals on cash valuable which are disinable as to induce a corrupt mind into through which bank can be defrauded but greater parts are penetrated through forgeries and defectives of customers’ lodgment.

Even though some staff involves in fraudulent practices, it was discover that they do this mainly in collaboration with outside. In the same vein, single handedly increase. This time they are not use the assistance of a staff, but operate through a computer scientists or expert who intercepts the flow of transaction without the knowledge of nation banks. It was for this reason that the rate of fraud through fictions transfer institutions has been the most prevailed way through which bank institute some controls however, have been yielding result, but people are of the opinion tat it will entail a lot of time which may cause delay in banks. But in the cause of this research, prompt services have maintained.

On the area of staff involvement in fraudulent practice it was discovered that banks either leaves with the money stolen. This is a development which does help the system. One would have expected as to return the money stolen.
During this research work it has been period that caused lack of sound internal control, proper accounting procedure and inside involvement. Even when it is reported and investigation commence, yet another difficult is the cooperation of member of the staff. Some of them who are in position to give vital information will always decline.
During this study, it was learnt that fear of the outcome of investigation and staff involvement in the reported fraud are some of the reasons a staff would not want to assists an investigator.

Finally, in course of this research work two dispute issue, which formed my first and last hypothesis, were addressed, it has now been established that fraudulent practice in bank can be presented and controlled using sound internal controls, proper accounting procedures and period audit by an external auditor.

Also established the fact that fraud actually has a negative effect on the profitability which decline the profit level, loss of public confidence/trust and eventually loss of customers

5.2 Conclusion

Banks have a duty to promote and maintain adequate banking services for the public via the restoration of banking confidence among the population.

The government also has a part to play in the game of fraud control.

Fraud should not be allowed to destroy the very society we are trying to build. It has destroyed the dignity of the banking sector and the confidence between bank and their customers. It is threatening the while economy and it is time appropriate actions were taken by both banks and the government.

The problem of detection and prevention of financial fraud is not only limited to the three bank only and the banking system but the whole facts of our society. A society where there is standard number of behaviour where corruption high and low places to the other of the data and where amazing wealth grading is the burring desire of money. How can we save the bank system?

As already noted there is no full proof against financial fraud in the society at large. We can only attempt to minimize it. This is true because, fraudster will always think ahead of the already existing check and balance. It obvious to the bank then to employ all reasonable and practicable measure to project the depositor and shareholders otherwise fraud can ruin the entire system. Existing laws should be reviewed and restricted to complements the efforts of the banks and other actions we can be sure to have a society with minimal incident of frauds.

5.3 Recommendation

Having explored in various ways the detection and prevention problem posed by fraudulent activities in the banking system, the researcher makes the following recommendation in the hope they would be of help to bank managers in minimizing the problems.

It is the duty of the police to prosecute crimes relating to bank fraud. This individual bank should not allow to prosecute the fraudster. This is to give room for an independent investigation without any form of interference by a staff who may twist in fraudulent activities that are going sophisticate the police should be well equipped and trained to match the sophistication of the current wave of fraud.

Another one is the judiciary which has been severally accused of delay justice and most times setting criminals free on more technicalities. Offenders should be well punished and made to reproduce everything that was stolen.

Bank should always stay ahead of cyber fraudster by being up-to date with the development in the world of information technology. They should not rely on any obsolete system and till prey to the net of creek. A good internal control mechanism is designed to divide responsibilities so that one person’s work is checked by another and then authorized by a higher official managers should come from outside the branch to act and check any unhealthy collusion existing in the branch. The personnel department within who jurisdiction is to recruit should do everything possible to ensure that people of undoubted integrity are employed.

Banks should get ride of non qualified staff the should also be a form of infer bank co-operation understanding.
Dormant account should be closely monitored and any transaction on them should be monitored with the consent of management inspector from the central bank of Nigeria must be allowed to visit and inspect the bank records at least once every year. This is to ensure that the bank are complying with CBN regulation and other statutory provision

Finally adequate discipline must be maintained among staff and professional ethics preached regular basis. Any observed fraudulent practice must be matched with adequate sanction. Each case must be purely treated on its merit.

There should be clear-cut arms length relationship in all transaction and firm of promiscuous relationship shall be condemned as they may be determined to the system. Where two staff enters into marriage with each other one should resign, with these, it is to believe that there should be a way forward for banking system.

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