Nigeria’s financial institutions faced losses of 52.26 billion Naira (US$34.8 million) in 2024 due to fraud, primarily linked to the misuse of Bank Verification Numbers (BVNs). Instances of fraud involved agents utilizing static images to register fake identities, prompting the call for robust liveness detection systems. Experts advocate for stricter regulatory measures to combat these growing threats and protect banking security.
The Nigeria Inter-Bank Settlement System (NIBSS) reported a staggering loss of approximately 52.26 billion Naira (US$34.8 million) to fraud in 2024, driven largely by the misuse of fake identities for Bank Verification Numbers (BVNs). Experts emphasize the urgent requirement for implementing robust liveness detection systems to secure biometric identity verification processes employed by financial institutions across Nigeria.
Specifically, the report highlights that around 329 million Naira (US$219,000) was lost as a direct consequence of fraudsters utilizing static images of BVNs to execute financial transactions. Fraudulent enrollment practices, wherein agents inaccurately registered still images as live identities, undermined the BVN system’s integrity, enabling criminals to manipulate genuine BVN records for illicit activities.
The fraudulent BVNs often bore Nigerian names to mask their legitimacy, but such deceptions ultimately led to the discovery and deletion of numerous fake accounts, with law enforcement engaged in tracking down the perpetrators for potential prosecution. Furthermore, an alarming 400 million Naira (US$270,000) in fraud was attributed to identity theft during the previous year.
Originally established in 2014 to enhance banking security, the BVN system has become an essential requirement for individuals wishing to open bank accounts or engage in banking transactions. The government mandates that all accounts be linked to a biometric ID number, with Dermalog indicating that over 64 million accounts currently utilize the BVN system.
The report also elucidates a significant increase in fraudulent activities, revealing a soaring loss of 52.26 billion Naira in 2024, in stark contrast to the 11.6 billion Naira recorded four years prior, despite a higher number of reported fraud cases at that time. This troubling trend highlights the growing challenges facing the financial sector amidst increasing instances of fraud.
In response to these mounting threats, industry leaders advocate for enhanced regulatory measures to strengthen the financial system’s defense against fraud. Adaora Eze, a fintech expert and CEO of Digital Finance Solutions, stressed the necessity for an evolved regulatory environment to combat emerging threats and called for stricter compliance protocols alongside government-imposed accountability measures, asserting, “Without these interventions, fraud losses will continue to rise” – Blueprint.
NIBSS’s previous annual fraud landscape report in 2023 also indicated serious concerns regarding the prevalence of fraud within Nigeria’s financial sector. These insights underscore the pressing need for effective strategies to mitigate future losses and safeguard the integrity of the banking landscape.
In summary, the NIBSS report underscores the alarming financial losses incurred by Nigeria’s banking sector due to fraudulent activities, particularly through the misuse of biometric identification systems like the BVN. The critical need for implementing liveness detection systems and enhancing regulatory frameworks has never been more evident, as financial institutions grapple with escalating threats. Stronger compliance measures and government intervention are vital to curtail ongoing fraud and ensure the security of financial transactions.
Original Source: www.biometricupdate.com
