Assessment of Fraud in the Nigerian Banking Sector and Regulatory Responses

Banking sector fraud in Nigeria represents one of the most costly forms of financial crime, eroding depositor confidence, destabilising individual banks, and undermining the broader financial system's integrity. This study assessed the patterns, scale, and regulatory responses to banking fraud in Nigeria's commercial banking sector, with focus on the South West zone where the highest density of banking fraud incidents is recorded. A descriptive design drawing on secondary data and primary interviews was employed. CBN annual banking supervision reports and NIBSS fraud reports from 2019 to 2023 were systematically reviewed, and structured interviews were conducted with 12 banking compliance officers and four EFCC banking fraud investigators in Lagos and Abuja. Results showed that total banking fraud losses exceeded 12.9 billion naira in 2022, with electronic fraud (internet banking fraud, SIM swap, and card fraud) accounting for 73.1 percent of all incidents. Insider-assisted fraud accounted for 38.4 percent of volume losses. Prosecution rates for detected banking fraud cases were below 6 percent. Know-Your-Customer compliance failures were identified in 52.4 percent of reviewed fraud cases as enabling factors. The study concludes that banking fraud remains inadequately prosecuted and systemically enabled by compliance failures. Recommendations include mandatory electronic fraud reporting integration, enhanced insider threat monitoring, prosecution acceleration, and customer digital literacy campaigns coordinated by CBN and EFCC.

Keywords: banking fraud, financial crime, regulatory response, Nigeria, electronic fraud