Evaluation of Fraud Detection and Prevention Mechanisms in Commercial Banks in Kaduna State

Bank fraud remains a pervasive challenge in the Nigerian financial system, with deposit money banks in North West Nigeria facing growing exposure to electronic and insider-related fraud. This study evaluates the effectiveness of fraud detection and prevention mechanisms in commercial banks in Kaduna State. A descriptive survey research design was adopted, and data were collected from 190 compliance officers, internal auditors, and risk managers across eight commercial bank branches in Kaduna North, Kaduna South, and Chikun Local Government Areas. A structured questionnaire covering fraud control mechanisms including real-time transaction monitoring, know-your-customer compliance, internal audit frequency, whistle-blower policies, and staff ethics training was administered. Data were analysed using descriptive statistics and multiple regression. Results revealed that real-time transaction monitoring (beta = 0.43, p < 0.01) and know-your-customer compliance (beta = 0.36, p < 0.01) were the most effective fraud prevention mechanisms as rated by respondents. Internal audit frequency had a significant negative relationship with reported fraud incidence (beta = -0.27, p < 0.05). Whistle-blower policies were under-utilised, with only 22% of respondents aware of formal whistleblowing channels. The study concludes that electronic monitoring systems are the strongest fraud deterrent in Kaduna State commercial banks, but their effectiveness is undermined by gaps in staff ethics training and whistle-blower policy awareness. Recommendations include mandatory quarterly ethics training and enhanced whistle-blower protection frameworks. Keywords: fraud detection, fraud prevention, commercial banks, Kaduna State, know-your-customer