₦52.26bn Fraud Shock: Insider Complicity, BVN Loopholes Expose Cracks in Nigeria’s Banking System

• NIBSS report reveals record financial losses in 2024, including a ₦30bn internal case, fraudulent accounts linked to minors and identity theft schemes that threaten confidence in Nigeria’s digital payments ecosystem

Nigeria’s financial system suffered a staggering ₦52.26 billion in reported fraud losses in 2024, exposing critical vulnerabilities in banking controls, identity verification and internal oversight, even as the number of recorded fraud cases remained below levels reported five years earlier.

The figure, published in the  recently released Nigeria Inter-Bank Settlement System (NIBSS) 2024 Fraud Report, represented an increase of ₦34.59 billion from the ₦17.67 billion recorded in 2023, equivalent to a year-on-year jump of approximately 196 per cent.

But behind the alarming headline figure lies a more complex story about the nature of financial crime in Nigeria: the growing capacity of fraudsters to exploit weaknesses in institutional systems, misuse personal identities, manipulate account-opening processes and move illicit funds through seemingly legitimate financial channels.

The Central Bank of Nigeria (CBN) subsequently attributed much of the increase to a single internal fraud case involving approximately ₦30 billion. The case accounted for more than half of the total reported losses for the year, suggesting that the extraordinary rise was not necessarily evidence of a comparable surge in everyday consumer scams.

Nevertheless, the scale of the loss raises important questions about the effectiveness of internal controls, staff accountability, customer verification procedures and the capacity of financial institutions to detect suspicious transactions before money disappears.

The report presents a critical warning for banks, fintech companies, regulators and consumers as Nigeria’s digital payments ecosystem continues to expand.

 Record losses despite fewer reported cases

The NIBSS figures reveal a troubling divergence between the number of reported fraud incidents and their financial impact.

Nigeria recorded 70,111 fraud cases in 2024, compared with 101,624 in 2020 — a decline of approximately 31 per cent. Yet reported financial losses rose from ₦11.61 billion in 2020 to ₦52.26 billion in 2024, an increase of roughly 350 per cent.

The comparison suggests that the financial impact of reported fraud has grown substantially even as the recorded number of incidents has declined.

The total value of fraud as a proportion of financial transactions also increased from 0.0022 per cent in 2023 to 0.0040 per cent in 2024.

Although that proportion remains small relative to the overall value of transactions processed through the financial system, the aggregate loss is substantial, and the damage can be devastating for affected customers and institutions.

The numbers must, however, be interpreted carefully. A single exceptionally large fraud case can significantly inflate annual losses without producing a corresponding increase in the number of reported incidents.

That appears to have been an important factor in 2024.

According to the CBN’s subsequent explanation, the approximately ₦30 billion internal case was a major contributor to the increase. Excluding that case leaves about ₦22.26 billion in reported losses, calculated by subtracting ₦30 billion from the annual total.

That adjusted figure would still be approximately 26 per cent higher than the ₦17.67 billion recorded in 2023, indicating that the underlying fraud problem remained significant even without the exceptional incident.

The distinction matters for policymakers and risk managers: the headline total reflects both the scale of the largest reported incident and the wider range of fraud risks facing financial institutions.

How fraudsters exploited identity and account-opening weaknesses

Beyond the exceptionally large internal case, the report describes incidents involving stolen identities, questionable business accounts and the alleged involvement of insiders or intermediaries in facilitating fraudulent transactions.

One case involved accounts opened using stolen identity information, including details belonging to senior citizens. According to the report, approximately ₦400 million moved through accounts associated with this scheme.

The incident illustrates the risks associated with identity verification procedures that fail to establish whether the person opening or controlling an account is genuinely the individual whose information is being used.

Identity theft can allow fraudsters to establish accounts that appear legitimate during initial checks, creating channels through which stolen funds can be received, transferred and withdrawn.

The risks become even more serious where identity verification, account monitoring and internal oversight fail simultaneously.

In another incident, a fraudulent oil and gas corporate account reportedly received ₦335 million on the day it was opened, July 30, 2024. The report states that the entire amount was recovered.

Although the recovery represents a positive outcome, the incident raises questions about how an account could receive such a substantial payment immediately after opening and whether the transaction triggered appropriate risk alerts.

The central compliance issue is not simply the size of a deposit. It is whether the transaction was consistent with the customer’s stated business activities, expected turnover, source of funds and risk profile.

Financial institutions must be able to identify and investigate unusual transactions without relying exclusively on the account holder’s business registration or the apparent legitimacy of the account documentation.

Fraudulent BVNs linked to more than ₦1bn

One of the report’s most concerning findings involved the alleged misuse of Bank Verification Numbers (BVNs) registered for minors, with the assistance of compromised banking personnel or agents.

In one case, a BVN was reportedly registered for a minor by a compromised bank employee, allowing an enterprise account to be opened. The account subsequently received approximately ₦495.3 million, which was swiftly withdrawn.

In another case, a banking agent allegedly facilitated the registration of a BVN for a minor and the opening of an enterprise account associated with a bakery. The account reportedly received approximately ₦507 million before the funds were transferred out.

Together, the two transactions involved approximately ₦1.0023 billion.

The cases expose a fundamental weakness in identity-management controls when individuals entrusted with customer onboarding or biometric registration can allegedly bypass established procedures.

The BVN system was designed to strengthen customer identification and reduce identity-related fraud. Its effectiveness, however, depends on the integrity of the registration process, the security of biometric data and the ability of institutions to detect suspicious account-opening patterns.

The reported incidents raise questions about the adequacy of staff supervision, agent oversight, exception handling and the independent verification of customer information.

They also demonstrate why accountability cannot stop at the account holder. Where employees or agents are suspected of facilitating fraudulent registration, investigations must establish who authorised the process, what controls failed and whether additional accounts were opened through the same channels.

The insider threat and the compliance challenge

The findings highlight the risk posed by insiders who possess legitimate access to banking systems or customer onboarding processes.

External fraudsters may use phishing, stolen credentials or social engineering to gain access to accounts. But when an insider allegedly assists in bypassing controls, the distinction between an apparently legitimate transaction and a fraudulent one becomes harder to identify.

The implications extend to internal audit, access management, employee screening, segregation of duties and the monitoring of unusual staff activity.

Banks and other financial institutions must ensure that employees can access only the systems and functions required for their roles, while sensitive activities such as BVN registration, customer verification and account approval should be subject to independent checks.

Where agents perform customer onboarding, institutions also need reliable monitoring and accountability arrangements to ensure that outsourced processes do not become gaps in the control environment.

A robust fraud-management framework should be capable of identifying not only suspicious customers but also unusual activity involving employees, agents, devices, account relationships and transaction patterns.

The cases described in the NIBSS report reinforce the importance of treating fraud prevention as an institutional responsibility rather than merely a customer-protection function.

 Attempted fraud rises 338 per cent

The report also recorded a sharp increase in attempted fraud during 2024.

Attempted fraud rose by 338 per cent compared with 2023, reaching approximately ₦86.36 billion, according to figures cited in the CBN’s Payments System Vision 2028.

The figure represents the value of attempted fraudulent activity, not the amount ultimately lost. It should therefore not be added to actual losses as though both figures represent separate financial damage.

The increase points to the scale of attempted attacks confronting the financial system, although the figures must be interpreted in the context of the unusually large internal case and changes in detection and reporting.

NIBSS attributed the increase in attempted and actual losses primarily to incidents involving system vulnerabilities at certain institutions. The CBN subsequently identified the major internal case as a key driver of the reported loss figure.

The report indicated that fraud activity peaked in the second and third quarters of 2024 before declining in the fourth quarter.

It did not provide a complete set of quarterly values in the publicly verifiable summaries reviewed for this report, making it difficult to quantify the precise movement between those periods.

Nevertheless, the annual figures underscore the importance of continuous monitoring, rapid incident response and effective controls across the entire payments’ ecosystem.

Digital fraud remains a consumer-protection concern

The report also identified individuals aged 40 and above as the main targets of fraud in 2023, continuing a trend observed in 2022.

The number of unique fraud victims fell from 84,130 in 2022 to 80,658 in 2023, a decline of approximately four per cent.

These figures relate to the earlier reporting period and should not be interpreted as the number of unique victims in 2024. They nevertheless provide useful context on the exposure of consumers to financial fraud.

Fraud can take several forms, including identity theft, unauthorised account access, fraudulent transfers and the use of personal information to establish accounts without the individual’s knowledge.

The consequences may extend beyond immediate financial losses to include disputes over unauthorised transactions, damaged credit or financial records, lengthy complaint processes and the risk of repeated exploitation.

Consumers should protect their authentication credentials, avoid disclosing sensitive banking information to unverified callers and promptly report suspicious transactions to their financial institutions.

However, customer vigilance alone cannot address fraud schemes involving compromised staff, fraudulent account-opening procedures or weaknesses in institutional systems. Effective protection requires banks and regulators to maintain strong preventive and detective controls.

What the findings mean for banks, fintechs and regulators

The NIBSS findings carry important implications for compliance officers, risk managers, internal auditors and financial regulators.

First, customer due diligence must go beyond collecting identity documents. Institutions need to verify customer information, establish beneficial ownership where applicable and ensure that account activity remains consistent with the customer’s profile and stated business purpose.

Second, identity verification processes must be strengthened, particularly where biometric registration, BVN enrolment or agent-assisted onboarding is involved. Exceptions to standard procedures should be independently approved, documented and monitored.

Third, transaction-monitoring systems must be capable of identifying unusual activity, including large deposits into newly opened accounts, rapid movement of funds and transfers involving networks of apparently related accounts.

Fourth, internal controls should address the possibility of staff or agents facilitating fraud. This requires segregation of duties, restricted system access, independent review of sensitive transactions and appropriate investigation of suspicious employee activity.

Fifth, financial institutions must ensure that fraud incidents are reported promptly to the relevant authorities and that evidence is preserved for investigation and potential recovery.

The report’s examples also support the case for stronger coordination among financial institutions, NIBSS, the CBN, law enforcement agencies and the Nigerian Financial Intelligence Unit, particularly where funds move rapidly across multiple accounts or institutions.

Recovery and accountability remain critical

The recovery of the ₦335 million deposited into the fraudulent corporate account demonstrates that intervention can prevent some losses from becoming permanent.

However, recovery is not guaranteed, especially when funds are transferred quickly through multiple accounts or converted into assets that are difficult to trace.

The reported BVN-related cases, in which large sums were allegedly moved swiftly, illustrate why early detection and prompt escalation are essential.

For affected customers and institutions, the ability to trace funds and identify the individuals who controlled the receiving accounts can be as important as detecting the initial fraudulent transaction.

Accountability must also extend to any individuals found to have deliberately facilitated fraud, while ensuring that allegations against employees, agents or customers are established through appropriate investigative and legal processes.

The existence of a suspicious account or transaction is not, on its own, proof that every person associated with it committed an offence.

A warning for Nigeria’s digital financial future

Nigeria’s digital payments infrastructure has expanded rapidly, bringing greater convenience to consumers and businesses while increasing the importance of reliable identity management, secure transaction processing and effective fraud controls.

The 2024 NIBSS figures show how a relatively small number of exceptionally large incidents can have a disproportionate effect on total financial losses. They also reveal that fraud risks can emerge from several directions, including external cyberattacks, identity theft, fraudulent business accounts and alleged insider involvement.

Subsequent figures cited by Pryme show reported fraud losses falling to ₦25.85 billion in 2025, from ₦52.26 billion in 2024. That decline is encouraging, but it does not eliminate the need to investigate the weaknesses exposed by the earlier cases or establish whether the improvement is sustainable.

The central lesson is that a reduction in reported incidents does not necessarily translate into lower financial exposure. Institutions must understand both the frequency of fraud and the potential severity of individual attacks.

For banks, fintech companies and regulators, the priority should be to close identity-verification gaps, strengthen internal accountability, improve real-time detection and ensure that suspicious funds can be traced before they disappear.

Ultimately, confidence in Nigeria’s digital financial system will depend not only on the speed and convenience of electronic payments, but also on the ability of institutions to protect customers, safeguard financial assets and respond decisively when controls fail.

Key figures at a glance