FRAUDS AND FORGERIES IN NIGERIAN BANKING INSTITUTIONS: IMPLICATIONS FOR BANKING REGULATIONS AND THE LAW

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FRAUDS AND FORGERIES IN NIGERIAN BANKING INSTITUTIONS: IMPLICATIONS FOR BANKING REGULATIONS AND THE LAW

Authors: Igbinosa, Sunday Osaretin, Igbinosa-Okoro, Abieyuwa B. & Eghobamien, Osawina

ABSTRACT

The Nigerian banking industry is still bedeviled by frauds and forgeries in spite of several measures that are in place to check the malpractices. The study examined frauds and forgeries in Nigerian banking institutions by means of a descriptive research design based on a sample of 180 bank employees and managers of deposit money banks’ branches and a microfinance bank in Ugbowo, Benin City. Data were analyzed by descriptive statistics and hypotheses were tested using inferential statistics and multiple regression analysis. The following findings were made, viz: That three main groups – bank employees, bank customers and contract staff  perpetrate frauds in Nigerian banking institutions but contract staff is singled out as the prime culprit, there are many causes of frauds and forgeries in the nation’s banking institutions, viz: greed of employees, inadequate regulatory enforcement and poor oversight, untrained employees and weak internal control system but inadequate regulatory enforcement and poor oversight is the main cause of fraud and forgeries in banking institutions in Nigeria, the lack of adequate punishment for  fraudsters  helps to create more opportunity for other like-minded individuals to commit frauds, certain factors serve as fraud motivators- inadequate cybersecurity, weak internal control system, poor remunerations but the use of contract staff in the employment process is the most important factor that motivate many bank workers to engage in fraudulent practices and that collusion among employees is a major aid to frauds in Nigerian banking institutions. Finally, that frauds and forgeries in banking institutions have negative impact on the nation’s economy. The study made a number of recommendations, among others- the CBN should outlaw the use of contract employment in the nation’s banking institutions, there is the need to adequately train staff not only in technical training in the area of detection and prevention of frauds but also in the ethics and norms of the banking profession. There is also the need to train all workers including management staff to pursue superordinate goals. Bank internal control systems should be strengthened so that control measures cannot be easily broken through employee collusion. Staff employed in Computer department/ICT should be specially screened before they are offered employment and banks may consider putting some of them on a watch list to ensure that they do not live above their means. Banks should deploy the use of blockchain technology to detect frauds particularly to detect ICT and computer-based frauds by computer staff and internet fraudsters. Four major implications for banking regulations and the law were highlighted.

JEL Classification code: K20

Keywords: Fraud and forgery, banking regulations, banking law, banking institutions, bank employees, collusion.

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