The massive increase in mobile and online transactions in recent years, has come with huge challenges for the banking industry, resulting in unprecedented rise in finance-related cybercrimes. It is a welcome development that the Central Bank of Nigeria (CBN) is responding to these problems with appropriate measures. One of such measures is its disclosure, a few days ago, that the Bank Verification Number (BVN) of 7,552 account holders had been placed on a watchlist for suspected fraudulent transactions. This number represents an increase of 25 per cent in less than ten months, from 6,045 as of June, last year.
Director of Payment System management at the CBN, Mr. Musa Jimoh, disclosed this at the recent 34th Seminar for Financial Correspondents and Business Editors held in Calabar, Cross River State. He said the BVN of the account holders being flagged are under investigation, and have been excluded from the financial system, at least for now. According to statistics from the CBN, a total of 57.43 million BVN enrolment had been recorded at the end of March this year. It also stated that the verification system has proved to be a great support in the sector in tracking, identifying and investigating fraudulent financial activities.
It, however, acknowledges that implementing the digital payment system has come with its peculiar, tough challenges. We welcome the introduction of new regulations that will curb cybercrime and other forms of illicit financial transactions in the banking and financial services industry. The economy has recorded huge losses that emanate from cybercrime and technology risks in the financial sector. Such risks call for timely actions to guide against banks being overwhelmed by the activities of internet fraudsters.
In April 2016, the National Security Adviser (NSA), Maj-Gen. Babagana Monguno (retd) revealed that Nigeria loses N127 billion annually to cybercrime activities, many of them perpetrated through the banking system. In 2017, the amount lost was put at N234billion. The total amount lost due to such fraudulent transactions may have tripled by now. According to McAfee, an antivirus software firm that specialises in protecting data and devices, it is estimated that cybercrime, ranging from bank account hacking and phishing (in which fraudulent emails are sent out with the aim of obtaining data or cash from the recipient), might exceed $100billion a year.
Nigeria recorded the largest loss in Africa. That strengthens the current measures taken by the CBN to place suspicious BVN account holders on its watchlist. There is no doubt that BVN supports the development of credit profiles for depositors and improves the access to credit. With the rise in payment platforms, the effectiveness and efficiency of these platforms will impact the stability and resilience of the payment system. But, it must be protected from the nefarious activities of unlicensed entities, especially fraudsters who are desperately threatening the payment system that support the economy and protects depositors’ funds.
We commend the CBN and urge it to do more in curbing cybercrimes. Frauds in the banks and financial service firms will be greatly minimised if the banks regularly update their security software operating systems and applications. It is even more crucial at this time that fraudsters have become more daring and adept in hacking and phishing. This calls for the enforcement of the Cybercrime Act 2015, and the amendment of some provisions of the Act in response to present realities.
We urge the incoming 10th National Assembly to revisit the Cybercrime Act, and do the necessary amendments, as new regulations are required to curb cybercrime. The CBN also needs new regulations that will address emerging technological risks in the banking industry. Nigeria’s image is at stake when the banking system is threatened from within and outside of the system. A recent Annual report of the Nigeria Deposit Insurance Corporation (NDIC), showed that fraud on e-payment platform of the banking sector increased from 181 per cent between 2013 and 2014, to over 200 per cent in the last two years.
Also, a report from the Centre for Strategic and International Studies, United Kingdom, estimated the annual cost of cybercrime in Nigeria at over one per cent of Nigeria’s current Gross Domestic Product (GDP) which, according to the World Bank, stands at $440.8billion. The one per cent represents over N200billion. Global tracking of cyber-attacks indicates that Nigeria is among countries with high cases of software piracy, intellectual property theft, malware attacks, particularly, the activities of ‘Yahoo boys.’
No doubt, the rise in cybercrimes is a serious challenge to the government and the plans of the incoming administration to revamp the economy. Overall, placing the BVN account holders on watchlist is a step in the right direction. However, it is not enough to achieve the intended objectives. Therefore, the banks should deal with insider abuses that have sometimes compromised banks’ software systems. The banks should collaborate with the CBN to train those that man their security systems.