Combating Financial Crimes

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Shonubi

The Central Bank of Nigeria introduces new technologies such as bank verification number and biometric data of bank customers in its bid to fight ATM and other fraud- related crimes in banks

|  By Vincent Nzemeke  |  Mar. 3, 2014 @ 01:00 GMT

OMOWUNMI Adepoju, an information and communication technology, ICT officer at a private firm in Abuja, recently lost a substantial amount of money in her bank account. A close friend of hers stole her automated teller machine, ATM, card and with that went ahead to withdraw money from her account.

The most pathetic part of the story is that when the funds were being withdrawn from her account, Adepoju got SMS alerts on her phones but could not do anything to stop it because it was a weekend and the banks had closed. “I felt very helpless. Somebody was robbing me and there was nothing I could do to stop it because banks don’t work on weekends.”

Godwin Emefiele
Emefiele

In another related development, Nathaniel Odiegwu, a civil servant in Abuja, recently lost about N30, 000 to his brother-in-law who stole his ATM card. The said brother-in-law made withdrawals from Odiegwu’s account on the same day.“ I thank God that there was only N30, 000 in the account and he withdrew everything. There is no gainsaying that if there was more, he would have withdrawn it. I only told him the pin of the card once when I sent him to make withdrawal for me. I thought I changed the pin thereafter but I obviously did not.”

Just like Adepoju and Odiegwu, many Nigerians have lost various amounts of money through electronic banking frauds. The trend has become so commonplace that it is almost impossible to walk into a banking hall without finding customers who have come to lodge complaints about missing or stolen ATM cards.

Okwuchi Alodia, a banker, told Realnews that she attends to at least three complaints from people who have lost various amounts of money through their ATM cards on a daily basis. She said the crime is perpetuated mostly by people who are close to the account owners and know the security codes of their ATM cards.

“We continue to tell customers that their ATM pin is a personal thing which should not be disclosed to anyone else. But they don’t listen and when they lose their money, they run back to the bank looking for help.”

As the trend continues, there have been calls from various quarters on the authorities to come up with ways of curtailing electronic banking fraud. The Central Bank of Nigeria, CBN, appears to have hearkened to the calls with the launching of a new technology known as bank verification number, BVN. The new technology which was unveiled by Sanusi Lamido Saanusi, CBN, governor in Lagos on February 14, 2014 , is a biometric authentication system for bank customers using Point of Sale, POS, machines and ATMs.

Omowunmi Adepoju
Adepoju

According to Sanusi, it is meant to address the safety of customer’s funds and avoid losses through compromise of personal identification numbers. He added that with the BVN, the era of cybercrime and identity-related thefts in the banking industry was over as the technology would protect customers.

With the BVN technology, bank customers are expected to provide their biometric such as finger prints to the banks. The biometric details of the customers will be customised into the ATM cards and other bank products thereby making it almost impossible for anyone to withdraw money from an account that does not belong to him.

Sanusi, who admitted that the issue of unique identity has been a problem in the banking industry for years, said arrangements have been made to ensure that banks complete the biometric registration of all their customers in the next 18 months. “Imagine a situation whereby within a year and half, we have everybody on the system, if you commit fraud in Maiduguri and try to withdraw the money in Ibadan, it will pick you up.

“If you committed a fraud in a bank and you are on the fraud data base, wherever you go and put up your finger, it will pick it up and people will know. Just the fact that you know that if you commit fraud somewhere, you are not going to use a microfinance bank or a bank is enough to stop money laundering and other crimes.”

Aside being offered freely at all banks, Sanusi further disclosed that all the data that would be generated from customers would be in the custody of the Nigerian interbank settlement system, NIBSS, where all commercial banks, microfinance banks and other financial institutions would have access to the information. “The central bank is going to issue a circular to officially inform banks of the commencement of the exercise and banks would also send notice to their customers and everybody would come and register. So you can go to any bank or any agent and register and once you register and you are in the system, you can’t register again. Banks are not charging customers anything for this,” he added.

Tope Fasua
Fasua

As expected, CBN’s intervention in combating fraud in the banking sector is already generating responses from various parts of the country. Although, it is seen by many as a step in the right direction, there are those who want the CBN and other banks to come up with other ways of dealing with ATM fraud because a single solution may not be enough to eradicate it.

Nevertheless, Ade Shonubi, managing director of NIBSS, was quoted by the News Agency of Nigeria, NAN, as saying the CBN initiative was a major landmark in the banking industry. Godwin Emefiele, group managing director/chief executive officer of Zenith Bank, who was also quoted in the same report, said the biometric solution would stimulate banking transactions and also improve access to credit by customers. “The issue of forgetting one’s personal identity number when it comes to transaction does not arise because the biometric cards only use bio-data information”, he said.

 Tope Fasua, an Abuja-based financial analyst, said even though the biometric solution was commendable, the CBN must not rest on its oars. He added that the apex bank must come up with more solutions because those who perpetuate financial crimes are also looking for ways to compromise what has been developed.

“It is good but not enough. Those at the CBN must think and cooperate with people in other banks to come up with more solutions. It may be hard now but the guys who commit these crimes are not sleeping; they are constantly looking for ways to compromise what has been developed.”

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