Cases of frauds and foreign in banks have not only become incessant but have also been on the increase in recent years. Although frauds and foreign in banks are global phenomena, their growth in Nigeria Deposit Insurance Corporations (NDIC) annual report for instance, presents a disturbing picture of rising trends of fraud in banks from N360.2 million in 1992 to N351.9 million in 1991. The amount unloved in frauds in commercial banks alone rose to N1, 377.15 million in 1993, whereas the actual expected loss rose from N64.8 million to N241.0 million.

Fraud, in banks is clearly unacceptably something’s drastic ought to be done to gently stem the tide in view of its image implications for the banking industry and the adverse effects it will have on the economy. The study emerges in response to this development. In carrying out this research work, questionnaires were distributed to the respondents for their reactions. Equally oral interviews were also carried out and some texts written by eminent scholars were consulted. The researcher believed all these would give enough information for a sound report. This study therefore seeks to identify the causes and effects of book fraud. After analyzing the returned 25 questionnaire distributed to the staff of Afribank Nigeria PLC Enugu, the following findings were made:

1. No internal control system is 100% errors proof but the internal control system of banks can be designed to make the perpetration of fraud difficult.

2. Non-periodic review of work by bank management gives loophole and the tendency to commit fraud in the industry.

3. The law enforcement agencies of the countries fail to deal seriously with the bank fraud sters apprehended and handed over to them.

Based on these, the following recommendation were made:

1. The use of close circuit television surveillance should be commencing in all banks.

2. Bank should ensure that computer operator’s passwords are kept in safe hands when there is movement of Alfred staff.

TABLE OF CONTENTS

CONTENTS PAGES

COVER PAGE

TITLE PAGE

APPROVAL PAGE

DEDICATION

ACKNOWLEDGMENT

ABSTRACT

CONTENTS

CHAPTER ONE

1.0 INTRODUCTION

1.1 BACKGROUND OF THE STUDY

1.2 STATEMENT OF PROBLEMS

1.3 PURPOSE OF THE STUDY

1.4 RESEARCH QUESTIONS

1.5 SIGNIFICANCE OF THE STUDY

1.6 SCOPE AND LIMITATION

CHAPTER TWO

2.0 LITERATURE REVIEW

2.1 MAJOR CAUSES OF BANK FRAUD

2.1.0 INSTITUTIONAL CAUSES OF FRAUD

vVOLUME OF WORK

vNUMBER OF STAFF

vNATURE OF SERVICE

vBANKING EXPERIENCE

vINADEQUATE / LACK OF STAFF TRAINING

vPOOR MANAGEMENT

vSTAFF NEGLIGENCE

vRECRUITMENT SYSTEM

vPOOR SECURITY ARRANGEMENT FOR DOCUMENTS

vUSE OF SOPHISTICATED ACCOUNTING MACHINES

vFRUSTRATION

vINADEQUATE INFRASTRUCTURE

vLAPSES IN THE MANAGEMENT

vCONTROL SYSTEM OF CORPORATE CUSTOMERS

2.1.1 ENVIRONMENTAL / SOCIAL CAUSES

vSOCIETAL VALUE

vPERSONALITY PROFILE OF DRAMATIZE PERSONNEL

vSLOW LEGAL PROCESS

vLACK OF EFFECTIVE DETERRENT PUNISHMENT

2.2 EFECTS OF BANK FRAUDS

2.2.0 EFFECTS OF BANK FRAUD ON THE BANKING INDUSTRY

vCRISES OF CONFIDENCE AMONG BANK CUSTOMERS

vIMAGE IMPLEMENTATIONS

2.2.1 EFFECTS ON OUR ECONOMY

2.3 NATURE AND TYPES OF FRAUD

2.3.0 ADVANCED FEE FRAUD

2.3.1 CHEQUE KITTING FRAUD

2.3.2 ACCOUNT OPENING FRAUD

2.3.4 MONEY TRANSFER FRAUD

2.3.5 LOANS FRAUD

2.3.6 COUNTERFEIT SECURITIES

2.3.7 CHEQUE FRAUD

2.3.8 MONEY LAUNDERING FRAUD

2.3.9 CLEARING FRAUD

2.3.10 COMPUTER FRAUD

2.3.11 TELEX FRAUD

CHAPTER THREE

3.0 RESEARCH DESIGN AND METHODOLOGY

3.1 AREA OF STUDY

3.2 POPULATION

3.3 SAMPLE SIZE

3.4 SAMPLING METHOD

3.5 INSTRUMENT FOR DATA COLLECTION

3.5.1 QUESTIONNAIRE

3.5.2 PERSONAL INTERVIEW

3.5.3 SECONDARY DATA

3.6 ANALYTICAL TOOLS

CHAPTER FOUR

4.0 DATA ANALYSIS AND INTERPRETATION OF RESULT

4.1 ANALYSIS OF OPERATIONAL QUESTIONS

CHAPTER FIVE

5.0 SUMMARY OF FINDINGS

5.1 RECOMMENDATION

5.2 OTHER CONTROL MEASURES

5.3 CONCLUSION

BIBLIOGRAPHY

QUESTIONNAIRE

CHAPTER ONE

INTRODUCTION

BACKGROUND OF THE STUDY

The level of fraud in the present day Nigeria has assumed on epidemic dimension. It has eaten deep into every aspect of our life to the extent that a three years old child talks about 419, the name given to the newly discovered fees fraud that is hunting us a nation. Fraud is defined as “deceit or tricking deliberately practiced in order to gain some advantages dishonestly.” For an action to constitute fraud therefore there must be a dishonest intention and the action must be intended to benefit the perpetrator to the detriment of another person.

Going by this definition, frauds in the Nigeria economy cannot be restricted to the banks alone. Although frauds cut across all sectors of the economy and that size of an enterprises usually determines the volume of frauds perpetrated, such problems as inadequate manpower, poor internal control system, inadequate incentives and unsuitable legal framework for dealing with offenders, downturn in the economy, recognition being accorded the wealthy people regardless of their sources of wealth play a major role in the perpetration of frauds. The fear now is the threats which this devilish and unscrupulous act will pos to the stability and survival of individual financial institution and the performance of the industry as a whole for one things, frauds result in huge financial losses to financial institutions and their customers, depletion of shareholders frauds and capital base as well as loss of confidence in financial institutions.