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The Detection And Control Of Financial Frauds In Nigeria Banking System, Problems And Solution

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This research work titled “The detection and control of financial frauds in Nigeria banking system, problems and solution” examined the following: The approaches of financial fraud detection and control mapped out by the bank. Researched into the reason why people involve in financial fraud. The various management and government controlling devices geared towards alimentation or checking financial fraud in our banking system. The facts contained in the detection and control financial fraud issued. Data for the study was sourced from two main sources which include Primary and Secondary sources of data Collection. Primary data: questionnaires and oral interviews were used to collect information from the respondents. Secondary data: journals, and other relevant materials relating to the area of my investigation will be review. Extensive literature review was carried out on the direct literature and indirect literature on books, journals and past works. The research instrument used in this study includes oral interview and questionnaire. The questionnaire is structural as to contain both close and open ended question. Simple tables and percentages was used in treatment of data. The research found out that various management and government controlling devices geared towards alimentation or checking financial fraud in our banking system. Based on the findings, the researcher recommends that the personnel department within whose jurisdiction, it is to recruit should recruit qualified staff. The bank should not be made a home for never – do – wells or what part or role has a graduate of history or geography has to play in the banking profession.   







Title page                                                              i

Certification page                                                   ii

Approval page                                                        iii

Dedication                                                             iv

Acknowledgement  s                                               v

Abstract                                                                vii

Table of contents                                                    ix



1.1  Background of the study                                   1

1.2  Statement of the problem                                 5

1. 3 Objective of the study                                      7

1.4  Research question                                            8

1.5 Research hypothesis                                         9

1.6  Significance of the study                                  11

1.7   Scope of the study                                          13


Literature Review

2.1      Who are the bank fraudsters                             17

2.2      Fraud and fraudulent practice in banking

Services                                                         20

2.3      The legal framework                                         25

2.4      What is fraud                                                  30

2.5      Causes of frauds in UBA bank                            36

2.6      The effects of bank frauds                                 39


Research Design and Methodology

3.1      Research design                                              42

3.2      Area of study                                                 43

3.3      Population                                                      43

3.4      Sampling and sampling procedure                     44

3.5      Instrument used for data collection                   45

3.6      The validation of the research instrument           45

3.7       Method of administration of research instruments  47

3.8      Method of data analysis                                   48


Data Presentation and Analysis

4.1  Data Presentation                                            49

4.2  Testing the hypothesis                                     70


Summary of Findings, Conclusion and recommendation

5.1  Summary of Finding                                         80

5.2      Conclusion                                                      87

5.3      Recommendations                                           92

Bibliography                                                    98

Appendix I                                                      100

Appendix II                                                     101




       Fraudhas been defined in so many ways but there has been no single accepted definition of term “fraud”. Fraud is limitless on classification. This is why courts and writers on fraud try to escape away from giving a decisive definition. Not withstanding, the varied meanings attached to the concept of financial fraud the author addressed the subject with the following working definitions.

       In the mind of civil court of justice, fraud may be said to cover “all acts, omissions and concealments which involve a branch of legal or equitable duty, trust or confidence justly reposed to another or by which an undue influence or available is taken off.

Oxford and Chamber dictionaries define fraud as a criminal deception, act of deceptive trick, cheating swindling person or thing that deceives.

       Longman dictionary define fraud as “an act of deceitful behaviour for the purposes of gain which may be punishable by law.

              Brmifagbeni define banking fraud to mean an act or cause of deception deliberately practiced to gain unlawful or unfair advantages such deception directed to the detriments of another. They go further to define fraud as depriving a person dishonestly or some thing which is his or of something to which he might but for perpetration of the fraud be entailed.

       After a close study of these approaches to definition of fraud especially from the banking perspective. One may correctly see bank financial fraud as a deliberate act by an individual or group with or without the Nigeria banking system to cheat, swindle, deceives or manipulate in other to disposes the banks depositors/shareholders of their funds.

       Despite several definitions of frauds, the authority believes that the ones so far given rate rather appropriate, advantages and inspiring for the purpose in which the research work intends to achieve. This is because; they contain the basic elements of fraud which include that:

a)          There must be decent or deception directed to the detriment of another.

b)         A false representation has been made knowingly or without belief in its truth or recklessly, carelessly, whether it true or false.

c)          To obtain damages for deceits, it must be proved that the defendant intended that the plaintiff should act on it an suffered damages in consequences.

The position of banking system in our economy cannot be over emphasized. They act as the “conduct pipe” through which all the financial transactions pass. Fraud has proved a serious bottleneck to the proper functioning of the roles of the banking system to the Nigeria economy. People are beginning to get worried and sooner than later may loose confidence in our banking sector due to mainly the very increasing incidence of fraud in our today’s banks as the store house of the public funds and properties should be on trust not fraud.



To some banking experts, the issue of fraud is an internal vice in the Nigeria banking system. They argue on this because a good number of fraud occur among our banks without the knowledge of outsiders even where the public is aware it doe’s not affect the rate at which customers withdraw or deposit money.

The frequent cases of financial fraud in many financial institutions in our country is now taken as the utmost concern to financial experts and micro encomiasts. This has also initiated that task of seeking solutions to eliminate its occurrences.

These experts are inclined to believe this because the nation is under-banked, the populaces are at no option but to use the available banks like especially the foremost and well established banks like UBA plc even if there are glaring inefficiencies in the operations incompetence and laziness among most banks staff give birth to fraud.

Fraud has paralyzed the roof, the foundation and creditability of our banking system. Just pick up any national daily or from police record and you will be alarmed at the extent and magnitude of bank fraud in Nigeria banking system. Many banks have gone on distressed. Therefore the researcher is aiming at finding out if there is any significant effect or solution to financial fraud in the Nigerian banking system which has to offer to these deficiencies aforementioned with special reference with UBA plc station road, Enugu.

In summary, the major problems of this study are as follows:

a)          The incessant/consistent casa of financial fraud

b)         Weakness this has attributed to banking industry prior to the introduction of effective control of financial fraud.         


 This research work is generally set towards ascertaining the effects of financial fraud on Nigeria banking system. The specific objective of this research work includes the following:

1.  To examine the approaches of financial fraud detection and control mapped out by the bank.

2.  To research into the reason why people involve in financial fraud              

3.  To examine the various management and government controlling devices geared towards alimentation or checking financial fraud in our banking system.

4.  To recommend solutions that may help in checking financial fraud in our banking system.

5.  To examine the facts contained in the detection and control financial fraud issued.     

6.  To determine if any lost of bills the banking have in relationship with the financial fraud in banking and to what extend.


Owing to the need for a compressive study of this topic, the researcher demands it necessary and reasonable to postulate the following research questions. This research has no doubt that the aware to these questions will help him to draw conclusions and recommendations are necessary.

The following questions are the research questions

1) What is the commonest causes of financial fraud, can this be checked and controlled.

2)  Has the financial fraud in the banking industry helped to impede problems towards banks failure (distressed)

3)  To what extend can the customers wait before being attended and assume they are being attended promptly, do they have adequate banking services available to them.


To fulfill the above outlined purpose, the research declares the following propositions.

Ho1:       Most financial frauds have not succeeded because of the complexity of banking activities.

Ha1:Most financial frauds have succeeded because of the complexity of banking activities.

Ho2:       Auditing and investigations are not indispensable weapons in the efficient management of the banking industry.

Ha2:Auditing and investigations and indispensable weapon in the efficient management of the banking system.

Ho3:       The problem of financial fraud is not limited to UBA station Road, Enugu nor to banking system as a whole but to the society.

Ha3:The problem of financial fraud is limited to UBA station Road, Enugu nor to banking system as a whole but to the society.

Ho4:       Commercial banks do not place any value on the auditors reports.

Ha4:Commercial banks place adequate value on auditors reports.


       This study is intended to highlight the indispensable position of an auditor and those concern to work in an enviable financial houses like banks.

       This project will equally be of immense help to other establishments and organisation both in public and private sector. The dive need to establish a visible internal audit unit as a means of internal control should not be over-emphasized.   The management of UBA of Nigeria plc station road, Enugu in particular should use the findings of this research to equip the audit department (i.e audit department and inspection). This department being the watch – dog of bank should be given more teeth to bile than more banking prospective investors, promoters, shareholders would find this study very – useful. This will serve as an eye opener to them on what it takes to invest in banks.

       This will also help readers and those who may wish to make reference on the topic of study may be while undertaking similar research work.

       Government agencies can install adequate internal control measures to avert the incessant frauds and embezzlement rampant in financial houses, ministries and parastatals today.      

       For prospective auditors and accountants, it is a material of reading. They should be able to understand what is fraud and where to audit, how and why auditing and internal control system is an invertible ambient of the business system.




       This research work on detection and control of financial fraud is with a particular reference to UBA plc station Road (Okpara Avenue) Enugu and its cover facts on the issue. This research work has a lot of difficulties. Firstly, top officials of bank were reluctant to give away relevant statistical data on financial frauds that occurred in the organisation.


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