Detection And Prevention Of Financial Fraud In Nigeria Banks

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Detection and prevention of financial fraud in Nigeria banks


Banks deal essentially in cash financial instruments and  other documents which are generally of a negotiable and easily transferable in nature. Hence it is very pertinent to say that the exposure of the banks to both internal and external fraud is very great. This practices is very common to areas involving cash, cheques and fund transfer operations.

Much research and thought are increasingly being directed towards the study of the causes of fraud in banks because of its effect on banking and the entire economy.

Recent study carried out by financial Institute training centre, Lagos showed that cause of fraud reported annually between 1989 and 1998 was about 500 and the annual average money involved in attempted fraud was thirty –six million naira while the annual average amount lost to banks and customers was sixteen million naira. It may not be said to be said to be an over statement that these figures may have risen geometrically upward afterwards when about seventy eight percent of our banking operation are going to the rural areas where poor Institutional and infrastructural factors militate against efficient and effective checks on the branches in these rural areas.

Another problem facing our nations banking system is that of long queues. Frustration, delays and disappointment being experienced in the banking halls by customer whole either paying in or withdrawing their hard earned money.   












Title Page                                                                      

Approval Page





Table of Content


1.0     Introduction                                                                            1

1.1     Background of the Study                                                        1

1.2     Statement of the Problem                                                        3

1.3     Purpose of Objective of the Study                                 5

1.4     Significance of the Study                                               6

1.5     Limitation of the Study                                                  7

References                                                                               8


Review of Related Literature                                                 


3.0   Research Design and Methodology

3.1   Source of Data (Secondary Sources Only)

3.2   Location of Data

3.3   Method of Data Collection (Literature work only)




Recommendation and Conclusion


                                                CHAPTER ONE







There has been no single accepted definition to the term “fraud”. Fraud in whatever forms is limitless on classification.


This is why courts and writers on fraud shirk or try to escape away from giving a decisive definition.


Notwithstanding, the varied meaning attached to the concept of financial fraud, the author addressed the subject with the following working definitions.


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


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


In the mind of civil court of justice, fraud may be said to cover all acts, omission and concealments which involve a breach of legal or equitable duty, trust or confidence, justly reposed and injurious to another or by which an under influence or advantage is taken off.


Bunmi Fagbenmi define banking fraud to mean an act or cause of deception deliberately practiced to gain unlawful or unfair advantage, such deception directed to the detriment of another. He goes further to define fraud to mean depriving a person dishonestly of something which his own.


Having closely studied 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 within or without the Nigeria banking system to cheat swindle, deceives or manipulates in order to disposes of their funds.


Therefore fraud and forgeries in banking transaction can be perpetrated through falsification of entries in account of customers with a view to take advantage of the excess processed.


Despite several definitions of frauds, the author believes that the ones so far given are rather appropriate, adequate, 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 deceit or deception directed to the detriment of another or entity. 


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


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


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. However, 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 then later may loose confidence in our banking sector due to mainly the very increasing incidence of fraud in our today’s banks. Banks as the store house of the public funds and properties

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