CBN Links 90% of Fraud to Bankers
Directs banks to make employment references
By Ayodele Aminu
The Central Bank of Nigeria (CBN) has linked 90 per cent of the cases of fraud and forgery perpetrated in the industry to staff of banks.
The banking watchdog made this revelation at the 273rd edition of the Bankers' Committee meeting in Abuja recently through its Banking Supervision Department.
To forestall such development, the apex bank has therefore directed banks to enquire from it before employing new staff above the entry level.
"It has been observed that most banks do not make enquiry on the Central Bank of Nigeria before employing new staff above the entry level. Consequently, discredited and fraudulent staff are recycled within the system.
"It is further observed that fraud and forgeries in the system have been on the increase in recent years and available data indicate that over 90% of the fraud cases are either perpetrated by insiders or with the above connivance of staff," stated the apex bank in a memo presented to the Bankers' Committee last week titled "The Need For Prior CBN Clearance of Prospective Employees of Banks and Non-Bank Financial Institutions."
Justifying the need for banks and non-bank financial institutions to revert to it before employing new staff above entry level, the apex bank noted that it "maintains a data bank on staff of financial institutions, dismissed or terminated on ground of frauds and forgeries dating back to over two decades."
Besides, the banking watchdog emphasized: "The Banks and Other Financial Institutions Act 1999 [as amended] section 44, sub-section 4, expressly states: "Any person whose appointment with a bank has been terminated or who has been dismissed for reasons of fraud, dishonest or convicted for an offence involving dishonesty or fraud shall not be employed by any bank in Nigeria.
"Furthermore, sub-section 7 states thus: "It shall not be a defence for any director, manager, or officer of a bank to claim that he is not aware of the provisions of sub-section [4] of this section, except he can prove that he had obtained prior clearance of such a person from the Secretary of the Bankers' Committee who maintains a register of terminated, dismissed or convicted staff of banks on the ground of fraud or dishonesty."
In addition to this, the CBN maintained: "The Code of Ethics and Professionalism in the Banking and Finance Industry section 4 [ix] [ii], also considers employing new staff without obtaining suitable reference as aiding and abetting unprofessional practices in the banking industry."
Given this scenario, the apex bank noted: "There is no doubt that ridding the system of persons that lack integrity and ensuring that they are not employed in the system is the responsibility of the operators and the regulators, an imperative for the sustenance of public confidence."
The apex bank therefore urged banks to ensure that adequate references are obtained before the employment of any new member of staff. "We also use this opportunity to remind all banks and discount houses of their responsibility to report all dismissed (members of) staff (or those whose appointments are terminated) to the CBN and also stop the dangerous practice of advising dismissible staff to 'simply resign,'" the banking watchdog warned.
Over the years, both the value and volume of frauds recorded in the banking industry have been on the increase.
For instance, about 1,036 reported cases of fraud and forgeries involving N3.6 billion, US$3.5 million, DM120 and Euros 895.0 last year.
Out of this number of incidents, according to the apex bank's annual reports for the year 2003, 3959 cases of fraud were successfully perpetrated, resulting in losses to banks amounting to N1.5 billion, US$271,822 and Euro 895.0.
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