A new report from the Nigeria Inter-Bank Settlement System (NIBSS) has uncovered a major financial fraud scheme in which criminals exploited vulnerabilities in the banking system to siphon over N1 billion using fraudulently registered Bank Verification Numbers (BVNs).
According to the report, compromised bank officials and agents facilitated the illegal registration of BVNs for minors, which were then used to open enterprise accounts and conduct fraudulent transactions.
In one highlighted case, a corrupt bank staff member registered a BVN for a minor and used it to open an enterprise account, which soon received N495.3 million.
The funds were quickly withdrawn before authorities could react.
Similarly, another fraud scheme involved a banking agent who created a BVN for a minor and opened a business account under the name of a bakery.
This account received N507 million, which was immediately funneled through multiple transactions to avoid detection.
The NIBSS report also revealed the involvement of financial institution employees, with one bank staff member directly implicated and a banking agent now facing law enforcement action.
Authorities are currently working with the affected bank to assess internal breaches and tighten security measures.
While reported fraud incidents dropped by 31 percent between 2020 and 2024, financial losses from fraud surged by 350 percent, rising from N11.61 billion in 2020 to N52.26 billion in 2024.
Fraudsters have taken advantage of regulatory loopholes, weak identity verification processes, and collusion within the banking sector to carry out financial crimes.
The report further exposed other fraudulent schemes, including identity theft of senior citizens, with stolen identities being used to open bank accounts and transfer over N400 million.
Additionally, a fraudulent oil and gas company received N335 million on its first day of operation.
Another growing trend is the use of cryptocurrency transactions disguised as gift card purchases to launder stolen funds, making it more challenging for authorities to trace illicit financial activities.
To curb such fraudulent activities, NIBSS has recommended stricter BVN registration protocols, real-time biometric validation, and the implementation of an Enterprise Fraud Management System to detect suspicious transactions more effectively.
It also suggested blacklisting fraudulent BVNs and ensuring that all newly opened financial accounts are thoroughly profiled within 24 hours.
The report calls on regulatory agencies and anti-fraud units to take urgent steps to protect Nigeria’s financial system from further exploitation.
