ABSTRACT: Since the beginning of the successful indigenization of banks in Nigeria, frauds have remained a fixed or durable feature and number one enemy to everybody with the recent growth in our banking industry. Thus, this project has identified a critical analysis on fraud in Nigerian financial institutions. In addition, the research also determined the presence of legal loopholes in the Nigeria legal system that facilitates the penetration of fraud. However, in examining the above problems, some prepared questionnaires were distributed bank staff in Nigeria. Information received from the responses were supplemented with oral interview, personal observations, and the review of some related books and Journals. The response from the returned questionnaires were analyse and the results of the analysis were later converted into statistical distribution on table percentages for the purpose of generalization. Recommendations were made based on information obtained and some literature review finally conclusion was draw and topic studied
TABLE OF CONTENTS
CHAPTER ONE
1.0 Introduction------------------------------------------1-2
Reference ---------------------------------------------------13
2.1 What is fraud? ------------------------------------15-17
2.2 Causes of fraudulent practices -------------------17-23
2.3 Methods through which perpetrators use cheques to defraud banks.---------------------------------------23-27
2.4 Computer fraud--------------------------------------27-29
2.5 The role of the branch manager on fraud -----------29
2.6 Types of fraud--------------------------------------30-35
2.7 Advance fee fraud (“419”)-------------------------35-38
2.8 Effects of fraudulent practice in banks------------38-40
2.9 Reasons for committing fraud ---------------------40-42
2.10 Techniques of fraud control in banks ------------42-46 Reference ------------------------------------------------47
CHAPTER THREE
3.1 Research design --------------------------------------48
References---------------------------------------------------55
CHAPTER FOUR
4.1 test for research questions-------------------------56-61
References----------------------------------------------------62
CHAPTER FIVE
5.0 Summary --------------------------------------------63-64
5.1 Recommendation-------------------------------------65-70
5.2 Conclusion-------------------------------------------70-72
Reference ---------------------------------------------------73
CHAPTER ONE
1.0 INTRODUCTION
In financial institution, the occurrence of fraud have negative effect on the economy. No financial institution is free from fraud, it’s just like an agent of lost annually and millions and billions are lost to fraud steer year after year do to thus effect, it becomes difficult or great for the investors to invest there money in some certain sectors of the economy.
To make clear explanation of fraud. Fraud according to Oxford Advance Learners Dictionary of current English written by A.S, Heorriby, that fraud is criminal deception benefit and it also seen as representation of fake document in the name of getting selfish benefit. Fraud is like a parasite, it eats deep into its host thereby threatening it existence.
The effect of fraud in the Nigeria financial institutions mainly regarded as the life-wire of the nation economy is to say the least devastating fraud cuts across the lengths and breath of the Nigerian financial institutions and has resulted in reducing.
Sometimes fraud occurs in an organization because of leoptides in their internal security net or careless of some officials. This provides a reason why some strategic position in an organization should be named with qualified officials.
Finally, I believe this works is not the end of this problem but it can put or services as a gateway to further the studies of fraud in Nigeria financial institutions.
Since the beginning of the successful indigenization of banks in Nigeria. The British and French banks established in 1961 now known as the banks in Nigerian financial institution frauds hence remained a fixed on durable feature in our banking industry. Banking business has always been associated with some degree of fraud. This should not be surprising in view of the fact that money and near monies are the stocks -in-trade in the banking industry.
But this fact of association has nevertheless not made of association has nevertheless not made the incidence of frauds in financial institutions. In Nigeria, bankers are particularly concerned because of fraud perpetration is on the increase and continued to acquire sophistication. More importantly, the news of fraud or attempted frauds dents the reputation of the bank concerned and reduces the level of confidence the public has in the entire banking system.
With the introduction of modern banking method automatic electronics gadgets, communication systems and computers into the banking industry, frauds have already taken a different shaped and the sum involves increased rapidly.
In a article “obstacles of growth of banking industry” it was discovered during investigations that banks now take extra care before clearing a chaque due to rampant cases of forgery and fraud, in which the bank boss placed o the year in Nigeria.
In another article “The cash economy phenomenon” “fraud has become sophisticated as to make a forged chaque look good for the owner to confirm it was his own signature” frequent occurrence of fraud ultimately, distracts the attention of the management and leads to increased running cost. Time and energies that would have been spent improving customer services would be expended on preventing frauds. Monies that would also have gone into services improvement activities would be expended in setting fraud control procedures and systems.
Another reason why the financial institutions like any other worries about fraud is that it varies very widely in nature character and methodology. Moreover the control of identified specie seems to give birth to another, which is invariably more sophisticated and complex. Thus each case can undoubtedly and instructive study in human negative use of ingenuity and endowment. Most frauds in the banks are with active connivance of bank staff. Bank staff, therefore, need to examine themselves to see if they are doing credit to their profession.
In a bid to reduce the occurrence and size of fraud in financial institution in Nigeria, bankers now take adequate measures before clearing chaque and other proceeds drawn on their customer’s accounts. These measures beings into play another problem of time wastage in the banking hall were customers wait many hours to cash their money. This is one of the most genuire criticisms of the qualify of bank services.
As checking system is long, and by the time a chaque could be released to the cashier for payment, the customer is frustrated and may be fast asleep among the crowd. This calls for an overhaul of the checking system. All these being the position of fraud in financial institutions, fraud is number one enemy to everybody with resent growth in our banking industry.
The reason for this research work is to identify the analysis on fraud in Nigeria financial institution. More so, the banks recommended more vital measure that will help in the controlling of frauds in financial institution in Nigerian.
The system used in controlling these frauds acquire greater sophistication by the day. A financial institution management are busy finding means of controlling frauds, the fraudsters in connection with some dishonest bank staff device new system of duping or robbing the bank. In addition, it should be noted that the results of these ugly cases are damaging. Frauds bring about unwanted losses for a bank and equally put the management on a confused state of mind while spending hard –earned resources on fraud control. Any case of bank fraud clips of a bit of public trust in financial institution and as well, so down the development of banking habits. Moreover, it can easily be noticed that if nothing is done to control these ugly incidence, sooner than later, fraud could lead to the total collapse of the economy as a whole and the wind up of banks if care were not taken. This research work tend to took into the major fraud detection and control with the intention to provide suitable recommendation that will help in fraud control.
Having successfully indicated the numerous problems obtained on fraud in banks, the main objective in caring out this research work will now be stated,
In carrying out this research more effectively, the researcher therefore designed the following questions.
Although this research work is not exhaustive one because of the none availability of some important information and limited time, all part of this work is very important in one way or the other to financial institution.
Moreover, this study is prepared for those who may be interested or willing in carrying out further investigation on fraud with special reference to financial institutions. However the banks will benefit greatly from this research work in detecting and controlling of frauds in their banks and this they can achieve by adopting and implementing the different ways suggested by this study in management control system.
Although people view fraud with astonishment, it still exists and on increasing trend in our human set-ups and this daily read in our headlines.
Thus, this research work is determined various types of frauds way of controlling it, the causes and effects in our banking industry with special reference to the financial institutions. The researcher carried out the study on the operation of financial institutions banks in Nigeria.
Due to the current emphasis on fraud in our banking industry and in order to reduce its effects, the study focus attention on the prevention of fraud in financial institution and recommendations were made to enable the bank to attain the needed height and capacity. The research cover selected branches of the banks in Enugu.
Fraud, according to dictionary of banking fraud is define to mean an act or cources of deception deliberately practiced to gain unlawful or unfair advantage such deception directed to the detriment of another. Bank, section fortilone of Nigeria banking Act of 1969 defines a bank as any person who carries on banking business and includes a commercial bank an acceptance house, discount house, financial institution and merchant bank.
Banking, the same section defined banking as the business of receiving money from outside source as deposits perspective of the payment of interest or the granting of money loans and acceptance of credits or purchase of bills and cheques or the purchase and sales of securities for account of other or the incurring of the obligation to acquire claims in resp
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