Nigerian banks reported losses in excess of ₦9.5 billion to electronic fraud over the past eight months, with online gambling platforms and point-of-sale transactions being cited as the primary causes by the Nigeria Inter-Bank Settlement System (NIBSS). The losses were sustained during the period from January to August 2023, according to Premier Oiwoh, the Managing Director and Chief Executive Officer of the NIBSS.
Oiwoh spoke at a recent meeting of the Nigeria Electronic Fraud Forum (NeFF) in Lagos, explaining the cashless policies adopted by the Central Bank of Nigeria are largely to blame for the spike in internet fraud the African country is currently witnessing. NIBSS’ Chief Risk Officer Temidayo Adekanye seconded this notion and attributed the rise in e-fraud to the dramatic surge in the volume of transactions resulting from NBC’s cashless policies.
Adekanye added that the total losses reported via the Electronic Fraud Forum portal amounted to ₦5.1 billion during the first quarter of the year alone. During the meeting, Oiwoh went on to warn this poses a significant threat to the stability of the local financial industry and drew a comparison with internet fraud data from previous years. According to the NIBSS Managing Director, the financial industry reported ₦3 billion in e-fraud losses in 2019.
The country recorded 8,649 e-fraud cases in July of 2023. These cases accounted for ₦2.1 billion in losses during this month alone, representing a 54% increase over the period. NIBSS’ Chief Risk Officer pinpointed point-of-sale systems, digital wallet accounts, and online sports wagering platforms as the most effective tools implemented by internet fraudsters.
Stricter Authentication Procedures for Online Betting Platforms Are a Viable Solution
The reason for their efficiency results from the fact that the transactions conducted through such betting and e-wallet platforms are extremely difficult to trace, Mr. Adekanye explained at the meeting. Adekanye proposed the introduction of stricter authentication and identification procedures for online sports betting platforms, cryptocurrency accounts, and point-of-sale agents as a viable course of action against e-fraudsters and cyber criminals.
Gambling is a widespread activity among the local population as estimates suggest approximately 60 million adult residents are involved in one form of sports wagering or another. However, the country’s online betting laws and policies remain vague for the time being, which prevents the local online gambling market from growing to its full potential.
The country unveiled the introduction of a new licensing framework for offshore gambling operators in 2022, allowing them to legally provide online gambling to Nigerians without having a local presence. Such companies can obtain remote operator permits from the Nigerian authorities on condition they have already procured licenses from other jurisdictions.
The move was made in an attempt to rein in gray market gambling operations, which have become increasingly problematic in Nigeria. The country additionally refurbished its tax collection system to enable payment service providers to deduct online gamblers’ taxes at the point of transaction and automatically forward them to the Nigerian Treasury.