Fraudsters in Nigeria have exploited weaknesses in the banking system to siphon over ₦1 billion using illegally registered Bank Verification Numbers (BVNs) for minors, a new report by the Nigeria Inter-Bank Settlement System (NIBSS) has revealed.
The report exposes a growing wave of financial fraud, with compromised bank staff and agents facilitating the illegal registration of BVNs for underage individuals. These BVNs were then used to open business accounts through which fraudulent transactions were carried out.
NIBSS detailed two major fraud cases in which minors’ BVNs were used to move massive sums of money:
- In the first case, a compromised bank staff registered a BVN for a minor and opened an enterprise account, which later received ₦495.3 million—funds that were quickly withdrawn before detection.
- In the second case, a corrupt banking agent used a minor’s BVN to open a business account under the name of a bakery, which received ₦507 million. The funds were immediately transferred out through multiple channels to evade law enforcement.
These two cases alone resulted in total financial losses of ₦1.002 billion. Investigations indicate that the stolen money was rapidly moved through various accounts, making it difficult for authorities to trace and recover.
The NIBSS report highlighted the role of complicit bank employees and agents in enabling the fraudulent schemes.
- A bank staff member was directly implicated in the first case.
- The banking agent involved in the second case has been reported to law enforcement authorities for possible prosecution.
- Regulatory bodies are currently engaging with the affected bank to determine the extent of internal complicity and to enforce stricter security measures.
The report underscores a disturbing trend in Nigeria’s financial sector:
- While the number of reported fraud incidents dropped by 31% between 2020 and 2024, financial losses due to fraud skyrocketed by 350% during the same period.
- The total amount lost to fraud surged from ₦11.61 billion in 2020 to ₦52.26 billion in 2024, indicating that fraudsters are becoming more sophisticated and effective in their schemes.
- Loopholes in identity verification, weak regulatory enforcement, and the involvement of corrupt financial service intermediaries continue to fuel the crisis.
Beyond the use of BVNs for minors, the NIBSS report identified other alarming fraud tactics:
- Identity Theft of Senior Citizens: Fraudsters have used stolen identities of elderly individuals to open bank accounts, with over ₦400 million funneled through these accounts.
- Fake Corporate Accounts: In July 2024, an oil and gas company was fraudulently registered using doctored documents. The fraudulent account received ₦335 million on the day it was opened, which was quickly moved to unlicensed Bureau De Change (BDC) operators. However, authorities managed to recover the funds.
- Cryptocurrency Laundering: Fraudsters are dissipating stolen funds through crypto transactions disguised as gift card purchases, making it harder to track and recover stolen money.
In response to the findings, NIBSS has recommended tighter security measures to combat banking fraud:
- Stricter Identity Verification: Enforcing real-time biometric validation during BVN registration.
- Enterprise Fraud Management System: Implementing real-time monitoring of financial transactions to flag suspicious activity.
- Blacklisting Fraudulent BVNs: Permanently disabling compromised BVNs to prevent further financial abuse.
- Faster Account Profiling: Ensuring that all new financial accounts are profiled within 24 hours to enhance fraud detection.
The revelations highlight growing concerns over banking security in Nigeria, with financial institutions and regulators now under pressure to implement urgent reforms to protect consumers and curb financial crime.
