Fraudsters have exploited loopholes in Nigeria’s banking system to steal over ₦1 billion using Bank Verification Numbers (BVNs) illegally registered for minors, according to a report by the Nigeria Inter-Bank Settlement System (NIBSS).
The report reveals how corrupt bank employees and agents facilitated fraudulent BVN registrations, enabling the opening of enterprise accounts used for large-scale illicit transactions.
How the fraud was carried out
In one case, a compromised bank staff registered a BVN for a minor and linked it to an enterprise account, which later received ₦495.3 million before the funds were swiftly withdrawn.
Similarly, a banking agent obtained a BVN for another underage individual and used it to open a business account under the guise of a bakery. The account was credited with ₦507 million, which was quickly transferred out to avoid detection.
NIBSS confirmed that a bank staff involved in the fraud is under investigation, while the agent linked to the second case has been reported to law enforcement for prosecution.
Insider involvement and regulatory action
The report highlights the role of some financial institution employees in enabling fraud. Regulators are currently engaging with affected banks to assess internal weaknesses and enforce stricter verification measures to prevent further occurrences.
Fraud on the rise despite fewer reported cases
Despite a 31% decline in reported fraud incidents between 2020 and 2024, financial losses from fraudulent activities have surged by 350%. The total amount lost to fraud rose from ₦11.61 billion in 2020 to ₦52.26 billion in 2024, driven by loopholes in identity verification and weak regulatory oversight.
Emerging fraudulent schemes
Beyond minors’ BVNs, fraudsters have exploited the identities of senior citizens to open fraudulent accounts, funnelling over ₦400 million.
In another case, criminals used fake corporate documents to register an oil and gas company, which received ₦335 million on the day of account opening. The funds were quickly moved to unlicensed Bureau De Change (BDC) operators, but authorities managed to recover them through swift intervention.
Additionally, stolen funds are increasingly laundered through cryptocurrency transactions disguised as gift card purchases, making it harder to trace fraudulent transfers.
NIBSS calls for stricter security measures
To curb rising fraud, NIBSS has recommended real-time biometric validation during BVN registration, the permanent blacklisting of fraudulent BVNs, and the enforcement of an Enterprise Fraud Management System to detect and halt suspicious transactions.
The report also advises that all newly opened financial accounts be profiled within 24 hours to strengthen fraud detection efforts.
Credit: TechEconomy (Text Excluding Headline)
