CBN APPROVES NIGERIAN BANKS AND FINETECH IN JOINING FORCES IN DISMANTLING ILLEGAL FUNDS.
According to the report from a high ranked executives informed (TechCarbal) CBN approves the Nigerian Banks and FineTech in collaborating together in dismantling the illegal funds that have caused billions in losses. This funds losses has raised talk among the Nigerian banks and FineTech in their sudden collaboration to checkmate this fund misses and this was reported in the article of Frank Eleanya (A Senior Reporter for TechCabal.)
It was said that two FineTech said they are aware of this dialogues but also stated that they are approaches to consider in finding a common ground for the Nigerian banks and FineTechs.
It was also seen that the industry-wide collaboration will create a solution that holds all financial institutions accountable for fraud, TechCabal learned. Two areas that may receive special focus include Bureau de Change operators and banking agents whom fraudsters usually turn to after successfully withdrawing the stolen funds, said one person close to those discussions.
In the reports it was noted that the depoidt banks lost about a total sum of 9.75 billion to fraud in Q2 2023, a dramatic 276% increase compare to the same period in 2022. According to the dta reported from the Finaicial Institution Training Center (FITC) The total losses from incidents of fraud amounted to ₦5.79 billion in Q2 2023.
Responses from the Central Bank of Nigeria.
It was reported that the CBN are currently on a tackling gear in finding out solutions. As of 2015, the regulator mandated all deposit money banks, mobile money operators, switches and all payment service providers to establish a fraud desk. The CBN had a dramatic argument that the fraud desk was an effective mechanism for receiving and responding promptly to fraud alerts. The apex bank has also slammed fines on banks and fintech companies found to have relaxed KYC rules.
According to TechCabal, since October 2023, licensed entities have paid hundreds of millions in fines,” said a fintech founder with first-hand knowledge of the companies which were fined.
Some financial industry stakeholders gave appraisals to the apex bank for mandating that all Tier-1 bank accounts and wallets for individuals be linked to either the Bank Verification Number (BVN) or National Identity Number (NIN) or both by 1 March 2024. Whereas others have had strong debate on these measures are not being enough.
The CBN view on Collaboration.
According to two ranked executives in the CBN, they reported to TechCarbals disclosing the CBN’s efforts have not translated into policies that bring circuit breakers into the system and lead to shared responsibility.
They also made emphases that banks and fintech companies have attempted to solve the problem collaboratively in the past. A low-trust environment and a preference for building in silos have led to little or no results. There have also been efforts made by CBN, CeBIH, NFIU, and NSA to unite the operators, but the solutions have not been implemented.
TechCarbal reported that last year that Fidelity blocked Opay and other neobanks to mitigate exposure from fraud. Complaints from customers over the opening of accounts in their names without their consent also caused a stir.
For the banks, one of the major concerns is that when fraud is committed and it involves a fintech, it is impossible to get a refund. On the other hand, banks tend to make refunds to avoid public embarrassment and a loss of reputation.
Ironically, even Nigeria’s big banks have also been accused of lax KYC and compliance measures. Last year, MTN Nigeria sued 18 banks after their customers received money from a breach of MoMo, the telco’s mobile money service.
“Whenever fraudulent money enters your bank, money that is not consistent with a particular customer’s behavior, the receiving bank will be the one to pause the check and not allow them to withdraw the money,” said one banking industry leader.
The Solutions Recommended by Stakeholders.
Having a layered system that displays older customers with proven identities and a track history of all transactions get instant value while customers who have just opened their accounts or been around for less than a year get delayed value.
Also the new customers would be allowed to see their money but cannot withdraw it until after a couple of hours or even a day. This rise in delay creates a room for the customer who has been defrauded enough time to make a complaint and for action to be taken by the third party or recipient bank.
Source: TechCarbal
