THE DETECTION AND PREVENTION OF FINANCIAL FRAUD IN NIGERIA BANKING SYSTEM


THE DETECTION AND PREVENTION OF FINANCIAL FRAUD IN NIGERIA BANKING SYSTEM

ABSTRACT

Detection and prevention of financial fraud in Nigeria banking system. The dictionary meaning of fraud by penny means unlawful act, unfair advantage such as deception to the deferment of another.

In banking system, financial fraud is also referred as a deliberate within or outside the banking system to cheat, deceive windle or manipulation in order to disposes the bank deposition or shareholders of their funds.

Banks deal essentially in cash and financial instrument and other document which are of negotiable or very transferable in nature. This makes the bank very vulnerable to internal and external fraud. Also fraud can be perpetrated in the banking transaction through falsification of entries in the account of customers with a view to take benefit of the excess proceed or the shortfall, other are forgery of signature of account holders to theft by bank and customers.

Here also, the research will identify the logs holes in banking procedures and way of filling it to examine managerial and governmental control device, geared forward eliminating financial fraud in the banking system.

Conclusively, my unalloyed gratitude I leave to the auditors of various books that I consulted.

table of content

Title page

Approval page

Dedication

Acknowledgment

Abstract

Table of content

CHAPTER ONE

 Introduction

1.1 Background of the study

1.2 Statement of the problem

1.3 Objective of the study

1.4Scope and limitation of the study

CHAPTER TWO

2.1Meaning of fraud

2.2Fraud and fraudulent practices in banking services

2.3Types of financial fraud

2.4Effects of computer on the detection and prevention of financial fraud in Nigeria banks

2.5 Checks and control of financial fraud in banks.

2.6 Causes of fraud in our banks

2.7 Prevention of fraud and bank management control device

2.8Summary of literature review

CHAPTER THREE

3.1The causes of financial fraud

3.2Prevention of fraud and bank management control devices

3.3Recommendation and conclusion

3.4Summary

Bibliography

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

 Fraud is whenever form is limitless in classification. This is the more reason why courts and writers on fraud haven / ways sly away from giving it a particular definition last discuss it under whatever form it prevent itself, so here, there has never been a single definition of term fraud. Not with standing the varied meaning accepted to the concept of financial fraud the concept of financial fraud the author address the subject with following working condition.

Oxford and charison dictionary simply define fraud as criminal deception. Act of decisive trick, cheating swindling person on thing that dictionary defined fraud as an act of deceitful behaviour for the purpose of gain which may be perishable by law.

However in the mind of civil court of justice fraud may be said to cover ill acts. Commission and co concealment which involves a breach of legal or equitable duty trust or confidence justly reposed and ingenious to another or by which in undue advantage is taken of another.

Bunmi Fagbemi 1990, while citing the dictionary of dictionary by penny, defined fraud to mean an act or course of deception deliberately practiced to gain unlawful or unfair advantage such deception directed to the detriment of another R.B Awasanya widely see fraud any deliberate action in whatever form (writer, spoken physical) designed to deprive a legitimate owners of his / her assets properties or rights further more, osboni’s concise law dictionary say that fraud is obtaining of a material advantage by unfair or wrongful means it involves more obliquity.

Then finally, Wole Adewumi describes financial fraud as a conscious premeditated action of a person thus the intention of the monetary gain thus having closely studies these perspective one may correctly see bank financial fraud a deliberate act by individual or group of finding within or without the Nigeria banking system to cheat deceive, swindle or manipulate in order to disposes the banks depositor / shareholders of their fraud fund.

Therefore, fraud or forgeries customer with a view to take benefit of the excess proceed or the shortfall.

Despite several definition of fraud, the author believes that one so far given are rather appropriate. Adequate and inspiring for the purpose in which the research work intend to achieve. This is because they contain the basic of fraud which include that:

⦁ There must be deceit or deception directed to the detriment of another.

⦁ A false representation has been made knowingly or without believes in its truth or recklessly whether it is truth or false.

⦁ To obtain damage for deceit it must be proved that the defendant intended that the plaintiff should act on it, and suffered damages in consequence.

Thus every act of unfair dealing whether against the back by its customer or by the third parties, against the customer by the banks (including his officers) or indeed against the bank by its officers really supposed to be included financial fraud in our today’s banking system involves the use of deceit and tricks and some times highly intelligent, cunning know – how the action usually take the form of forgery, falsification of document and authority signatures and outright theft.

A fraudulent act without damage is not actionable but fraud is actionable if it deals to any form of damage, which involves on gaining at the expenses of the other.

The position of banking system in our economy cannot be over emphasized. The banking system houses the central bank of Nigeria (CBN), the commercial banks the merchant bank and the development bank. At the end of March, their were about eight five 85 licensed bank 35 merchant bank and 5 development bank. These banks occupy an indispensable position in the financial system in particular and in Nigeria economy as a whole.

Fraud have been shown serious bottleneck in the proper dispensation of the Nigeria bank roles and function to the nation the efficiency of banking system as observed by the customer has been degenerated overtime. People are becoming to get worried and sooner than late may lose confidence in our banks today fraud a common phenomenal in bank has perpetrated an agonizing influence resulting in loss of confidence and trust in our banks by depositor banks as the store house of public / people fund should be built on trust not on fraud.

Definition of terms

⦁ Fraud 

The Webster’s English dictionary summarizes as deception of fraud as anything continued or intended to deceive.

⦁ Commercial 

There refer to the various fraud activities that can take place in commercial establishment such as manufacturing administrative organization and school etc.

⦁ Lapping

When cash receipt from customer a is misappropriated and the misappropriation is subsequently covered up by recording cash received from customers B.

⦁ Fraud detection

There is no perfection in our society or environment everyone in any sphere of life or job function is expected to be primarily conscious of his her environment

⦁ Fraudulent 

Is obtained or done by fraud, involving fraud, make fraudulent insurance claims or it’s a deceitful or dishonest, a fraudulent display of emotion

1.2 STATEMENT OF PROBLEM

This research work seeks to identify the three major problems confronting the banking system. These are the problem of fraud, long queues and delay and high incidental expenses. 

To some banking experts, the issue of fraud is in intend in the Nigeria banking system 

The argument on the is because as they contended that a good number of fraud occur among out banks without the knowledge of the outsiders and even of where the public is aware, fraud does not effect the mood at which customers withdraws his deposited money and nor does it relate to long queues and delays. 

These experts are inclined to believe this premises because that the nation is under banked, the populace are at no option to use the available banks even if there are glaring inefficiencies in their generation. The experts are of the view that the problem of long queues and long delay in banking halls always characterized the norm of Nigeria banking system other argue that long queues and delay are as a result of incompetence and business among some bank staff.

Another problem confronting our banks today is the high incidental expenses occurring as a result of amount spent on insurance premium paying action among the banks workers. In fact, the banking industries have had the largest number of strikes in recent years in each care, all the banks have lost their traditional, if not valued customers in the process entries and condition of service have been bought extra expenditure which have never thought of while preparing the budget for the fiscal year.

Fraud has been paralyzed the root of banking foundation, its base nad credibility just pick up a national daily enquire from police record and you will be surprise at the extent and magnitude of bank failure and fraud.

Today, the disbursement mechanism function of our banking system has a lot of ditches militating against its smooth operations.

1.3 PURPOSE OF THE STUDY

The research set out to achieve the following objectives:

⦁ To determine if there are frauds in Nigeria banking industry

⦁ To determine the cause of fraud in the operation banks in Nigerian

⦁ To determine the effects of fraud in operation of bank in Nigeria

⦁ To diagnose the bank procedure with the intent of fishing out the loopholes inherent there in and suggest ways of filing them

⦁ To determine the various management and government control devices geared towards eliminating or checking financial fraud in out banking industry 

⦁ To offer recommendation and solution that may help in preventing or at least reducing fraud in our banking industry

1.4 SIGNIFICANCE OF THE STUDY

Although this research is not comprehensive and exhaustive one as a result of the unavailability of some vital information, limited some and financial constraints. All aspect of the working is very relevant in one way or the other to the Nigeria banking system as a whole

Here also, banks in Nigeria will derive great assistance from the work in detecting fraud in their and subsequently preventing or minimizing them.

This can be  achieved by adopting and implementing the various suggestion and recommendation made in this study in their management control alert in the various possible loopholes their establishment this lending to overall of funds and of management, assets of the organization, for the advancement of management overall goal and better output for Nigeria overall.

1.5 SCOPE OF THE STUDY

This research work met a lot of difficulties as some workers of the banks were reluctant to give out relevant fraud occurrence in their organization information were gathered from few banks in Enugu.

Through there are fraudulent practices prevalent in most of the Nigeria banks

Secondly another problem encountered in the course of gathering date, for this research is the high inflation in the country.

The non compliance is as a result of the following.

⦁ That such data on financial fraud is an official secret of the bank and should not made public

⦁ That any attempt to disclose this official data will result in the lost of public confidence in the banking system

⦁ That no banks live its competitors to know how much it looser annually to fraud because it is a parameter with which internal control efficiency is measured.

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THE DETECTION AND PREVENTION OF FINANCIAL FRAUD IN NIGERIA BANKING SYSTEM



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