FRAUD PREVENTION AND CONTROL IN THE BANKING SYSTEM
CHAPTER ONE
- INTRODUCTION
- BACKGROUND OF THE STUDY
Banking system in our economy is a very vital sector and their position in our economy can not be over emphasized. The banking system in Nigeria was fashioned along with that of Britain the banking system act as financial intermediate for funds between the deficit and surplus sector of the Nigeria economy.
Nigeria banking sector is made up of the central bank of Nigeria (CBN) commercial banks, merchant bank, development bank and specialized banks. This banks deal on various financial instruments and development there are transferable and desirable in nature. Not withstanding, the recent incident of fraud and forgeries tend to pose a serious bottle neck to proper functioning of the banking system, thereby incensing the association risk and business system loss report early.
The oxford dictionaries defined fraud as criminal deception deceptive tricks cheating swindling but Longman dictionaries’ prefers to defined fraud from the view point, fraud in fact and fraud in equality.
According to Okezie (1999) 9.476 frauds involves the use of deception to obtain an unjust or illegal financial advantages or also CBN banking supervision annual report 1998 defined fraud as involving the willful misinterpretation, the deliberate concealment of material fact or the purpose of inducing another person to do something. Poss. J.A (1990) P.99 also defined fraud as a legal term for a purposeful deception that result in financial loss to another.
However, an over view of event in the law few years not helping matters at all. In this part of the world, fraud and person with questionable character are applauded and honored with chieftaincy titles and can not fight this epidemic instead, more person grow for the act daily. Frauds generally, are motivated by greed. This is true because the rise in the activities of fraudsters tend to respond due to the desire of wealth and the intention to receive and obtain benefit at the detriment of another person
A recent survey by financial institutions forms the major part and plays the major role (Ngwu, 2012). The size of an enterprise usually determines the size of fraud perpetrated in it, the banks are the most victimized as it has leads to many bank failures in Nigeria in particular and the entire globe in Nigeria.
Going by this backdrop, the problem now is how to effectively monitor activities of these fraud, which seen to be matching their skill with rapid development in the system. Fraud has been viewed as inherent in nature of banking operations still it can be prevented or reduced to the bearest minimum. However, the report of December 2002 prepare by the financial institution investigated (that in the fourth and also affect the economic growth in Nigeria) quarter, 36%m of the banks that rendered returns repeated, experienced one forgery and fraud or other of the total of 176 cases. And amount involved in the case was N 802.07 million
On the forgoing, I wish to adopt chi-square technique and to analyse the report of data collected from the three selected bank visited for my study.
1.2 STATEMENT OF THE PROBLEM
Many banks today have suffered a great financial loss in the end of numerous financial transaction and unsecure loan. Fraud has become sophisticated as to make a forged cheque look good for the owner to confirm it was his own signature, frequent occurrence of fraud ultimately distracts the attention of the management and leads to increased running cost. However, the major problem face in this study is that
Fraud brings about unwanted
losses for bank and equally put the
management on a confused state of mind
and also effects the economic growth
of Nigeria while spending hard earned control.
Any case of bank fraud clips of a bit of public truth in financial institution and as well, so down the development of banking habits. Moreover, it can easily be noticed that if nothing is done to control these ugly incidence, sooner than letter fraud could lead to total collapse of the economy as a whole and the wind up of bank if care if were not taken
- OBJECTIVE OF THE STUDY
Having successfully indicated the numerous problems obtained on finance fraud in the Nigeria banking system, the main objectives in caring out this research work will now be stated.
- To study critically how fraud in banks could be prevented and controlled.
- To evaluate the easiest way ration of fraud and other fraud committed could be electronically captured.
- Ways to reduce the spread of fraud in our banking system, through effective monitoring control procedure and efficient monitoring electronic transaction until properly executed.
- RESEARCH QUESTION
Considering the importance of this study, it has become imperative for the researcher to postulate the following question.
- Is it true that fraud is inherent in banking operation?
- Does fraud have any impact on the bank?
- Why is it that it takes months for fraud to be dictated?
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