EVALUATION OF FRAUD CONTROL MEASURES IN THE NIGERIAN BANKING SECTOR (A CASE STUDY OF CENTRAL BANK OF NIGERIA, KADUNA BRANCH)

CHAPTER ONE

1.0 Introduction

Fraud is an intentional deception made for personal gain or to damage another individual. Fraud is a crime and a civil law violation. Defrauding people of money is presumably the most common type of fraud.

Customers of banks are currently experiencing increase in fraud schemes. Scams to get a customer personal information can occur through many different means such as e-mail and telephone.

Bank fraud is the use of fraudulent means to obtain money, assets, or other property owned or held by a financial institution. In many instances, bank fraud is a criminal offence, while the specific element of a particular banking fraud law varies between jurisdictions; the term bank fraud applies to actions that employ a scheme as opposed to bank robbery or theft.

Controlling bank fraud in the financial sector is a major task for all the stake holders in the sector. Every year, banks lose billions of naira to fraud which comes in all size and shapes both from external perpetrators and internal employees.

1.1 BACKGROUND OF THE STUDY

In its broadest terms, fraud means obtaining of something of value through deception. If fraud were described as an industry it would clearly be one of the fastest growing areas of the economy. One hundred criminals who serve several periods of imprisonment for armed robbery offence were recently reported that he wished he had understood earlier in his criminal career how easy it was to commit fraud. He now considers that fraud involves less traumas, the reward, are far greater and the penalties substantially fewer than in other form of crime. This study will address those forms of fraud that target the financial service sector and how the industry has responded with some measure successful in controlling this ever increasing problems and other measure that can be geared towards achieving further results.

1.2 STATEMENT OF THE PROBLEM

As earlier mentioned, the Nigerian banking industry, the back bone of Nigeria economy is one of the most profitable of higher performance and could achieved better result in output and obligation to the society. To realize this, the banking industry will have to perform lending role that can reinstate the economy.

The low level of the performance of the Nigerian banking industry is due to an array of problems, one of which is the issue of fraud which is one of the most intractable and monumental problem facing the industry.

The problem of accountability is traceable to the root cause of fraud which results from poor record keeping misappropriation forging, poor internal control, excess power given to the executive or management etc.

1.3 OBJECTIVE OF THE STUDY

The primary objective of the research is to evaluate the fraud control measures in the Nigerian Banks practical means of reducing the incidence of fraud in our bank to achieve these objectives, the following secondary objective have been specified.

1. To identify the causes of fraud perpetrated in bank

2. To ascertain the effectiveness of various fraud control measures adopted by banks.

3. To determine the effects of fraud in the banking industry and the economy in general.

By so doing, customer is better informed on the nature, type modes and various operations of the various frauds and so placed in a better position to prevent and detect any fraud led activity.

1.4 RESEARCH QUESTIONS

1. What are the causes of fraud perpetrated in banks?

2. How effective is the various fraud control measures adopted in Nigerian Bank in the prevention and detection of fraud.

3. What are the effects of fraud practices in the Nigerian banking indu