First Bank, Nigeria's oldest bank, has been hit by a massive fraud that led to the theft of N7 billion from customer accounts by unknown individuals, according to a person with direct knowledge of the matter. Three other people, who asked not to be named and discussed sensitive matters about the company, confirmed the incident.
The scale and complexity of the incident highlights the increasingly sophisticated nature of fraud in Nigeria's financial services sector. Nigerian banks lost N43 billion to fraud in the second quarter of 2024, but these figures are likely understated. According to a report by the Nigeria Interbank Settlement System (NIBSS), only 60 out of 163 financial institutions in Nigeria have reported cases of fraud; many choose not to report incidents for fear of damaging their reputations. The First Bank fraud incident, which is said to have started several months ago, involved the unauthorized diversion of funds from multiple customer accounts. While the exact mechanism of the fraud remains unknown, three people with knowledge of the incident said the stolen funds were transferred to multiple bank accounts, including those of two fintech companies, a tactic used by fraudsters to obscure the trail of illicit funds, making it difficult for law enforcement to track and recover the money.
Despite the significant amount involved, the fraud allegedly went undetected for months, suggesting significant internal control weaknesses. In May 2024, TechCabal reported that a First Bank employee fraudulently transferred N40 billion over a period of two years before it was finally discovered. Two people with direct knowledge of the matter say that a full audit of the bank found that the total amount of money owed to the employee was about N60 billion. The incident led to the layoff of 100 employees and is believed to be related to the abrupt departure of the bank's CEO.
First Bank did not respond to a request for comment for this story.
According to two people with knowledge of the matter, First Bank has initiated the collection process and reported the matter to law enforcement. Banks and fintechs typically work with police and courts to recover stolen funds. It is not yet known whether First Bank has taken legal action in this regard.
[attachment deleted by admin]