FRAUDULENT ACT IN THE BANKING INDUSTRY: CAUSES, EFFECTS AND POSSIBLE REMEDIES

ABSTRACT

There were so many difficulties which this research work was confronted with bank officials were so reluctant to give out helpful information of this problem and there was also the cost of research and limited  time for acquisition analysis and prop or interpretation of   data effort was mode bys the researcher to personally visit places where the above secondary data were located. In the absence for the need for primary data question pairs administration was deemed unqualified therefore every material used in the research writing were completely work done by other people personal effort was only employed in tracing out relevant information needed for the project.

After due analysis of the available secondary data the researcher discovered the statistical data of member of staff involved in frauds and forgeries, retunes of commercial and merchant bank in frauds and forgeries and so on.

Experience has shown that even in the most regulated home accident can still happen. Bank staff should be properly screened before being employed and adequate bank education should be organized for the banks questioners.

TABLE OF CONTENT

CHAPTER ONE

INTRODUCTION s

1.1     BACKGROUND OF STUDY

1.2     STATEMENT OF PROBLEM

1.3     THE AIM OF THE STUDY

1.4     RESEARCH QUESTIONS

1.5     SIGNIFICANCE OF THE STUDY

1.6     SCOPE LIMITATION AND DELIMITATION

REFERENCES

CHAPTER TWO

REVIEW OF RELATED LITERATURE

2.1     WHAT IS FRAUD IN THE BANKING INDUSTRY

2.2     CAUSES OF BANK FRAUD

2.3     TYPE OF FRAUD

2.4     ADVANCE FEE FRAUD (“419”)

2.5     EFFECTS OF BANK FRAUD

2.6     reasons for committing fraud

2.7     TECHNIQUE OF FRAUD CONTROL IN BANKS

REFERENCES

CHAPTER THREE

RESEARCH DESIGN AND METHODOLOGY

3.1     SOURCE OF DATA

3.2     LOCATION OF DATA

REFERENCE

CHAPTER FOUR

4.0     SUMMARY OF FINDINGS

4.1     MEMBERS OF STAFF INVOLVES IN FRAUD AND FORGERIES 1989-2003.

4.2     RETURNS OF COMMERCIAL BANKS ON FRAUD AND FORGERIES 1989-1998

4.3     RETURNS OF MERCHANT BANK IN FRAUD AND FORGERIES 1989-2003.

4.4     TEN BANK WITH HIGHEST NUMBER OF REPORTED FRAUD CASES 1989-2003.

REFERENCE

CHAPTER FIVE

5.1     CONCLUSION AND RECOMMENDATION

BIBLIOGRAPHY

CHAPTER ONE

INTRODUCTION s

1.1     BACKGROUND OF STUDY

Fraudulent act in the banking industry” is of a special concern to the monetary control and supervisory authority who are charged with the safety of individual banks and the soundness of the banking industry.

Fraudulent act” is common in Nigeria banking industry, but clients as well as employees, temporary staff engage in fraud and forgeries in banks.

Frequent occurrence of fraud ultimately distracts the attention of the management and lead to increase in running cost.

Time and energy that would have been spent improving customer service would be expended on preventing fraud. Increasing cases of fraud and forgeries in our banks lately if not shopped would pose certain threats to the stability and survival of individual banks and the performance of the industry as a whole. Reported cases of fraud in merchant banks dropped significantly from 16 in 1997 to 9 during the year 1998 similarly, there was a reduction in the total amount involved, from 187-59 million in 1997 to N67.35 million in 1998.

Fraud in whatever loss is limitless in classification. In banking industry, there could be presentation of forged cheques granting of unauthorized loans unauthorized over draft, position of fictitious credits, suppression of cheques, fraudulent transfer and withdrawal and so on Dr John Orjih in his text, defined fraud as the deliberate effort aimed at obtaining unlawful advantage at the detriment of another person who is the rightful owner of the fund.

Awosanya, widely defined fraud as any deliberate action in whatever from, written spoken, physically designed  to deprive a legitimate owner or his or her asset, property or right.

Osbarn, defined fraud as a means of obtaining material advantage by unfair or wrongful means involving certain moral obligations.

1.2     STATEMENT OF PROBLEM

          Banks operate on the pivot of public confidence and trust in the ability of the bank of deliver as and when demanded the Nigeria society is poisoned with the desire to get rich quick so as to fell important, as they behave that wealth is the measure for power and importance. It is in realization of these fact that those get rich quick minded set of people direct their attention to defrauding the banks.

          Fraud has cause the loss of large amount of money, contributing to the liquidating of several banks and consequent unemployment and similar problems.

          This study is therefore beset bys the actuate problem of discovering the genesis and cause of fraudulent act in the banking industry the magnitude of fraudulent practices in the police records remains worrisome, and this has caused  a partial paralysis an the root of the root of Nigeria banking system.

          This study is also besieged by discovering and suggesting ways of eliminating these frauds before they turn to full paralysis on the banking system and entire economy.

1.3     THE AIM OF THE STUDY

The objectives of this study are as follows

1.       To discovered the key interest of involvement in frauds by member of the public.

2.       To discovered the extent of involvement of Nigerians in      fraudulent practices.

3.         To evaluate the consequences of the frauds in the banking industry.

4.         To discover ways in checking and preventing frauds in out banks

5.         It helps to know the frequent occurrence of fraud and forgeries quarterly and annually in our banks

6.         It gives information needed to gain good understanding of the concept that will be highlighted on fraudulent practices.

1.4                  RESEARCH QUESTIONS

i.                   How can bank staff be informed in preventing fraud

ii.                 What are the ways in checking and preventing fraud

1.5     SIGNIFICANCE OF THE STUDY

          This study shall be remarkable in the following ways

a.       It shall inform banks an dissections of the extent of fraud and suggest means of checking it.

b.       It shall expose Nigerian banks to the extent of fraudulent activities.

c.       It shall discover other problems caused by fraud in the banking industry.

d.       It shall inform the general public on average number of banks rendering returns total number of fraud cases quarterly and annually total amount involved actual expected loss and so on.

e.       It shall also serve as a foothold for other researchers who may to go into in depth study on this issue (fraud)

1.6     SCOPE LIMITATION AND DELIMITATION

          There are so many difficulties which this research work is confronted with first most bank officials approached were reluctant to give out relevant helpful statistical data  on financial frauds occurring in the organization. None of them have accepted being a victim of financial frauds they refused to test such vital information out so that those competitors will not use it as a parameter to determine or measure their internal control efficiency. There is also the cost of research and limited time for acquisition analysis and proper interpretation of  data because of the limitation of time finance and other reasons.

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