DETECTION AND CONTROL OF FINANCIAL FRAUDS IN NIGERIA BANKING SYSTEM; PROBLEMS AND SOLUTION
(A CASE STUDY OF U.B.A)
COMPLETE PROJECT MATERIAL COST 5000 NAIRA
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ABSTRACT
Banks deal essentially in cash financial instrument and other documents which are generally of a negotiable and easily transferable in nature. Hence it is very pertinent to say that the exposure of banks to both internal and external fraud is very great. This practice is very common to area involving cash, cheque and fraud transfer operation. Much research and thought are increasingly being directed towards the study of the causes of fraud in Banks because of its affects on Banking and the entire economy.
Recent study carried out by financial institutions training centre, Lagos, showed that causes of fraud reported annually between 1989 and 1998 was about 500 and the annual average money involved in attempted fraud was thirty-six money naira while the annual average lost to banks and customers was sixteen million naira. It may not be said to be an over statement that these figure may have risen geometrically upwards afterwards when about seventy eight percent of our banking operations are going to rural areas where poor institutional and infrastructural factors militate against efficient and effective checks on the branches in these rural areas.
Another problem facing our nations banking system is that of long cheques, frustrations, delays and disappointments being experienced in the banking halls by customers while either paying in or withdrawing their hard earned money. These associated problems and deficiencies have in recent years resulted to disencouraging growth of banking habit among the public. This our society has been turned into a mere “cash society”.
My personal experience as an accounting personal in one of the private companies and various articles I read on the problems of our banking system have aroused my deep interest in this project topic. It is therefore my pleasure to carryout this e on ‘detection and control of financial fraud in Nigeria banking system” using U.B.A plc as a case study.
Chapter one of this research work deals with introduction and over view on financial fraud.
The second chapter reviews the previous write-ups on the subject matter.
The third chapter assesses the work procedures on banks and focuses the loopholes inherent in there that aid fraudsters carryout the nefarious activities.
Chapter four of this work did on analysis of financial frauds by examine the methods used by fraudsters indefrauting the banking system. It establish that falsification of accounts and forged cheques and signatures ranked highest as means of perpetrating frauds.
An examination of categories of persons involved in the preparation of fraud reveals that bank staff are in the majority. This chapter also focuses on the final incidence consequence of bank fraud.
Chapter five discusses the general prevention techniques (solution) available to bank management in checking financial fraud, while the last chapter evaluates and concludes the with personal economic on the issue of financial frauds in our banking industry.
TABLE OF CONTENT
CHAPTER ONE: INTRODUCTION
- Background of the study 1
- Statement of the problem 4
- Objective or purpose of the study 5
- Scope or delimitation of the study 6
- Research questions 7
- Hypothesis 7
- Significance 8
CHAPTER TWO: REVIEW OF LITERATURE
- Who are the bank fraudsters 13
- Fraud and fraudulent practice in banking services 16
- The legal framework 20
- What is fraud 25
- Causes of fraud in U.B.A bank 29
- The effects of fraud in U.B.A. Bank 31
CHAPTER THREE: METHODOLOGY
- Research design 33
- Area of the study 44
- Sample and sample procedure 45
CHAPTER FOUR
- Data presentation and result 50
4.1 Summary of results/findings 50
CHAPTER FIVE
- Discussion implication, recommendation 74
5.1 Discussion of result 75
5.2 Conclusion 80
5.4 Recommendations 84
5.5 Suggestions for further research 87
5.6 Limitation of the study 88
References 89
Appendices 91
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND TO THE STUDY
There has been no single accepted definition of term “fraud”. Fraud in whatever form is limitless on classification. This is why courts and writers on fraud shirk or try to escape away from giving a decisive definition. Notwithstanding, the varied meanings attached to the concept of financial fraud the author addressed the subject with the following working definitions.
Oxford and Chamber dictionaries define fraud as a criminal deception, act of deceptive trick, cheating swindling person or thing that deceives.
Longman dictionary define fraud as “an act of deceitful behaviour for the purposes of gain which may be punishable by law.
In the mind of civil court of justice, fraud may be said to cover “all acts, omissions and concealments which involve a branch of legal or equitable duty trust or confidence justly reposed and injurious to another or by which an undue influence or available is taken off.
Brmifagbeni define banking fraud to mean an act or cause of deception deliberately practiced to gain unlawful or unfair advantages such deception directed to the detriments of another. The goes further to define fraud to mean depriving a person dishonestly or some thing which is his or of something to which he or would or might but for perpetration of the fraud be entailed.
Having closely studies these approaches to definition to fraud especially from the banking perspective. One may correctly see bank financial fraud as a deliberate act by an individual or group within or without the Nigeria banking system to cheat, swindle, deceives or manipulate in other to disposes the banks depositors/shareholders of their funds.
Therefore fraud and forgone in banking transactions can be perpetrated through falsification of entire in accounts of customers with a view to take advantages of the excess proceed.
Despite several definitions of frauds, the author believes that the ones so far given are rater appropriate, advantages and inspiring for the purpose in which the research work intends to achieve. This is because, they contain the basic elements of fraud which include that:
- There must be decent or deception directed to the detriment of another or entirety.
- A false representation has been made knowingly or without belief in its truth or recklessly, carelessly, whether it true or false.
- To obtain damages for deceits, it must be proved that the defendant intended that the plaintiff should act on it an suffered damages in consequences.
The position of banking system in our economy cannot be over emphasized. They act as the ‘conduct pipe’ through which all the financial transactions pass. However, fraud has proved a serious bottleneck to the proper functioning of the roles of the banking system to the Nigeria economy. People are beginning to get worries and sooner than later may loose confidence in our banking sector due to mainly the very increasing incidence of fraud in our today’s banks. Banks as the store house of the public funds and properties should be on trust not fraud.
- STATEMENT OF PROBLEM
The frequent cases of financial fraud in many financial institutions in our country is now taken as the utmost concern to financial experts and micro encomiasts. This has also initiated that task of seeking solutions to eliminate its occurrences. To some banking experts, the issue of fraud is an internal vice in the Nigeria banking system. They argue on this because a good number of fraud occur among our banks without the knowledge of outsiders even where the public is aware it doe’s not effect the rate at which customers withdraw or deposit money.
These ex