UBA CEO recommends ‘harsher’ penalties on financial firms that fail to enforce fraud controls

Oliver Alawuba, chief executive officer (CEO) of the United Bank for Africa (UBA), has asked regulators to impose “harsher” penalties on financial firms that fail to enforce internal fraud controls.

In Nigeria, the key regulators of the financial system include the Central Bank of Nigeria (CBN), the Nigeria Deposit Insurance Corporation (NDIC), the Securities and Exchange Commission (SEC), the National Insurance Commission (NAICOM), and the National Pension Commission (PenCom).

Alawuba spoke in Lagos on Wednesday at the 2024 annual general meeting and fraud conference of the Association of Chief Audit Executives of Banks in Nigeria (ACAEBIN), themed, ‘Fraud and Governance: Strengthening Institutional Frameworks in Nigeria’.

The CEO said fraudulent activities in Nigeria’s financial sector are increasing due to weak corporate governance, insufficient internal controls, and the lack of real-time fraud monitoring and enforcement.

Alawuba, who is also the chairperson of the body of banks’ CEOs, said financial institutions remain prime targets for fraud, emphasising the urgent need for decisive action.

“We need to fortify our governance structures to protect the present and the future of our financial institutions,” Alawuba said.

“The fight against fraud is not a one-man battle, one-bank battle. It is an ecosystem approach. We need to attack it at all levels.”

To combat fraud in the financial sector, the CEO said banks’ boards and executive management must set a tone of zero tolerance for fraudulent activities.

He also urged banks to invest in predictive fraud detection technologies such as artificial intelligence, machine learning, and real-time transaction monitoring.

“Internal audit functions must be truly independent. Whistleblowers’ protection, surprise checks, and continuous monitoring,” Alawuba said, making recommendations on fraud prevention.

“Regulatory enforcement and accountability. Fraud must carry severe consequences. Regulators must impose harsher penalties on financial institutions that fail to enforce internal fraud controls.”

Alawuba proposed the creation of an anti-fraud information-sharing platform to enable banks to collaborate in identifying emerging threats, alongside nationwide fraud awareness campaigns.

In addition, he revealed that bank executives are working on a proposal to the CBN aimed at improving fraud control within Nigeria’s instant payment system while maintaining efficiency.

The bank CEO stressed the need for enhanced know-your-customer (KYC) protocols, stricter monitoring at the account-opening stage, and a centralised fraud management system across financial institutions to curb fraudulent activities.

‘FINANCIAL FRAUD IS AN ECONOMIC THREAT, A NATIONAL DEVELOPMENT RISK’

Also speaking, Aina Amah, chairperson of ACAEBIN, said the evolving nature of fraud, fuelled by technological advancements and complex financial transactions, demands vigilance, innovation, and collaboration among stakeholders to effectively combat financial malpractices.

She said the meeting came at a critical time when financial institutions and regulatory bodies “must work hand in hand to fortify our institutional frameworks against fraud and financial crimes”.

In his remarks, Babajide Sanwo-Olu, governor of Lagos, said financial fraud is not just a banking problem but an economic threat, and a risk to national development.

Sanwo-Olu, represented by Oyeyemi Ayoola, special adviser to the governor, office of internal audits, noted that each occurrence harms businesses, erodes investor confidence, and undermines public trust in the financial system.

He said his government would continue to support initiatives “that promote financial integrity, investor confidence, and sustainable economic growth in Lagos and beyond”.