FCMB reports nearly N1billion loss to fraud and forgery in 2023

FCMB Group Plc, the parent company of First City Monument Bank, has reported a 637.99 per cent increase in fraud and forgery expenses, from N123.08 million in 2022 to N908.35 million for the financial year ended December 31, 2023.

The bank disclosed this in its ‘unaudited annual report and financial statements for the year ended December 31, 2023’ released on Friday, January 26.

A check by The ICIR showed that the figure represents the highest amount the bank incurred on fraud and forgery issues in the last five years.

It also represents 65.23 per cent of the total N1.39 billion the bank spent on fraud and forgery issues since 2019.

The FCMB has incurred the following amount in fraud and forgery since 2019: N212.26 million (2019), N59.04 million in 2020, N89.86 million in 2021, and N123.08 million in 2022.

The bank did not give details on the fraud and forgery expenses; however, a public affairs commentator and finance expert, Bala Zakka, said banks use fraud and forgery in their financial statement to report cases already confirmed and yet to be ascertained.

“Once it is a fraud case, it has already been confirmed, and the loss must have happened. But forgery is a case of probability until forensic investigation is conducted to ascertain its truth. But once it is true, it is transferred completely to fraud cases,” he explained.

Generally, fraud and forgery expenses are regarded as losses and deducted from banks’ bottom-line profits.

The issue could be linked to corruption, concealment of information or misappropriation of funds by bank staff with the involvement of outsiders, a lecturer of Banking and Finance at the University of Lagos, Abu Noruwa, said.

Over the years, FCMB’s staff had reportedly been involved in fraud operations.

In March 2023, the Economic and Financial Crimes Commission (EFCC) arraigned one Kichime Gomwalk, a branch manager of FCMB, along with two others, before a High Court on a five-count charge bordering on N55 million fraud.

In March 2022, FCMB’s Ikeja GRA branch manager, Tope Munis, was reportedly docked before a High Court for allegedly aiding N1.2 billion fraud along with two other suspects.

In December 2020, the EFCC also prosecuted one Adejare Sonde, a former staff of FCMB, on four counts of stealing. He was sentenced to four years imprisonment.

    To control incidents relating to fraud, banks should invest in modern fraud detection technologies that can identify and flag suspicious transactions and patterns, such as machine learning algorithms and artificial intelligence (AI) tools, according to a report by the Financial Institutions Training Centre (FITC).

    It stated that regular risk assessments could help identify potential vulnerabilities and threats to the banking system while identifying emerging trends in fraud and updating risk management strategies accordingly.

    “Moreover, it is crucial for Nigerian banks to collaborate closely with law enforcement agencies to investigate and prosecute cases of fraud. This entails sharing information on fraudulent activities, promptly reporting incidents, and providing assistance in investigations.

    “By collaborating with law enforcement agencies, banks can help to bring fraudsters to justice and deter other potential offenders,” FITC added.

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