Bank Fraud Detection, Prevention And Control

Bank Fraud Detection, Prevention And Control (A Case Study Of United Bank For Africa Plc (Uba) Enugu Baranch)


            Since the beginning of the successful indigenization of banks in Nigeria, frauds have remained a fixed or durable feature and number one enemy to everybody with the recent growth in our banking industry.




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Thus, this project has identified the fraud detection, prevention and control in Nigeria banks. (a case study of united bank for Africa –UBA).

In addition, the research also determined the presence of legal loopholes in the Nigeria legal system that facilitates the penetration of fraud.

However, in examining the above problems some prepared questionnaires were distributed to UBA bank staff in Enugu. Information received from the responses were supplemented with oral interview, personal observations and the review of some related books and journals.

The responses from the returned question were later converted into statistical distribution or table percentages for the purpose of generalization.

Recommendations were made based on information obtained and some literature review. Finally, conclusion was drawn on the topic studied.



1.1       Background Of The Study 

Since the beginning of the successful indigenization of banks in Nigeria, the British and French banks established in 1961 now known as the United Bank for Africa, frauds hence remained a fixed or durable feature in our Banking industry.

Banking industry has always been associated with some degree of fraud. This should not be surprising in view of the fact that money and near monies are the stock in trade in the banking industry.

But this fact of association has nevertheless not made the incidence of frauds in banks lesser to bankers in Nigeria, bankers are particularly concerned because fraud perpetration is on the increase and has continue to acquire sophistication.

More importantly, the news of fraud or attempted frauds has dented the reputation of the banks concerned and reduces the level of confidence the public has in the entire banking system.

Between 1892 and 1952 during the free banking period there were no form of banking Acts and ordinance to control the establishment and operations of commercial banks or any central bank to regulate and supervise banks in Nigeria. During that time, many banks were registered. Some of which did not open their doors for business even for one day, while others simply collect customers deposits and disappeared. This had the effect of depriving the economy as a whole of valuable funds needed for development and equally deprive individuals of their hard earned funds.

However, with the introduction of the first banking ordinance in 1952 and Central Bank of Nigeria (CBN) Acts in 1958 and other subsequent acts and ordinance with their amendments over the years to control and regulate the activities of banks such as the United Bank for Africa (UBA) fraud have rather increased in size and the procedure used obtained great sophistication by the day.

Currently, with the introduction of modern banking methods, automatic electronic gadgets, communication systems and computer into the banking industry, frauds have   already taken a different shape and the sum involved increased rapidly.

In an article “obstacles of growth of banking industry”, it was discovered during investigation that bankers now take extra care before clearing a cheque due to rampant cases of forgery and fraud in which the bank boss placed on the year in Nigeria.

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In another article “the cash economy phenomenon”, fraud has become sophisticated as to has a forged  cheque look good for the owner to confirm it was his own signature..

Frequent occurrence of fraud ultimately, distracts the attention of the management and leads to increased running cost. Time and energies that would have been spent improving customer services would be extended on preventing frauds. Money that would also have gone into service improvement activities would be extended in setting fraud control procedures and systems.

Another reason why the banking industry, like any other worries about frauds is that it varies very widely in nature, character and methodology.

Moreover, the control of an identified specie seems to give birth to another that is invariably more sophisticated and complex. Thus each case can be said to be a variant of another and undoubtedly an instructive study in human negative use of ingenuity and endowment.

Most frauds in the banks are with active connivance of bank staff. Bank staff, therefore need to examine themselves to see if they are doing credit to their profession the code of conduct and ethics of the banking profession are being abused and gradually eroded. Consequently many people feel shy in patronizing the bank.

In a bid to reduce the occurrence and size of fraud in United Bank for Africa (UBA) bankers now take adequate measures before clearing cheque and other proceeds drawn on their customer accounts. These measures brings into play another problem of time wastage in the banking hall where customers wait many hours to cash their money. This is one of the most genius criticisms of the quality of bank services.

As checking system is long and by the time a cheque could be released to the cashier for payment, the customer is frustrated and may be fast asleep amongst the crowd. This calls for an overhaul of the checking  system. All these being the position of things in United bank for Africa (UBA) fraud is number one enemy to everybody with recent growth in our banking industry.

The reason for this research work is to identify the fraud detection prevention and control in Nigeria Banks (UBA). Moreso, the United Bank for Africa have recommended more vital measure that will help in the controlling of frauds in it’s bank

Historical Background Of United Bank For Africa (Uba)

The United Bank for Africa (UBA) Plc, is one of Nigeria’s top three commercial banks. It was established in 1961 by a consortium of five international banks to take over the banking business carried out in Nigeria since 1949 by the British and French bank limited. With Assets of over N54.4 billion and 205 branches spread all over Nigeria. The bank has recorded an impressive growth rate.

UBA is active in all aspects of commercial banking and provides international banking trusteeship, ship registration, corporate finance and computer services through specialized divisions and sub-sidiaries.

An aggressive business promotion strategy coupled with a willingness to innovate has earned the bank an enviable position in the banking industry.

UBA plc is strongly committed to it’s social responsibilities and identifies with the communities in which it is represented in Nigeria interest constitute 60 percent of the shareholders of the bank.

Four of the founding international banks namely: Banque Nationale de Paris, Bauca Nazionale del Lavore and monte du paschidi sung, who altogether own 40 percent of the shareholding are represented on the board of directors and continue to make their expertise and resources through out the world available to assist the bank and it’s customers.


UBA plc has branches in New York and grand Layman Island. It also maintains correspondent relationships with many banks in Africa and in Major countries in the world.

1.2       Statement Of Problem

The system used in controlling these frauds acquire greater sophistication by the day. As the United Bank for Africa (UBA) management are busy finding means of controlling frauds, the frusters in  connection with some dishonest bank staff device new system of duping or robbing the bank.

In addition, it should be noted that the results of these ugly cases are damaging. Fraud bring about and equally put the management on a confused state of mind while spending hard earned resources on fraud control.

Any case of bank fraud clips of a bit of public trust in financial institution and as well, slow down the development of banking habits.

Moreover, it can easily be noticed that if nothing is done to control these ugly incidence sooner than later, fraud could lead to the total collapse of the economy as a whole and the wind up of United Bank for Africa (UBA) in particular if care were not taken.

This research work tend to look into the major fraud detection and control with the intention to provide suitable recommendation that will help in fraud control.

1.3       Objectives Of The Study

Having successfully indicated the numerous problem obtained on fraud in United bank for Africa (UBA), the main objective in carrying out this research work will now be stated:

  1. Determination of control measure and strategies against fraud and making of vital recommendations.
  2. To determine the cause of frauds in United Bank for Africa (UBA).
  3. To observe if there are legal loopholes in Nigeria legal system that encourages fraud.

1.4       Research Questions

In carrying out this research more effectively, the researcher therefore designed the following questions.

  1. Are there fraud in UBA)?
  2. What are the major causes of fraud in UBA?
  3. What are the effect of fraud on the operation of business in UBA?

1.5       Hypothesis

For the purpose of this research work, the following assumption were made in order to employ a scientific approach. The following hypothesis were analyzed.

  1. Ho: There are no fraud in UBA.

Hi:        There are fraud in UBA.

  1. Ho: Fraud cannot be controlled.

Hi:        Fraud can be controlled.

1.6       Scope Of The Study

Although, people view fraud with increasing trend in our human set-up and this is daily read in our headlines.

Thus, this research work determined various types of fraud, ways of controlling it, the causes and effects in our banking industry with special reference to United Bank for Africa (UBA).

The researcher carried out the study on the operation of United Bank for Africa (UBA). Due to the current emphasis on fraud in our banking industry and in order to reduce it’s effect, the study focus attention on the prevention of fraud in United Bank for Africa (UBA) and recommendations were made to enable the bank to attain the needed height and capacity. The research covered selected branches of the bank in Enugu.

1.7       Significance Of The Study

Although this research work is not exhaustive because of the none availability of some important information and limited time, all part of this work is very important in one way or the other to United Bank for Africa (UBA) in particular.

Moreover, this study is prepared for those who may be interested or willing in carrying out further investigation on fraud with special reference to United Bank for Africa (UBA).


However, the United Bank for Africa (UBA) will benefit greatly from this research work in detecting and controlling of frauds in their banks and this they can achieve by adopting and implementing the different ways suggested by this study in management control system.

1.8       Limitation Of The Study

In carrying out this research work, the following problems were encountered which prevented the researcher from  covering a wide area for a broader generalization of result.

  1. Finance

The high cost of materials used in this research work constituted a problem to the researcher like cost of stationary and printing of questionnaire.

  1. Lack of Transportation Facilities

The high fare of public transportation greatly influence the cost of production as the researcher is not mobile and thus limit the scope of areas covered by this study.

  1. Time Factor

            A lot of time were consumed by the researcher to gather the required necessary information since most of the top management staff may simply inform the researcher to come back next time, not minding the limited time given for the researcher to complete the work.

  1. The Uncooperative Attitude of Some of the Staff

Some of the staff misconstrued the essence of the study thereby refusing to answer the questions in the questionnaire some were just unfriendly and though that the information being gathered were to be used against them.

  1. Difficulties Encountered in Collecting Data from the Bank Used as the Case Study   

            Some of the questions in the questionnaire were not answered inspite of the explanations given to them on the need for the study. They insisted that those information are confidential and should not be released.

1.9       Definition Of Terms Fraud

According to dictionary of banking, fraud is defined to mean an act or course of deception deliberately practiced to gain unlawful or unfair advantage. Such deception is directed to the detriment of another.


Section 41 of Nigerian Banking Act of 1969, defines a bank as any person who carries on banking business and includes a commercial bank, acceptance house, discount house financial institution and merchant bank.


The same section defined banking as the business of receiving money from outside source as deposits perspective of the payment of interest of the granting of money loans and acceptance of credits or purchase of bills and cheques for the purchase and sale of securities for account of other or the incurring of the obligation to acquire claims in respect of loan prior to their maturity.

Bank Fraud Detection, Prevention And Control (A Case Study Of United Bank For Africa Plc (Uba) Enugu Baranch)


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