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Financial crimes, Banks and Society

February 1, 2012

Financial crimes, Banks and Society
BY TUNDE AKINGBADE. published in 2007

INTRODUCTION

Jesse James, America’s most notorious armed robber and legendary thief who was the first to rob a moving train in the USA was asked why he began to target banks and rob them. Jesse, the son of a Baptist Pastor asked his inquisitors, where is money kept? They answered banks! This response demonstrated the main reason why banks are targets of robbers, whether armed or unarmed.
Jesse James whose cave where he used to keep his loot has become a tourist’s delight in Missouri robbed the Mid West of USA with ease until he was shot dead by gang member who wanted to draw a ransom of $ 10,000 placed on his head. Also Bonnie Parker and Clyde Barrow were known to be the greatest bank robbers who left sorrow and blood everywhere they descended in the Mid West of the USA. The couple were the greatest terror to banks and individuals in their time. It appears the Mid West of USA and Nigeria’s Mid West have some things in common. Parading the most notorious bank robbers. I hope we have not forgotten Anini and Sunday Osunbor.
America’s Mid West and Nigeria’s Mid West have both produced gangsters who targeted financial institutions, maimed and killed in order to get money out of their vaults. Some of them, like Jesse James and Anini were known to have even thrown stolen money to the populace after each raid.

BANK VULNERABILITY AND SECURITY

All over the world, security of banks have been a major concern for operators of these financial houses. Bank security is a specialised area that focuses on protection of both external and internal facilities and risks that may inflict loss on the organisation. Banks in Nigeria became major targets of armed banditry in the early 1990s after the civil war. Today’s armed robbers have engaged all kinds of tactics to gain entry into banking halls and vaults. Besides, there are other internal pen robbers who use their knowledge and position within the banks to defraud. These days, bank robberies have gone computerized or electronic. In some cases, robberies are done with the connivance of officers within the banks. Before we go into some case studies of tactics used by armed robbers we will highlight the vulnerability of banks and financial institutions.

Generally, banks are exposed to certain risks. Some of the risks could be from natural causes or man made. Natural causes could emanate from fire, windstorm, earthquakes; tornadoes (in some foreign countries) flood, building collapse (recently in our country). It could be as a result of natural causes or man made through defects in construction processes. The real man-made threats emanates from robbery, kidnapping within and outside bank premises.
INNOVATION IN ROBBERY

And very recently, another innovation by some men who flash a law Enforce-Officers identity card at people who step out of the banking hall. These people are told that they are suspects being trailed by the police following a tip off. At the end of the drama, they are thrown into unmarked vans and driven to places where they are disposed of their cash. This is not our primary focus here. We are concerned with how banks are defrauded or robbed and strategies of protecting the banks and financial institutions. Generally, there are certain basic rules and principles that guide banks and finance houses towards effective security. The most import challenge that faces the security personnel in banks and finance houses come from criminal activities which could originate from within the banks itself (though careless divulging of information) or external through desperate carefully planned attacks from bandits. Security personnel in Nigeria are aware that banks are on the top of the list of organizations that are vulnerable to attacks by armed robbers. In recent times, focus has shifted to petrol stations during or after the close of sales. Let me add to that churches are equally becoming targets of robbers especially during the period of harvest when cash donations are involved. Anywhere there is money such as the bank, there is likelihood of robbery. There is no doubt that the bank has a higher appeal to robbers all over the world. This is why, for example, in 1968, there was a protection Act of Banks which (1991) was revised by the government. The Act initially placed emphasis on devices and equipment that guarantees security of banks. However, the revised version placed emphasis on the procedure and administration of security in Banks. The Act brought the issue of security of financial institutions registered by the government with deposits in the Federal Deposits Insurance Corporation and other allied institutions into focus.
More importantly, under the revised Act, security officers in charge of banks are required to file reports to the board in charge of administration and implementation of policies on annual basis. This Act, according to observers in the security industry indicates that the security officers are now professionals. In one of the treatises on Bank Security by Security and Safety magazine “this change in interpreted by most banks as a head for appointing qualified security professional as designated security officers mostly with a background in previous security – related positions and/or experience in law enforcement.”
There are certain standards that must be met in bank security. Apart from the provision of security devices in banks, the Banks Protection Act (BPA) stipulates that there must be a protected place where cash and other valuables are stored including, an alarm system, illuminating system for the vault and locks that are tamper resistant.
However, despite all these protective guidelines, banks and finance houses have become the target of criminals as have been stated earlier. Apart from armed attacks, banks are now vulnerable because of the electronic or computer age which now facilitate easy access to operations.

MODERN TIMES

In the past, banks have been under the threat of burglary, robbery, cheque frauds, larceny and schemes to defraud under the guise of loans, these days, frauds are carried out internally and externally through Electronic Fund Transfer (EFT), Automatic Teller Machine (ATM.) There are also Internet Banks in the United States and Europe. This writer has also fallen victim of carefully schemed ploy perpetrated by the so-called Yahoo Yahoo boys which has put him in limbo with the USA based internet bank. It is instructive to note that fraudsters have acquired computer skills and dexterity which enables them to rob without carrying guns. In 2002, Nigeria lost N12.9 billion in 796 fraudulent cases. These are the known or reported cases. Many have probably been swept under the carpet. It is generally known that frauds are carried out in banks through the opening of accounts with fictitious names and locations. These fraudsters also use fictitious names, locations and identifications on the internet to defraud people across the globe. A cyber criminal may inform a bank or victims that they live in Ivory Coast or Ghana when they are actually resident in Lagos.

Fraud in Banks

Frauds in banks are often carried out through collaboration and connivance between officials and outsiders. In very bizarre cases, unscrupulous officials design and execute internal embezzlement systematically that they are often undetected by their bosses. In some cases, the bosses are the thieves. In these days of evangelism of all kinds of faith, the tight-faced, shawl or veil carrying “religious” woman may be financially more dangerous than the woman with shocking assorted lip sticks and boobs exposing garments. About two weeks ago, a female cashier who was believed to be a religious zealot carefully defrauded a first generation bank at Matori area of Lagos N48 million in what was believed to be a carefully scripted plot with a pastor. Of course, the messages and preaching from the tracts she reportedly distributed made no meaning to her as the “devil” pushed her into the fraud. These days, it appears the women are taking over from men in internal bank frauds. There was the case of some married women who regularly stole Western Union money meant for their customers. The police retrieved all kinds of driver’s licences, identification cards and passports that one would think the female bankers were immigration officers or road safety marshals. Experts believe that 80 percent of frauds in banks are carried out internally while 20 percent are carried out by outsiders. It is believed that banks with large staff and billions of cash are prone to big or large scale frauds.

A study revealed that sharp practices in banks also occur through lodgements made in bank tellers. Those who usually defraud banks from within are officers who have won the confidence of their superiors over the years. Dishonest insiders have been able to master the rudiments of electronic fund transfer (ECT), set up fictitious accounts around the world and used same to embezzle. In a particular scenario, an officer who unknown to the authorities used to stuff cash into his person within his own closed cubicle was caught through the CCTV! These Dishonest bank officers who are in charge of computers or Electronic Fund Transfer usually stole from large organizations in order to conceal their fraud. In the USA, electronic funds transfer frauds are carried when an officer deliberately compromises passwords, not following guidelines for authorization. The question now is; how does a security officer play any role in ensuring safety or protection of the bank from electronic fraud when he is not directly inside when the action takes place?

Contemporary Crimes in Banks and Financial Institutions
At this juncture, I will try to explain some of the tricks generally used to defraud so as to open our eyes in order to individually proffer solutions in our places of work as professionals.
With the introduction and use of Internet in the country, cyber crimes have also come into fore. People easily sit behind their computers, steal passwords or assume names and roles, which are fictitious in order to defraud individuals and banks. Today, this is the easiest way to steal globally. Nigerians have been noted worldwide as one of the greatest fraudsters on the Internet. Young men and women claim to be the custodians of millions of dollars wishing to part with a certain percentage.

Cyber Crime

Cyber Crime is a major threat to banks and financial institutions. Under this, there are various ticks by fraudsters behind the computers to defraud. These tricks which are used to steal from people’s savings, inheritance Includes; telemarketing fraud, consumer scans on telephones etc, investment, schemes, crimes of persuasion (Known as 419 in Nigeria), so – called pyramid schemes in which someone is told that the more people he brings into a savings scheme, the more interest or percentage he gets. Other schemes to defraud are; chain letters, various courses and degrees are offered on cyber crime to avail people of the schemes and plays of internet thieves and criminals. There are also cyber crime lawyers, investigators and forensics especially in advanced countries. Modelling agency, credit card fraud, counterfeit money orders, tax fraud, lotteries, gemstones, mining scams, real estate fraud, vanity press publishing, untrue literary contests, Green card lottery, scholarship, and work – at – home bates, non-existent scholarships, etc. This year, I carried out and investigation on an extensive pyramid scheme used by an American organization to take money from innocent Nigerians.

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