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Cases of Banks’ Frauds on the Rise-NDIC

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Nigeria Deposit Insurance Corporation (NDIC) yesterday released its 2012 report and statement of accounts, which showed that banks in the country reported a total of 3,380 cases of frauds involving a ₦17.97 billion loss to the industry.

Bank fraud is the use of potentially illegal means to obtain money, assets, or other property owned or held by a financial institution, or to obtain money from depositors by fraudulently posing as a bank or other financial institution.

The reported cases of frauds represents a 43.7 per cent rise compared to 2,352 cases in 2011 while the expected/contingent loss rose by ₦455 million (10.9 per cent) from ₦4.072 billion reported in 2011.

The expected/contingent loss in 2011 however fell by 36.4 per cent from ₦28.40 billion in 2011, to ₦18.04 billion last year.

The corporation, however, noted the significant improvement in the financial standing of the nation’s banks in 2012, as they (banks) pooled a total of N525.34 billion pre-tax profit compared with the N6.71 billion loss reported at the end of 2011.

The return to profit, as contained in the 2012 NDIC report and audited statement, according to a statement by the corporation, was helped by the improved capitalisation resulting mainly from the activities of the Asset Management Corporation of Nigeria (AMCON), which acquired toxic assets in the industry.

This acquisition led to healthier balance sheets for the banks.

As a further sign of the improved health condition of the banks, the NDIC said the industry’s total assets improved by 10.91 per cent from N21.89 trillion in 2011 to N24.58 trillion in 2012.

Total loans and advances at N8.15 trillion represented a third of total assets, out of which 54.97 per cent or N4.48 trillion went to the real sector of the economy, compared with N3.88 trillion (or 53.37 per cent) and N3.51 trillion (or 48.95 per cent) in 2011 and 2010, respectively.

“Of particular note was the rising trend in the banking industry’s credits to the agric sector which stood at 3.60 per cent of total loans and advances in 2012 compared to 2.15 per cent and 3.11 per cent recorded in 2010 and 2011, respectively,” the statement added.

The corporation also expressed grave concern over the failure to assess financial condition and performance of 555 micro finance banks (MFBs) in the country on a continuous basis during the year.

It said in 2012, “310 out of the 323 MFBs that rendered returns had met the minimum paid-up capital of N20 million. A total of 302 MFBs had capital adequacy ratio of more than 10 per cent.”

Also, the NDIC said it has so far paid N73.58 billion as liquidation dividend to 250,209 depositors of banks that went under over the years, up to December 31, 2012.

Of this amount, the corporation said it paid a cumulative N6.82 billion to 528,212 insured depositors of closed banks by December 31, 2012, compared with N6.68 billion paid to 527,942 depositors in 2011.

The 2012 payout and beneficiaries could have been higher, the NDIC said, but for the unwillingness of many depositors to file their claims.

“It is pertinent to indicate that a total of 14 out of the 34 banks-in-liquidation prior to 2006 had declared a final dividend of 100% of their total deposits, indicating that all depositors of the affected closed banks had fully recovered their deposits,” the NDIC said.

The report further rated one of the nation’s existing 20 banks “marginal,” while 10 are “sound” and nine others “satisfactory,” following which the corporation concluded that “the industry could be considered to be relatively stable in 2012 (as there) was no unsound bank in the banking industry as at 31st December, 2012.”


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NAICOM Urges State Governments to Implement Compulsory Insurance

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The National Insurance Commission, NAICOM, is seeking collaboration especially from State Governments on implementation and enforcement of compulsory insurance.

Speaking during a meeting with the Governor of Ekiti State, Kayode Fayemi, the Commissioner for Insurance Sunday Thomas, noted that over the years, the Commission has embarked on series of programs aimed at a nationwide massive public enlightenment with respect to compliance with the laws on compulsory insurance.

As a subset of the Financial Services Industry, Insurance industry is a pivot to guarantee the sustainability of growth and development of the State and its people, said Thomas, adding, We have therefore noted the necessity to plant “Insurance” and “People” at the center of any equation that tends to create, enhance, sustain and manage growth and development in any economy.”

He said: “As a people, human activities have associated risks and in spite of every precautionary measure to avoid the occurrence of losses or damages, the unexpected still occur.

“In consequence of the losses the victims are prone to sufferings which in many cases may lead to total impoverishment of a large proportion of those affected. To ameliorate the situation of victims, laws have been put in place for an arrangement that will ensure that victims and especially third parties are adequately compensated.”

According to him, “the objectives of protecting third parties and relieving the government of the avoidable burden of compensation from the meagre wallet of the government led to the enactment of various laws on compulsory insurance products”.

Thomas listed the Compulsory Insurances to include, all buildings under construction that are more than two (2) floors (builders liability); all Public Buildings including Schools, offices, hotels, hospitals, markets (occupiers liability) etc; Group Life Insurance for all Employees of both Public and Private Sectors; Professional Indemnity for all Medical Practitioners and Third Party Motor Vehicle Insurance in respect of death, injury or damage to the property of third parties.

The Commissioner added that it is on the strength of the above that the Commission is seeking collaboration with the State government in the enforcement of the above mentioned compulsory insurances in the State.

“As the Chairman of the Nigerian Governors’ Forum there is no better place to start the campaign than Ekiti State.” he said.

He also highlighted the benefits of this collaboration with State Governments, which include, Financial Compensation to the families of insured citizens who may become victims of a disaster through loss of their properties or become disabled in event of occurrence of insured accidents/disasters, robust group life insurance policy made compulsory by the Pension Reform Act 2014 gives hope to the workforce who will be ready to go extra mile in carrying out assign duties knowing fully well that the employer has made provision for the dependant in event of the unexpected and creation  of employment opportunities for citizens of the State.

Others are provision of grants and Fire-Fighting Equipment for the States’ Fire Services by NAICOM from the Fire Fund as stipulated in the Insurance Act 2003, reduction in the government expenditure in event of disaster that may affect the citizens of the State by shifting the burden to the risk-bearers (Insurance Companies), free Insurance and Risk Management Education and Enlightenment programme for the citizens of the State; and creation of additional source of internally generated revenue (IGR) for State Government in collaboration with your relevant Ministries and Agencies.

He therefore appealed to the Governor to graciously consider the benefits of the proposed collaboration for the enrichment of the State and the sustainability of the Nigeria economy at large.

The Commissioner also requested the Governor to domesticate the compulsory insurances in the State and create a structure that can be supported by NAICOM in the enforcement of the compulsory insurances and also nominate an Agency of the Government that will serve as liaison office with the Commission in this collaboration.

“The nominated agency may be requested to work with the Team of the state who shall be dedicated to this collaboration and recommend appropriate measure to domesticate the enforcement of the compulsory insurances in the State.” he said.


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CBN Disburses N3.5tr COVID-19 Intervention Cash

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Central Bank of Nigeria (CBN) had disbursed N3.5 trillion to different sectors of the economy to cushion the effects of the Coronavirus pandemic.

CBN Disburses N3.5tr COVID-19 Intervention Cash

Mr. Godwin Emefiele, CBN governor

It will also contribute N1.8 trillion into the N2.30 trillion Federal Government’s one-year Economic Sustainability Plan (ESP) through its Participating Financial Institutions (PFIs).

Godwin Emefiele, CBN Governor stated this on Tuesday after the Monetary Policy Committee (MPC) meeting in Abuja.

Emefiele gave a breakdown of who got what out of the N3.5 trillion COVID-19 intervention as follows: Real Sector (N216.87 billion); COVID-19 Targeted Credit Facility (N73.69 billion); Agri-Business/Small and Medium Enterprise Investment Scheme (N54.66 billion); Pharmaceutical and Health Care Support (N44.47 billion); and Creative Industry Financing (N2.93 billion).

Under the Real Sector Funds, Emefiele said: “a total of 87 projects that include 53 manufacturing, 21 agriculture and 13 service projects were funded.

He added: “In the health care sector, 41 projects which include 16 pharmaceuticals and 25 hospital and health care services were funded.”

The CBN boss also said: “Under the Targeted Credit Facility, 120,074 applicants received financial support for investment capital.

“The AGSMEIS intervention has been extended to a total of 14,638 applicants, while 250 Small and Medium Enterprises (SMEs), predominantly the youth, have benefited from the Creative Industry Financing Initiative.”

Emefiele said in addition to  the  initiatives, the   apex bank “is set to contribute over N1.8 trillion of the total sum of N2.30 trillion needed for the one year  ESP, through its various financing interventions using the  PFIs.”


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Banks Fingered in $2trn Dirty Money Scam

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Some of the world’s top banks have been found to be complicit in aiding criminals move $2 trillion in dirty money around the world, according to leaked government files.

Banks Fingered in $2trn Dirty Money Scam

The exposition was done by Buzzfeed News and shared with the International Consortium of Investigative Journalists (ICIJ), a group that brings together investigative journalists from around the world, which distributed them to 108 news organisations in 88 countries.

In the revealing documents, they said: “global banks including JPMorgan, HSBC, Standard Chartered Bank, Deutsche Bank, Bank of New York Mellon, among others defied money laundering crackdowns by moving staggering sums of illicit cash for shadowy characters and criminal networks that have spread chaos and undermined democracy around the world.”

It was also revealed that they kept profiting from these powerful and dangerous players even after the United States authorities fined these financial institutions for earlier failures to stem flows of dirty money.

FinCEN is the US Financial Crimes Enforcement Network. These are the people at the US Treasury who combat financial crime. Concerns about transactions made in US dollars need to be sent to FinCEN, even if they took place outside the US.

Known as the FinCEN files, these are more than 2,600 documents which banks sent to the US authorities between 2000 and 2017 which help show that these banks raise concerns about what their clients might be doing.

They have also been regarded as some of the international banking system’s most closely guarded secrets.

Some of what has been found so far showed that JPMorgan, the largest bank based in the United States, moved money for people and companies tied to the massive looting of public funds in Malaysia, Venezuela and Ukraine, the leaked documents reveal.

The bank moved more than $1 billion for the fugitive financier behind Malaysia’s 1MDB scandal, the records show, and more than $2 million for a young energy mogul’s company that has been accused of cheating Venezuela’s government and helping cause electrical blackouts that crippled large parts of the country.

JPMorgan also processed more than $50 million in payments over a decade, the records show, for Paul Manafort, the former campaign manager for President Donald Trump. The bank shuttled at least $6.9 million in Manafort transactions in the 14 months after he resigned from the campaign amid a swirl of money laundering and corruption allegations spawning from his work with a pro-Russian political party in Ukraine.

It was also revealed that one of Russian President Vladimir Putin’s closest associates used Barclays bank in London to avoid sanctions which were meant to stop him from using financial services in the West. Some of the cash was used to buy works of art.

HSBC allowed fraudsters to transfer millions of dollars around the world even after it had learned of their scam, leaked secret files show.

Britain’s biggest bank moved the money through its US business to HSBC accounts in Hong Kong in 2013 and 2014.

The United Arab Emirates’ central bank failed to act on warnings about a local firm which was helping Iran evade sanctions.

Deutsche Bank moved money launderers’ dirty money for organised crime, terrorists and drug traffickers.

Standard Chartered moved cash for Arab Bank for more than a decade after clients’ accounts at the Jordanian bank had been used in funding terrorism.

The FinCEN Files represent less than 0.02 per cent of the more than 12 million suspicious activity reports that financial institutions filed with FinCEN between 2011 and 2017.

Mr Fergus Shiel from ICIJ said the leaked files were an “insight into what banks know about the vast flows of dirty money across the globe”. He said the documents also highlighted the extraordinarily large amounts of money involved.


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