The Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, has identified banks as pivotal to the government’s ambition of achieving a $1 trillion economy within the next seven years. The banking sector, with its N74 trillion in gross assets and N36 trillion in loans to crucial economic segments, is indeed a powerhouse in the national economy, as highlighted by the CBN leader.
However, this financial strength also carries the potential for misuse, with adverse effects on national security, the business environment, and the broader economy. Recent investigations have unveiled that numerous banks have been implicated in exacerbating the country’s security challenges.
These investigations reveal that several financial institutions have strayed from their primary roles, violated regulatory guidelines, and engaged in activities detrimental to the economy. Such actions include facilitating kidnapping through the allowance of their platforms for ransom payments, insider abuses, and involvement in e-fraud and cybercrimes.
A report from SB Morgen Intelligence, focusing on geopolitical research in Africa, points out that the motive behind kidnappings, fueled by Nigeria’s struggling economy, rising inflation, and high unemployment rates, has increasingly become ransom payments. From July 2022 to June of the previous year, Nigeria witnessed 3,620 abductions across 582 kidnapping incidents, with ransom demands totaling at least N5 billion and actual payments reaching N302 million, much of which was funneled through the financial system, although the true amount is likely higher due to underreporting.
Sir Chikwe Udensi, a former Interpol Representative in Nigeria and CEO of Sheiks and Bishops Limited, highlighted the yearly loss of N350 billion through frauds, cybercrimes, and other illicit activities like ransom payments. He noted that out of Nigeria’s 133 million bank account holders, five million accounts are fraudulent.
Banks have been found using stolen identity cards of deceased individuals to open accounts, which kidnappers then use to receive ransom payments, making these funds difficult to trace.
Dr. Aminu Gwadabe, President of the Association of Bureaux De Change Operators of Nigeria (ABCON), criticized some banks for their alleged involvement in money laundering, kidnapping, terrorism financing, and illicit drug transactions, driven by their pursuit of profit and market share. He pointed out that illicit financial inflows through financial institutions are often enabled by compromised professionals.
Gwadabe emphasized that the quest for large deposits has led banks to overlook proper checks, Know Your Customer (KYC) protocols, and due diligence in account opening and customer service, making them susceptible to sophisticated cybercriminals.
Highlighted cases include the hacking of former federal lawmaker Tokunbo Afikuyomi’s WhatsApp number, leading to significant financial losses, and the ransom collection for the kidnapped daughters of Alhaji Mansoor Al-Kadriyar, including Nabeeha Al-Kadriyar, a 400-level student who was tragically killed before the ransom payment.
Over N13.6 billion was reportedly paid to non-state actors as ransom between June 2011 and July 11, 2022. These incidents underline the need for stricter enforcement of financial regulations, enhanced due diligence, and better cooperation between banks, regulatory bodies, and law enforcement to curb the misuse of the financial system and combat the broader issue of kidnapping and related crimes in Nigeria.
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