Curtailing internet, telecom-based financial crimes in 2024

The year 2023 saw internet and telecom-based financial crimes spiked in Nigeria. The rate of online financial crimes began going up during the COVID-19 lockdown in 2020 and it.almost touched the ceiling last year. Many Nigerians lost their money and documents to hackers and cyber criminals.   This is because the digital technology is now revolutionising […]

The year 2023 saw internet and telecom-based financial crimes spiked in Nigeria. The rate of online financial crimes began going up during the COVID-19 lockdown in 2020 and it.almost touched the ceiling last year. Many Nigerians lost their money and documents to hackers and cyber criminals.  

This is because the digital technology is now revolutionising how we transact business and it is changing Nigeria’s payment systems.  So the number of perpetrators of e-fraud in the country are increasing with it. E-fraud knows no geographical boundary as potential perpetrators could be in the Northern part of Nigeria and defraud their victims in the South and vice versa.

Between 2019 and January 2023, Nigerians lost about N12.5 billion to financial crimes linked to the telecommunications industry, this is according to the Nigerian Communications Commission (NCC). 

The commission’s Director of Consumer Affairs, Dr Al-kasim Umar, had said, “According to some reports, Nigerians have lost about N12.5 billion to financial crimes linked to the telecommunications industry in the past four (4) years. The Center for Strategic and International Studies (CSIS) estimated that $600 billion is lost to cybercrime each year, an increase from a 2014 study that put global losses at about $445 billion”. 

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A report from the Federal Bureau of Investigation (FBI) listed Nigeria as the 16th country worst affected by cybercrime, and the rising number of scammers in the country is worrisome, according a top government official who pleaded to remain anonymous. Experts said this may due to the ubiquitous internet connectivity now being enjoyed in the country. Fast Internet supports cybercrime activities such as raiding bank accounts, identity theft, impersonation and stealing corporate information. 

The NCC Consumer Affairs boss said e-fraud posed a significant threat to Nigeria, added that it undermines the trust and confidence in the country’s digital platforms, hampers economic growth, and adversely impacts the lives of its citizens.

Umar said the commission decried that daily, Nigerians are losing their hard-earned money to fraudsters, who are taking advantage of the vulnerabilities on their platforms to defraud them.

As such, he said eFraud poses a significant threat to the society, as it undermines the trust and confidence in our digital platforms, hampers economic growth, and adversely impacts the lives of our citizens.

He disclosed that as the regulatory authority responsible for overseeing the telecommunications industry, the NCC recognises its duty to safeguard the interests of consumers and protect the integrity of the digital ecosystem.

Non-Executive Director and Chief Executive Officer, FutureSoft, Nkemdilim Uwaje-Begho, said key challenges of eFraud, include evolving threat landscape; increased risk; lack of awareness; lack of collaboration and limited regulations.

Uwaje-Begho said to mitigate the threats, there was need to build consumer confidence in the digital economy; regulators must implement policies that facilitate collaboration; establishment of formal mechanism for information sharing; encouraging public-private partnerships within the telecoms industry as well as cross-sector to leverage expertise.

According to her, international cooperation and information sharing among countries can help curb eFraud; telecoms operators should implement multi-layered security measures; regular security audits, vulnerability assessments and timely software upgrades. She advised that there should be collaboration with cybersecurity experts and law enforcement agencies, saying that this can help curb eFraud.

Also speaking on the e-fraud, Prof. Kareem Olatoye of the Faculty of Law, Lagos State University (LASU), said the digital payment system is vulnerable to fraud and evidence of this abound everywhere, with cybercrimes such as cyberstalking, cybersquatting, phishing, among others, leading the pack.

Olatoye said a report has it that identity fraud global losses totaled $52 billion in 2021, but he said that there are a plethora of existing Nigerian laws having provisions capable of helping to mitigate fraud.

According to him, these include Cybercrime (Prohibition, Prevention) Act 2015; Central Bank of Nigeria Act; Economic and Financial Crime Commission Act 2004; Money Laundering (Prohibition) Act 2012; the Advanced Free Fraud and Other Fraud Related Offences Act 2006; the Communications Act 2003; Nigeria Deposit Insurance Corporation Act; Evidence Act 2011; Criminal Code Act 1990; the Penal Code 1990; Companies and Allied Matters Act 2020.

Others are the Constitution of the Federal Republic of Nigeria 1999; the Trademarks Act 2004; Anti-Corruption Act; Bank Employees, etc (Declaration of Asset) Act; National Drug Law Enforcement Agency Act and Special Tribunal (Miscellaneous Offences) Act.

The Law Professor said law could be used to proffer solutions, stressing that effective regulation is required. He said registration/licensing of e-payment platforms/the Fintechs and effectively regulating them; KYC requirement/supervision, S.37 cyber crime Act 2015.

Olatoye said data protection must be robust; stressing that Section.6 NITDA Act enables regulating electronic data interchange.

Mitigating the impacts, the Law Professor recommended that there is a need for law mandating payment software developers/owners to ensure security of the payment system against hacking and other abuses that could result in financial loss to users. 

He said there should be digital payment risk insurance in Nigeria as seen in the USA, adding that online safety law is also required as seen the United Kingdom online safety bill (s.36), which imposes duty of care to offer protection where criminals impersonate to steal people’s personal data or break into bank accounts.

He said there is a need to place and enforce the legal burden on anyone carrying on business using Internet enabled platforms to take responsibility for the safety of customers making digital payments.

“Adequate punishment for cybercrime and effective implementation. Digital Infrastructure needs to be robust. Online policing /monitoring of financial transactions, international cooperation are needed,” he stressed.

To safeguard their customers, NCC urged telecom operators to invest in robust infrastructure, employ state-of-the-art security measures, and conduct regular audits to identify vulnerabilities and address them promptly.

How to safeguard your money in 2024

 An online banking fraud refers to any illicit activity completed on a financial institution’s web application or mobile apps for money management, bank transfers, instant payments, and money lending. 

An ICT expert, Chief Martin Nwoga, told Daily Trust that banks and Nigerians should fortify their IT infrastructure and devices. According to Nwoga fraudsters target weak gaps in technology deploy by banks and other financial institutions and they (fraudsters) exploit such gaps.

Another IT expert, Engr AbdulMuizz Oyewole said the breach of security in banking system comes in many forms. Some, he said, are due to vulnerabilities in the banking system security architecture from application to network, banking staff, third party integrations and so on.  Many others, he added, are due to negligence or carelessness by the bank customers.

On how to curtail online related financial crimes this year, Oyewole said, there is need for a holistic approach involving cooperation among key players including regulators in the financial and technology industries. 

Oyewole, who is the founder and chief technical officer of Madjatek Pro Technology Limited, Lagos, however, said no matter how secure a banking system is, if there is vulnerability from the network service or any other provider then that weak point is enough to compromise the entire system. 

He also said a targeted individual could have man-in-the-middle exploits on their devices. This is when, he said, username and passwords and other confidential information are recorded and transmitted to the fraudster. This information, he added, is used for identity theft and customer accounts are completely drained.

He also said there are cases of bank hacks. “This is usually an exploit of the security of the bank’s internet facing systems. An example of such an attack is a DNS (denial of service) attack. The bank URL or link is no longer available to the public. This could go on for days and the bank is blackmailed if it is a criminal attack. There is also a Domain Name exploit where the customer is sent to a spoof (fake) site and their details captured as part of identify theft. Sometimes the customer is sent to a pornography site causing great damage to the bank’s reputation”. 

On what banks and bank customers should do, Oyewole said banks should have a dedicated cybersecurity unit, employ experts to manage the unit and commit good budget to the operations of that department. This unit, he said, must include technology, financial and legal experts who have undergone extensive training in cybersecurity. 

“The cybersecurity unit of the bank will take care of all necessary steps from orientation to policies and implementation. The unit should be mandated to implement AI-driven security architecture and be on top of their game. That is why experts need to be hired”, he said. 

Also, he added, banks need to provide a 24/7 active multi-channel fraud tracking, reporting and de-escalating system. 

These channels, he explained,  should be as seamless and user-friendly as possible to allow customers get quick relief in the event of a potential breach. “Imagine a customer just got robbed and his wallet containing his banking instruments in the hand of fraudsters, he should be able to use the closest possible means to report deactivation of his banking credentials. I am aware some USSD codes exist for this but I have personally witnessed at least two occasions where a friend who lost his debit card attempted to dial these codes to deactivate access to his bank account but failed. Also call to customer care service ended up being frustrating. Some of those who experienced this ended up losing funds in their account to fraudsters which could have been prevented. AI-driven solutions could have helped here but I won’t want to go too technical with this discourse”.

He said further: “Like I stated earlier, there is need for synergy among the agencies. Cybersecurity team and fraud preventation/monitoring team of the relevant regulators and agencies need to work together with operators to adopt a unifying approach. This should be highly enforced. Also, the national assembly needs to come up with legislation that helps fast track recovery of stolen funds. The existing laws make the process very cumbersome and a lot of people end up loosing hope. National identity also has a big role to play here. The NIMC has a long way to go together with NCC and NITDA. We have data but highly unstructured and collection points are still inadequate. We are making too little insights from even the available data. At the international scene we should target driving up our National Security Index to help create confidence required for foreign stakeholders to step in and collaborate. But with a determined mindset and the required effrontery we can do wonders within few years”.

Few other steps you could take to prevent falling victims to online frauds in 2024

Keep social media private: 

Be sure that your social networking profiles (Facebook, Twitter, YouTube, etc.) are set to be private. Once be sure to check your security settings. Be careful with the information that you post online. 

Protect your storage data: 

Protect your data by using encryption for your important diplomatic files such as related to financial and taxes

Protecting your identity online: 

We have to be very alert when we are providing personal information online. You must be cautious when giving out personal identities such as your name, address, phone number, and financial information on the Internet. Be sure to make that websites are secure when you are making online purchases, etc. This includes allowing your privacy settings when you are using social networking sites.

Keep changing passwords frequently:

 When it comes to password, don’t stick to one password. You can change your password frequently so that it may be difficult for the hackers to access the password and the stored data.

Securing your Phones:

 Many people are not knowing that their mobile devices are also unsafe for malicious software, such as computer viruses and hackers. Make sure that you download applications only from trusted sources. Don’t download the software /applications from unknown sources. It is also pivotal that you should keep your operating system up-to-date. Be sure to install the anti-virus software and to use a secure lock screen as well. Otherwise, anybody can retrieve all your personal information on your phone if you lost it. Hackers can track your every movement by installing malicious software through your GPS.

Call the right person for help: 

Try not to be nervous if you are a victim. If you come across illegal online content such as child exploitation or if you think it’s a cyber-crime or identity theft or a commercial scam, just like any other crime report this to your local police.