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(A CASE STUDY OF FIDELITY BANK)
ABSTRACT
The Nigeria banks of recent have experienced a high level of fraudulent activities, the main objectives of the study is to understand the nature of fraud in Nigeria banks, to identify and look into the causes of fraud in the Nigeria banks and to analyse the extent and effect of fraud in the Nigeria banks and economy in general. Hence the need of fraud controls system. This work deals with the designing of a fraud control system that will help in tracking fraudulent transactions in banks. The design and development of this system, that handles fraud control in the bank is associated with Visual basic as the front-end and Microsoft access database as the back-end. Finally, this research work was able to achieve a system with high security, easy transactions for customers, easy data update and easy tracking of fraudulent transaction.
TABLE OF CONTENT
Cover Page………………………………………………………………………….i
DECLARATION ii
CERTIFICATION iii
DEDICATION iv
ACKNOWLEDMENT v
ABSTRACT. vi
TABLE OF CONTENT vii
LIST OF TABLES x
LIST OF FIGURES xi
CHAPTER ONE 1
INTRODUCTION 1
1.1 BACKGROUND TO THE STUDY 1
1.2 STATEMENT OF THE PROBLEM 2
1.3 AIM AND OBJECTIVES OF STUDY 3
1.4 SCOPE OF STUDY 4
1.5 SIGNIFICANCE OF STUDY 4
CHAPTER TWO 5
LITERATURE REVIEW 5
2.1 BANK FRAUDS 5
2.2 NATURE AND TYPES OF FRAUD IN BANKS 6
2.2.1 COMPUTER FRAUD. 7
2.2.2 ACCOUNT FRAUDS. 12
2.2.3 CHEQUE FRAUD: 13
2.2.4 COUNTERFEIT SECURITIES 13
2.2.5 FRAUDULENT TRANSFERS AND WITHDRAWALS 14
2.3 CAUSES OF FRAUD IN NIGERIA BANKS 14
2.3.1 BAD MANAGEMENT 14
2.3.2 RECRUITMENT SYSTEM 14
2.3.3 STAFF NEGLIGENCE 15
2.3.4 INTERNAL CONTROL 15
2.3.5 POOR SECURITY ARRANGEMENTS FOR DOCUMENTS. 15
2.3.6 NEGLIGENCE BY CUSTOMERS. 15
2.3.7 USE OF SOPHISTICATED ACCOUNTING SYSTEM. 16
2.3.8 DELAY IN PROCURING DOCUMENTS. 16
2.3.9 LACK OF CO-OPERATION AMONG BANKS 16
2.4 TECHNIQUES OF CONTROLLING FRAUD IN BANKS 16
2.5 MEASURES FOR CURBING FRAUD IN BANKS 17
2.6 EFFECTS OF FRAUD ON NIGERIA BANKS 19
CHAPTER THREE 21
ANALYSIS AND DESIGN 21
3.1 METHODOLOGY 21
3.2 ANALYSIS 22
3.2.1 ANALYSIS OF THE EXISTING SYSTEM 22
3.2.2 ANALYSIS OF THE NEW SYSTEM 22
3.2.2.1 ADVANTAGES OF THE NEW SYSTEM 22
3.2.2.2 DISADVANTAGES OF THE NEW SYSTEM 22
3.3 DESIGNS 22
3.3.1 DATABASE DESIGN 23
CHAPTER FOUR 27
PROGRAM IMPLEMENTATION 27
4.1 REASONS FOR CHOICE OF LANGUAGE 27
4.2 DOCUMENTATION 27
4.2.1 ALGORITHM 27
4.2.2 ACCOUNT CREATION/CLOSURE 28
4.2.3 DEPOSIT/WITHDRAWAL MODULE 29
4.2.4 FUNDSTRANSFER MODULE 29
4.2.5 BALANCE INQUIRY 30
4.2.6 SECURITY MODULE 30
4.3.1 FLOWCHART 31
4.4 DISCUSSION OF RESULTS 36
4.5 SOURCE CODE 36
4.6 SAMPLE OUTPUT 36
CHAPTER FIVE 37
SUMMARY, CONCLUSION AND RECOMMENDATION 37
5.1 SUMMARY 37
5.2 CONCLUSION 38
5.3 RECOMMENDATION 39
REFERENCES 41
APPENDIX A (SOURCE CODE) 42
APPENDIX B (SAMPLE OUTPUT) 57
LIST OF TABLES
TABLE 3.1 ACCOUNTTABLE 246
Table: 3.2 SECURITY TABLE 257
Table: 3.3 TRANSACTION TABLE 257
LIST OF FIGURES
FIG 3.3.2 ENTITY RELATIONSHIP DIAGRAM 235
FIG: 3.3.2.1 ACCOUNT ER DIAGRAM 235
FIG: 3.3.2.2 SECURITY ER DIAGRAM 235
FIG: 3.3.2.3 TRANSACTION ER DIAGRAM 246
FIG: 3.3.2.5 DATABASE TABLE RELATIONSHIP DIAGRAM 268
FIG: 4.3.2 MAIN MODULE FLOWCHART 325
FIG 4.3.3 BALANCES INQUIRY FLOWCHART 336
FIG 4.3.4 TRANSFER FLOWCHART 347
FIG 4.3.5 ACCOUNT CREATION/CLOSURE 358
FIG 4.3.6 DEPOSIT/WITHDRAWALFLOWCHART 39
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND TO THE STUDY
Fraud is recognized as a significant threat facing government, businesses and individuals all over the world. In our own environment, fraud appears to have assumed a tragedy of epic dimension. Fraudsters are not only becoming sophisticated, innovative and refined in their planning and execution of their nefarious acts, but are becoming daring as well. Our everyday living experiences are awash with report of fraudulent Acts being committed in our businesses and on individuals.
(Oseni, 2006) the incessant frauds in the bank industry are getting to a level at which many stakeholders in the industry are losing their trust and confidence in the industry. Corroborating the view of (Oseni, 2010) stressed that the spate of fraud in Nigerian banking sector has lately become a source of embarrassment to the nation as apparent in the seeming attempts of the law enforcement agencies to successfully track down culprits. Although the incidence of fraud is neither limited to the banking industry nor peculiar to Nigerian economy, however the high rate of fraud within the banking industry calls for urgent attention with the view of finding solutions. The cost of fraud is always passed to the society in the form of increased customer inconvenience, opportunity cost, unnecessary high prices of goods and services. It was established that fraud was one of the main cause of distress in our banks system that lead to the closure of many banks in 1990’s. As a matter of facts some resent bank failures were caused by fraud.
There is a genuine fear that the increasing wave of bank fraud is causing a lot of havoc in our financial systems. This is because the bank fraud has eaten deep into every aspect of the banking system to the extent that many banks have lost the confidence of their customers.
Oxford Advance Learners Dictionary of Current English defines fraud as “Criminal deception”. Fraud is concerned with the activities of those who seek to divert to their pockets the fruits of others handwork. In general, fraud could be said to mean any activity that amounts to unfair dealing. In legal parlance, fraud has been defined as the act of depriving a person dishonestly of something, which is, or of something to which he is, or might be entitled but for the perpetration of fraud. Fraud in banks are not new, they are as old as the industry itself. However, like in the greater societies, it has become one of the most hard to manage problems of modern day banking.
1.2 STATEMENT OF THE PROBLEM
Fraud is a major challenge to the entire banking industry; no bank is immune to it and in all facets of life (Olusegun, 2010). The banking public expert is accountability, fairness, transparency in their day operation for effective intermediation.
The government and its agencies have not put enough effort in the prevention and control of bank fraud in Nigeria. Otherwise the level of bank fraud would have reduced to a bearable level. Agencies like money laundering Act which helps to place surveillance on any account through which such excess cash deposits or withdrawals are made, Nigeria Deposit Insurance Corporation which is involved in managing bank distress, failed banks and financial malpractices in bank Acts which was vested with powers to recover the debts of failed banks, dishonored cheques Acts which affects banks in there collection and payment of cheques on behalf of their customers and bill of exchange act which helps to collect the proceeds of trade bills exchange and cheques are not putting enough effort in the prevention and control of bank fraud, that is the reason why bank is increasing day by day in Nigeria.
Though there was known cases of fraud in the sector, one major question still remains unanswered which is what is the nature and different ways through which fraud can be perpetuated in banks. It is asserted by Adeyemo (2012), that fraud in the bank is possible with co-operation of an insider. The banks are expected to ensure that they carry out their responsibilities with sincerity of purpose which is to devoid of fraudulent practices. This is relevant if the banking sector is to gain public trust and good will. Environmental factor are those factors that can be traced to the immediate and remote environment of the bank, these factors are manifest in the following manner, the desire to get rich quick, complex legal process, poverty and the wondering gap between the rich and the poor, competition among bank staff, the desire to belong to any social class, job insecurity, peer group pressure, and societal expectation.
Fraud can bring about disturbance in management objectives /budgets which might lead to non-provision of some fringe benefits such as transportation, medical facilities, service training etc. Massive employment of contract staff in the banking industry and low payment of wages compared to the permanent staff.
1.3 AIM AND OBJECTIVES OF STUDY
The purpose of this research is to critically examine fraud control techniques used in the Nigeria banks.
Specifically, the objectives include:
1. Understand the nature of fraud in Nigeria banks.
2. To identify and look into the causes of fraud in the Nigeria banks.
3. To analyse the extent and effect of fraud in the Nigeria banks and economy in general.
4. To proffer ways of preventing and controlling fraud in the Nigeria banks.
1.4 SCOPE OF STUDY
The study centers on fraud in the Nigeria banks with a keen interest on commercial banks. It recorded cases of fraud in the Nigerian banking industry, what constitute fraud, causes of fraud, most common types of fraud, their effects on the banks, fraud detecting methods and recommendations for controlling and prevention of frauds in the Nigeria banking industry.
1.5 SIGNIFICANCE OF STUDY
This study would be of great use to authorities concern with banking operations, managements, staff customers and prospective investors in the industry. In Nigeria, bank fraud has assumed a frightening scale and sophistication consequent upon the general economic depression of the last decade and the continuing travails of the banking sector in the wake of government frantic policy experimentation. The study will therefore identify the various means (Theft, embezzlement, forgeries etc) employed in defrauding banks.
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