Advance-fee fraud — also known as 419— has always been in existence. But with the advent of information and communication technology, massive digitalization and unprecedented interconnectivity provided by the internet, frauding went digital. The 419ers began using their laptops to perpetrate crime and the best way to fight digital financial crimes is with technology.
According to a report, by one of the world’s largest providers of financial markets data and infrastructure, Refinitiv, titled Innovation and the fight against financial crime: How data and technology can turn the tide, almost 72 percent of organisations have been victims of financial crime over the past 12 months with a lax approach to due diligence checks when onboarding new customers, suppliers and partners. Of this 72 percent, only 62 percent were reported internally, and just 60 percent said that they were reported to the relevant external organization.
Generally, more than 90 percent of African businesses are unable to adequately protect themselves against losses, 60 percent of organizations didn’t keep up to date with cybersecurity trends and program updates and at least 96 percent of online-related security incidents went unreported.
A total of 3,138 managers with compliance-related responsibilities at large global organizations completed the Renitiv survey, from across 24 geographies including Nigeria. Of these 3,138 managers, 81 percent said that there is some sort of existing partnership or taskforce in their country to combat financial crime.
As of 2017, the amount of money stolen worldwide via the Internet reached $172 billion, according to a report by cybersecurity firm Norton and Nigeria currently ranks third globally in these cybercrimes. Sadly, just 1 percent of the criminal funds flowing through the international financial system every year are detected and dealt with by law enforcement agencies.
Like many other countries, Nigeria has been committed in its fight against cybercrime. Section 5(1), under offences and penalties of the 2015 Cybercrime Act, any person who with intent, commits any offence punishable under this Act against any critical national information infrastructure, shall be liable on conviction to imprisonment for a term of not more than 10 years without an option of fine. Also, hackers, if found guilty of unlawfully accessing a computer system or network, are liable to a fine of up to N10 million ($27.778) or a term of imprisonment of 5 years (depending on the purpose of the hack).
These funds were stolen because of weak security architectures, the scarcity of skilled personnel, a lack of awareness and strict regulations. However, for the country to adequately tackle this global menace, it needs the right tools to do so and Refinitiv believes that emerging technologies can turn the tide. Therefore, organisations need to look at other forms of innovative collaboration.
An overwhelming 97 precent of respondents believe that cloud-based data and technology, Artificial Intelligence and machine learning tools can significantly help with financial crime.
There is a challenge of maximizing technology in the fight against internet fraud. Over 71 percent of Nigerians are struggling to harness technological advancements and a lack of digitization is evident and may be stalling the progress of combating crime. In Africa, just about 56 percent of the data and legal documentation obtained to carry out due diligence are in a digitized format.
However, at the heart of this technological revolution is the need to have trusted data, accurate and relevant information, so that the technology can help the people who are responsible for the compliance, risk management and the financial crimes make informed decisions.
Phil Cotter, Managing Director of the Risk business at Refinitiv noted that “it is clear from the results of this report that businesses exposed to financial crime threats need to maximize their use of technology and future collaboration could prove key to realising the potential of innovation, particularly between tech companies, governments and financial institutions.”