Authored By: SOPULU DIVINE CHINWENDU
Graduate, Redeemer’s University
ABSTRACT
Banks are institutions with a significant impact on a country’s economic well-being and development. They play a crucial role in the economy’s financial operations. However, there is a significant increase in banking-related crimes, resulting in financial losses for clients. In light of the above, this article seeks to examine the laws on banking crimes in Nigeria. In achieving this, a doctrinal research methodology was adopted by consulting primary and secondary sources of law that were subject to content analysis. The article found that the laws established to combat banking crimes are good, but the level of enforcement are to poor. In conclusion, although it is clear that the rise in crimes in the banking sector in Nigeria has affected all aspects of the country, however, the article recommends that there should be stringent enforcement of these crimes that these laws seek to combat to make the banking sector achieve its goal, which it is supposed to attain.
KEYWORDS: Banks, Banking Crimes, Legal, and Nigeria
1.0 Introduction
The banking sector is one of the pillars that support a country’s economy. It is considered to be the oil that keeps the wheels of any country’s economy turning, causing frequent and occasional searches for reasons why the industry is performing well or poorly.1It plays a crucial role in economic growth by facilitating financial transactions. Banks encourage capital formation, improve production efficiency, and promote economic growth as part of their vital job. 2
The banking business over the years has evolved significantly in terms of the creation of a network of branches, and the number of workers and consumers has also increased. Also, there has been innovation in the various banking processes meant to speed up operations and make financial services more accessible to customers, as well as sophistication in the banking services themselves. However, the crime saga has eaten deeply into the banking sector, making people lose trust and confidence in this sector.
Against this backdrop, this paper seeks to discuss some banking crimes and examine the legal frameworks that combat banking crimes in Nigeria.
2.0 Conceptual Clarification
2.1 Legal: Any issue relating to law is considered legal. It refers to everything or any actions that are permitted by law or carried out in accordance with its rules. It is anything that falls under the legal or judicial purview. It is anything that the law relates to, requires, or permits.3
2.2 Banks: Section 131 of the Bank and Other Financial Institutions Act 2020 (hereinafter referred to as BOFIA) did not give a clear definition of the term. It states that a bank means a bank licensed under this Act. However, Section 258 of the Nigerian Evidence Act 2011 (as amended) defines a bank to mean a bank licensed under the BOFIA and includes anybody authorized under an enactment to carry on banking business.
2.3 Crime: The word ‘offence’ has been used in the Criminal Code. It defines offence as an act or omission which renders the person doing the act or making the omission liable to punishment under the Code or under any Act or Law.4
2.4 Banking Crimes: It is any offence that involves dishonest or fraudulent misconduct with regards the use of information relating to the banking business or handling the proceeds of crime. Some of the banking crimes include money laundering, false declaration of assets, account counterfeiting, illegal forex trading, embezzlement, round trip transaction, exceeding lending limits, bank theft, et al.
Money laundering: It is a process by which the source of money obtained illegally is concealed, frequently through transfers involving international banks or reliable companies.5 Money laundering is the process of earning money that was obtained illegally, by transporting weapons or money obtained under pretenses.6
- False Declaration of Assets: To attract large customers with large investments, certain banks, while adhering to banking regulations, make misleading or fraudulent annual asset declarations.7 These banks are encouraged to do this because most clients demand to know a bank’s asset position before investing in it, as it is thought that a bank with a strong asset base cannot fail easily and that investor funds can be recovered easily when it does.
- Account Counterfeiting: With the consent or knowledge of one of the consumers, the bank staff executes this fraud while using two different bank accounts. When there is an unauthorized transfer of funds from a high-balance account to a low-balance account, the banker may feel that the customer won’t need or desire to withdraw the funds within a certain time frame. The high balance account’s owner is unaware that funds are being transferred unlawfully from his account to another account. The owner of the beneficiary account is, however, aware of this deception, and the bank employee and he typically invest the transferred cash in a company they think will have a quick turnover and split the benefit therefrom.8
- Bank Theft: Theft happens in banks just like it does in most other companies. Some bank employees essentially steal from clients’ deposits, from the vault or strong room, and by transferring money from one bank account to another and other financial assets without the owners’ consent. When a cashier leaves his cage in the banking hall for a moment without locking it, it frequently leads to theft from the money left behind before he returns.9
- Embezzlement: This explains a procedure when a criminal who has a fiduciary duty to maintain and safeguard property turns it for his personal benefit. It usually entails a breach of fiduciary duty and involves stealing from an employer by an employee. There are three requirements in this case: an employment or agency relationship; possession of the embezzled asset by the fraudster as a result of that relationship; and a purposeful and fraudulent appropriation or conversion of the asset.
3.0 Legal and Regulatory Framework on Banking Crimes in Nigeria.
The Federal Government of Nigeria has created several notable and well-known laws to prevent bank crimes in Nigeria, including:
3.1 Bank and Other Financial Institution Act 2020 (BOFIA): It is targeted towards regulating the activities of banks and other financial institutions in Nigeria. In order to ensure this regulation, S.2 of the Act specifically provided that no one should carry out any banking business except such has been issued a license, duly registered. It provided punishment for anyone who breached such laws. Flowing from this, it is trite that the Act seeks to combat fraudulent crimes by punishing those who engage in banking business without a license.10
Additionally, the Governor shall have the authority to issue rules, regulations, and policies to banks and other financial institutions11. Additionally, the Governor shall designate one or more bank officers, not below the rank of director, to perform supervisory duties and shall give them instructions to examine banks and other financial records or conduct special investigations as may be necessary.
Thus, from the foregoing, it is apparent that these provisions are conscientiously put in place by the legislature to ensure that banks work to safeguard the funds of the bank and customers from any form of malpractices or fraud.
3.2 Bank Employees etc. (Declaration of Asset) Act: By virtue of S. 1 of the Act, every bank employee must fully report all of his assets within 14 days of the Act’s start date and within 14 days of a new employee’s return to work. With this, the employee will be held responsible for any new assets they acquire both while their job with the bank and after they leave. Every year, the declaration must be made.12
Section 7 of the Act provides that it is an offence for a bank employee to earn assets whose value is above his legitimate income. And where found guilty, the employee shall be liable to a term of imprisonment of 10 years, and in addition, such asset or its money value shall be forfeited to the federal government.
3.3 Failed Banks (Recovery of Debts) and Financial Malpractices in Banks Act: The Act is a significant regulatory law that was passed to stop the ongoing dual issues of recovering non performing loans and financial malpractices in financial institutions brought on by a failure of legal regulation of the institutions. Debts due to bankrupt banks are recovered in Part II of the Act. In cases involving the recovery of debt owing to failed banks, the Act has settled the fundamental jurisdictional question that affects a court’s ability to hear or decide a matter and acts as a bottleneck in the adjudicative process.
One of the most efficient ways to speed up the recovery of debt owed to financial institutions and stop financial malpractice in the system is the imposition of civil and criminal sanctions on insiders (any director, manager, officer, or employee of financial institutions) and outsiders (bank debtors or customers). Section 23 of the Failed Banks (Recovery of Debts) and Financial Malpractice in Banks Act says it includes a wife, husband, father, mother, son, or daughter of a director.13
3.4 Money Laundering (Prevention and Prohibition) Act 2022: The MLA’s main goal is to punish money laundering agents and establish a compliance framework for financial institutions and other entities that have been identified as such in this regard. It provides that Any person or body corporate, in or outside Nigeria, who directly or indirectly; conceals or disguises the origin
of, converts or transfers, removes from the jurisdiction, or acquires, uses, retains or takes possession or control of any fund or property, intentionally, knowingly or reasonably ought to have known that such fund or property is, or forms part of the proceeds of an unlawful act, commits an offense of money laundering under this Act.14
It gives the bank the authority to report suspicious transactions within 24 hours.15 It goes further to talk about the preservation and keeping of all necessary records on transaction both domestic and international.16 The Act also prohibits aiding, abetting, and conspiring to any offence under the Act.17
The application of financial penalties and criminal penalties under Section 12(4) of the Act for violations of the provisions of Subsections (1), (2), and (3) of the Section highlights the necessity for the government to take a proactive and resolute approach in the fight against money laundering.
3.5 Dishonoured Cheques (Offences) Act: By virtue of this Act, issuing a dud cheque is against the law. The Central Bank of Nigeria (CBN) issued orders adopting procedures to prevent the offence in an effort to stop the practice of issuing dud cheques. It is essential to note that criminal and civil action can be taken against a person for the issuance of a dud cheque. S. 1 provides that When someone obtains or induces the delivery of anything that can be stolen to themselves or another person, or purchases credit for themselves or another person using a cheque, that when presented for payment not later than three months after the date of the cheque, is dishonoured because no funds or insufficient funds were standing to the credit of the drawer of the cheque, such a person is said to have committed an offence of issuance of dud cheque and is liable imprisonment of two years or an option of fine.18
It is important to note that there is a bill sponsored by Senator Sunday Steve Karimi to repeal and re-enact the dishonoured cheques (offences) act 1977, to make it an offence anywhere in Nigeria to induce the delivery of property or service or to purport to settle a lawful obligation by means of cheque which when presented within a reasonable time is dishonoured on the grounds of no funds or insufficient funds were standing to the credit of the drawer of the cheque or on other grounds provided in this act, and for related matters, 2024.19
3.6 Corrupt Practices and Other Related Offences Act: This law grants the ICPC the authority to investigate, search, seize, and arrest suspected offenders in cases involving gratification, concealing offences related to corruption, fraudulent acquisition and receipt of property, fraudulent postal system transactions, bribery, conspiracy, etc. Part 4 of this law gives the ICPC the authority to do these things.
3.7 Guidelines on Mobile Money Service in Nigeria, July 2021: To combat banking crimes, this guideline was established to regulate transactions through mobile payment. It provides that all transactions initiated and concluded within the mobile payment system must have a unique transaction reference issued by the system. It must have a transaction reference number, payer and payee phone numbers, transaction amount, and the date.20
4.0 Conclusion and Recommendations
After looking into the various crimes, evaluating the laws responsible for combating these crimes, and suggesting recommendations to address the ineffectiveness of these laws, although it is clear that the rise in crimes in the banking sector in Nigeria has affected all aspect of the country, flowing from the loss of money to belittling confidence in the banking sector. However, if the following are looked into, our banking sectors would achieve the aim that they intend to achieve:
- The laws established to combat banking crimes are good, but the level of enforcement are to poor. Hence, there should be stringent enforcement of these crimes that these laws seek to combat to make the banking sector achieve its goal, which it’s supposed to attain.
- Also, some of the Act confers the power to make regulations on the president, who may know little or nothing about the financial laws. Thus, this should be amended to grant the powers to the CBN governor or the Chief Regulator of financial institutions the power to make regulations.
- Some of the laws needed to be amended because the impunity is too much. Thus, in my opinion, it will be very good if the laws are amended to jettison all monetary sanctions (in the form of fines) and impose only penal sanctions.
- Also, there should be a financial Ombudsman, i.e. compliant commission that will be charged with the responsibility of listening to customers’ complaints where the bank has committed a bank theft.
- There should be a stringent policy on the grant of loans, and also punitive sanctions on any employee who grants any unauthorized loan.
- It is not just enough to have laws in place; there should be sensitization in banks, customers, and everyone at large on the ills of these crimes.
BIBLIOGRAPHY
ARTICLES
Maurice Ogbonnaya ‘Cybercrime/Nigeria’s Financial Institutions: Vulnerability to Cybercrime’ (Enact 2020) <https://enactafrica.org/enact-observer/nigerias-financial-institutions-vulnerability to-cybercrime> accessed 16 January 2026.
Dr. Adebayo, Williams Adewumi & Dr. Filani, Alfred Oluropo, ‘Unauthorized Withdrawal of money from customer’s Account in Nigeria: the legal implications for the banker/customer relationship’ (2021) Global Journal of Politics and Law Research 9(4) <https://www.eajournals.org/wp-content/uploads/Unauthorized-Withdrawal-of-Money-from Customers-Account-in-Nigeria.pdf> accessed 17 January 2026.
Dr. Solomon Abeki, ‘Internal Control System and Financial Statement Fraud of Quoted Banks in Nigeria’ (2023) < https://dx.doi.org/10.47772/IJRISS.2023.70999> accessed 17 January 2026. O Akinle , ‘Legal and Introductory Framework for the Control and Prevention of Crime in the banking Industry’ in Ajobola, B and Awa, U. (eds) Banking and other Financial Malpractices in Nigeria (Lagos and Oxford: Malthouse Press, (1990) P.1.
Sopulu Divine Chinwendu &Anjolaoluwa Fadele, ‘Recapitalisation of the Banking Industry In Nigeria: Appraisal Of Merger And Acquisition’ (2025) PPLRUNLAW REVIEW 4(1) <https://www.researchgate.net/publication/392796547_RECAPITALISATION_OF_THE_BAN KING_INDUSTRY_IN_NIGERIA_APPRAISAL_OF_MERGER_AND_ACQUISITION> accessed 17 January 2026.
Uchenna Jerome Orji ‘Protecting Consumers from Cybercrime in the Banking and Financial Sector: an Analysis of the Legal Response in Nigeria’ (2019) <https://tilburglawreview.com/articles/10.5334/tilr.137> accessed 17 January 2026. Usang & Enemuoh, ‘An Appraisal of the Legal Protection Against Banking Fraud and Malpractices in Nigeria’ (2021) Law and Social Justice Review 2(3) <file:///C:/Users/hp/Downloads/2329-4596-1-SM%20(1).pdf> accessed 17 January 2026.
CASES
Atoyebi v. Barclays bank PLC & Anor [2015] LPELR-26025(C)
Bolanle Abeke v The State [2007] 9 NWLR Pt. 1040, 411
Onakoja v The Federal Republic of Nigeria [2002] 11 NWLR Pt. 779. 595 Seed Vest Microfinance Bank Plc. & Anor. v Ogunsina &Ors [2016] LPELR-41346 (CA)
STATUTES
Bank and Other Financial Institution Act 2020.
Bank Employees etc (Declaration of Asset) Act.
Corrupt Practices and Other Related Offences Act
Dishonoured Cheques (Offences) Bill, 2023
Failed Banks (Recovery of Debts) and Financial Malpractices in Banks Act Money Laundering (Prevention and Prohibition) Act 2022.
Nigerian Criminal Code.
Guidelines on Mobile Money Service in Nigeria
1 O Akinle , ‘Legal and Introductory Framework for the Control and Prevention of Crime in the banking Industry’ in Ajobola, B and Awa, U. (eds) Banking and other Financial Malpractices in Nigeria (Lagos and Oxford: Malthouse Press, (1990) P.1.
2 Sopulu Divine Chinwendu &Anjolaoluwa Fadele, ‘Recapitalisation of the Banking Industry In Nigeria: Appraisal Of Merger And Acquisition’ (2025) PPLRUNLAW REVIEW 4(1) <https://www.researchgate.net/publication/392796547_RECAPITALISATION_OF_THE_BANKING_INDUSTRY _IN_NIGERIA_APPRAISAL_OF_MERGER_AND_ACQUISITION> accessed 17 January 2026.
3 Uchenna Jerome Orji ‘Protecting Consumers from Cybercrime in the Banking and Financial Sector: an Analysis of the Legal Response in Nigeria’ (2019) <https://tilburglawreview.com/articles/10.5334/tilr.137> accessed 17 January 2026.
4 Nigerian Criminal Code, Section 2.
5 Maurice Ogbonnaya ‘Cybercrime/Nigeria’s Financial Institutions: Vulnerability to Cybercrime’ (2020) <https://enactafrica.org/enact-observer/nigerias-financial-institutions-vulnerability-to-cybercrime> accessed 16 January 2026.
6 Uchenna Jerome Orji ‘Protecting Consumers from Cybercrime in the Banking and Financial Sector: an Analysis of the Legal Response in Nigeria’ (2019) <https://tilburglawreview.com/articles/10.5334/tilr.137> accessed 17 January 2026.
7 Dr. Solomon Abeki, ‘Internal Control System and Financial Statement Fraud of Quoted Banks in Nigeria’ (2023) < https://dx.doi.org/10.47772/IJRISS.2023.70999> accessed 17 January 2026.
8 Dr. Adebayo, Williams Adewumi & Dr. Filani, Alfred Oluropo, ‘Unauthorized Withdrawal of money from customer’s Account in Nigeria: the legal implications for the banker/customer relationship’ (2021) Global Journal of Politics and Law Research 9(4) <https://www.eajournals.org/wp-content/uploads/Unauthorized-Withdrawal-of Money-from-Customers-Account-in-Nigeria.pdf> accessed 17 January 2026.
9 Usang & Enemuoh, ‘An Appraisal of the Legal Protection Against Banking Fraud and Malpractices in Nigeria’ (2021) Law and Social Justice Review 2(3) <file:///C:/Users/hp/Downloads/2329-4596-1-SM%20(1).pdf> accessed 17 January 2026.
10 Atoyebi v. Barclays bank PLC & Anor [2015] LPELR-26025(C)
11 Bank and Other Financial Institution Act 2020, section 29.
12 Bank Employees etc (Declaration of Asset) Act, section 4
13 Onakoja v The Federal Republic of Nigeria [2002] 11 NWLR Pt. 779. 595
14 Money Laundering (Prevention and Prohibition) Act 2022, section 18(2).
15 Money Laundering Act 2022, section 7.
16 Money Laundering Act 2022, section 8.
17 Money Laundering Act 2022, section 21.
18 Seed Vest Microfinance Bank Plc. & Anor. v Ogunsina &Ors [2016] LPELR-41346 (CA) and Bolanle Abeke v The State [2007] 9 NWLR Pt. 1040, 411.
19 Dishonoured Cheques (Offences) Bill, 2023
20 Guidelines on Mobile Money Service in Nigeria, Rule 7.3.
