Full Project – Computer-based fraud detection and prevention system in banking operations

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CHAPTER ONE

INTRODUCTION

• BACKGROUND OF THE STUDY:

Fraud is an inherent vice. It has been on from time immemorial even before the invention of money. However in our developing word with the quest to become rich quick on the increase fraud is becoming rampant. Banks deal essentially on cash and other financial instruments, because of this it has been exposed to greater risk of fraud. The attention of many has been drawn to the banks either directly or indirectly. Most people / workers look up to the banks to escape from their financial challenges, with such motives, when they can’t achieve their expectations, they get disappointed and derell to defrauding the banks at slightest opportunity. However the bank officials may have been pulling up ill practices for a personal gain due to lack of orientation. The banks rules and procedures laid down in the manual instructions and the circulars may not have been observed or may have been deliberately ignored.

It does not mean that external fraudsters do not defraud banks, based on Nigerians depressed economy, fraudulent persons often connive with bank officials to dupe the bank. It can be put to stop if the staffs are honest and diligent in duties.

Nigeria banking sector continues to be a vital part of the economy. Even since the inception of the nation’s first bank in the 19^th century, banks have recorded tremendous growth. Inspite of the hardship in the economy, people still rush to work in banks compared to other sectors with the belief of finding greener pasture with such negative motives as making money faster in mind, some people go to banks and when they can’t make it so fast, they go on to defraud the bas.

Banks deal with money and so still remains the widest area open to fraud. The rate at which fraud occurs continually increase by the year and new means of perpetrating fraud is devised. In recent times with advancement in technology inform of invention of computer, telex system etc. fraud has taken a new dimension. In our banks unscrupulous individuals operate the computer fraudulently, transfer huge some of money through telex system. Fraud has reached alarming state where bank notes, cheques and other financial instruments are now forged and circulated. The detection of fraud and its prevention emerged in banking sectors based on personal experience and views of others, was prompted to develop a system that will detect and prevent fraud with the aid of a computer.

• STATEMENT OF THE PROBLEM

Our banks have in recent times been exposed to greater risk of fraud. It has been noticed that many people now forge canter, embezzle fund in business organizations. In Eco-bank Plc Afikpo, the major problem confronting the banking system is based on the following statement of problems.

1. The rate of financial embezzlement
2. Poor accounting recording and poor remuneration

• Inability of them to discover who actually is the fraudsters which include official of the bank, customers and the society at large

• OBJECTIVE OF THE STUDY

1. To use computer in detecting fraud
2. To use computer in preventing fraud

• Scanning and programming of accounts holders biometrics with the aid of computer.

1. To develop measures on fraud preventions.
   • IMPORTANCE OF THE STUDY

This study from the little I know will be very important or significant to the Nigeria economy as a whole. The banking sector will remain an inevitable aspect of the economy and it would pay for it to be conducted in a very free and fair manner. The areas of risk of financial fraud when detected will help restore peoples mind to using banks as some people are now having the impression that banks are not actually what they are meant to be.

The study will be indispensable to the banks. Common areas of risk will be brought to light, effective ways eliminating fraud will be put to place.

• SCOPE OF THE STUDY

Since fraud detection and prevention involved the staff, both supervisors and clerical officers either independent of external element or connivance with outsider, will ensure that loses sustained by the bank as a result of fraud in their organization is proffered solution without delay in society at large.

The program is written and packaged so that fault can be entertained from customers. The study considered past preventive measures, and there lapses than went down to implement updated measures in detection and prevention of fraud. Eco-bank Plc Afikpo is chosen as the case study.

1.6.    LIMITATIONS OF THE STUDY

1. i) Insufficient materials
2. ii) Fear of fraudsters by the operations manager

iii)     Lack of time, there wasn’t enough time to visit bank organization, cyber café and library for information.

1.7     DEFINITION OF TERMS

1)      Bank: This is a financial institution where money and valuable assets are left in a vault for safe keeping and collection when needed.

2)      A Customer: This is a person who comes to the bank for transactions.

3)      Fraud: This is a deliberate deception to secure unfair or unlawful gain.

4)      Check Fraud: This is impersonating or act of obtaining money by false pretense with a check.

5)      Fraudsters: This are people who commits fraud.

6)      CCTV:       This is a television usually in the bank and been monitored by (HOP) head of operations, its used to view every movement in the bank.

7)      Vault: This is an inner room in the operational unit in banking system where all the bank money are kept after daily transaction.

8)      Usual View Light (UVL):  This is a florescent light in the bank use in detecting fake money (mercury light).

9)      Strapping Machine: It is a machine in the banks bulk room, it is used for strapping money.

10)    Time Stamping Machine: This is a machine which contains the time, date, month, year which a transaction was made. It is used to time stamp a taller.

11)    Scrolling Register: This is a register which is used to register peoples taller before depositing.

12)    Stamp: This is only a machine that bears the name of the bank and time it was used on the taller after transactions.

13)    Till Box: This is a box where the left over money are kept in the bank after balancing banks account for the day.

14)    Fraudulent: This is a situation whereby a person is intending to cheat in order to make money illegally.

15)    Box Cash: These are money brought in the bank after closure and will be boxed in a bag against another day.

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Full Project – Computer-based fraud detection and prevention system in banking operations