Why internet fraud persists in Nigeria despite govt efforts

Someone using a computer used to illustrate the story.
Someone using a computer used to illustrate the story.

Eighteen-year-old Nicholas Dike dreamed of playing football professionally. To achieve his dreams, he trained relentlessly while attending tryouts of local clubs in Lagos.

Like every aspiring footballer, the teenager had his eyes on playing professionally in Europe. Since he was not affiliated to any local professional club, his best chance of playing for the big clubs in Europe was to get into a football academy there, he thought.

So, he applied to be admitted into football academies all over the world but especially in Europe.

There was a lot of waiting to do. One evening, Nicholas got an email that said his application had been received and he was going for a real tryout. He would be flown and lodged in a hotel for 30 days and could he send a football CV? This hotel was in Azerbaijan, a landlocked Eastern European country.

To access the offer, he was required to pay a $500 acceptance fee. His elder brother, a tech solutionist, had $500. They didn’t need to ask their parents for it, but could they out of respect mention it to their father? They did.

He wasn’t as excited. He mentioned human trafficking. The boys thought: well it’s just $500. The father thought: ask for a Skype interview and if all goes well, you can go ahead and pay. That was the unravelling.

This benevolent football academy didn’t exist.

Nicholas had heard of internet fraudster called yahoo boys, like many Nigerians. But why were these conmen not writing love letters or asking for help to recover money stuck in some part of the world for half the profit?

Organised Crime?

According to a March 2018 report by cyber intelligence company, Crowdstrike, titled ‘Nigerian Confraternities Emerge as Business Email Compromise Threat’ internet fraudsters are run by organised crime syndicates.

“Behind the fraudsters is an organised crime network with its hands in human trafficking, drugs, prostitution, money laundering and cybercrime.”

I ran Mr Dike’s scenario by a an internet fraudster, popularly known as ‘yahoo boy,’ who asked that his name is withheld. I asked him if Nicholas’ case was that of an internet scam or human trafficking. He was certain it was a case of internet scam.

Firstly, the target was male; women are generally more profitable for trafficking. Secondly, traffickers lure victims into prostitution after they have got the victim to travel, so they need potential victims to cooperate enough to actually travel and so they would not have asked for any fees at all.

Then more than half of the correspondence would have been done by women, he patiently explained.

He said human trafficking agents may have needed to visit, to scout, to ensure that the potential victim fits a certain profile. He added if Mr Dike could pay $500 to some strangers on the internet, then he may be well to do and unlikely to fall for traps of work opportunities abroad.

But if this was a yahoo boy, I asked, isn’t $500 too small for all that trouble?

“You’re not looking at this like a yahoo boy, Olivia. This thing is like a Ponzi scheme. He would have sent that email and run the same scheme to about 1,000 people and if 200 people responded, that is $100,000.

“The thing is never to pay any money at all because once you do, chances are that you would keep paying. There could have been a last-minute change of hotel once you are ready to travel or at the airport or a thousand other things that could make $500 become $1,000 or more very quickly.”

Internet Scam Hotbed

Nigeria is a renowned hotspot for internet scams. Conversations with career yahoo boys reveal that this hustle is in no way slowing down.

The CrowdStrike report said it was commonplace for the fraudsters to have officers of some crime-fighting outfits on their payroll. Here is how another yahoo boy, who also requested anonymity, described it:

“You receive the money using accounts. To receive money from overseas, you need accounts to move it around and there are middlemen whose only contribution to a scam operation is providing accounts. Many are in China so when they receive money, they buy goods and export to Nigeria.”

But what if you want to move the money into Nigeria, surely there are flags within the banking system, I asked him. He told me of an instance when a huge sum of money was moved.

“If you want to bring in N400 million, you have to use state agents, the uniforms, bank managers etc, it is a network of people.

“Liberality is part of how you survive because if you are using state agents, then you have to be prepared to pay. Heavily too. So you find a judge of the jurisdiction where your money is coming into and give him N50 million, you give the financial uniforms N20 million, (you) budget N20 million for whoever else may have a problem and you keep N300 million. So how can you be flagged by a bank if you have paid millions not to be flagged?”

In August, at a cybersecurity conference in Abuja, the Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, said the apex bank was developing a risk-based cybersecurity framework for payment service providers and commercial banks in Nigeria.

Mr Emefiele said the CBN used automation, artificial intelligence and machine learning to address cyber threats.

But it would appear that the real problem is the human factor: corrupt people at the banks themselves and in the institutions supposed to stop illicit money flows.

“You have options. You can use the Lebanese community in Nigeria to launder your yahoo money,” said Martins Obidike, a former hacker and now a post-graduate student at the University of Nigeria, Enugu campus.

“Some of them are businessmen and so if the government is trying to encourage businesses then they are not asking them too many questions. Some of them run casinos so it is easy,” he said. “If you don’t want them, you can use the Merchant Account of Bureau de Change operators.

“You can also find someone running for (political) office or inject someone into the electioneering process and move your money into his campaign account. If anybody asks the aspirant, he’d (or she) say the money is for his campaign.

“If you still do not want all these, then you’re looking for a church or a mosque. No one questions their accounts,” Mr Obidike added.

Money Laundering

The crime of aiding and abetting money laundering carries a jail term and a fine equivalent to five times the proceeds, according to the Nigerian Money Laundering Prohibition Act (2011).

In 2018, the CBN introduced new sanctions against bank staff found to have helped in money laundering with the aim to strengthen laws against terrorism financing.

No one has been convicted yet.

“It is possible there are fraud cases in the law enforcement that involve insider abuse. But I won’t say it isn’t being checked,” head of the Strategic Analysis Department of the Nigerian Financial Intelligence Unit (NFIU), Tola Salisu, said.

“A bigger challenge” she went on “may be funding and lack of capacity for manpower. The NFIU has just the Abuja office and processes information from reporting entities such as banks, capital market operators, insurance companies, and the over 60,000 registered Designated Non-Financial Businesses and Professions (DNFBPs) in Nigeria.

The DNFBP is regulated by the Special Control Unit against Money Laundering (SCUML) to see that players in these sectors comply with the Central Bank’s Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) regime.

The AML/CFT was updated this year with tougher sanctions against bank staff found to have helped in money laundering.

In practical terms, the DNFBP is supposed to know the customer and then file suspicious transactions to SCUML and the NFIU so the latter develops intelligence on Illicit transactions and finances and where it goes, follows the money and not just catch a criminal but to ensure the proceeds are taken away from the criminal according to the AML/CFT.

A lack of funding, however, to power this collaboration between agencies means that the NFIU, SCUML and other such agencies are unable to take effective action on intelligence.

This lack of funding across law enforcement agencies also means it might be easy to find those who will work with fraudsters directly.

Tony Ejinkonye, vice president of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), said he was aware of the distressing ways foreign business accounts can be used as a conduit for illicit money.

“But we are a business membership organisation and there’s a limit to what we can do especially when banks are complicit.”

His organisation blacklists or terminates membership for unethical business behaviour; but in his tenure, no member has been reported, he said.

Victimised

Legitimate tech workers in Nigeria bear the brunt of the country’s reputation for online fraud.

Stories of visas being denied are common. Within Nigeria, legitimate tech workers say they are hounded, extorted and sometimes arrested by police for ‘looking like yahoo boys’.

Benjamin Dada, a developer formerly with Google and Andela presently working in financial technology in Lagos, recalls that the situation has made him so conscious he always carries identification.

“If you work remotely, there are chances you don’t have an ID card but you must carry one. They (police) waste your time and extort you. My laptop is my work tool and I cannot carry it about because they will say I am a yahoo boy. They search my phone, laptop, apps. They stop your taxis and ask you to come down and after wasting your time, ask you for money,” he says.

Salaudeen Hashim is the programme manager for defence and security at a non-governmental organisation, Transparency International, in Abuja Nigeria. He does not believe authorities are doing enough to curb the crime.

In theory, fighting cybercrime has become a national priority and it is handled by the presidency through the office of the National Security Adviser.

But Mr Hashim says ‘stronger leadership’ was required.

“There is a lack of funding and political backing for intelligence and how can you fight cybercrime which requires special skills with these inadequacies?” he says

“This story was written as part of Wealth of Nations, a media skills development programme run by the Thomson Reuters Foundation. More information at www.wealth-of-nations.org. The content is the sole responsibility of the author and the publisher.”

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