THE ROLE OF KNOW YOUR CUSTOMER (KYC) IN REDUCING FRAUD IN THE BANKING SECTOR OF NIGERIA (A CASE STUDY OF ACCESS BANK PLC)

INTRODUCTION

1.1     BACKGROUND OF THE STUDY

Theincreasing pace of fraud and money laundry in the financial services sector encouraged the formulation and implement of new guidelines and policy statement for the eradication of fraud and money laundry activities in the country. The KYC policy statement is defined as a process which enables the verification and identification of the client and determining the chance for illegal intension for a business relationship. KYC also constitutes the Banks Regulation and Anti-money Laundry Act to combat fraud and illegal activities. The purpose of KYC is therefore to protect the financial sector from being used as a means of perpetrating fraudulent activities and money laundry. Consequently, the financial service providers are able to manage their risk. KYC policies should indicate Customer Acceptance Policy; Customer Identification Procedures
Monitoring of Transactions; and Risk management. KYC   has become an essential and crucial part of banking procedures; thereby reducing the risk of fraudulent transactions. They study seek to provide an appraisal the role of know your customer KYC in reducing fraud in the banking sector of Nigeria. Case study of access bank plc.

1.2 STATEMENT   OF   THE PROBLEM

The increasing volume of fraud due to exponential growth of the financial sector precipitates the need for a new policy directive to combat the menace. Therefore, the consequences of fraud have resulted in significant losses to the public exchequer, thereby adversely affecting service delivery. It is estimated that with a 20 billion USD direct losses many firms cannot accurately identify and measure losses due to fraud especially fraud on FDI inflows. The objectives of KYC policy statement are to prevent banks from being used, intentionally or unintentionally to commit fraud and money laundering activities. It enables the bank to manage their risks prudently by understanding their customers and their financial dealings. The problem confronting the study is to appraise the role of know your customer KYC in reducing fraud in the banking sector of Nigeria. A case study of access bank plc.

1.3 OBJECTIVES   OF THE STUDY

The Main Objective of the study is to appraise the role of know your customer KYC in reducing fraud in the banking sector of Nigeria. A case study of access bank plc; The specific objectives include:

  1. To determine the relevance of the “know your customer” exercise.
  2. To determine the effects of KYC in the banking sector.
  3. To determine the challenges of the KYC in the banking sector.

1.4 RESEARCH QUESTIONS

    i.        How relevant is the “know your customer” exercise?

   ii.        What are the effect of KYC in the banking sector?

 iii.        What are the challenges of the KYC in the banking sector?

1.5 STATEMENT OF THE HYPOTHESES

The statement of the hypotheses for the study is stated in Null as follows:

Ho: The level of fraud in Access Bank is low.

Ho: The   role of know your customer KYC in reducing fraud in access bank plc is low.

1.6 SIGNIFICANCE OF THE STUDY

The study provides an additional measure to combat the rising level of criminal activities involving fraud and money laundering in the financial services sector.

1.7 SCOPE OF THE STUDY

The study focuses on the appraisal of the role of know your customer KYC in reducing fraud in the banking sector of Nigeria. A case study of access bank plc.

 1.8 LIMITATION OF THE STUDY

The study was confronted with logistics and geographical factors.

1.9 DEFINITION OF TERMS

KYC DEFINED

The KYC policy statement is defined as a process which enables the verification and identification of the client and determining the chance for illegal intension for a business relationship. KYC also constitute the banks regulation and anti-money laundry act to combat fraud and illegal activities.

ID VERIFICATION DEFINED

ID Verification is a comprehensive identity verification solution for customer enrollment. It is the answer for financial institutions looking to deploy a fast, convenient, and compliant way of performing identity checks to prevent themselves from money laundering activities.

ENHANCED DUE DILIGENCE DEFINED

This is a complete process of ensuring that the customer’s identity; business and account information is verified and authenticated to ensure that there is no criminal intent; identify relevant adverse information and risk; and mitigate against financial, regulatory and reputational risk and ensure regulatory compliance.

 REASONABLE ASSURANCE

This refers to the balance of probability. What is reasonable depends upon factors including jurisdiction, risk, resources, and state of the art technology.

RELEVANT ADVERSE INFORMATION

This refers to those Information obtained from other sources, which is directly or indirectly implicate the customer of involvement in money laundering, terrorist financing or predicate offenses.

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