In early 2024, Nigerian financial institutions reported a staggering 11,472 fraud cases, highlighting the growing risk in the financial sector. Banks and fintech companies have been stepping up to help victims recover their lost funds, often working with the police and courts to freeze accounts and reverse fraudulent transactions. But in a troubling twist, even recovered funds aren’t always safe.
In May 2023, a well-known African fintech found itself in a difficult situation. After successfully recovering ₦146,188,208 (about $317,200) on behalf of its clients, the funds were stolen again. The money had been placed in a recovery account held by a tier-2 Nigerian commercial bank, but hackers managed to break into the account. The stolen money was quickly spread across accounts in 26 different banks and fintech platforms, a tactic often used by fraudsters to make recovery efforts harder.
Court documents reveal the fintech’s struggle: “The petitioner as (a) fraud recovery agent is helpless as these monies are some of the monies recovered on behalf of clients, which they supposed to be remitted by the petitioner to the owners.” Understandably, the company’s clients are growing frustrated, demanding their money back and answers about what happened.
In response, the fintech has taken the matter to court, asking for the 26 banks and fintech companies involved to share their customers’ KYC (Know Your Customer) records and freeze the suspicious accounts. They’ve also asked for arrest warrants for three suspects linked to the theft.
This case shines a light on the need for stronger security around recovery accounts, as even funds that have been clawed back from fraudsters can still be at risk. For now, the fintech is working to recover the stolen money and reassure its anxious clients.
