Volume 4, Issue 3, March – 2019 International Journal of Innovative Science and Research Technology

ISSN No:-2456-2165

A Study of Electronic Banking Fraud,

Fraud Detection and Control
Dr. Eneji, Samuel Eneeji; Angib, Maurice Udie; Ibe, Walter Eyong; Ekwegh, Kelechukwu Chimdike
Department of Computer Science, Federal College of Education,
Obudu, Cross River State, Nigeria

Abstract:- Electronic banking frauds have been issue of tokens and other electronic banking applications access
concern all over the world. It has left so many banks codes; which they use in defrauding their victims [14]. Many
bankrupt, and caused many customers so much pain. banking customers resist electronic banking for fear of being
Fraudsters are inventing newer techniques continually to defrauded. Some internet thieves use phishing and spooling
elude detection and rub banks and customers of their to bait their victims. Bank customers who do not seek
possessions. This paper critically examines electronic verification from their banks easily fall prey.
banking frauds, detection of electronic banking frauds,
control of electronic banking frauds, and challenges In order to fully utilize and enjoy the internet banking
associated with the detection and control of electronic as conceived, there is the need for a sure security system
banking frauds. more reliable than the pin, password, user name or token for
the electronic banking [1].
Keywords:- Detection, Control, Analysis.
The integration of Global Positioning System (GPS)
I. INTRODUCTION with electronic transaction was provided as a means to
identify and locate users, such that, a fraudster can easily be
A bank is an industry that houses monies and other identified and traced [2]. User anonymity is believed to be
valuables for safe keeping pending when such monies or one of the reasons fraudsters has the courage to involve in
valuables would be needed by their owners. Bank exist in falsehood in electronic transactions [2]. Ref “[2]” observed
different forms depending on the scope and purpose for that if users of electronic transaction systems can be known
establishing the bank such as; Savings Banks, Commercial at each time of transaction with the electronic systems, then
Banks, Industrial Development Banks, Land development the fear of being identified can curtail most of their
Banks, Indigenous Banks, Mortgage Banks, Spare Bank, fraudulent intentions.
Federal or National Banks, Exchange Banks, Consumer’s
Bank, and Community Development Banks, [10]. A security system should be able to defend itself from
Enhancement on the banking system led to the internet or external attack; otherwise, fraudsters can choose to attack the
electronic banking. system by rendering it inactive [5]. It therefore becomes
pertinent that an electronic banking application should have
Internet banking is an online that uses communication some levels of security intelligence, and should be able to
gadgets such as the computer, phones, Automated Teller defend itself against external attacks.
Machine (ATM), etc. It improves greatly on banking services
to customers and makes transactions more convenient [14]. This research work focuses on the detailed study of
The internet banking enables one to buy and sell without electronic banking frauds, fraud detection and control.
physical cash, make deposits, transfer, pay bills, etc. with
ease [1]. Electronic banking is driving the world toward II. ELECTRONIC BANKING FRAUD
cashless banking.
Ref “[14]” defined fraud as a conscious and deliberate
The electronic banking though beneficial to the banking action by a person, or group of persons, with the intention of
system, has introduced great security threats to banks, and altering the truth or fact for selfish personal gain. Ref “[6]”
their customers. Electronic banking makes use of access defined fraud as any premeditated act of criminal deceit,
codes, which is in the form of Personal Identification trickery or falsification by a person or group of persons with
Number (PIN), before access is granted to the user of the the intention of altering facts, in order to obtain undue
bank services. This has not always safe the banks from the personal monetary advantage. Frauds committed in the banks
antics of fraudsters , fraudsters use various avenues to are called banking frauds, while the use of electronic to
divulge or steel customers secret access codes which they commit banking frauds is termed electronic banking fraud.
personalize, and use the opportunity to impersonate and rob Ref “[13]” defined electronic banking frauds as frauds
their victims of their valuables from the bank. Some robbers associated with electronic banking perpetrated using ATM,
confiscate ATM cards from owners with their PINs, seize POS, internet and mobile banking platforms. They further

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Volume 4, Issue 3, March – 2019 International Journal of Innovative Science and Research Technology
ISSN No:-2456-2165
stated that, electronic banking frauds are achieved through These processing units transmit signals to each other through
the following; some links that are weighted [2].
i) Impersonation: exposing secrete identities to a third party
who impersonate and defraud the owner. IV. CONTROLLING ELECTRONIC BANKING FRAUD
ii) Phishing and spooling: giving response to futile text
messages by revealing identities which are later used to Electronic fraud is committed using communication
defraud victims. platforms and can be control using the same medium.
iii) Hacking: using random code generating software Information technology utilizes in full computer technology,
developed specifically for frauds purpose to hack into any which is the brain child of communication. Computer
matching account and defraud victims. security which is concern with the protection of computer
iv) Bankers: liaise with fraudsters by providing identities that resources and infrastructure from misuse, theft, corruption
are used to defraud banks and customers and natural disaster as to make them remain accessible and
v) Trojan horse: the interface with user login to divulge functional to the user, is one of the media through which
user’s secret personal codes/identities which is in turn electronic banking fraud can be controlled. Ref “[2]” opined
used to defraud victims. that computer security encompasses processes of protecting
sensitive and valuable computer resources from misuse or
III. EMERGING TECHNIQUES IN ELECTRONIC destruction from unauthorized activities, users, and
BANKING FRAUD DETECTION AND CONTROL unplanned events. According to Ref “[90]”, [[2]”, the
following ways can be measures to prevent fraudulent and
The increasing level of banking frauds with the banking sharp practices in the net;
system has called for concern, and emerging techniques to  Blocking software: An example of blocking software is
mitigate the fraud. This research work reviewed two of such the surf watch that has the ability of filtering or
technologies. disallowing any application that is suspicious or have the
likelihood of causing security breaches.
The use of artificial neural network and geographic  V-chip: v-chip is software developed and uses to control
information system (GIS) children access to websites. V-chip restricts children from
viewing information that is considered dangerous to them.
GIS is complemented with artificial neural network by It can be installed on computers or televisions.
providing intelligent predictions of the emergence of  Browsers with ratings: Browsers such as kidDeck,
fraudulence activities in the banking system [1]. Ref “[1]” chiBrow, and seaMonkey are customized browsers for use
further opined that the emergence of artificial neural network by certain category of people such as children to guide
and GIS has led to a system under development at Carnegie them against falling prey to cyber criminals.
Mellon University and the Pitts burgh (PA). Bureau of police  Audit controls: Audit controls is a software installed and
which is artificial neural network enables early warning run in most networks to keep track, records and file of
system incorporated with GIS to track criminal activities in transactions by internet users. The records can be used to
drug, hot-sports area. The system obtains inputs from cell- trace security breaches and their sources.
aggregated GIS-based data, processes the data with  Encryption: Encryption is used in data communication to
previously trained artificial neural network and gives out the convert data on transit or stored to an indecipherable
result in the form of map. In the map, the regions where forms such that, the data will be meaningless to fraudster
threats are predicated by the network are indicated. in the cause of interception. The policy here is that, it is
According to Ref “[2]” and “[3]”, the Pittburgh DMAP is one only the owner of the message that can decrypt the data
of such artificial neural network that enables GIS systems and make it meaningful. Microsoft and Netscape email
that assist investigators in crime policing. programs has synCrypt, and SIMIME encrypting program
used in its data communication.
One of the important attributes of DMAP in fraud  People controls: Hence fraud is committed by people,
detection is that it gives early warning signals for people controls is rather a policy that regulates the right to
administrators to analyze crime pattern trends according to use the net and other net applications. It is expected that
geographical coordinates. According to [3], the concept is organizations that use the net should prevent misuse, or
called “geocoding”. Geocoding is a process of address abuse by screening who to employ or give right of usage,
coverage which is the matching of address against data [2], have job specifications for employees, limits to coverage
and [3]. and proper disposal of documents that may communicate
the organization’s secretes to the public.
Neural networks evolved from the research on  Fire walls: Firewalls is use in computer to block
biological neurons which metamorphosed into the study and suspicious programs from running on the system, thereby,
design of mathematical neurons which have applications in denying the suspicious programs control or access to the
computational tasks in electronic circuits [3]; [2]. Artificial system.
neural networks are made up of a number of processing units.

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Volume 4, Issue 3, March – 2019 International Journal of Innovative Science and Research Technology
ISSN No:-2456-2165
 Access point cloaking: this has to do with the V. DETECTING AND CONTROLLING ELECTRONIC
configuration of access points, such that, request to BANKING FRAUD
connect from unknown sources are not responded to. The
techniques used in Access point cloaking according to Ref Fraud is committed by people who are conscious that
“[7]” includes; their identities are not known to the public, as such, they
would not be known hence, no consequence(s) to suffer. It
 Access authorization: Access authorization is a program will be ideal if the electronic banking application is
that masquerade the access point requesting for authority, integrated with technology that can identify users, and
or permission to access an application or the net. The (a) possibly keep a good record of their identities such that they
Access authorization: Access authorization is a program can be trace in the case of unethical or fraudulent practices.
that masquerade the access point requesting for authority, Ref “[4] observed that, PIN is no longer secure enough to be
or permission to access an application or net. The user used on the ATM, rather the use of facial recognition should
will be expected to enter the necessary requirements in be introduce as a means of identity.
the form of PIN (Personal Identity Number), user name,
password or biometrics as the case may be before access Identity is concern with the verification of a person to
is granted. be sure he is what he claims. Hence it is difficult to track
 Use of anti-virus software to debug viruses and malware down electronic banking fraudsters; it is expedient to identify
 Use of cryptography to transform data or information who is the one on e-banking transaction at any point in time.
before transmitting, so that an unauthorized person who
intercepts it cannot decipher it. Only the sender and the Ref “[2]” states the following as ways in which online
authorized recipient can decipher the message. users can be identify;
 Identify card and credentials
 Use of Biometric authentication: Biometric is the measure  Use of radio frequency identification (RFID)
of physical feature or behavioural pattern of individuals.  Use of Biometric technology and
The physiological features scan is analyzed using  Surveillance system
mathematical algorithm. The analyzed physiological
feature is stored in the database in the form of data VI. CHALLENGES IN DETECTION AND CONTROL
(minutiae), which is used to verify and authenticate the OF ELECTRONIC BANKING FRAUD
person in subsequent transaction. Ref “[13]” opines that,
biometric security is one of the most reliable security Banking fraud is a crime with severe consequences, but
measures. to the fraudster it is a means of living. Worst is in the
 Legislations and policies: The promulgation and developing countries with the slogan of “survival of the
implementation of legislations, and policies prohibiting fittest”. The question is what happens to the unfit? It would
electronic frauds with stipulated punishment for culprits, have better been said “survival of the fittest and the
is a very important control measure for electronic fraud. elimination of the unfit”. In this kind of a system, either side
Human are complex and trivial in behaviour. When given of the coin is consequential, as such; it becomes practically
the opportunity to control themselves, they find it difficult impossible to think that preaching of sanity would make
to do the right. As such needs documented control meaning. It therefore becomes expedient for detection and
measures that control their behaviours against excesses. control of banking fraud. The following discussed are the
Such document should specify in clear terms the basic challenges associated with electronic banking fraud.
punishment meted for any misconduct. As a matter of
necessity and precedence, offenders should be made to  i). Human Rights Implications: Human right struggle have
face the consequences of their misconduct as stated in the place bounds or challenge most of the activities carried
constitutions. If this is enforced, human are expected to out for the purpose of identification. Human right has
shape their behaviour to suit well in such a society, if this condemned the use of computer and networks in
is equally implemented in electronic fraud, it should be a monitoring people, and maintain that the use of electronic
good control measure then. Ref “[2]” noted in his research in monitoring system and techniques on human bodies is
work that, after the Pentagon Building attack in USA, in tantamount to human right violation, abuse of privacy and
September 2001, that Federal Information Security abuse of power by authoritarian leaders who use their
Management Act (FISMA) was enacted in 2002, giving positions to humble their subjects and political opponents
the Office of Management and Budget (OMB), the [8]; [2]). Ref “[11]” held the view that while emerging
responsibility to coordinate information security standards technologies are encouraged, there should be room for
and guidelines developed by federal agencies. debate on the social implications and people’s desired
guiding principles on their usage should be established.

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Volume 4, Issue 3, March – 2019 International Journal of Innovative Science and Research Technology
ISSN No:-2456-2165
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