In May 2022, shortly after my story on Chinese moneylenders in West Africa was published, a number of new tips and leads started rolling in. At first it looked like a follow-up story would emerge, focusing on how some Nigerian banks are still offering banking services to illegal loan sharks despite CBN regulations that expressly prohibit it. Wema Bank – without surprise – was the most regular offender in this category, lending his support to several illegal loan sharks until as recently as the timestamps in the images below.
However, as I was browsing through the tracks and my own pile of untold story ideas sitting on my Google Drive, I began to realize something – there was a much bigger issue at play here than a few banks bypassing the KYC rules to bank certain customers who should be unbanked. These were borderline unbelievable stories – stories of aggressive fraudulent behavior by Nigerian banks presented with evidence that was as devastating as it was undeniable.
Moreover, these were not stories of a few “bad eggs” in the Nigerian banking sector. Instead everything major Nigerian banks have been involved, although to varying degrees. For the sake of brevity, an editorial decision has been made to tell the 4 most disturbing stories in no particular order.
There is a history of collusion with regulators to deceive customers and brazenly steal their property. There is a history of illegal and unauthorized account openings that potentially expose customers to a whole world of pain and liability. There is even a history of brazen collaboration with Ponzi schemes and illegal investment schemes.
Most alarming is that there is a common denominator of regulatory weakness and complicity, if not outright collusion in all the stories, culminating in a story of an influx from Qatar potentially funding terrorism in Nigeria for more than a decade. ‘a decade. While working on this story, I contacted no less than 6 financial institutions and regulators involved in the maze of documents and testimonials I went through.
As always, they had nothing to say.
WEMA, UBA and junk accounts: Nigeria’s Wells Fargo moment?
In 2016, a scandal broke at Wells Fargo Bank, which at the time was the largest bank in the world. It emerged that more than 3.5 million accounts had been secretly opened to customers without their knowledge or permission, in response to unrealistic internal sales and marketing targets. Staff were encouraged to open as many accounts as possible for their customers, and the bank knowingly turned a blind eye when basic KYC protocols such as customer authorization were violated.
In response to the scandal, Wells Fargo fired more than 5,000 employees and paid more than $3 billion in fines as part of a settlement announced by the US Department of Justice in 2020. Given the damaging publicity that the scandal received, it has become an opportunity for banks and banking regulators. around the world to review and tighten their operating practices to avoid getting caught up in a similar mess. In Nigeria however, it was not treated as a cautionary tale, but as the inspiration for a potentially even bigger brewing scandal.
Starting in May 2022 for example, hundreds of tweets like this started popping up:
Read the full article: West Africa Weekly