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Sahel Analyst: ISSN 1117-4668 Page 73

DETERMINANTS OF INTERNET BANKING FRAUD IN NIGERIA

Mr Imagbe, V. U.1

Mr Abilogun, T. O.2

Abstract

This study reviews the determinants of electronic banking fraud in

Nigeria. Primary data were used for the data, the population and sample size

of this study was gotten from all the quoted banks in Nigerian Stock Exchange

(NSE) as at 31st December, 2016. This study utilised ordinary least square

regression model. It was found out that the major and key determinants of

electronic banking fraud are security challenges, legal and regulatory

challenges and lack of continuous public education which had over the years

made the banking institutions and their customers vulnerable to different

forms of fraudulent attacks on internet. This indicates that a further increase

in these variables will increase banking institutions’ vulnerability to internet

banking fraud. The study recommended that the banking institutions should

strictly apply every legal and regulatory guideline, also to develop a know-

your-customer policy by vigilantly monitoring every e-banking transaction

strictly and continuous customers’ education on different security risk.

Keywords: E-banking, Security Challenges, Legal and Regulatory challenges,

Lack of Continuous Public education, Fraud.

Introduction

The quest for users and consumers to find it easy and convenient in

managing their accounts with the banks has given rise to internet banking

globally. The banking industry themselves enjoyed this so called internet

banking system because it has reduced some of their overhead costs such as

operational costs, staff training cost, the need for more skilful staffs,

investment in ATMs and some other branches. Electronic banking or online

banking as defined by Geethai and Malarvizhi (2010) is the delivery of both

modern and traditional banking products and services directly to users and

customers automatically through electronic and interactive communication

medium. This encompasses those systems that enables the banking customers,

governments, individuals, partnerships and businesses to transacts business, to

1 Bursary Department, University of Benin, Benin City, Nigeria 08060568819

[email protected] 2 Bursary Department, Rufus Giwa Polytechnic, Owo, Ondo State, Nigeria

08138152323 [email protected]

mailto:[email protected]

mailto:[email protected]

Sahel Analyst: Journal of Management Sciences (Vol.15, No.7 2017), University of Maiduguri


access accounts, to get information on their services and products through the

use of public or private network while not necessarily getting down to the

nearest branch. Saudi Arabian Monetary Agency (2010) noted that Customers

access e-banking services using an intelligent electronic device, such as a

personal computer (PC), personal digital assistant (PDA), automated teller

machine (ATM), kiosk, or Touch Tone telephone. This internet banking has

the capability to transform the traditional business to a model of electronic

commerce (e-commerce) in providing banking alternatives and facilitating for

the convenience to their Internet banking customers (Steinfield, 2002).

Electronic banking are majorly associated with some basic services

which are: viewing of account balances and transaction histories; paying

several bills; transferring funds between accounts; requesting credit card

advances; loading of recharges cards; and ordering checks for more faster

services that can be provided by domestic and foreign bank. E-banking is

beneficiary to both the banks and its customers. Hamid (2007) viewed from

the bank’s perspectives that e-banking has enabled banks to lower operational

costs through the reduction of physical facilities and staffing resources

required, reduced waiting times in branches resulting in potential increase in

sales performance and a larger global reach. Jain, Hong and Pankanti (2000)

viewed from the customer’s perspective that e-banking allows customers to

perform a wide range of banking transactions electronically via the bank's

website at their own convenience. Customers no longer relied on the opening

hours of banks, the need to travel and the waiting times before they can access

information regarding banking services because they are now easily available

due to internet banking (Hutchinson & Warren, 2007).

The banking industry in an attempt to keep on with the new trend in

the evolutionary world brought about the challenged that arose due to new

technology and software systems to be put in place in order to make the

institution run smoothly and be more globally competitive (Stewart, 2000).

Panida and Sunsern (2011) noted that the more increase in the benefits derived

by the banking industry in adopting e-banking services as led to increase

security threat in terms of integrity, confidentiality and privacy, which is

capable of limiting the advancement of its progress. These security issues

seems to be something that cannot be really defined because fraudsters tends

to design new methods everyday order to overcome every security obstacles

but in place by the institution, but the most common among them are:

confidentiality of information exchanged, authentication of the relevant

instructions, integrity of the banking platform etc. A secure transaction must

have integrity i.e. not being altered while transmitting. Confidentially on the

other hand means that the content of the messages remain private as it move

from the customer though the internet to the bank. Without this, anyone can

view the transaction information and gain undue private information. Another

security factor is the authentication; authentication goes a long way with

Determinants of internet banking fraud in Nigeria

Sahel Analyst: ISSN 1117- 4668 Page 75

confidentiality because someone can be right sure that the person sending the

information is the person they say they are.

Other determinable factor of electronic banking fraud is the legal and

regulatory challenges. The absence of proper legal and regulatory law on

internet banking constitutes one of their major challenges in Nigeria. The

banking laws in existence do not address the security issues as it relates to e-

banking system in Nigeria. The increased and very high exposures of the e-

banking system to fraudsters, system hackers and other criminally minded

persons who could retrieve, access and utilised confidential information from

the systems majorly where there are weak measures to check mate the

unauthorised access. Other key determinable factor or area that has not being

explored or observed by various researchers is the area of continuous public

education. This paper tends to fill this gap by addressing this three key

determinants of electronic banking fraud which are the security challenge,

legal and regulatory challenges with continuous staff and customer’s

education.

Objectives of the Study

Given the scenario described above, the broad objective of this paper

is to investigate on the determinants of internet banking fraud in Nigeria.

Specific objectives are:

(i) to know the extent at which security challenges affects internet

banking fraud;

(ii) to examine the influence of legal and regulatory challenges on internet

banking fraud; and

(iii) to know how lack of continuous public education on various internet

fraudulent activities affect internet banking fraud.

Research Hypotheses

The hypotheses to be tested in this study are stated in null form as

follows:

(i) Security challenges does not have significant influence on internet

banking fraud

(ii) There is no relationship between legal and regulatory challenges and

internet banking fraud; and

(iii) Lack of continuous public education has no significant influence on

internet banking fraud.

Literature Review

Concept of Electronic Banking Fraud

Electronic banking has been around for quite some time in the form of

automatic teller machines (ATMs) and telephone transactions. In recent times,

it has facilitated banking transactions for both customers and banks, by using

Internet, and has enabled banks to scale borders, change their strategic tactics

and open new possibilities. Banking industries in countries all over the world

in this 21st century have transformed or changed to better operate in the new



complex and competitive environment (the electronic environment or

electronic platform), in which the economic climate also has changed.

Information technology (IT) is the pivot of these major substantial changes.

With the new era of technological revolution, banking and financial industries

are now capable for offering financial services, through electronic media to

various customers, regardless of their place, time and distance (Tunmibi &

Falayi, 2013). In the 1990’s, the use of Internet evolved when more people

owned computers and became connected to the Internet through their dial-up

connection from anywhere in their homes. This technological evolution and

the spread of home Internet use allowed bank customers to enjoy 24/7 e-

banking services. But customers during the 1990’s didn’t fully trust e-banking

enough to make serious and substantial monetary transactions. This triggered

a massive effort and investment by banks to develop more security features

for their online banking services. Throughout the 2000’s, online banking

started to grow and become more acceptable by customers. It covered most of

banking services range (Shannak, 2013). There are many various types of

services that can be provided by e-banking.

The popular services include automated teller machines (ATMs),

credit cards, debit cards, smart cards, electronic fund transfer (EFT) systems,

mobile banking, etc. On the transaction level, e-banking include account

access, balance transfer, bill payment, bill presentment, mortgage lending,

customer service and administration, cross selling, etc. From the bank’s point

of view, the use of Internet has significantly reduced the physical costs of

banking operations, including the costs of information processing and

transmission. E-banking can be seen as the extension of existing physical

banks. It’s the use of computers to retrieve and process banking data, and to

initiate transactions directly and remotely with a bank via telecommunication

networks. It addresses several emerging trends such as customer demand for

anytime/anywhere service, product to market imperatives and increasingly

complex back-office integration challenges (Omariba, Masese & Wanyemi,

2012). Scholars classified e-banking under the domain of ecommerce, where

e-financing is the other major financial eservice provided. E-banking is more

devoted to Internet banking, telephone banking, and other banking channels

(Chavan, 2013). While e-banking is the commonly used term in literature, it is

used by people interchangeably with virtual banking, on-line banking, cyber-

banking, web banking, phone-banking and remote electronic banking

(Shannak, 2013).

Fraud on the other hand defined as” any behavior by which one person

intends to gain a dishonest advantage over another” (Chakrabarty, 2013).

Fraud is an act which intends to cause wrongful gain to one person and a loss

to the other, either by a way of concealment of facts or otherwise. Kovach and

Ruggiero (2011) concluded that a large number of different e-banking

accounts were accessed by a single fraudster, which included small value

transactions with a total value larger than a single account fraud are common



based on the increased number of password failures that open doors for

fraudulent behaviours. Wei, Li, Cao, Ou, and Chen (2012) in their

investigation made in one of the largest banks in Australia as regard e-banking

fraud concludes that most of the banks has the following challenges: i) Highly

imbalanced large dataset: With large number of transactions usually millions

in e-banking system and very small number of daily frauds, the task of

detecting frauds becomes a tough challenge. ii) Real time detection: In some

online banking transactions, fraud detection needs to be in real time to prevent

instant money loss. iii) Dynamic fraud behaviour: fraudsters continually

advance their techniques to defeat online banking defenses. Defence against

an ever-growing set of attacks is beyond the capability of any single fraud

detection model. iv) Weak forensic evidence: Some external information

(forensic evidence) associated with each e-banking transaction is very useful

and needed to be known, to help understand the nature of deception of fraud

behaviour. v) Diverse behaviour patterns of customers. Customers of online

banking perform different kind of transactions in many ways and for several

purposes, this is a challenge as it leads to diversity of genuine customer

transactions that would be simulated by fraudsters who change their styles

frequently to compete with advances in fraud preventive and detective

measures, thus makes it difficult to characterise fraud behaviour from genuine

behaviour. These determinants are discussed under three sub-heads below:

Security Challenges and E-banking fraud

One of the major determinants of e-banking fraud is security

challenges, which are commonly referred to as Cybercrimes. This has been

the major concern of business executives in Nigeria and all over the world,

though banks have implemented some high technology security system for

online banking but yet have fallen victims of security breach.

The introduction of e-banking has come with its challenges, ranging

from e-banking adoption, to financial limitations of new system (Usman &

Shah, 2013). Research concluded to several factors that influence the adoption

process of e-banking like its usefulness and ease of use, system security, trust

and social influence, the user friendly features of system, accessibility, the

cost and time factors embedded in fund transfer (Abu-Shanab & Pearson,

2013). Security is a factor that is constantly highlighted as a critical success

factor (CSF) for the success of e-banking. The inadequacy of security will

potentially lead to financial losses, punitive measures by regulators and

negative media publicity. Security was rated in some research as the most

important issue of online banking services (Auta, 2010). Jassal and Sehgal

(2013) aimed to find various types of flaws in the security of online banking

that result in loss of money for account holders and financial institutions.

They explained the reasons behind security breaches, and the participation of

both customers and banks to enable hackers or crackers to access their

networks. Bank clients log on to bank websites daily, through a Web-browser



installed on client’s personal computers, which open opportunities for

cybercrimes to take place.

The authors pointed to some flaws in security that could result in loss

of money, along with leakage of information to unauthorised persons. Flaws

could be on banking websites themselves, such as cross site scripting which

happens when an attacker injects malicious scripts into a web page, and

structured query language (SQL) injection vulnerability in which the hacker

enters SQL statements into a field on a web form, in an attempt to get to the

website to pass the command to the database (Jassal & Sehgal, 2013). Other

Flaws could be in banking security policies, that they publish online in order

to help users understand security measures that the bank follows, or could be

in users’ usability and customer awareness. It is important for clients to

educate themselves about risks involved in online banking. Nigudge and

Pathan (2014) stated the advantages and various popular services that could be

provided by e-banking, but they presented the challenges that e-banking faces.

One of these challenges is concerned with the security issues which can be

represented by the increased potential of fraud, weak security measures, and

the lack of strong trust environment. Generally, some security challenges

which can lead to fraud in e-banking are leakage of important information to

unauthorised persons, cross site scripting (injection of malicious script),

injection of structured query language by hackers and some careless banking

security policies.

Legal and Regulatory Challenges and E-Banking fraud

Lack of a proper legal and regulatory law for internet banking

constitutes one of the major challenges of e-banking in Nigeria. The banking

laws in existence do not address the security issues of e-banking as a new

banking system in Nigeria. The high exposure of the system to fraudsters,

hackers and other criminally minded persons who could access, retrieve and

utilise confidential information from the system where security measures are

weak to checkmate unauthorised intrusion is a major challenge to the

authorities (Singh & Malhorta, 2004).

Central Bank of Nigeria (2003) on the report technical committee on

electronic banking gave an all-encompassing legislation on internet/electronic

banking, which should be enacted to address issues inclusive of privacy,

encryption, digital signature, domain registration penal provisions and

issuance of guidelines on e-banking consumer protection. They amend

relevant provisions of the evidence act to admit computer generated document

as primary evidence, they also enacted an act of electronic funds transfer

(EFT) and that bill of exchange act be amended to accommodate cheque

truncation.

The Central Bank of Nigeria Guidelines on electronic banking in

Nigeria has given provisions to address issues relating to technology solutions

on E-banking to ensure that every bank meets the needs of consumers, the

economy and international best practice in the areas of communication,


Sahel Analyst: ISSN 1117- 4668 9

hardware, software and security, Internet banking, electronic payments

delivery channels and consumer rights protection. However, these guidelines

have not fully solved the problems; the recent loss of money recorded by the

Central Bank of Nigeria (CBN) has given a case study which shows that the

acclaimed tools and techniques currently used by Nigerian banking authorities

and banking institution are not sufficient (CBN guidelines on electronic

banking, 2013).

Lack of strict compliance with legislations or inadequate law or

regulation protecting the Consumer information from various online banking

risks represents another major challenge of the development of e-banking in

Nigeria. The risks include financial loss, malfunctioning of terminals or cards

as well as the possibility of unauthorised disclosure of information without the

consent of the consumer. The challenges here range from customer details

being stolen via fraudulent website to unauthorised withdrawal from account

via other means. Online breach of Internet banking has not been adequately

solved and the banks as well as the customers are susceptible to banking risk

(Sokolov, 2007).

Continuous Public Education and E-Banking Fraud

In this modern era, most customers rely heavily on the web for their

banking business, leading to an increase in the number of online transactions

(Berney, 2008). Fraudsters react to these changes as the internet provides

them with more opportunities to attack customers (Gates & Jacob, 2009).

Orad (2010) even claims that the internet allows criminals to organise as a

network, supporting each other in their attacks. Banks are expected to provide

sensitisation or educations to both their employee and customers on

continuous basis because fraudsters are very skilful and dynamic; they

improve on their unethical attitude every single minute and continuously

designing new means of defrauding the financial institutions. As this fact is

established, banks should be well positioned to provide basic electronic

banking fraud prevention education to both staff and customers. This can be

done by providing tips on their websites, through SMS, in fliers, radio and

television information, also displaying this tips in the poster pasted in the

banking hall wall, just to better communicate the concern people on how to

avoid becoming fraud victims. Even during regular meeting with their staff

and sometimes with customers they can also better discussed fraud mitigation

strategies. Lack of continuous public education would have greater effect on

e-banking fraud.

Theory of Fraud Triangle

This theory entails the triangle of different fraud aspects which

includes perceived pressure/motives, perceived opportunities and

rationalisation. The term perceived is important in the context because at

times pressure, opportunities and rationalisation may not be necessarily real

(Chiezey & Onu, 2013; and Ogechuckwu, 2013). Chiezey and Onu (2013)

observe that the first temptations to commit fraud are financial and non-


Sahel Analyst: ISSN 1117-4668 0

financial pressure. Though financial pressure is the major pressure and as

argued by Ngalyuka (2013) that 95% of fraud committed are due to financial

pressure. This pressure can be inform of debts, underpayments, personal

family financial challenges of the employees and those that related to work in

terms of pressures to perform more than others (Ngalyuka, 2013).

The opportunity to commit fraud on the internet banking is determined

by the undue access of the fraudsters to some resources and basic information

which gives them an advantage to commit an unethical behaviour and conceal

it (Chiezey & Onu, 2013). Mahinda (2012) argue that these opportunities are

due to lack of control measures, weak control measures, lack of expectation

for punishments which can serve as deterrence, inadequate infrastructure and

inadequate public sensitisation.

The last factor in the fraud triangle is the perceived rationalisation.

Njenga and Oseimo (2013) observe that rationalisation which in other word

called justification of fraud aspect as acceptable by the fraudster.

Rationalisation is the justification of an unethical behaviour within an

organisation other than a criminal activity. Mahinda (2012) opined that

individual that can’t rationalise its unethical behavior might probably not

commit fraud. From the argument above, it is glaring that Security

Challenges, Legal and Regulatory challenges, Public education are great

potential for preventing opportunity and rationalisation of fraud which in turn

break the fraud triangle and determines e-banking fraud if not properly

explore.

Methodology

This study employed the use of primary data and questionnaire as a

tool for collecting data, the population of this study was made up of 15

commercial Banks listed on Nigerian stock exchange (NSE) as at December

2016, their Directors/Finance Managers, Branch Managers and Operations

Managers, Compliance officers, Head of different units and Customers service

officer were the respondents and some other staffs based on their experience

and knowledge of banking activities and some customers met at each branch.

A branch of each of the quoted banks was chosen at random to represent the

entire branch in Nigeria, ten respondents each were selected from each of the

quoted banks which makes it 150 respondents in total. This study uses simple

random sampling technique, which gives all the population equal chance of

been selected. The instrument was an 8 – term survey questionnaire with a – 4

Likert scale responses which are Strongly Agreed (SA), Agreed (A),

Disagreed (D) and Strongly Disagreed (SD).

Model specification

The dependent variable for the study is the Internet Banking Fraud

(IBF). The independent variables are Security Challenges (SC), Legal and

Regulatory Challenges (LRC) and Lack of Continuous Public Education

(LCPE). For empirical analysis purpose, the study used Regression Model



with Ordinary Least Square (OLS) Technique to test the relationship between

the dependent and independent variables, in such a way that the results

obtained from the regression analysis are used to make decision in order to

reject or accept formulated hypothesis of the study.

The following models were specified in accordance with the objectives

and formulated hypothesis in other to guide and capture the effect of

independents variable on dependent variable on this study:

IBF = f (SC, LRC, LCPE) ………………………………………………… (i)

This is can be re-specified in a regression form thus:

BFPt = β0 + β1SCt + β2LRCt+ β3LCPEt + ut ……………………………… (ii)

Where:

IBF = Internet Banking Fraud

β0= Intercept/Constant, β1, β2, β3 are slope/coefficient,

SC = Security Challenges

LRC = Legal and Regulatory Challenges

LCPE = Lack of Continuous Public Education

u= Error term.

The Apriori signs are: β1, β2, β3,>0

Data Analysis and Interpretation of Results

Table 1: Descriptive Statistics

N Range Mean Std. Deviation Skewness

Kurtosis

IBF 150 3 2.46 1.024 0.115 -1.039

SC 150 3 2.56 1.012 0.082 -1.I20

LRC 150 3 2.49 1.034 0.124 -1.048

LCPE 150 3 2.54 1.046 0.130 -1.180

Valid N (list wise) 150

Source: Field Study, 2016

Descriptive Statistic (Table 1)

The descriptive statistics of the variables used in the analysis as

presented in Table 1 explains the range, mean, standard deviation and the

normality of variables, Banks fraud prevention is the main variable of interest,

which is the dependent variable. From the table internet banking fraud had a

mean value of 2.46 and the standard deviation is 1.024 which is a little close

to the mean, this shows a low degree of variability of data. Internet banking

fraud was positively skewed with a skewed value of 0.115 which shows it is

normally distributed. All the explanatory variables are positively skewed

which are Security Challenges (SC), Legal and Regulatory Challenges (LRC)

and Lack of Continuous Public Education (LCPE).



Table 2: The Computation of (OLS) Result

Variables Coefficient Standard error. T-statistics Probability

Intercept 3.684 0.247 8.968 0.000

SC 2.275 0.120 3.865 0.016

LRC 1.352 0.257 3.876 0.003

LCPE 2.683 0.456 8.465 0.005

R2=0.782, R

2 bar=0.734, F-stat., (3,150)=34.572, Pro(F-stat.,)=0.000

D.W = 2.142

Source: Field Study 2016

OLS Analysis (Table 2)

IBF = 3.684 + 2.275 + 1.352 + 2.683 +U

S.E = (0.247) (0.120) (0.257) (0.456)

T-Stat = {8.968} {3.865} {3.876} {8.465}

The intercept value shows 3.684 which means Internet Banking Fraud

(IBF) has 3.684 units when other variables are held constant. Security

Challenges shows that 1unit increase in Security Challenges will bring 2.275

unit increases in Internet Banking Fraud and this is significant at 0.016 level

of significance which means it is less than 0.05 level of significance; therefore

this variable can significantly affect the Internet Banking Fraud. Legal and

Regulatory Challenges (LRC) shows that 1unit increase in it will bring 1.352

unit increases in the Internet Banking Fraud, it is also significant at 0.003

level of significance which means it is less than 0.05 level of significance,

therefore this variable can significantly affect Internet Banking Fraud.

Lack of Continuous Public Education (LCPE) shows that 1unit

increase in it will bring 2.683 unit increases in the Internet Banking Fraud, it

is also significant at 0.005 level of significance which means it is less than

0.05 level of significance, therefore this variable can significantly affect

Internet Banking Fraud.

The R-squared stand at 0.782 which shows the explanatory power of

the model which can be seen as 78.2%, means 78.2% of changes in Internet

Banking Fraud can be explained living 21.8% unaccounted for. The F –

statistic shows the robustness of the model by comparing F-calculated to F-

critical in order to explain the impact of whole explanatory variables on

explained variable, and this was shown by looking at it from the angle of 0.01

and 0.05 level of significance which are 3.78 and 2.60 and are less than

34.572 calculated respectively, in terms of overall significance all independent

variables showed a significant relationship with the dependent variable with

the prob. (F-statistic) of 0.000. The Durbin Watson value of 2.142 is an

indication of the absence of autocorrelation in the model.



Discussion of Findings

Based on the OLS Table 2 above, the result shows about 78.2% of the

systematic variation in IBF is explained by three independent variables (SC,

LRC and LCPE). This coefficient is strong and shows a good fit of the

regression line as well as indicating the forecasting power of the model is

strong. The F value of 34.572 is statistically significant at 5%. This means that

SC, LRC and LCPE have significant positive relationship with IBF and this is

in compliance with the Apriori expectation. The results from the analyses

above are indications that the independent variables have a significant impact

on the Internet Banking Fraud.

In considering the variables individually, Security Challenges (SC)

showed both positive and significant relationship with banks Internet Banking

Fraud. This implies that security challenges have a greater effect on internet

banking fraud. This is in consistent with the findings of Tunmibi and Falayi

(2013) and Panida and Sunsern (2011). Legal and Regulatory Challenges

(LRC) showed both positive and significant relationship with Internet

Banking Fraud. This means inadequate laws and regulations on internet

banking will have a greater effect on Internet Banking Fraud. Chavan (2013)

also found a positive and statistically significant relationship in consistence

with this finding.

Lack of Continuous Public Education (LCPE) was also found to have

positive and significant relationship with Internet Banking Fraud. This implies

that, inconsistency in the education and sensitisation of the public towards

internet banking fraud will cause more damage by increasing internet banking

fraud. This is in consistent with the findings of Geetai and Malaryzhi (2010).

Conclusion

The exponential growth of Internet has offered tremendous market

potential for today’s businesses including e-banking industry. E-banking

revolution changed the business of banking fundamentally by providing many

benefits for customers and new business opportunities for banks. However, it

imposes traditional banking risks and many challenges especially in terms of

security and legal issues. Security aspects should be taken in consideration at

all levels of financial organisations, to protect themselves against various

types of fraud and attacks. There is no doubt that security issues in electronic

banking are key considerations in any meaningful discourse on the purport

and impact of electronic banking. The vulnerability of the e-banking platforms

to new and more sophisticated threats makes the situation even more

dangerous. Efforts are however being made continuously to ensure that the

various e-banking platforms are better secured from these threats.

From all the above, it can be concluded that there is not any single

strategy that covers all the different dangers threatening the e-Banking

platforms. On the contrary, focusing on a multi-layer protection approach is

the best alternative for system security and for protection of consumers’



interests, including a mix of different factors that allow implementing

complementary protection for the end-user’s station; communicating the

occurrence of potential transactions frauds to the end-user; shielding the

authentication process from malicious activities that can affect the end user’s

station; providing user-to-site authentication strategies which allow the end-

user to verify that the connection is indeed established with the correct site.

Recommendations Electronic banking has a great potential of creating opportunities for

criminal activities and thereby facilitating fraudulent activities such as money

laundering. In that context, there should be a strict application every legal and

regulatory guideline developed at both national and international level,

development of “know-your-customer policies and vigilantly monitoring

every e-banking transaction strictly, taking a strategic and proactive approach

to information security and continuous customer education on different

security risk which will play an important role for consumer protection and

the same time limiting reputational risk.

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