Wema Bank Suffers N2.9 Billion Loss Due to Transfer System Failure

Wema Bank Plc is scrambling to reclaim approximately N2.9 billion in funds that were allegedly siphoned from its system following a technical malfunction. The bank has turned to the Federal High Court in Lagos, filing a lawsuit to secure a preservative order that would force implicated financial institutions to return N2,906,226,083 traced to accounts under their control.

The trouble began on January 16, 2025, when a failure in Wema Bank’s core banking system triggered unauthorized transfers from customer accounts. According to Kehinde Buari, the bank’s Head of Special Review and Investigation, the glitch caused a cascade of unintended transactions affecting accounts both within Wema Bank and across 26 other financial institutions named as defendants in the suit.

In the wake of the incident, Wema Bank launched an internal probe to track down the missing funds. While some of the unauthorized transactions were contained within its own system, a substantial portion had flowed into external accounts tied to the defendant institutions. So far, N888,301,598.15 has been recovered with the cooperation of some of these institutions.

Investigations uncovered attempts by certain recipients to conceal the funds’ origins, with money shuffled across multiple accounts. Wema Bank promptly notified the affected financial institutions, urging them to freeze the implicated accounts, and enlisted the Nigeria Inter-Bank Settlement System (NIBSS) to trace the funds’ movements across the banking network.

The bank’s legal and audit teams have since produced detailed reports mapping the funds’ journey, pinpointing recipient accounts, and tallying the amounts recovered. Now, Wema Bank is asking the court to compel the 26 institutions to disgorge both the retrieved sums and any additional traceable funds. It also seeks an order requiring these banks to disclose the identities of account holders who received and dispersed the money, paving the way for law enforcement to step in and pursue further recoveries.

Beyond restitution, Wema Bank wants the court to mandate that these account holders be flagged on the Central Bank of Nigeria’s Credit Risk Management System and other financial watchlists, tied to their Bank Verification Numbers (BVNs), until the full amount is recovered. While some institutions have taken preliminary steps to curb the unauthorized transactions, the bank insists a court order is critical to enforce complete compliance and prevent the funds from slipping away.

Wema Bank cautioned that without judicial intervention, the frozen accounts could be unlocked, jeopardizing its recovery efforts. The stakes are high, as the bank battles to restore customer trust and financial stability.

This isn’t an isolated case in Nigeria’s banking sector. NewsNGR notes that in January, Guaranty Trust Bank (GTBank) won a court order to recover N1.9 billion mistakenly credited to customers due to a system error in October 2024. These recurring incidents are sounding alarms about the security of interbank transactions in Nigeria, especially as digital banking surges. Experts point to aging infrastructure and lax oversight as potential culprits, warning that such vulnerabilities could fuel a rise in errors and fraud if left unchecked.