Nigeria’s reported financial fraud losses fell sharply last year, but cyber criminals are becoming more sophisticated and inflicting bigger losses per attack as artificial intelligence changes the economics of financial crime, according to a new industry report.
The report, ‘The Compliance Reckoning: Regulating Financial Services in the Age of AI’, released on Friday by Adhere in partnership with TechCabal, said digital payment fraud losses dropped to N25.85 billion in 2025 from N52.26 billion in 2024, offering what appears to be a positive picture for the country’s financial system.
However, the researchers warned that the decline masks a deeper shift in criminal tactics. While the number of reported fraud cases fell by about 31 percent, overall losses remain about 350 percent higher than in 2020, suggesting fraudsters are carrying out fewer but more targeted and more expensive attacks.
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The report argues that Nigerian banks and fintech companies are entering a critical period in which artificial intelligence is reshaping financial crime faster than many institutions can adapt.
“The fall in reported fraud is welcome, but it is also a warning. When reporting drops faster than fraud, the risk does not leave the system; it leaves the record. What this report shows is that the next eighteen months will be decided by architecture, not by tools,” said Gbemisola Osunrinde, group managing director of Smartcomply, the parent company of Adhere.
The findings come as Nigeria continues to experience rapid growth in digital finance. The country now processes more than 10 billion real-time payment transactions annually, making it one of Africa’s busiest digital payments markets.
Yet the report says the country’s fraud prevention capacity has failed to keep pace with that expansion. Nigeria ranks 110th out of 112 countries in fraud protection, while facing a cybersecurity workforce shortage estimated at about 90 percent.
Globally, financial fraud cost an estimated $442 billion in 2025, according to the report. It also found that fraud schemes enhanced by artificial intelligence are about 4.5 times more profitable than conventional methods, allowing criminals to automate phishing campaigns, create convincing fake identities, bypass traditional verification systems and launch attacks at greater scale.
The report warns that the same AI technologies helping banks improve customer experience are increasingly being deployed by cybercriminals to exploit weaknesses across financial institutions.
Regulatory pressure is also intensifying.
According to the report, the Central Bank of Nigeria (CBN) introduced 17 regulatory actions over the past 14 months covering cybersecurity, anti-money laundering and data protection. Six of those measures carry compliance deadlines between March 2026 and March 2028.
The report said regulators are increasingly treating cybersecurity and compliance failures as systemic financial risks rather than operational lapses.
It cited a N15.42 billion regulatory fine imposed on a leading commercial bank in 2025 as evidence that non-compliance now threatens not only profitability but also relationships with international correspondent banks.
The report argues that financial institutions should focus on building stronger governance frameworks around AI deployment. It recommends continuous transaction monitoring, richer customer risk profiling, stronger model governance and greater information sharing among banks, fintech firms and regulators as essential defences against increasingly sophisticated attacks.
“The institutions that come through the next eighteen months intact will not be the ones with the best AI tools. They will be the ones with the architecture around them,” the report said.
The findings were unveiled at the Adhere Compliance Frontline Forum 2026, themed: ‘The Trust Frontier,’ in Lagos.
The event brought together senior compliance executives, fraud investigators, regulators and law enforcement agencies to examine how financial institutions should respond to the next generation of AI-enabled financial crime.
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Participants included representatives from the Nigeria Inter-Bank Settlement System (NIBSS), the Economic and Financial Crimes Commission (EFCC), the Nigeria Police Force Cybercrime Laboratory, as well as payment companies including Paystack, Seerbit, PAYAZA, ChamsSwitch, Hydrogen Payment Services and Novac Payments.
Uche Henry Ifeanyi, assistant inspector general of Police delivered the keynote address on financial crime enforcement, while discussions centred on strengthening collaboration between regulators, banks and fintech operators as cyber threats become increasingly complex.
For Nigeria’s financial sector, the report concludes, the biggest challenge is no longer whether fraud is declining, but whether institutions can adapt quickly enough to a new generation of AI-powered attacks that are becoming harder to detect, more targeted and significantly more damaging when they succeed.
Adhere is the AI compliance and fraud platform for African financial services, built to make compliance and security part of every transaction rather than a check done after the money has moved. It is trusted by more than 1,000 companies, is ISO 27001 certified, is aligned to the Nigeria Data Protection Act, and is a Mastercard Engage partner. Adhere is part of the Smartcomply group.
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