AI-powered fraud emerges as new threat despite Nigeria’s digital payment fraud losses dropping to ₦25.85bn

Report says cybercriminals are becoming more sophisticated as artificial intelligence transforms financial crime

Nigeria’s reported losses from digital payment fraud declined significantly in 2025, falling from ₦52.26 billion in 2024 to ₦25.85 billion, according to a new industry report. However, experts warn that the drop should not be interpreted as a victory against cybercrime, as fraudsters are increasingly leveraging artificial intelligence (AI) to execute more sophisticated and damaging attacks.

The findings are contained in The Compliance Reckoning, a report published by compliance technology firm Adhere in partnership with TechCabal. The report was unveiled at the Trust Frontier Forum in Lagos, where regulators, financial institutions, fintech operators and law enforcement agencies discussed the future of financial crime prevention in Nigeria.

Although reported financial losses declined, the report noted that fraud attacks are becoming more targeted, resulting in greater financial impact whenever criminals succeed.

It added that reported fraud losses have increased by about 350 percent since 2020, despite a decline in the total number of reported fraud cases.

AI changing the fraud landscape

According to the report, artificial intelligence is rapidly reshaping financial crime across the world.

It projects that global financial fraud losses could reach $442 billion by the end of 2025, with AI-enabled fraud generating returns estimated to be 4.5 times higher than conventional fraud schemes.

Fraudsters are increasingly deploying AI to generate convincing fake identities, clone voices for impersonation scams, automate phishing campaigns and personalise fraudulent messages that are harder for victims to detect.

The report warned that traditional fraud prevention systems are no longer sufficient to tackle these evolving threats, urging financial institutions to strengthen their cybersecurity capabilities.

Tougher compliance requirements

The report also highlighted increasing regulatory pressure on Nigerian financial institutions.

According to the findings, the Central Bank of Nigeria (CBN) introduced 17 regulatory actions within a 14-month period, covering cybersecurity, anti-money laundering and data protection, with compliance deadlines extending from 2026 to 2028.

It noted that compliance has evolved beyond meeting regulatory obligations and has become a critical business function. Institutions with weak compliance frameworks risk operational disruptions, reputational damage and strained international banking relationships.

Strong governance remains critical

While AI is becoming an important tool for detecting and preventing fraud, the report stressed that technology alone cannot eliminate financial crime.

Instead, it recommended combining AI with stronger governance frameworks, enhanced customer due diligence, continuous transaction monitoring and closer collaboration between regulators, banks, fintech companies and law enforcement agencies.

“The next eighteen months will be decided by architecture, not by tools,” the report stated, emphasizing that sustainable fraud prevention depends on strong compliance systems supported by technology.

Cybersecurity skills gap poses additional risk

The report further identified Nigeria’s shortage of cybersecurity professionals as another challenge facing the country’s rapidly expanding digital payments ecosystem.

It warned that without sustained investment in cybersecurity talent and advanced fraud detection systems, banks and fintech companies could become increasingly vulnerable to highly skilled cybercriminals using AI-powered tools.

As digital payments continue to grow across Nigeria, the report concluded that stronger collaboration between regulators, financial institutions and technology providers will be essential to protecting consumers and maintaining trust in the country’s digital financial system.