MTN’s Mobile Money Bank hit by N22B fraud drags 18 banks to court seeking recovery

The newly licensed Mobile Money Payment Service Bank Limited (MOMO PSB) a banking subsidiary of MTN Communications Limited has been hit by massive fraud worth over N22 billion.

The bank suffered the lost in less than a month of it’s operations and is already in court seeking relief.

Court processes in a suit instituted by the Mobile Money Bank against 18 Banks and obtained by our correspondent revealed that an aggregate sum of N22,300,000,000, equivalent to about $53.7m was erroneous transferred to accounts maintained by customers of 18 different banks in the country.

In an originating summons dated May 30, 2022 and filled before a Federal High Court, MTN’s MOMO payment Bank is seeking court declaration that the deposits of the said sum of N22.3B allegedly erroneously transferred by the company to the accounts of customers of the 18 banks having been done in error belong to MTN’s MOMO PSB and not to the customers of the banks.

The requests formed part of the reliefs sought in the suit filed by a Senior Advocate of Nigeria, Chief Lotanna Chuka Okoli (SAN) on behalf of Momo Payment Service Bank Limited.

Among other reliefs, the MTN bank is also seeking order of the court directing the 18 banks to individually account for the sums available in their customer accounts and the sums which have been removed by the customers and are no longer available.

In an affidavit in support of the originating summons, the Chief Executive Officer (CEO), MOMO PSB Ltd, Mr. Anthony Usoro Usoro claimed that MOMO PSB Ltd is the bona fide owner of the aggregate sum of N22.3B which is maintained in its MOMO settlement account.

He averred that on or about the 24th day of May, 2022, it was noticed that funds had been erroneously transferred from its settlement account to various accounts maintained by the 18 banks.

Anthony in the affidavit further claimed that a total of about 700, 000 transactions were processed with credits made into about 8,000 various accounts in the listed 18 banks.

Upon becoming aware of the incident, he further asserted that MOMO PSB Ltd management responded by immediately shutting down the service to limit the impact and triggered engagement with the banks for the commencement of recovery activities from the accounts of the various beneficiaries in the various banks.

The erroneous transfers, he claimed, were due to the fact that MOMO PSB Ltd suffered a system exploitation which led to the said debits.

The MTN’s MOMO Bank’s boss in the affidavit asserted that the 18 banks requested for an order of court mandating them to reverse the credits made into their customers account before they can do so, hence, the filing of the suit.

The plaintiff therefore prayed the Federal High Court to compel the 18 commercial banks operating in the country to refund about N22. 3billion erroneously transferred into their customers’ accounts.

It also asked the court to order the banks to provide information about the customers into whose accounts the said funds were unintentionally paid.

MPSBL is contending that, under the Central Bank of Nigeria (CBN) Regulation on Instant (Inter-Bank) Electronic Funds Transfer Services, made pursuant to Sections 2(D), 33(1)6) and 47(2) of the CBN Act 2007, it is incumbent on the 18 banks to make refund and provide the required information.

It added that its resort to the court was informed by the insistence of the 18 banks that they needed to be ordered by the Federal High Court before they could act.

The affected banks were listed as defendants in the suit marked: FHC/L/CS/960/2022.