Commercial Banks occupy an indispensable position in the Nigeria economy. They are the picot upon which other business firms and other activities revolve and “a conduit pipe through which all financial transactions pass”. However, literature in the field shows that fraud and other financial malpractice in the Nigeria Banking system nearly always lead to loss of monies that ordinarily belong to someone other than banks. In every bank cases where frauds with crippling frequency and in lagrge sizes such banks may be forced to close down or outright distress as a result. When the commercial Banks lose money and it is wound up or distressed in turn the customers and the nation in general loses of money, which also affects the economy. These study, therefore investigate the various levels of fraud in our Nigerian banking system. To this end a hypothesis was tested and confirmed that fraud not only drain the economy, but also lead to a lost of confidence by foreign investors.