2nd December 2023

  • Damilola Aina, Fatteh Hamid, Daniel Ayantoye and Emmanuel Ojo

Apex bank orders electronic revalidation of BVN, NIN attached to accounts, wallets Jan 31

Account holders, others fear new round of hardship, naira scarcity

The Central Bank of Nigeria on Friday directed commercial banks to bar customers without Bank Verification Numbers and National Identity Numbers from having access to their accounts from March 2024 by putting a “post no debit” restriction on such accounts.

However, bankers told Saturday PUNCH that the directive would likely lead to a rush by desperate customers to regularise their accounts in the coming weeks and months, adding that this would put pressure on employees to register the customers for the BVN, while the National Identity Management Commission offices and centres would face a similar situation for the NIN registration.

A senior official of a Tier-1 bank in Lagos told one of our correspondents that the directive would sanitise the industry although it would exert considerable pressure on the banks.

The official said, “Many customers are careless by ignoring the directive to link their BVN to their accounts. With the directive of the CBN, they will now be rushing to get their BVN so that their accounts will not be frozen.

“The truth is that many banks will find it difficult to cope with the anticipated rush as we have lost several key employees to the Japa syndrome. Besides, the banks had embarked on staff rationalisation to keep the operating expenses low.”

A branch manager of a new generation bank, who also spoke on condition of anonymity, said if the rush of customers without BVN and NIN was much, the lender would have no choice but to extend the working hours for its employees and might consider working on Saturdays and Sundays to clear the backlog.

This, he noted, would put pressure on the already stressed employees, adding that it could also lead to naira scarcity.

However, a corporate communications manager of an old-generation bank, who pleaded not to be identified, said his institution was ready to deal with anything that the apex bank’s directive would throw up, adding that technology was making the work of bankers easier.

The ‘Post No Debit’ is a term used to describe a restriction imposed by banks on specific accounts, preventing customers from making withdrawals, transfers, or debits from their accounts.

This measure effectively freezes the funds in the account, rendering them inaccessible for the duration of the restriction.

The CBN directive was contained in a circular issued to all Deposit Money Banks on Friday.

The circular with reference PSM/DIR/PUB/CIR/001/053 was jointly signed by the Director, Payments System Management Department, Chibuzo Efobi, and Director, Financial Policy and Regulation Department, Haruna Mustapha.

The apex bank said the directive was part of efforts to promote financial system stability and strengthen the ‘Know Your Customer’ procedures in all financial institutions.

It also amended Section 1.5.3 of the Regulatory Framework for Bank Verification Number to ensure mandatory registration of all Tier-1, 2 and 3 bank accounts and wallets with BVN or NIN.

The circular read, “As part of its efforts in promoting financial system stability, it becomes necessary to strengthen the Know Your Customer procedures in financial institutions under the purview of the Central Bank of Nigeria.

“Accordingly, the CBN hereby issues an amendment to Section 1.5.3 of the Regulatory Framework for Bank Verification Number Operations and Watch List for the Nigerian Banking Industry.

“In this regard, it is mandatory for all Tier-1 bank accounts and wallets for individuals to have BVN and/or NIN. It remains mandatory for Tiers 2 & 3 accounts and wallets for individual accounts to have BVN and NIN.

“The process for account opening shall commence by electronically retrieving the BVN or NIN-related information from the NIBSS BVN or the NIMC’s NIN databases and for the same to become the primary information for on-boarding of new customers.

“All existing customer accounts/wallets for individuals with validated BVN shall be profiled in the NIBSS ICAD immediately and within 24 hours of opening accounts/wallets.”

As a result of the new guidelines, the bank said any unfunded account/wallet would be placed on ‘Post No Debit or Credit’ until the new process was satisfied.

The central bank also stated that all the BVN and NIN attached to and/or associated with all accounts/wallets must be electronically revalidated by January 31, 2024.

“Effective immediately, no new Tier-1 accounts and wallets should be opened without the BVN or NIN.

“For all existing Tier-1 accounts/wallets without the BVN or NIN: i. Effective immediately, any unfunded account/wallet shall be placed on ‘Post No Debit or Credit’ until the new process is satisfied.

“Effective March 1, 2024, all funded accounts or wallets shall be placed on ‘Post No Debit or Credit’ and no further transactions permitted.

“The BVN or NIN attached to and/or associated with all accounts/wallets must be electronically revalidated by January 31, 2024.”

The CBN further directed all executive compliance officers, chief compliance officers, or heads of the compliance functions to acquaint themselves with the attached guidance notes to ensure full and uniform compliance.

It added, “To ensure uniform and full compliance, the executive compliance officers, chief compliance officers, or heads of the compliance functions are advised to acquaint themselves with the attached guidance notes, which become applicable to all institutions regulated by the CBN.

“Also, a comprehensive BVN and NIN audit shall be conducted shortly and where breaches are identified, appropriate sanctions shall be applied.

“Finally, all financial institutions regulated by the CBN are required to apply strict compliance on restrictions on Tier-1 accounts/wallets as they relate to limits on transaction values and cumulative balances.”

Apex bank on April 6, 2023, indicated plans to remove accounts not linked to the BVN to clean up the sector and reduce the growing incidence of fraud.

At the Prembly Compliance Breakfast Dialogue, the bank listed three loopholes that cybercriminals were exploiting.

According to the bank, the Tier-1 account is top of the list of loopholes. A Tier-1 account refers to a bank account that can be opened with minimal or without any form of documents. This account can be opened with a passport photograph. The account has a limit of N50,000 deposits and an operating balance of N200,000 and N300,000.

Experts react

Speaking on the development, a professor of Economics at the University of Nigeria, Nsukka, Enugu State, Cletus Agu, stated that Nigerians do not want to obey rules and regulations and should be ready to face the consequences of their action.

He said, “It has been over two years that we have been asked to get our NIN and almost 10 years that the BVN has been introduced. Why are Nigerians not doing what they are supposed to do? Why must we wait until there’s a rush? Why must we wait until there’s a punishment coming? We have a civic duty to do. The government has done its part and people must also do theirs to have normalcy in the system.”

Agu noted that the deadline given by the CBN was not short and that if it was extended beyond that, some Nigerians would be found wanting.

“So, yes, this directive is right. When you are unable to withdraw your money, you will have no option but to go and do the needful,” he added.

Also commenting on the directive, a strategy and economics advisory associate at PricewaterhouseCoopers Nigeria, Olalekan Fadiya, noted that the citizens take many developments for granted.

He stated, “This directive is coming at an appropriate time. In this age, everything is digitised and the CBN needs to have adequate data on those that are banking in the country. We are in a country with ransoms being paid here and there; when the banks do not have the needed information, how will they be able to efficiently work to nab criminals?

“What about those who launder money? Nigerians should make good use of the time given and ensure that they are compliant with the directive.”

Human rights lawyer, Afam Osigwe, stated that the apex bank was in order, saying the directive would help to curb money laundering and other financial crimes.

He said, “Most countries are required to have laws that mandate banks and other financial institutions to know their customers, which simply means getting as much information as possible to have an idea of who operates bank accounts in Nigeria; this includes having a Bank Verification Number, National Identification Number, and others. This helps you to be able to fight money laundering, terrorism financing, and other financial and economic crimes.

“I think the CBN is in order because the notice has been given mandating everybody to get their BVN as far back as 2014 when this process started. It is expected that those who maintain bank accounts have had adequate time to obtain it.”

Human rights lawyer, Tolu Bableye, lauded the directive, saying it was in line with the constitution.

He, however, urged the CBN to give Nigerians who had not obtained their BVN to do so before the deadline.

He said, “In the world over now, this concept of knowing your customer is the norm. Some years ago, the Federal Government directed people to register for the BVN and link it to their accounts. The essence is to curb corruption, money laundering, and other financial crimes. So it is within the ambit of the law. It is commendable, but they should give Nigerians time to adjust and comply with the directive.”

The Executive Director, Civil Society Legislative Advocacy Centre, Auwal Rafsanjani, said it was only fair that the CBN gives sufficient notice to allow the citizens to do their verification.

Rafsanjani noted that it was important for Nigerians to go through the verification process as it would help the data system of the nation.

He added that it would also help the security agencies fish out illegal businesses and those involved in illegitimate dealings.

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