Recently, the Central Bank of Nigeria (CBN) gave banks and other financial institutions a 30-day timeline to close accounts without Bank Verification (BVN) which is a good omen to end the incessant diversion of funds by public Officers and government appointees into private accounts without BVN.
Records indicate that the Data from the Nigeria Inter-Bank Settlement System (NIBSS) showed that 57.39 million customers’ accounts have been linked to their BVNs as at April 8, 2023. This clearly indicates that millions of Nigerians captured into the banking system are yet to link their accounts with the BVN perhaps for fear of being invited, arrested and investigated by law enforcement agencies like the Economic and Financial Crimes Commission (EFCC) and her sister agencies like the ICPC.
A review of the ‘Regulatory Framework for Bank Verification Number (BVN) Operations and Watch-list for the Nigerian Banking Industry’ said the move was driven by the demand for effectiveness of Know-Your-Customer (KYC) and Customer’s-Due-Diligence principles, and promotion of more safe, reliable and efficient banking and payment systems. Though, the policy was also meant to address increasing incidence of fraud, to enhance public confidence in the banking industry, to provide a guide for BVN operations and watchlist activities carried out by financial institutions in Nigeria.
As part of the policy implementation plan, the CBN directed banks to link customer’s BVN to related accounts/wallets (except Tier-1). This requires using the customer’s BVN generated after his/her enrollment to link accounts/wallets to which he or she is a signatory, after validation.
“No new account/wallet shall be allowed to operate without BVN (except inflows), however, any account/wallet without BVN shall be closed within 30 days,” the framework said. It said delinking of customers’ BVN from accounts/wallets involves removing the BVN of a signatory (except for Directors/Beneficial owners) that is linked to an account/wallet.
The CBN said the BVN shall be delinked upon the approval of the Chief Audit Executive of the customer’s bank.
“This delinking is for corporate or joint accounts and for activities not associated with breaches. Returns on delinked accounts/wallets (except Tier 1) shall be rendered to the Director, Payments System Management Department on a monthly basis,” it said.
Also, “Where there is no linked account, a nil report should be submitted while fraud management is a process aimed at using BVN to deter, prevent, detect and mitigate the risks of fraud in the banking industry,” it added.
A watchlisted individual is barred from entering into new relationship with any bank. The apex bank said that in a situation that a bank chooses to continue business relationship with an account holder on the watchlist, an account holder shall be prohibited from e-channels, issuance of third-party cheques, shall not provide reference to another customer, shall not be allowed to access credit facility or guarantee credit facilities. Also individuals shall remain on the watch list for up to 10 years and penalties that applied to such shall apply to their accounts.
“Once a Watchlisted BVN has served its term on the Watchlist, the Nigerian Interbank Settlement System (NIBSS) shall automatically delist the BVN and notify the stakeholders. Where a bank realises that an individual was placed on the watchlist in error, the bank shall apply in writing, with supporting documents to the Director, Risk Management Department of the CBN, for approval to delist,” it said.
The supporting documents shall be duly authorised by the MD/CEO and the Chief Audit Executive of the bank. Upon approval from CBN, the bank shall forward the approval to NIBSS for delisting. Only the institution that placed an individual on the watchlist can request for such delisting.
According to the framework, it is the responsibility of the CBN to conduct oversight on BVN operations and systems, monitor other stakeholders to ensure compliance, issue circulars to regulated institutions on the operations of the Watchlist, review framework for the operations of the Watchlist, as the need arises and apply appropriate sanctions for non-compliance with the Regulatory Framework.
The NIBSS is expected to collaborate with other stakeholders to develop and review the Standard Operating Guidelines of the BVN, initiate review of Guidelines, as the need arises, subject to the approval of the CBN, ensure seamless operations of the BVN system, maintain the BVN database, ensure adequate security of the BVN information; an maintain an online real-time Watchlist Portal.
The BVN capturing in banking system will enhance the operations of the Banks of the Deposits Money Banks (DMBs) smoothly with accurate data about their activities when needed. This will reduce frauds, protect the bank customers and reduce fraudulent transactions if not totally eliminated. The Apex bank is also targeted towards strengthening the security of banking transactions and to simplify banking operations especially inter-bank transfer.
The customers of the various Commerical and Microfinance Banks will have their interest protected despite having multiple accounts with single registration in any of the banks where they have account and it will continue to enhance credit advancement to bank customer thereby reducing reported cases of scam, impersonation and thefts in the banking industry.
Therefore, all hands must be on deck to ensure that various financial institutions should meet the deadline as stipulated by the Apex bank.
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