To strengthen the battle against money laundering in Nigeria, the Central Bank has directed that all bank customers must link their Bank Verification Number (BVN) and/or National Identification Number (NIN) with their bank accounts before March 1, 2024. This new directive will put pressure on bank employees, OLUWAKEMI ABIMBOLA and DAMILOLA AINA write

At the Financial Action Task Force plenary held late October in Paris, France, Nigeria failed to scale a review of Money Laundering and Terrorism Financing Risk conducted by the global financial intelligence agency.

The global agency faulted Nigeria’s anti-money laundering war, which had landed the country on the international grey list in February alongside South Africa, and 20 other countries.

Although the Nigerian Financial Intelligence Unit said it had been working to meet the FATF recommendations on money laundering and terrorism financing, it did not scale the review carried out by the FATF at its last plenary.

Countries on the FATF grey list have been identified as having strategic deficiencies in their anti-money laundering, terrorist financing, and proliferation financing regimes. According to KPMG, the implications for the greylisting of two of the biggest economies in Africa may be far-reaching.

Concerning Nigeria, KPMG said that “FATF noted that although Nigeria had made some progress since the adoption of its Mutual Evaluation Report in August 2021 it is required to implement FATF’s action plans. This FATF greylisting adds another layer of risk and complexity to businesses that already perceive Nigeria as a high-risk country for anti-corruption and other financial crime risks. This may put businesses with connections to Nigeria under more regulatory scrutiny, as regulators may expect them to implement more stringent AML/CFT compliance measures to mitigate the risks associated with greylisting.”

Also, the greylisting may result in higher compliance costs and increased due diligence requirements for businesses, making transactions with Nigerian counterparties more difficult.

A key component of the anti-money laundering requirement of FATF is Know Your Customer, which helps financial institutions verify the identity of new and existing customers.

In a bid to get the country off the greylist, the Central Bank of Nigeria on Friday directed all commercial banks to bar customers without Bank Verification Numbers and National Identity Numbers from having access to their accounts from March 1, 2024, by putting a ‘Post No Debit or Credit’ restriction on such accounts.

The circular with reference PSM/DIR/PUB/CIR/001/053 was jointly signed by the Director of the Payments System Management Department, Chibuzo Efobi, and the Director of 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 BVN has been an integral part of identity verification in Nigeria, especially for financial services businesses, since it was introduced in February 2014.

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 with the threat of sanctions hanging on them.

The circular said, “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.”

The PUNCH gathered that Tier-1 accounts were the major source of concern where discrepancies in information were involved. 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.

The Executive Director of, Centre for the Promotion of Private Enterprise, Muda Yusuf, reacting to CBN’s latest directive, stressed the need for a digital database to harmonise all information of every citizen.

He said, “The country should have an organised database, and some of the new government officials have indicated plans to put together a framework to harmonise all these databases all over the place.

According CPPE boss, the NIN is the central database under which all other things will be centralised.

“The Know Your Customer policy is one of the effective ways to stop the flow of illicit funds because there are a lot of things going on in the economy. Some of which are also disrupting and affecting the effectiveness of policies.

“If we don’t have this proper database, the illicit funds will continue to create problems for the economy and we need to clean up the space.

“So for the CBN, there must be a way to coordinate these things and get the data seamlessly without necessarily asking people to come around to authenticate and stop creating problems for citizens physically,” he remarked.

In his reaction, the newly-elected President of the Association of Mobile Money and Bank Agents in Nigeria, Fasasi Sarafadeen, said “We are in support of the policy but the implementation and the urgency is going to create a crisis for the country.

“It is going to throw people into hardship. We are calling on CBN to meet with stakeholders and solve all the access issues so that we can spread this over a year for to customers to regularise. You don’t need to freeze their accounts; you only need to instruct your service providers that they should link the NIN of their database. “Retrieve their customers’ NIN from NIMC and retrieve their BVNs from NIBSS and marry the two. You don’t need to inflict punishment on the masses of the people.”

A financial analyst, Brain Essien, stated that while the circular is not an entirely bad idea, it was not a novel one, especially given that a few years back, the CBN issued a similar directive.

“Is the CBN telling us that the circular they released way back then on this matter was not acted upon or enforced by their regulatory department? If so, why not? This invariably reflects badly on the central bank as we should be way past this hurdle by now! Also, if our Money Deposit Banks and other banks have been managing bank accounts on behalf of customers without said verification processes as BVN or NIN information, should they, the banks, not have been punished for such negligence by now?” he quizzed.

Making a case for improved adoption of technology, Essien asked, “Our banks spend a lot of money, as gleaned from their quarterly financials, on technological upgrades, advancements and maintenance. They should put these to good use and not overburden their lowly paid staff due to their negligence in pursuing due diligence, with laborious and non-profiting assignments.”

Speaking with The PUNCH, the Chief Responsibility Officer of Peculiar Innovative Consulting, Segun Aremu, also welcomed the initiative, stating that it would strengthen Nigeria’s financial system.

“Our financial system thrives on the integrity of our information. This circular that has come out will help to strengthen the fight against money laundering. Money laundering thrives on information asymmetry because someone can open 10 accounts with 10 different names where no data connects the person to the accounts. That is why you see the NIN coming to play here.

“Every single person in Nigeria is expected to have NIN and if you have a BVN, it is easily traceable anywhere you are in the world and the number of accounts you have. It helps to check money laundering and deepen our financial system,” he noted.

A senior official of a Tier-1 bank in Lagos told The PUNCH 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.

“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 also said if the rush of customers without BVN and NIN was too much, the lenders 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.

The apex bank’s circular also elicited varied reactions on the popular social media platform, X, (formerly known as Twitter). An economy enthusiast who tracks the performance of Nigerian ministers every week, OpeOluwa (@OpeBee) stated that the timeframe for the implementation of the PND was okay as it would allow Nigerians in rural areas to regularise their accounts.

He said, “Most mobile banking customers especially those in rural areas don’t have BVN. The idea is to drive BVN registration (which will later be harmonised with NIN) in rural areas to expedite financial inclusion. Cardoso sabi ball.”

Reacting on X (formerly Twitter), Usman @Abiola_Usman said, “This new NIN requirement for account opening is tricky. It means that if I’m acquiring a customer, I’m doing a two-level check on BVN + NIN, and both have tokenisation (two OTPs), which means a longer onboarding time. Then, I will need a PII matching script somewhere to validate foundational KYC data.”

Another X user, Seun Odegbami, said: “Stressful for customers, especially those in the fintech space who are trying to acquire customers. Remember that they still have “TRUST” issues. So, how do they not to onboard easily? NIN wey get problem, or is it BVN that people are scared to give you? Sometimes.”

“So, they have so many accounts without no BVN before? This country na joke,” Stanley Junior noted.

While the stakeholders are still divided about the implementation of this policy, there is no doubt that the move would improve Nigeria’s anti-money laundering fight and possibly boost its chances of getting off the global grey list. (The PUNCH)

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