Banks will soon crack down on customer’s accounts following new directives from the Central Bank of Nigeria (CBN) yesterday, on Bank Verification Number (BVN) operations and watch-list for the banking industry.
Records from the NIBSS show that there were about 45.85 million total bank accounts unlinked, but when compared with the active accounts the number dropped to 15.72 million unlinked to BVN as of February 2017.
The record further shows that as of October 8th, 2017, the total BVN issued were 30,511,506.
In a memo to the Nigeria Inter-Bank Settlement System (NIBSS), Deposit Money Banks (DMBs) and Other Financial Institutions (OFIs) obtained by Daily Trust signed by Mr. Dipo Fatokun, Director Banking and Payment System, the apex bank warned banks and OFIs to ensure proper capturing of the BVN data and validate same before linkage with customers’ accounts; ensure all operated accounts are linked with the signatories’ BVN; and ensure customer’s names on the BVN database are the same in all of his/her accounts, across the banking industry.
Some intelligence reports observe recently that some banks have relaxed the BVN linkage of some customers, a situation that will allow fraudulent transactions in the banking system, a source in the banking industry told Daily Trust.
With the new circular, the apex regulator orders banks to report confirmed fraudulent individuals’ BVNs to NIBSS for update of the watch-list database; report the BVN of deceased customers to NIBSS for update on the BVN database; render returns to NIBSS for enlisting individuals involved in confirmed fraudulent activities, with the report signed by the chief audit executives.
The new regulation also states that CBN (Banking Supervision Department) shall be granted real-time online access to the watch-list database while the chief audit executive of the customer’s bank shall be notified, where a bank needs to watch-list a customer of another bank.
The chief audit executive of the customer’s bank, upon notification, shall investigate within one month and after confirmation of the fraudulent activity, watch-list the customer within two business days.
CBN also mandates NIBSS to ensure BVN data are stored within the shores of Nigeria and shall not be routed across borders without the consent of the CBN while users of the BVN information shall establish adequate security procedures to ensure the safety and security of its information and those of its clients, which shall include physical, logical, network and enterprise security.
Appropriate penalties shall apply to any bank that fails to enlist individuals confirmed to be involved in fraudulent activity, it said.
“Any other stakeholder who fails to perform its stipulated responsibilities shall be penalized by the CBN. A watch-listed individual shall not be allowed to enter into new relationship with any bank. A bank may choose not to continue business relationship with account holder on the watch-list.
“Where a bank chooses to continue an existing business relationship with holders of account on the watch-list, the account holder shall be prohibited from all e-channels, such as ATM, POS, Internet Banking, Mobile Banking, including issuance of third-party cheques.
“A watch-listed customer shall not provide reference to another customer, neither shall he/she be allowed access to credit facility or guarantee credit facilities,” the new circular directed.