In April 2024, CBN takes action by placing a freeze on accounts lacking BVN and NIN
As of April 2024, the Central Bank of Nigeria has issued a directive imposing a “Post no Debit” restriction on all bank accounts lacking a Bank Verification Number and National Identification Number. The term “Post No Debit” signifies a restriction implemented by banks, preventing account holders from conducting withdrawals, transfers, or any debits from their accounts.
This directive, conveyed through a circular from the central bank to all deposit money banks on a Friday, effectively places a freeze on the funds in such accounts, making them inaccessible for the duration of the imposed restriction.
Additionally, the Central Bank specified that electronic revalidation must be performed for all BVN or NIN linked to and/or linked with all accounts/wallets by January 31, 2024.
The circular bore the joint signatures of Chibuzo Efobi, the Director of Payments System Management Department, and Haruna Mustapha, the Director of Financial Policy and Regulation Department.
The bank highlighted that this directive is a component of initiatives aimed at enhancing financial system stability and reinforcing Know Your Customer procedures across all financial institutions.
Furthermore, there was an amendment to Section 1.5.3 of the Regulatory Framework for BVN, making it obligatory to register all tier-1, 2, and 3 bank accounts and wallets with either BVN or NIN.
The circular explicitly stated, “As part of its commitment to enhance financial system stability, there is a need to reinforce the Know Your Customer procedures within financial institutions regulated by the Central Bank of Nigeria.”
Consequently, the Central Bank of Nigeria is hereby introducing an amendment to Section 1.5.3 of the Regulatory Framework governing Bank Verification Number Operations and the Watch List for the Nigerian banking industry.
Under this amendment, it is imperative for all Tier-1 individual bank accounts and wallets to be associated with BVN and/or NIN. Similarly, it remains compulsory for individual accounts in Tiers 2 and 3 to have both BVN and NIN.
The procedure for opening new accounts will involve the electronic retrieval of BVN or NIN information from the NIBSS BVN or NIMC’s NIN databases, with this information serving as the primary data for the onboarding process of new customers.
Every individual customer account or wallet with a confirmed BVN will be promptly entered into the NIBSS ICAD. This profiling will occur instantly for existing accounts and within 24 hours for newly opened accounts or wallets.
Under the updated regulations, the bank specified that any account or wallet without sufficient funds will undergo a “Post No Debit or credit” status until the prescribed procedures are successfully completed.
Additionally, it stated that the electronic revalidation of all accounts and wallets must be completed by January 31, 2024.
The circular also emphasized that, with immediate effect, no new Tier1 accounts and wallets should be established without the inclusion of BVN or NIN. Furthermore, for existing Tier1 accounts or wallets lacking BVN or NIN, any account or wallet without sufficient funds will be subject to a “Post No Debit or credit” status until the required procedures are fulfilled.
Starting from April 1, 2024, every funded account or wallet will be subjected to a “Post No Debit or Credit” status, and any subsequent transactions will be prohibited.
The BVN or NIN linked to or associated with all accounts/wallets must undergo electronic revalidation by January 31, 2024.
In addition, the Central Bank of Nigeria instructed all Executive Compliance Officers, Chief Compliance Officers, or Heads of the Compliance Functions to familiarize themselves with the accompanying guidance notes to ensure comprehensive and consistent compliance.
For consistent and thorough compliance, it is recommended that Executive Compliance Officers, Chief Compliance Officers, or Heads of the Compliance Functions familiarize themselves with the enclosed Guidance Notes. These notes are applicable to ALL institutions under the regulation of the Central Bank of Nigeria.
Moreover, a thorough audit of BVN and NIN will be carried out soon, and in instances where violations are detected, suitable sanctions will be imposed.
In conclusion, the circular emphasized that all financial institutions under the regulation of the Central Bank of Nigeria must diligently enforce compliance with restrictions on Tier1 accounts/wallets, particularly concerning limits on transaction values and cumulative balances.