CBN updates BVN rules to forestall fraudulent activities in banking transactions

CBN updates BVN rules to forestall fraudulent activities in banking transactions

- There are indications that commercial banks will soon crack down on customers' accounts

- This is due to a new directive from the Central Bank of Nigeria (CBN)

- The move is aimed at curbing fraudulent transactions in the Nigerian banking system

A report by Daily Trust indicates that commercial banks in the country will soon crack down on customers' accounts following a directive by the CBN.

According to the report, the is already updating the Bank Verification Number (BVN) rules in order to forestall fraudulent activities in the Nigerian banking system.

The report noted 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 8, the total BVN issued were 30,511,506.

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In a memo to the Nigeria Inter-Bank Settlement System (NIBSS), Deposit Money Banks (DMBs) and Other Financial Institutions (OFIs), the CBN warned banks and OFIs to ensure

1. Proper capturing of the BVN data and validate same before linkage with customers’ accounts

2. Ensure all operated accounts are linked with the signatories’ BVN and

3. Ensure customer’s names on the BVN database are the same in all of his/her accounts, across the banking industry.

The CBN's instruction is reportedly due to reports that some banks have relaxed the BVN linkage of some customers, a situation that would likely increase the rate of fraudulent transactions in the banking system.

With the new circular, the CBN has ordered banks to

1. Report confirmed fraudulent individuals’ BVNs to NIBSS for update of the watch-list database

2. Report the BVN of deceased customers to NIBSS for update on the BVN database and

3. 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 the CBN's 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.

Also, 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.

“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 instructed.

Meanwhile, the Inter-Governmental Action against Money Laundering in West Africa has pledged support for efforts by the EFCC and the Nigerian government to ensure the lifting of the suspension of the Nigerian Financial Intelligence Unit (NFIU) from the Egmont Group in the shortest time possible.

The director-general of GIABA, Adama Coulibaly, made the pledge on Wednesday, September 27, when he led a delegation on a courtesy visit to the acting chairman of the EFCC, Ibrahim Magu, at the commission's headquarters in Abuja.

While commending the EFCC for championing the anti-corruption crusade in Nigeria, Coulibaly said that the agency’s achievements were not only for the country, but for the African continent.

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Source: Naija.ng

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