FOLLOWING the Central Bank of Nigeria (CBN)’s latest directive to financial institutions to halt transactions on all individual accounts or wallets without Bank Verification Number (BVN) or National Identity Number (NIN), over 75 million bank accounts are now under threat, investigation by Sunday Tribune has revealed.
Latest data from the Nigeria Inter-Bank Settlement System (NIBSS) have shown that the banking industry recorded 59 million (58,999,262) BVN counts as of October 9, 2023.
Recall that the CBN mandated financial institutions to halt transactions on all funded individual accounts or wallets without BVN or NIN, effective March 1, 2024.
Checks on the NIBSS data showed that the total number of bank accounts in the country as of 2021 was 191.4 million, out of which 133.5 were actively in use. It is expected that the figure on the total number of bank accounts would have risen as of today.
Commenting on the development, a public affairs analyst, Michael Egwuonwu, commended the policy, adding it will help in harmonising identities in the country because presently, Nigeria still operates data silos.
According to him, the Independent National Electoral Commission (INEC) doesn’t speak to BVN, BVN doesn’t speak to NIN, NIN doesn’t speak to everybody else.
“Driver and Vehicle Licensing Agency (DVLA) doesn’t like the rest. Immigration strolls around when they want to. Nigeria Police are oblivious of all data. The Economic Financial Crimes Commission (EFCC) is looking for slips, and the Independent Corrupt Practices and Other Related Offences Commission (ICPC) couldn’t care less while the Nigerian Population Commission (NPC) remains on its own.
“Fix these, and then we can start looking at this API business that should be the private sector driven,” he stated.
Analysis by Sunday Tribune revealed that going by available data as of 2021, over 75 million bank accounts would be affected as banks and other financial institutions prepare to halt transactions on such accounts due to absence of BVN and NIN.
Industry analysts have cited several factors for the increasing number of inactive accounts in the country.
According to them, these factors include an increase in the prices of goods and services, low income accompanied by the low purchasing power of Nigerians, increasing rate of unemployment, and immigration among others.
An inactive or dormant account is a bank account that has had no activity on it for 12 months.
Banks convert accounts with no activity for a long period into inoperative or dormant accounts to curtail the risk of fraud. By segregating the accounts, banks bring to their workers’ attention the risk involved in these accounts and call for their due diligence.
The apex bank also said that all existing unfunded individual Tier 1 accounts/wallets without BVN or NIN shall be placed, with immediate effect, on “Post No Debit or Credit.”
CBN disclosed this in a circular to all commercial, merchant, non-interest and payment service banks, other financial institutions and mobile money operators, noting that all individual existing and new tier 1, 2 and 3 accounts/wallets must have BVN or NIN.
The circular signed by the Director, Payment System Management Department at the CBN, Mr Chibuzo Efobi and Director, Financial Policy and Regulations Department, Mr Haruna Mustapha, noted that the mandate was part of the apex bank’s effort in promoting financial system stability which has led to its amendment of Section 1.5.3 of the Regulatory Framework for BVN Operations and Watch-List for the Nigerian Banking Industry (Guidelines).
The apex bank said: “As part of its effort in promoting financial system stability, it becomes necessary to strengthen the Know Your Customer (KYC) procedures in financial institutions under the purview of the CBN.
“Accordingly, the CBN hereby issues an amendment to Section 1.5.3 of the Regulatory Framework for BVN Operations and Watch-List for the Nigerian Banking Industry (The Guidelines).
“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 process for account opening shall commence by electronically retrieving BVN or NIN related information from the NIBSS’ BVN or NIMC’s NIN databases and for same to become the primary information for onboarding of new customers
“All existing customer accounts/wallets for individuals with validated BVN shall be profiled in the NIBSS’ ICAD immediately and within 24 hours of opening accounts/wallets.
“Consequently, implementation shall be as follows: Effective immediately, no new Tier 1 accounts and wallets should be opened without BVN or NIN.
“For all existing Tier 1 accounts/wallets without BVN or NIN: Effective immediately, any unfunded account/wallet shall be placed on ‘Post No Debit or Credit’ until the new process is satisfied.
“Effective March 1, 2024, all funded accounts or wallets shall be placed on ‘Post No Debit or Credit’ and no further transactions permitted.
“The BVN or NIN attached to and/or associated with all accounts/wallets must be electronically revalidated by January 31, 2024.
“To ensure uniform and full compliance, the executive compliance officers, chief compliance officers or heads of the compliance functions are advised to acquaint themselves with the attached guidance notes which becomes applicable to all institutions regulated by the CBN.
“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 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.”
