In a move aimed at enhancing financial system stability and reinforcing Know Your Customer (KYC) procedures, the Central Bank of Nigeria (CBN) has instructed commercial banks to impose a “post no debit” restriction on accounts lacking Bank Verification Numbers (BVN) and National Identity Numbers (NIN) from March 2024. The directive signifies that customers without BVN and NIN will be unable to access their accounts, prompting concerns among account holders and financial institutions.
According to a senior official from a Tier-1 bank in Lagos, the directive, while beneficial for industry sanitization, is expected to trigger a rush as customers scramble to regularize their accounts. The surge in registrations is predicted to strain bank employees and National Identity Management Commission (NIMC) centers, potentially causing delays and operational challenges.
The CBN’s circular, jointly signed by the Directors of Payments System Management and Financial Policy and Regulation Departments, amends the Regulatory Framework for Bank Verification Number Operations. It mandates the electronic retrieval of BVN or NIN-related information for new customer onboarding, making it a prerequisite for Tier-1, 2, and 3 bank accounts and wallets.
Key points from the circular include:
- Mandatory BVN or NIN for Tier-1 bank accounts and wallets for individuals.
- Electronic retrieval of BVN or NIN-related information for onboarding new customers.
- “Post No Debit” restriction on unfunded Tier-1 accounts/wallets without BVN or NIN.
- Existing customer accounts/wallets with validated BVN to be profiled in NIBSS ICAD.
- Electronic revalidation of all BVN and NIN attached to accounts/wallets by January 31, 2024.
- No new Tier-1 accounts/wallets to be opened without BVN or NIN.
While the CBN’s directive is expected to enhance KYC procedures and curb financial crimes, concerns have been raised about potential challenges arising from the anticipated rush of customers seeking BVN and NIN registrations. Some banks may extend working hours to cope with the influx, with possible implications for staff and operational efficiency.
Financial institutions are urged to implement strict compliance with the restrictions on Tier-1 accounts/wallets, and a comprehensive BVN and NIN audit will be conducted, applying sanctions for identified breaches. The directive aligns with the CBN’s earlier intention, announced on April 6, 2023, to clean up the banking sector by removing accounts not linked to BVN.
Experts and stakeholders emphasize the importance of Nigerians complying with the directive, stating that it contributes to national security, anti-money laundering efforts, and overall financial system integrity. The CBN has provided a reasonable timeline for customers to complete BVN and NIN registrations, urging financial institutions to ensure uniform compliance with the new guidelines.