A number of steps have been taken by the Federal Government in the last decade to tackle the crime of money laundering in the financial industry. This was what brought the implementation of Bank Verification, where a unique 11-digit number is issued to every account holder and used to consolidate the identity to different accounts at the same or different banks. In simpler words, the Bank Verification Number (BVN) acts as a unifying identification for each person operating a bank account, such that the details are the same across board.
Recently, the government has also extended to the telecommunications industry as Subscriber Identification Module (SIM) registration, activation, swap and re-activation was made to require a National Identification Number (NIN) before being done. While this was being implemented, the NIN was also linked to each person’s account when requested by the customer so that communication to a particular phone number is seamless. While all these occurred, Nigerians never complained about the ethics of the policies; instead, they complained of the bottlenecks of getting them done while they have other things to attend to during work hours.
Apex bank requires comprehensive customer info.
Last weekend, the Central Bank of Nigeria (CBN) released two controversial policy documents. With those documents, the apex bank raised the bar on Know Your Customer (KYC) protocols for financial institutions. Financial Institutions (FI) have also been charged on implementations. Nigerians are now calling this outrageous and absolutely tyrannical if implemented. The two set of guidelines are titled “Guidance Note on Politically Exposed Persons” and “CBN Customer Due Diligence (CDD) Regulations 2023.” These directives contain specific call-to-actions that banks should carry out to combat financial crimes.
The apex bank directed that Money Deposit Banks (MDB) must obtain comprehensive information about customers, including social media handles as part of measures “designed to improve the ability of financial institutions to identify and monitor potential risks linked to customer activities.” This is supposedly because banks have been accused of aiding financial crimes such as money laundering. According to the CDD guidelines, “By including social media handles as part of the customer identification process, banks seek to gain further insights into customers’ online presence and activities, helping to assess potential risks and monitor for suspicious behavior.”
Much to do about lack of central database.
Further, the CDD process for individuals now includes gathering information such as legal name, addresses (permanent and residential), contact details (telephone, email, and social media handles), date and place of birth, Bank Verification Number (BVN), Tax Identification Number (TIN), nationality, occupation, public position held, name of employer, official personal identification number and a unique identifier contained in a valid government-issued document bearing the customer’s name, photograph and signature. Even though all these details could have been stored in a national central database with a unique number (like the United States’ SSN) issued to each person, the mother bank deems it necessary to do it through the banks.
Perhaps this is why the policies never sat well with many Nigerians. The regulations have raised questions on where the line between KYC and each person’s fundamental human rights lies. The Socio-Economic Rights and Accountability Project (SERAP) has already given the Acting Governor of CBN, Mr. Folashodun Shonubi, a three-day ultimatum to do away with the potentially unlawful provisions of the CDD asking banks to collect customers’ social media handles for KYC. Many Nigerians have interpreted that as a move by the government to track, monitor and punish dissenters or oppositions of the current All Progressive Congress (APC) administration.
Developed countries never asked account users for social media handles.
In 2022, the Basel Institute on Governance rated Nigeria as a high-risk country for money laundering and terrorist financing. The country was rated 6.77 out of 10, with the country being 17th out of 128 countries assessed. So, the basis for the regulation was to reduce the country’s vulnerability. But there are also concerns about overregulation, which experts and concerned citizens have said have negative repercussions and may reduce FIs’ inclusion campaign. As a Nigerian-American put it on Twitter, “Even the United States never asked me for my social media handles.”