CBN goes tough on banking fraud with these new rules

In a circular released yesterday, the Central Bank of Nigeria (CBN) has instructed banks to place Bank Verification Numbers (BVNs) of fraudulent customers on a watchlist . Failure to do so, will lead to the Chief Audit Officer of the affected bank being penalized.

Here are highlights of the circular:

• Banks are expected to report confirmed fraudulent individuals with BVNs to NIBSS for update of its watch list database.
• Banks are expected to update the terms and conditions of account opening package with the following disclaimer for new accounts and communicating the update to existing customers:

If a fraudulent activity is associated with the operation of your account, you agree that we have the right to apply restrictions to your account and report to appropriate law enforcement agencies.

• Customers are also expected to report any fraudulent activity on their accounts.
• 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.
• A watch-listed individual shall remain in the watch-list for a period as specified in the penalty table. In the event of a reoccurrence, the tenure shall begin to count from year one.
• Penalties that applied to watch-listed customers shall apply to all accounts that he or she is a signatory to.
• All aggrieved individuals listed in the watch-list shall go to their bank to obtain formal request for delisting.
• Only a bank that places an individual on the watch-list can request for such delisting.
• A customer’s name can only be removed from the watch list upon expiration of term in the watch-list or a BVN was included in error.

Here is a copy of the circular.