CBN,Explain Why 45 Million Accounts Are Not Linked To BVN – The Punch - OLAMORE
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CBN,Explain Why 45 Million Accounts Are Not Linked To BVN – The Punch

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In Nigeria’s dubious financial labyrinth, regulations are made but hardly obeyed, no thanks to the weakness of the regulator. Take the implementation of the Bank Verification Number, which the Central Bank of Nigeria and the Bankers’ Committee inaugurated a few years ago to deescalate fraudulent practices in the banking industry: A recent probe by the House of Representatives Ad hoc Committee on Unclaimed Funds in Nigerian Commercial Banks discovered that 45 million bank accounts are not yet linked to the BVN. The committee said the accounts contained a staggering N1.2 trillion.

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At inception in February 2014, the CBN and its partners presented iron-clad arguments for enrolment, mandating the banking public to register or have their accounts rendered inoperable after the original deadline of March 2015. The BVN is an 11-digit number biometric scheme that enhances the integrity of an individual’s bank accounts. It supposedly protects a customer’s bank account from unauthorised access, addresses issues of identity theft, and enables the industry to fish out blacklisted customers. It aims to combat money laundering and duplication of accounts being used for fraud. In an era where cybercrime is rife, these features are unimpeachable.

Like most good policies in Nigeria, however, the implementation has been compromised, which is a shame. The initial deadline of March 2015 was shifted to June 2015. When that failed, the CBN shifted it to October 2015. Initially, the target was a 40 per cent compliance rate by December 2014, reaching 70 per cent by March 2015. The CBN introduced the ‘BVN Premium’ and ‘BVN Lite’ along the line to enhance compliance. The ‘Lite’ policy grants new bank account holders temporary access to their accounts, which should ordinarily be regularised within a given time frame. But trust the Deposit Money Banks; they have thoroughly abused it. Characteristically, the CBN under its Governor, Godwin Emefiele, has looked the other way.

Thankfully, the House has not. A 2019 report said the DMBs open millions of bank accounts annually not linked to the BVN. As of May 2020, there were 111.54 million active accounts in the industry and many more inactive ones. The Nigerian Inter-Bank Settlement System said that as of February 13, just 52.85 million accounts had BVNs. In a country battling with serious fraud, money laundering, terrorism and illicit drug trafficking funding, this gap is scandalous. The DMBs carry on business as usual since the penalties are either not enforced, or infractions attract only mild rebukes.

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This laxity has implications for the financial system. Poor enforcement of the BVN rule aggravates digital financial crime. Between 2012 and 2014, Nigeria lost $157.5 billion to illicit financial flows, the highest in the continent, says the President, Major General Muhammadu Buhari (retd.). According to the New York-based Brooklyn Institute for Social Research, Nigeria, along with South Africa, DR Congo, and Ethiopia combined, account for half of the illicit financial flows out of sub-Saharan Africa.

Additionally, hard drug smugglers, corrupt politicians, Internet fraudsters and dodgy private sector operators exploit the loophole to undermine the system. It encourages tax dodgers to escape the net of the Federal Inland Revenue Service, and of its state counterparts, resulting in enormous income losses for the two tiers of government. At 6.1 per cent, Nigeria has one of the lowest tax-to-GDP rates in the world. All this indicts and portrays the CBN as toothless. It barks without biting.

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Indeed, there is a toxic culture of rules/regulations exculpation in the CBN. Notable is the mishandling of the stamp duty remittance. At various times, the National Assembly alleged that commercial banks, which collect the N50 per transaction on behalf of the government, withheld between N7 trillion and N20 trillion of the takings. The CBN recovered only N35 billion from the banks in 2019. Compliance with the dictates of the Treasury Single Account in which all Ministries, Departments and Agencies are mandated to remit all income to a single account at the CBN for easy tracking has suffered the same fate. On a few occasions, the CBN fined some banks for flouting the TSA rule, but since the sanctions are neither regular nor hefty, the power of deterrence is reduced.

Despite elaborate extant anti-money laundering regulations, the Economic and Financial Crimes Commission accused a bank managing director of receiving $115 million in cash from a government minister to compromise the 2015 general election. At the end of the day, the bank chief was rewarded with another top post in another commercial bank. A judge of the Federal High Court similarly escaped censure. In court testimonies, she opened an account without proper Know Your Customer requirements, including using an uncompleted building as the address for the account holder. During the trial of a former governor in the South-West, bank officials recounted in court how they used an airplane to ferry billions of naira to the state capital in clear contravention of the money laundering law. The bankers and the bank went scot-free. Other jurisdictions impose harsh penalties for financial misdeeds. South Africa’s central bank once imposed a combined $12 million in fines on four top banks for lax anti-money laundering controls.

The BVN scheme was projected at a cost of $50 million at inception. The way the CBN is going about it suggests that it is money badly spent. Therefore, things should change. Enforcement of extant rules should be inevitable in the event of violations.

The ad hoc House committee should get to the bottom of this, compelling the CBN to explain in detail the number of accounts not linked to the BVN, why this is so and the sanctions – if any – it has meted out to the defaulting DMBs.

To underscore the seriousness of the issue, the House should exact a definite time frame from the CBN on how and when it would enrol all bank account holders onto the BVN scheme. This will deepen the integrity of Nigeria’s financial system, protect customers, and enable the authorities to punish delinquent behaviour promptly and forcefully.

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