In achieving the goals of the Bank Verification Number (BVN), the Central Bank of Nigeria (CBN) recently extended the registration to other financial institutions including microfinance banks, developmental banks, mortgage banks, investment banks amongst others.
Although the BVN exercise had been implemented among the customers of commercial banks in the country resulting in a total of 51.722 million bank accounts linked to the BVN database, it had not been extended to other financial institutions.
In achieving the goal of financial inclusion, financial system unified identification system as well as combating fraud in the system, it had become imperative for the CBN to include the other financial institutions.
The CBN in a circular issued and signed by the Director, Other Financial Institutions Supervision department, Tokunbo Martins, said all Other Financial Institutions (OFIs) are required to enroll their customers on or before July 31, 2017.
The apex bank also noted that effective from August 1, 2017 all customers without BVN linked to their account would not be allowed to make withdrawals from their accounts.
The implementation of the BVN which started in 2014 involved only commercial banks as other financial institutions were left out of the process. The number of BVN issued had risen to 28.747 million as at April 9, 2017 since the implementation. The number of bank accounts that are linked to BVN in the industry currently stands at 51.722 million as at February 2017 according to latest data provided by the Nigeria Inter Bank Settlement System (NIBSS).
CBN in the circular said it had become necessary to extend the BVN enrollment to the customers of other financial institutions to avoid a broken identification link in the banking system. Also it became necessary because some of the OFIS particularly microfinance banks are located in the rural areas of the country and have customers that may not have enrolled with the commercial banks.
“In view of the forgoing, all OFIs are required to enroll their customers on or before July 31, 2017, conspicuously display notices sensitizing customers on BVN in the banking hall, ensure that all new customers have BVN and forward to the directors, Other Financial Institutions Supervision department schedule of customer accounts with BVN on August 7, 2017,” the circular stated.
The BVN which is aimed at revolutionizing the payment system in the country captures bank customers’ biometrics which are electronic verification tools for online and mobile banking that offer unique customer identification, giving unchangeable identification that helps in Know Your Customer (KYC).
It was a tool put in place by the Bankers Committee led by the apex bank to combat electronic fraud in the Nigeria banking sphere, ensuring that every bank customer is identifiable and transactions can be traced.
The BVN is an addition to the Know Your Customer requirement which ensures that the bank knows who is who. The BVN is expected to also minimize the incidence of fraud and money laundering in the financial system as well as enhance financial inclusion.
This is becoming effective as the CBN along with banks are putting together a database of suspected fraudsters so as to blacklist them within the financial system. According to the managing director and chief executive officer of Access Bank, Herbert Wigwe, “Once the database is set up, and there is suspected fraud going through the system, we can have ways of ensuring there is strong deterrent for people who are known as fraudsters in the system.
“Hopefully, if that is implemented, the level of fraud will decrease significantly. Very strict measures will be implemented to make sure that people don’t do it and repeat offenders are taken out of the banking system to make sure that we sanitize the system.”
Last year, the CBN had issued the exposure draft of the proposed framework on the watch-list for the Nigerian banking system to address the increasing incidence fraud, forgeries and other unethical practices in the system.
Launched in 2014, BVN enrollment had begun last year, extending up to January this year for existing bank customers within the country. Aimed at revolutionizing the payment system in the country, the BVN captures bank customers’ biometrics which are electronic verification tools for online and mobile banking that offer unique customer identification, giving unchangeable identification that helps in Know Your Customer (KYC).
It was a tool put in place by the Bankers Committee led by the apex bank to combat electronic fraud in the Nigeria banking sphere, ensuring that every bank customer is identifiable and transactions can be traced. The BVN is an addition to the Know Your Customer requirement which ensures that the bank knows who is who.
Also the BVN was to serve as a fraud management tool in the industry by ensuring that accounts used for fraudulent purposes are identified and blacklisted, giving rise to the framework on watch-list. According to the exposure draft issued by the CBN, the Watch-list is a database of bank customers identified by their Bank Verification Number (BVNs) who have been involved in confirmed fraudulent activities.
The watch-list for the Nigerian banking system was introduced by the apex bank in order to address the increasing incidence of fraud/forgeries and other unethical practices with a view to engendering the needed public confidence that will ensure a safe and sound financial system.
The database which will be hosted by the Nigeria Inter Bank Settlement System (NIBSS) will serve as a guide banks in their financial operations put into categories, holders of accounts in the watch-list “shall be prohibited from all e-channel and non- personal transactions (such as ATM, Internet Banking, Mobile Banking, etc.) including issuance of third-party cheques. Holders must visit bank branches to transact.”