Central Bank of Nigeria (CBN) has released a regulatory framework for Bank Verification Number (BVN) operations and watch-lists for Nigerian financial system, in the quest to develop and enhance security of electronic payment systems in the country.
The framework was communicated by the apex bank, yesterday, in a circular dated October 18, 2017 to all deposit money banks (DMBs), switches, mobile money operators (MMOs), payment terminal service providers, payment solution service providers, microfinance banks and others, titled: “Regulatory framework for BVN operations and watch-list for Nigerian Banking Industry”.
In the circular which takes immediate effect, CBN’s Director, Banking and Payments system department, Mr. Dipo Fatokun stated: “This framework defines the establishment and operations of a Watch-list for the Nigerian Banking Industry, to address the increasing incidences of frauds, with a view to engendering public confidence in the banking industry. The framework, without prejudice to existing laws, is a guide for the operations of the Watch-List in the Financial System”.
It provides standards for the BVN operations and Watch-list for the Nigerian Banking Industry.” The Watch-list comprises a database of bank customers’ identified by their BVNs, who have been involved in confirmed fraudulent activities in the Nigerian banking industry.
The guideline stated that participants in the service are grouped into five categories namely: the CBN, Nigeria Inter-Bank Settlement System (NIBSS), Deposit Money Banks (DMBs), Other Financial Institutions (OFIs) and bank customers. It further noted that entities that may have access to BVN information, subject to the approval of the CBN include: DMBs, OFIs, Mobile Money Operators, Payment Service Providers, Law enforcement agencies, Credit Bureaus and Other entities as applicable.
On sanctions and penalties, the circular noted that appropriate penalties shall apply to any bank that fails to enlist individuals confirmed to have been involved in fraudulent activity, adding that any other stakeholder who fails to perform its stipulated responsibilities shall be penalized by the CBN.
The circular stated further: “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. Where a bank chooses to continue an existing business relationship with holders of account on the watch-list, the account holder shall be prohibited from all e-channels, such as ATM, POS, Internet Banking, Mobile Banking, including issuance of third-party cheques.”
“A watch-listed customer shall not provide reference to another customer, neither shall he/she be allowed access to credit facility or guarantee credit facilities. 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.”
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