Lakinbofa Goodluck
The federal government recently obtained a court order for a temporary forfeiture of funds in bank accounts without the mandatory Bank Verification Number (BVN). The court also ordered for the forfeiture of funds in accounts with unidentified ownership. Consequently, the 19 banks joined in the suit have been directed to publish bank accounts without BVN in national newspapers with a 14-day notice. The notice is to make provision for individuals with interest in such accounts to approach the banks and justify why the funds in their accounts should not be forfeited to the federal government. Thepronouncement has received divergent reactions from Nigerians. Some quarters believe it is unnecessary because the banks are only custodians of people’s money and BVN is simply an initiative of the Central Bank of Nigeria, which is a regulator of the banks in the country. Therefore, if people have not complied with a policy of the government exercised through the banks, the appropriate thing to do is to return their money,being the rightful owners of the funds. The government on the other hand believes the latest move is aimed at protecting Nigerians from threats to financial crimes, national security and overall safeguard of the financial system.
BVN is a biometric identification system implemented by the federal government through the Central Bank of Nigeria to curb illegal banking transactions in the country. According to the CBN, the purpose of the Bank Verification Number (BVN) is to uniquely verify the identity of each Bank’s customer for ‘know your customer’ (KYC) purposes.The policy was introduced in February 2014 with ample time for bank customers to register. Data from the Nigeria Inter-Bank Settlement System Plc (NIBSS) shows that as at October 22nd 2017, a total of 30, 655, 492 BVN had been issued. Although, there are no official figures of the total banking population in the country, the report of the EFInA 2016 suggests that about 37million Nigerians have access to bank accounts, which represents 38.3% of the adult population. Similar to the practice in the telecommunication industry, some individuals operate more than one bank account; some even operate up to ten accounts. Thus the total bank accounts in Nigeria are as high as 90million but only operated by less than 40% of adult Nigerians. In other words, about 60% of bankable Nigerians are unbanked. This is a reality that explains why the economy is the way it is considering that sizable funds move around freestanding from the banking system.
The BVN has many benefits for the financial sector, the economy and the security of the nation. Firstly, it affords banks the opportunity to have a proper knowledge of their customers. Its implementation also serves as deterrence for individuals that move from bank to bank to obtain loans without sufficiently respecting the terms of the loans. Pre-BVN, some individuals would run to a bank to secure loans without servicing existing loans in another bank. Unsuspecting banks may grantloan request because they are unaware of the banking history of the applicant, and this could eventually lead to bad debt for the bank and ultimately threatens its liquidity. But with BVN, every customer’s banking history is easily accessible, which helps to detect prospective fraud in the bank. Secondly, the BVN is also helpful in tracing criminal activities. Prior to the introduction of BVN, it was easy for individuals to open accounts with any bank just by producing a supporting ID card. This was further heightened by the banks’ drive to corner customers and increase capital base in the tightly competitive banking industry. This provided a loose end for criminals to exploit without necessarily leaving a trace for uncovering. In the BVN dispensation,security officials will find it easier to trace bank transactions in their investigation just by identifying the BVN of an individual. This is because the implementation of BVN discourages opening a bank account by proxy or altered identity. Thirdly, the BVN will also curb money laundering in the country. Fourthly, the policy will help the government in ascertaining the actual population of active bank customers in the country and guide against the incidence of double counting. Ultimately, the BVN can be used for social security programmes of the government in the future.
Considering the benefits of the BVN and its importance to the processes of the financial system in Nigeria, the Central Bank of Nigeria should actually be commended for introducing the policy in the first instance. Operating accounts without BVN does not only pose a threat to the banking system; it also poses a threat to the security of the country. More so, since the introduction of the policy and the expiration of the deadline for registration, many unregistered individuals have been unable to operate their bank accounts. Understandably, some of the owners of these bank accounts do not currently reside in the country. They are either based abroad or on short term personal assignments abroad. Some of the people constantly send money into their bank accounts in Nigeria as a way of preparing for their return into the country.In fairness, the CBN had made provision for Nigerians based abroad to register by visiting branches of Nigerian banks in their country of residence or make use of the Offshore Registration Centres such as the Online Integrated Solution consultant (OIS) provided by the CBN. But some people could not take advantage before the deadline for registration elapsed. In this case, for an individual to go through the pain of travelling to Nigeria all in the name of registering for BVN must mean that he possesses a significant amount of money in the bank account.
Although, it is worrying that anyone would be in the country and refuse to register for the all-important number; yet it is also understandable that people may even have more logical reasons for non-compliance.There is a possibility that a percentage of the owners of these accounts are no more, which means they can never register BVN. It is in the light of these possibilities that one has to examine the latest move by the federal government to temporarily confiscate all accounts in 19 Nigerian banks without BVN. According to analysts, about N3trillion currently domicile in 46 million bank accounts without BVN. And as expected, banks are currently doing business with the funds with attendant profit. However, for a government that is running a budget deficit and has been looking to borrow from every available lender, this isprobably another opportunity to attract funds into the government coffers. Analysts have wondered why the government would obtain an ex-parte order for the forfeiture of people’s funds without duly carrying other stakeholders along, and leaves room for the decision to be challenged in court. More so, pulling out N3trillion from the Nigerian banking system, analysts believe, can create liquidity crisis. Peripherally, the new move by the government appears to be a form of daylight robbery and should be discouraged. The inherent shortcomings in the latest attempt by the government also provide opportunities for the decision to be challenged in court. Nevertheless, the banking system operates with tight rules and regulations that demand individuals to comply in the interest of the country.
Whilst, one may not be thoroughly bothered about account holders resident in the country, it is important for the government to be fair to Nigerians abroad. The government has to reconsider its deadline and provide an accessible system for them to register. The CBN can coordinate a process for Nigerians abroad to register just as it did before the expiration of the deadline. It is also necessary to take into cognisance complaints from the people abroad. For instance, apart from the insufficient registration centres, Abiodun Salami, who resides in Paris, said that whilst he was able to register at the Nigerian Embassy in Paris through a consultant, many others could not register because the consultant always had issues with the registration process. If the government is truly interested in providing a fair opportunity for Nigerians abroad, it is important to provide accessible registration options with ample duration. Provision must also be made for the next of kin of individuals that are either dead or handicapped to be able to link accounts. In the end, if customers are still unable to obtain the BVN after the provision from the CBN, then the government can justifiably confiscate the funds in their accounts.
In the meantime, all options to allow everyone register must be considered before people’s funds are confiscated; otherwise it will amount to an unfair treatment of customers and a breach of trust.The more pertinent question is what the forfeited funds will be used for when they are mopped from the private sector that should be driving the economy now. The main problem with Nigeria is not necessarily the absence of funds. Our problem has been the manner of our expenditure and the corruption in the system. Whilst the government is seeking morefunds; some individuals within the government are probably strategizing on how to embezzle the funds. In Nigeria, an individual can be declared wanted for embezzling billions of pension funds and two years later, the wanted is recalled from exile and promoted with benefits.To put it appropriately, he was handsomely rewarded for corruption. If in the end people’s funds are forfeitedto the government only for someone to steal or embezzle, then nothing can be more tragic.
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