In what seems to be yet another ingenious way of generating money, the Federal Government this week approached a federal high court seeking an interim forfeiture order of funds in bank accounts with no BVN (Bank Verification Number) or incomplete KYC (Know Your Customer) requirements.
BVN is issued by the Central Bank after biometrics (finger print and photograph) details of a bank customer have been captured. KYC requirements are a means of identification and proof of address required before customers can operate or open a bank account.
Key highlights of the court order
The Federal Government wants the following information from the banks:
- Names of accounts without BVN.
- Account Numbers.
- Outstanding balances.
- Domicilary accounts without BVN.
- Branch/locations where these accounts are domiciled.
In addition, the government has also sought the approval of the court to instruct the banks to disclose any investments made with these funds and to freeze any outward movement from these accounts.
Last chance
The order also empowers the government or any agent it applies to advertise the accounts without BVN in a widely circulated newspaper and gave a period of 14 days for the account holders to claim ownership and give a tangible reason why the funds should not be forfeited.
Penalties for banks that fail to comply
The court order mandates the Central Bank of Nigeria (CBN) to appoint an examiner to examine the books of any commercial bank that fails to comply.
Why is the government doing this?
Forfeited funds will be an additional source of revenue to the government potentially running into billions of Naira. Individuals involved in illegal activities will be unwilling to come forward to claim such funds, as that could result in their prosecution.
Banks won’t let go easily
The move serves as a huge blow to banks, as such funds have served as revenue drivers. The banks could decide to appeal the judgement while they embark on a last minute BVN exercise for customers. The banks may also be against the move as it would reveal funds they may have been keeping off their balance sheet.
Legal Opinions
A few lawyers spoken to by Nairametrics, indicate the court order will likely be vacated on appeal by banks and Nigerians that are affected by this court order. They opine that, the court may have been ‘too forward’ by granting an exparte order that can be liken to a Fait Accompli. According to a legal expert, “why grant an exparte order giving the FG powers to seize accounts without BVN, when the case being determined is whether the FG has powers to seize funds in bank accounts on the back of non registration of BVN.”
Several CBN circulars indicate the penalty for non compliance with a BVN is a “No Customer Initiated Debit” which means the customer will not be able to withdraw money from the account until the holder obtains a BVN to the account. It will appear this is the legally plausible powers the CBN has over accounts that do not comply with BVN.
It is also interesting to note that the CBN had in August 1, this year, approved an extension of BVN compliance for Other Financial Institutions to December 31, 2017. It therefore calls to questions the validity of the FG, court order.
The CBN in 2015 said Nigeria had over 52 million bank accounts and over 30 million had not complied with the BVN enrollment.
Here is a copy of the judgement.