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Home Sectors Financial Services

CBN wants to be able to freeze bank accounts linked to suspected criminals

Emmanuel Abara Benson by Emmanuel Abara Benson
July 16, 2020
in Financial Services
CBN reduces over-the-counter withdrawals to N100k, N500k per week for individuals, companies
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The Central Bank of Nigeria (CBN), yesterday, demanded statutory powers from the Nigerian Senate that will enable it to freeze bank accounts that are linked to criminal suspects.

The apex bank’s director in charge of legal services, Mr. Kofo Salam-Alade, argued this point while appearing before a Senate Committee Hearing for a new Act seeking to replace the Banks and Other Financial Institutions Act (BOFIA) of 2004. The lawmakers have commenced the process of repealing/replacing BOFIA 2004 with the re-enactment of BOFIA 2020. However, a particular omission in the new bill has the CBN worried.

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The details: In his presentation to the lawmakers, Mr. Salam-Alada pointed out that the new BOFIA bill has ‘inadvertently’ omitted a clause that should normally grant the CBN Governor the power to freeze any bank accounts linked to criminals, using a court order. Note that BOFIA 2004 contained this clause. However, the new bill seeking to re-enact BOFIA does not have it. Interestingly, this new bill has passed its second reading at the senate, meaning that it could soon become law.

Speaking further, Mr. Salam-Alade argued that the clause should be re-introduced into the new BOFIA bill in order not to frustrate the apex bank’s fight against fraud and other financial crimes.

READ ALSO: FG rejects calls for tax reduction, offers tax relief for donors to intervention funds

“This omission erodes the powers of the CBN and creates a huge gap in the regulatory and resolution framework. Therefore, we propose that the extant provisions should be reinstated,” Mr. Salam-Alada noted.

Creation of Credit Tribunal: The CBN director later called on the lawmakers to consider the creation of a credit tribunal that will have the responsibility of addressing the persistent issue of non-performing loans in the banking sector. Such a tribunal is expected to fast-track the recovery of bank loans and other financial institutions through the enforcement of rights over collaterals. Salam-Alade said:

“As part of measures to address the role of nonperforming loans, we propose the creation of a credit tribunal. The overarching objective is to create an efficient regime for the recovery of eligible loans of banks and other financial institutions and enforcement of rights over collateral securities.

READ ALSO: Nigerian Treasury Bills stay flat at 4.02% per annum

“Several new types of licensed institutions have entered the Nigerian financial services sector since the enactment of the 1991 Act. These include the non-interest banks, credit bureaux, payment system service providers, among others. There is a compelling need to introduce new provisions in the bill to address the unique peculiarities of these institutions.” 

Another important point Salam-Alade raised during the hearing was the fact that the CBN’s power to intervene and rescue a failing bank was ‘inadvertently omitted in the new BOFIA bill.

Further Reading attempting to explain this proposed bill.


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Tags: Banks and Other Financial Institutions ActBusiness NewsCBNKofo Salam-Alade
Emmanuel Abara Benson

Emmanuel Abara Benson

Emmanuel Abara Benson is an experienced business reporter and editor. He currently edits articles at Nairametrics. Reach him via email on Emmanuel.abara@nairametrics.com and follow him on Twitter @Mr_Abara for his personal opinions.

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Comments 1

  1. Stella ObiohaUdeozor says:
    July 16, 2020 at 9:27 pm

    ??????????????About time!

    Reply

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