The House of Representatives, has requested the Central Bank of Nigeria (CBN) to temporarily halt the implementation of the directive instructing banks to gather and verify customers’ social media handles.
The decision was made during the plenary session on Tuesday after a motion sponsored by nine lawmakers was approved.
Why the motion was passed
Nairametrics had reported earlier that The Central Bank of Nigeria (CBN) issued guidelines in June stating that the purpose of the regulation, which is a component of banks’ know-your-customer (KYC) procedures, is to deter financial crimes and terrorism while improving the accuracy and comprehensiveness of customer identification.
According to the CBN, the policy was to empower financial institutions to acquire information regarding customers’ online presence and activities in order to more effectively evaluate potential risks related to money laundering, terrorism financing, and proliferation financing.
The Central Bank of Nigeria (CBN) released this statement as part of its Customer Due Diligence Regulations 2023 for financial institutions under its regulatory purview as it takes a decisive stance against financial crimes.
Also, this policy was to reflect CBN’s commitment to keeping pace with technological advancements and evolving risks in the financial sector.
Policy violates privacy rights
During the debate on the motion, Kelechi Nwogu, a representative from Rivers, highlighted that although the policy is praiseworthy, it infringes upon Section 37 of the constitution, which safeguards privacy rights.
- “As laudable as this directive may appear, it is unnecessary as it is likely to bear pressure on teeming Nigerian masses at a trying period,” he said.
Sufficient financial identification measures on ground
He argued that financial institutions in the country already possess sufficient customer identification measures such as names, telephone numbers, passport photographs, emails, national identification numbers (NIN), biometric verification numbers (BVN), utility bills, and other essential requirements.
According to the lawmaker, there are more effective methods for monitoring money laundering and terrorism financing, such as utilizing the Nigeria Police Force (NPF), Nigeria Financial Intelligence Unit (NFIU), the Economic and Financial Crimes Commission (EFCC), intelligence agencies, and crime tracking agencies.
Potential to exclude semi-illiterate business people
He emphasized further that traders not on social media would be excluded. He said the policy may cause “untold hardships” to millions of Nigerians, especially the illiterate or semi-literate business owners, traders and entrepreneurs living in the villages and rural areas who do not have social media handles if the policy is implemented.
- “If the directive takes effect, Nigerians who are not on social media, with large turnovers from their businesses and trades, would be compelled to or systematically excluded from formal banking systems with its attendant negative effects and implications.
- “Implementing the CBN’s directive at this point may clearly be unnecessary as it is likely to bear a lot of pressure on teeming Nigerian masses,” he said.
He concluded by saying,
- “There is a need to revisit and halt the Central Bank of Nigeria directive to reduce the hardship and pain faced by teeming Nigerians. The motion was unanimously adopted by Tajudeen Abbas, speaker of the house and presiding officer”.