Banks May Block 70 Million Accounts Over CBN’s Directive

People in a bank

In a significant development impacting over 70 million bank customers, the Central Bank of Nigeria (CBN) is set to enforce a new directive mandating the linkage of all bank accounts with Bank Verification Numbers (BVN) and National Identification Numbers (NIN) by March 1, 2024. Accounts failing to adhere to this requirement will face a ‘Post No Debit’ restriction, effectively freezing such accounts and halting withdrawals, transfers, or debits.

This directive, issued on December 1, 2023, is part of the CBN's ongoing efforts to bolster financial security and streamline banking operations across the nation. The implementation of the ‘Post No Debit’ status may pose challenges for millions of customers who have not yet complied with the linkage requirement, potentially impacting their financial transactions and access to funds.

This move highlights the critical role of BVN and NIN in combating fraud and illicit financial activities, aiming to ensure a more secure banking environment in Nigeria. Bank customers are urged to promptly link their BVN and NIN with their bank accounts to avoid being affected by the impending account restrictions.

A circular jointly signed by Chibuzo Efobi, Director of Payments System Management Department, and Haruna Mustapha, Director of Financial Policy and Regulation Department, states, “It is mandatory for all Tier-1 bank accounts and wallets for individuals to have BVN and/or NIN. It remains mandatory for Tiers 2 & 3 accounts and wallets for individual accounts to have BVN and NIN."

"For all existing Tier-1 accounts/wallets without BVN or NIN: Effective immediately, any unfunded account/wallet shall be placed on ‘Post No Debit or Credit’ until the new process is satisfied. Effective March 1, 2024, all funded accounts or wallets shall be placed on ‘Post No Debit or Credit’ and no further transactions permitted. The BVN or NIN attached to and/or associated with all accounts/wallets must be electronically revalidated by January 31, 2024.”

The circular also warns banks of an impending “comprehensive BVN and NIN audit,” indicating that breaches will result in appropriate sanctions.

As the deadline looms, some banks have notified their customers to regularize their accounts in compliance with the CBN directive. While some require physical branch visits, others offer online solutions.

Tier-1 accounts are characterized by minimal documentation requirements, catering to the unbanked population with a deposit limit of N50,000 and an operating balance of N200,000. This sector, primarily dominated by fintech firms, raises concerns about lax Know Your Customer (KYC) standards being exploited for fraudulent activities.

Sarafadeen Fasasi, National President of the Association of Mobile Money and Bank Agents in Nigeria, calls for an extension of the deadline, citing challenges in implementation due to insufficient access points for NIN registration and BVN enrollment. He notes a substantial gap between the number of expected registrations and actual enrollments, raising questions about the feasibility of the current timeline.

This development coincides with the National Communications Commission's directive for telecom companies to block mobile lines without NIN, adding to the burden on Nigerian citizens amidst challenging economic conditions. Fasasi advocates for a reconsideration of the current approach, emphasizing the need for a more measured and feasible implementation plan.