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House Of Representatives Kick Against CBN's New Know Your Customer(KYC) Policy

 

By Nerly Shammah Jul 12, 2023

 

In the quest to assess risks and monitor suspicious behaviours, the Central Bank Of Nigeria(CBN) looks to include social media handles as a required detail in the Know Your Customer(KYC) policy.

 

 

The Central Bank Of Nigeria issued a directive to financial institutions within the nation to collect social media handles in addition to email addresses, phone numbers, residential addresses, bills and other relevant information.

 

The newly introduced requirement as stated by the apex bank is intended to strengthen customers’ due diligence measures and combat money laundering and terrorism financing in the country.

 

Given the increased fraudulent activities within the financial walls of the nation spanning even globally, the CBN and major relevant agencies in the country have been on their toes to implement structures and deploy tools that restricts and ultimately stops the strain this activities has had on the nation. 

 

Citing the roles the digital space plays in communications and monetary transactions, as per reports, the apex bank says the system is designed to enable financial institutions to identify and monitor potential risks and suspicious activities linked to customers activities. 

 

The implementation sets out to give banks leverage into better insights on customers' online presence and activities. A move which has been previously criticized by the Socio-Economic Rights and Accountability Project (SERAP) -  a non-government organization - as a violation of Nigerians rights to freedom of expression and privacy, judging by the obvious randomness of communications that takes place on the digital space. 

 

As reported by Premium Times, the person of Kelechi Nwogu of the People's Democratic Party(PDP) led the motion with the House Of Reps kickback on the new KYC policies of the CBN. 

 

Kelechi cited the conflict of this policy with provision of section 37 of the Constitution of the Federal Republic of Nigeria, 1999 (as amended) on the right to privacy of citizens. 

 

He said 

 

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Banks in the country already have the names, telephone numbers, passport photographs, emails, National Identification Number (NIN), Biometric Verification Number (BVN), utility bills and other basic requirements.

 

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. 

 

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Kelechi also opposed the Central Banks' claims on leveraging this data to combat money laundering and terrorism financing by pointing to the relevant agencies already in place to do this job and also the imposed demand to have a social presence that this would have on individuals or businesses that currently operate without one. 

 

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There are better means of monitoring money laundering, terrorism financing, and proliferation financing, such as the Nigeria Police Force (NPF), Nigeria Financial Intelligence Unit (NFIU), the Economic and Financial Crimes Commission (EFCC), intelligence and crime tracking agencies, amongst others. 

 

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. 

 

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The house of representives has urged the apex bank to halt the implementation of this policy into the system.

 

It mandated the committee on banking and currency (when constituted) to investigate the matter and report back within three weeks for further legislative action - reports.