CBN to freeze accounts without NIN, BVN effective April 2024

The Central Bank of Nigeria (CBN) has issued a directive imposing a “Post No Debit” restriction on all bank accounts without a Bank Verification Number (BVN) and National Identification Number (NIN) effective April 2024.

The term “Post No Debit” refers to a restriction placed by banks on specific accounts, preventing account holders from making withdrawals, transfers, or any other debits during the duration of the restriction. This directive effectively freezes the funds in the affected accounts, making them inaccessible until the necessary verifications are completed.

The CBN’s directive, communicated through a circular issued to all deposit money banks, also emphasizes the need for electronic revalidation of all BVN or NIN attached to and/or associated with accounts and wallets by January 31, 2024.

The circular, jointly signed by Chibuzo Efobi, Director of Payments System Management Department, and Haruna Mustapha, Director of Financial Policy and Regulation Department, outlines amendments to Section 1.5.3 of the Regulatory Framework for BVN. The amendments mandate the registration of all tier-1, 2, and 3 bank accounts and wallets with BVN or NIN.

The CBN justifies these measures as part of broader efforts to promote financial system stability and strengthen KYC procedures across all financial institutions. By making BVN and NIN mandatory for all tier-1 accounts and wallets, the CBN aims to enhance the verification process, ensuring a more secure and transparent financial environment.

The circular states, “The process for account opening shall commence by electronically retrieving BVN or NIN related information from the NIBSS BVN or NIMC’s NIN databases and for the same to become the primary information for onboarding new customers.” This shift towards electronic retrieval is aimed at streamlining the onboarding process and enhancing the accuracy of customer information.

As a result of these new guidelines, any unfunded account or wallet will be placed on “Post No Debit or Credit” until the new process is satisfied. Furthermore, effective April 1, 2024, all funded accounts or wallets without the necessary BVN or NIN will also be placed on “Post No Debit or Credit,” prohibiting further transactions.

To facilitate a smooth transition, the CBN mandates the electronic revalidation of all BVN or NIN by January 31, 2024, for all existing customer accounts and wallets. This comprehensive approach ensures that financial institutions adhere to the new guidelines within a specified timeframe.

Financial institutions are required to strictly comply with the restrictions on tier-1 accounts, including transaction value limits and cumulative balances. The CBN emphasizes the importance of full compliance and directs Executive Compliance Officers, Chief Compliance Officers, or Heads of the Compliance Functions to familiarize themselves with attached guidance notes.

The CBN’s directive signifies a pivotal shift in the regulatory landscape, placing a heightened emphasis on customer verification and KYC procedures. The move towards electronic retrieval and mandatory BVN or NIN registration reflects a commitment to fostering a secure and transparent financial ecosystem. Financial institutions must now adapt to these changes, ensuring full compliance with the new guidelines, with audits and sanctions awaiting those found in breach.