The Central Bank of Nigeria (CBN) recently issued a circular to all banks and financial institutions, directing them to obtain customers’ social media handles as part of the Know Your Customer (KYC) policy in the financial services sector. This move, outlined in the CBN’s Customer Due Diligence Regulations 2023 report, aims to strengthen the fight against financial crimes and enhance compliance with anti-money laundering (AML) and counter-terrorism financing (CFT) provisions.
The regulation, signed by Chibuzo Efobi, Director of the Financial Policy and Regulations Department at the CBN, aligns with international best practices while emphasizing the importance of accurate customer identification. Financial institutions operating under the CBN’s purview are now obligated to collect and verify social media handles during the KYC process for both individuals and legal entities.
To ensure compliance, financial institutions must retain records obtained through customer due diligence measures, account files, business correspondence, and analysis results for a minimum of five years after the termination or cessation of a business relationship or occasional transaction.
However, the Socio-Economic Rights and Accountability Project (SERAP) has expressed concern over the directive, calling for the removal of the request for customers’ social media handles. The non-profit organisation argues that the provision violates Nigerians’ rights to freedom of expression and privacy, stating that it is inconsistent with the rule of law.
SERAP claims that obtaining social media information may inhibit the free exercise of human rights online and could potentially be misused for political or unlawful purposes. In a letter to Mr. Folashodun Shonubi, the acting Governor of the CBN, SERAP requested the deletion of the allegedly unlawful provisions, warning of potential legal action if the request is not addressed within three days.
While the new regulation reflects efforts to combat money laundering, terrorism financing, and proliferation financing, similar to the Customer Identification Program (CIP) implemented in the United States following the 9/11 attacks, concerns have been raised regarding privacy and freedom of expression.
It is important to note that the introduction of the mandatory social media handle requirement aims to strengthen the financial system’s ability to prevent illicit activities. As long as the implementation remains in line with the objectives of curbing financial crimes, the regulation is likely to persist. Transparency and adherence to ethical practices are crucial for ensuring the regulation’s effectiveness without compromising citizens’ fundamental rights.
As the situation unfolds, it remains to be seen how the CBN will address the concerns raised by SERAP and strike a balance between regulatory requirements and individual privacy rights. The banking and financial sector, along with Nigerian citizens, will be closely observing developments in the implementation of this new policy.
