On January 26, 2022, the House of Representatives passed a resolution to start an investigation on billions of Naira “stuck” in commercial banks because owners failed to link their bank accounts with the Bank Verification Number (BVN).
In 2014, the Central Bank of Nigeria (CBN) introduced the Bank Verification Number as a security measure in the Financial Industry, aiming to combat money laundering, illicit financing and other financial crimes.
But to understand the sudden concern of the Financial Industry about the BVN, it is worth first detailing what this CBN’s policy is.
So, let’s see what exactly is the Banking Verification Number.
What is BVN?
The Bank Verification Number is a unique number assigned individually to anyone who has bank accounts in the Nigerian Financial system, controlled by the CBN. Thus, this number allows the verification of bank accounts across Nigeria’s Financial Industry.
This number is issued when a customer opens a bank account and is then associated with all accounts held by that customer at any other Nigerian bank. Therefore, the BVN is assigned to a person in order to identify which bank accounts belong to that customer and to prevent identity theft.
Why Banks in Nigeria are worried about the BVN validation issue?
The BVN is a measure to control and combat financial fraud created by the CBN. This identification system is a mandatory requirement in Nigeria and has its own Regulatory Framework.
Waynbo Team helping Grooming Microfinance Bank in BVN enrolment with biometrics.
Despite the measure being launched in 2014, as we have already mentioned, a report released by the Nigeria Inter-Bank Settlement System (NIBSS), in January (2022), shows that there are 59 million bank accounts not linked to a BVN.
The data demonstrates a worrying slowness in the adoption of the BVN system in the Financial Industry. 7 years after the implementation of the regulatory measure, more than half of bank accounts remain non-compliant.
This problem has stirred up some regulatory bodies.
Consequently, the Ad Hoc Committee on Unclaimed Funds in Nigerian Commercial Banks and Infractions by the Central Bank of Nigeria started an investigation into funds held in commercial banks due to BVN failures.
According to a report from the investigation there are over 45 million accounts holding funds worth over N1.2 billion.
What's at stake for Financial Institutions if they don't rectify the BVN requirement?
In addition to the problem mentioned in the previous point, last year, CBN stated that financial institutions and consumers that violate Bank Verification Numbers (BVN) would face sanctions.
The warning was communicated in a circular to all banks, mobile money operators, super agents and payment service providers.
Don't Risk getting a Penalty
Avoid being banned by the CBN and any reputational crisis.
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