- Nigeria still ranks high in illicit financial flow;
- CBN had set a deadline for all banks’ customers to have the BVN attached to their accounts in October 2015;
- There are 111.5 million active bank accounts as at May 2020.
On the Sixth Anniversary of the BVN
It’s been six years since the Central Bank of Nigeria (CBN) ushered in the Bank Verification Number (BVN). Yet, about 71 million customers still use their accounts without the compulsory identification, per data from the Nigerian Inter-Bank Settlement Systems (NIBSS).
On February 14, 2014, CBN in collaboration with the bankers’ committee launched a $50 million BVN project as a deterrent for illicit fund transfers. The framework would also aid the apex bank in tracing such transactions.
According to CBN, the goal of the Bank Verification Number is to verify each Bank’s customer unique identity; tagged ‘know your customer’ (KYC), the initiative would help address identity theft, reduce fraud within the system. Overall, it would enhance transparency and credibility in the financial services sector.
However, on August 31, NIBSS reported that since May, only 43.2 million users had accounts linked with the verification number; i.e. 38 percent of the 111.5 million total active bank accounts.
More so, this figure seems unlikely to improve with the aggressive bank opening initiatives across the country. What’s more, some of these initiatives don’t follow due process, ignoring biometric capture; a decision that has also contributed to the increasing number of inactive bank accounts, and unclaimed funds in banks.
The issue with low enrollment
In December last year, CBN, in tackling the low enrolment of bank users, launched BVN 2.0. It featured sub-categories like BVN Premium, BVN lite.
The BVN Lite requires minimal documentation like name and phone number for bank customers, especially those in the rural areas that do not meet the full requirements. While BVN Premium covers customers that can provide the 18 basic requirements for a complete BVN enrolment
Despite these measures, financial institutions added over 36 million new bank accounts without BVN identification in December 2019. Rather, it seems the financial sector is more focused on racking numbers with total accounts accounting for 160 million as of May 2020; i.e. 35.2 million extra users from last year’s 124.8 million.
Illicit transactions still prevalent
The growing number of active bank accounts without BVN is troubling. Worse, though, is that the apex bank is not sanctioning such institutions; after all, one of the critical components of CBN is combating money laundering and illicit financing.
Between 2012-2014, President Muhammadu Buhari revealed the country lost an estimated $157.5 billion to illicit financial flows.
Similarly, the Brooklyn institute said Nigeria along with South Africa, the Democratic Republic of Congo, Ethiopia accounted for half of the illicit financial flows from Sub-Saharan Africa between 1980-2018.
“Without full implementation of the BVN project, it would be difficult to expose questionable sources of wealth such as the ones from a crime like kidnapping and theft of public funds.”
The low number of BVN-linked accounts was surprising to Omuli Iwerre, Legal Counsel for Tech advance, a payment application development company. Given the rate at which fraudulent activities take place in the country, the Tech expert expected better from the apex bank. This is especially true given CBN intention’s in debiting loans and accrued interest from the bank accounts of loan defaulters using linked BVN.
“Government and financial institutions will be lost. That close to 70 million bank accounts were yet to be linked with BVN should be a real source of concern for the Government especially and financial institutions trying to track down loan defaulters.”
It is therefore pertinent that CBN administers appropriate sanctions and penalties to BVN defaulting banks in the country.