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Tag: Bank Verification Number

  • Court modifies orders freezing accounts without BVN

    Court modifies orders freezing accounts without BVN

    A Federal High Court in Abuja Wednesday modified the order it made on October 17 this year for interim freezing of bank accounts who owners have not registered for the Bank Verification Number (BVN)

    The court, which had stayed further operation of such accounts pending the determination of a case pending before it, has now said the accounts could be operated once the owner registers for BVN.

    Justice Nnamdi Dimgba announced the modification Wednesday after parties in the case agreed that as presently couched, the order creates an awkward and unfortunate result such that even when account owners have got their BVN, they still will not be able to operate the accounts because doing so will be in violation of the order of court.

    Parties in the case also agreed that the said Relief No 4 should be revised to eliminate this problem, in the interim.

    In a ruling, Justice Dimgba said: “Having listened to all counsel on record, and with the consent of all parties represented, I hereby revise Relief No 4 of the court’s order of 17/10/17 such that the new Relief No 4 shall be:

    “AN INTERIM ORDER of the Honourable Court stopping all outward payments, operations or outward transactions (including any bill of exchange) in respect of the accounts pending the linking of the accounts to a Bank Verification Number”.

    In view of the above agreed compromise revision of Relief No 4, I also hereby revoke and set aside Relief No 5 of the Court’s Order of 17/10/17, which provides for:

    “AN INTERIM ORDER of forfeiture of the monies in the said accounts without BVN to the Claimants/Applicants being accounts with insufficient Know Your Customer (KYC) guidelines contrary to Section 3 of the Money Laundering Act, 2011 and CBN guidelines the determination of the Originating Motion on Notice,” the judge said.

    As as yesterday, none of the 19 commercial banks listed as defendants in the suit complied with the court’s order that they provide information about accounts without BVN in their custody.

    They only filed a motion challenging the court’s jurisdiction.

    Earlier in the proceedings, lawyer to 18 of the 20 banks listed as defendants in the suit, A. A. Adegbonmire (SAN) said his clients have filed an application, challenging the court’s jurisdiction to have made the order of October 17.

    He said the plaintiffs served him with their response yesterday, which he needed time to react to.

    Adegbonmire urged the court for an adjournment, which was not objected to by Joseph Tobi (for the plaintiffs).

    The judge consequently adjourned further proceedings to December 11.

    The Federal Government and the Attorney General of the Federation had filed the suit, querying among others, the continuous retention of accounts without BVN by banks.

  • BVN: Banks that may suffer from deposit loss

    BVN: Banks that may suffer from deposit loss

    The biggest casualties in terms of deposit loss should the Federal Government go-ahead to implement court order on funds forfeiture for Bank Verification Number (BVN) non-compliant accounts will be the first generation banks, The Nation has learnt.

    These set of banks, according to an industry source who spoke anonymously, seem to have the largest number of customers that have stayed with them for close to or over 100 years.

    Justice Dimgba Igwe of the Federal High Court, ruling on an ex parte application filed by the Federal Government through the Office of the Attorney-General of the Federation on October 21, granted the temporary forfeiture of funds in accounts not linked to BVN within two weeks unless the owners justify their ownership of such accounts. The deadline for compliance ended yesterday.

    The source said it would be very difficult to put a figure to the 46 million accounts not linked to BVN, adding that: “The first generation banks are believed to have the largest number of dormant accounts, although that has not been established. These banks have the largest number of dormant accounts because of how long they have been in the business,” he said.

    The source explained that some new generation banks also have a large number of accounts, but a majority of their customers are from the middle class. He said many of the customers joined the bank during or after the banking consolidation of 2005, in what is regarded in the banking industry as ‘’Flight to Safety’’.

    “A lot of the middle class tend to associate more with some new generation banks. So, even though the accounts are many, but they remain largely active,” the source said.

    The banks with the largest impact are likely to lose deposits running into billions of naira, and that may affect their liquidity positions.

    The Federal Government has secured an interim forfeiture order from Federal High Court which would now allow it to freeze the accounts of bank customers in Nigeria who have no Bank Verification Number, BVN.

    The order obtained before Justice Dimgba gave the Federal Government the nod to instruct the banks to disclose any investments made with these funds and to freeze any outward movement from these accounts.

    The court order mandates the Central Bank of Nigeria (CBN) to appoint an examiner to look into the books of any commercial bank that fails to comply. The banks are expected to provide the names of accounts without BVN, account numbers, outstanding balances, domiciliary accounts without BVN, branch/locations where these accounts are domiciled.

    The CBN through the Banker’ Committee and in collaboration with all banks in Nigeria on February 14, 2014, launched a centralised biometric identification system for the banking industry tagged Bank Verification Number (BVN). The BVN gives a unique identity that can be verified across the Nigerian Banking Industry (not peculiar to one bank) while bank customers are protected from unauthorised access.

  • Lower income earners carrying huge burden of tax payment

    Lower income earners carrying huge burden of tax payment

    There is no hiding place for tax defaulters. The Federal Government has engaged the services of asset tracing-companies to investigate the tax payment status of 150 firms/individuals.

    Minister of Finance Mrs. Kemi Adeosun said yesterday in Lagos that investigators would rely on information derived from Bank Verification Number (BVN),  records of property ownership, records of foreign exchange allocation, and records of company ownership from the Corporate Affairs Commission (CAC), among others, to ascertain the income status of the companies/individuals vis-a-vis their lifestyle.

    The minister, who delivered a lecture at PWC’s Business School, with the theme: “Voluntary Assets and Income Declaration Scheme (VAIDS) Interactive Session for Executives and Business Owners” said: “We are using some firms (I will not mention their names)  to trace assets internationally.

    “We are working alongside projects we have locally, like the Bank Verification Number (BVN), records of property ownership, records of property allocation, records of company ownership from the Corporate Affairs Commission (CAC), among others. It is from these projects that we look at how much tax such companies or individuals should be paying”.

    She said findings from these statistics would be computed, and compared with how much tax the person/company is paying to know if the right taxes are being paid or not.

    Adeosun said: “The investigators’ findings will enable us to compare the income and how much tax the company/person is really paying, and that gives us lots of information. But we encourage people to come up and pay their taxes willingly.”

    She added: “You can register a high-end car. It tells me something about your income. So we look at your tax returns. If you registered Mercedes E-Class and you are paying N100,000 tax, then something is wrong. Those are red flags. We now have the capacity to assess people accurately.”

    The minister said no one would be left out in the campaign to enlarge the tax net adding that the response being received so far showed that people were embracing the tax policy.

    She said some beggars were earning millions, and the government would even look at their lifestyles and tax them, adding that “even proceeds from begging are taxable. You are supposed to pay taxes even if your means of income is begging”.

    To Mrs Adeosun, tax is a matter of law and Nigerians should continue to pay. “We are trying to build an economy where we have oil and other things. It is going to be oil plus and wider economy,” she said.

    Asked whether the funds from taxes will be judiciously used, she replied: “Why I think the resources will be used judiciously is because when people pay taxes, they get involved. When people do not pay taxes, when you call for budget meetings, they will not come. But when they pay their taxes, if the government says these are the projects we want to execute on the budget, people will show up because they have contributed to the tax revenues.”

    In her view, such contributions improve the democratic process. “As our tax revenues go up, governance will improve. We have many projects we want to execute and I think if we have the funds, they will be executed. I think we are seeing improved budget performance. That will lead to getting the roads done, and improve the condition of our schools. Progressively, what we should look out for are improvements in the standard of living, and lifestyles of Nigerians as we get more tax compliant.”

    The minister said government set a preliminary tax target of $1 billion annually, but her belief is that the target can be surpassed. “I think we can get more, and let’s see how it goes. For me it is not about how much money we recover it is about getting more people to pay their right taxes continuously. How much we recover from taxes is not as important as getting people into the tax net and paying the right taxes,” she added.

    The minister also disclosed that the people who are paying taxes are mainly those whose taxes are being deducted from source. Also, the people who seem to be evading taxes are either on their own business, or high net-worth individuals.

    “Ideally, they are supposed to be the biggest tax payers. What is happening now is that the lower earning people are carrying the huge burden, which is really unfair. So, we need to reverse that. Everybody has to pay their fair share, according to their level of income,” she said.

    Mrs  Adeosun spoke of tax as a means of income distribution, adding that taxes should be taken from the rich, to support the poor.

    Explaining how it works, she said: “If somebody has a property. We have no problem with that. The only thing the tax man asks you is where did you get the money to buy the property? If you bought it for N20 million, that’s no problem, but the income you used to buy that property would have been subjected to tax. If you show us your tax slip then no problem.”

    “But what we are finding out is that there are someone people with a property of N20 million, but when you look for the tax returns, they paid only N15,000 annually for the last seven years. So, how did they fund that house? What that means is that the person has other incomes, which was not declared to the taxman because for you to own that house, it is either the money was stolen, or it was inherited. If it was stolen, another agency will deal with that, because it is not for us.”

    “In that case, you will tell us, from whom you inherited it, and such information can be confirmed. From your income, you couldn’t have earned that. So, we want you to now declare those incomes. We want to correct people, whose lifestyle is not commensurate with their income. It may be house, it may be private jet, and so on.”

    To Mrs. Adeosun, it is regrettable that while most developing countries have tax to Gross Domestic Product ratios above 20 per cent, Nigeria still records a global low of six per cent.

    She said the Federal Ministry of Finance, in a bid to address this, set up the Voluntary Assets and Income Declaration Scheme (VAIDS) in collaboration with the 36 states. The scheme was launched by the Acting President Prof. Yemi Osinbajo.

    The main objective of VAIDS is to increase the number of taxpayers in the tax net and raise revenue for government. Specifically, it is expected to increase Nigeria’s tax to GDP ratio from six per cent to between 10 per cent and 15 per cent, broaden the national tax base, curb tax evasion and discourage illicit financial flows.

    Besides, it is expected to improve good governance, guarantee a better quality of life, encourage robust national planning and increase the size of the formal economy.

    Mrs. Adeosun stated that at six per cent, Nigeria’s tax compliance rate was low whilst most developed nations were at 30 to 32 per cent. “Prosperous nations have high levels of tax compliance whilst poor nations have low rates. Nigeria aspires to be a prosperous nation, so this problem must be solved,” she said.

    The scheme, which began on July 1, will last nine  months and will be implemented by the Federal Inland Revenue Service (FIRS) in collaboration with all 36 State Internal Revenue Services and the FCT IRS.

    Taxpayers who make full and honest declarations will enjoy a waiver of interest and penalty, immunity from prosecution, confidentiality of information supplied, exemption from tax audits for the periods covered by the disclosure and flexible payment of tax due.  Taxpayers who fail to participate in the scheme will be investigated and if found culpable will face trial.

    LIRS Executive Chairman Ayo Subair said: “We have seen the positive impact taxpayers’ money can make at the state level in terms of social services, administration of government and infrastructure development. So we are fully supportive of this initiative and we are ready to assist as many taxpayers who would like to take advantage of the Scheme to remediate their tax affairs,”

    According to Taiwo Oyedele, Head of Tax at PwC Nigeria, “paying taxes is not particularly easy anywhere in the world for anyone who has expended time, energy and other resources to earn the income”. “However, it is necessary for there to be an organised society for the benefit of all.”

    In his welcome address at the session, Uyi Akpata, Country Senior Partner, PwC Nigeria said: “This session and indeed the renewed interest and policy direction on taxation by this administration is a positive development for the transformation of our economy. At PwC, we have consistently made the point that reliance on oil as the main source of government revenue is not sustainable and that other forms of revenue generation, such as taxation, must be explored for Nigeria to build a truly viable economy and reach all of its potential. On taxation, we have over time advocated various initiatives to broaden the tax base, reform the tax laws, and improve the ease of paying taxes so we are happy that some of these ideas are beginning to take life.”

  • CBN maintains BVN deadline

    CBN maintains BVN deadline

    The Central Bank of Nigeria (CBN) on Thursday called on all bank customers, who are yet to register for their Bank Verification Number (BVN) to do so before the expiration of the deadline.
    With just  six days to the October deadline set by the apex bank, it said it will no longer extend the deadline after the October date.

    The BVN exercise which had been on for over six months initially ended on July 30th, 2015 but was extended by an additional three months following calls from many bank customers who could not register within the period.

    Appealing to those not yet captured under the scheme to ensure they don’t miss out on the re-scheduled deadline, the apex bank said there is no need for people to wait until the last day before they go for the registration.

    Hajia Khadija Kasim, Deputy Director, Consumer Protection Department, while addressing stakeholders at a one-day CBN sensitisation fair in Ibadan, said the BVN coupled with the cashless policy will go a long way to help the apex bank and other banks in the country tackle the issue of money laundering in the country.

    “The initial deadline was June 30th before we extended it to end of October. By now we expect all Nigerians to go before the expiration date and get their Bank Verification Number. Please Nigerians, come out and ensure that within the few days left for the registration, you are registered for the exercise, she said.

    Explaining how the cashless policy and biometric registration will help check money laundering and fraudulent transactions in the banking sector, the deputy director assures that the two policies which goes hand-in-hand will help make the identity of money launders  and or fraud perpetrators easier to nab.

    “You will see some interrelationship between our cashless policy and the need for us to have our bio-metrics. When you are now registered as a bank customer and your details are there, it will be very difficult for somebody to use that account for any fraudulent activities.
    “So, if any fraudulent activities take place there, we will be able to trace the owner of the account. The situation where we have faceless people carrying out money laundering or fraudulent transactions will be reduced to the barest minimal”, the deputy director explained.

    Commending the cashless policy which has gone full scale all over the country, the deputy director, said people are now getting well enlightened on the need not to carry cash about, but using electronic platforms to do their business transactions anywhere within and around the country.
    She said: “we started the cashless policy in areas that have a large volume of money transaction, but now it has been extended to all over the country and our people are now getting better enlightened by the day” adding that the CBN fair organised for the stakeholders is part of the efforts of the apex bank to educate and enlighten members of the public on the activities of the apex bank.

    The event which held at the Jogor centre Ibadan had in attendance farmers, government officials, representatives and members of different cooperative societies, deposit money bankers, micro-finance operators, physically challenged people who are willing to start Small and Medium Scales business, SMEs operators, representatives of the student community and the general public.
    Policy issues bothering payment system vision (PSV 2020), mobile payments, agent banking, E-payment incentive schemes, BVN and cashless Nigeria were discussed among by resource persons from the different department of the apex bank while the attendees also had their questions answered.

    In a presentation entitled “Payments System: Cashless Nigeria and Consumer Protection”, another official of the CBN, Mr. Caleb Orji disclosed that the apex Bank would soon come up with initiatives for the visibly impaired persons to enable them operate their bank accounts effectively.
    In another presentation on Rights and Duties of Bank Customers, another CBN official, Mr. Damola Atanda warned Nigerians to be safety conscious in the handling of their bank documents, including the ATM cards since, according to him, “unscrupulous people have started using other peoples accounts to perpetrate fraudulent activities”.

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  • Countdown to bank verification number

    Countdown to bank verification number

    By the end of this month, about 34 million bank customers in Nigeria are expected to have keyed into the biometric data capture policy and have their bank verification numbers (BVN) or risk losing their accounts. Bukola Aroloye in this report examines the pros and cons

    LIKE other previous policies introduced by the apex bank, the Bank Verification Number (BVN) initiative announced last year by the Central Bank of Nigeria (CBN) is yet to be accepted wholeheartedly by majority of the banking consumer public. Talk of Nigerians averse to change!

    What the BVN is all about

    The BVN project launched on February 14, 2014 by the immediate past CBN governor, Mallam Sanusi Lamido Sanusi, was driven at the time by the Bankers’ sub-committee on the Biometric project, with the then Managing Director/Chief Executive Officer, Zenith Bank Plc, who is now the CBN governor Mr. Godwin Emefiele as its chairman at the time of its introduction.

    The objective of the BVN initiative is to protect bank customers, reduce fraud and further strengthen the Nigerian banking system.

    It is the registration of customers in the financial system using biometric technology. Biometric technology involves the process of recording a person’s unique physical traits such as fingerprints and facial features. This record can then be used to correctly identify the person afterwards. Once a person’s biometrics has been properly captured, the person is given a BVN.

    Fraud is reduced because no two people have the same biometric information. With the BVN, banks will be able to check the features of a person doing a transaction against the record which the bank has captured, thereby correctly identifying the owner of an account. The BVN given to a person by one bank will apply to that same person for any bank in Nigeria.

    At the BVN launch, Mallam Sanusi had noted that Nigeria is the only country in the world to deploy biometrics data capture in its banks nationwide.

    He had promised that within two years after the launch, Nigeria would have an industry that is efficient, saying the BVN initiative would introduce limitless opportunities in Nigeria’s financial space. “I wouldn’t want us to underestimate the significance of what we have achieved. If we make biometrics the basis of whatever we do, then it will be easier to standardise and reduce cost and make banking more efficient. We will deliver services at lower cost, enhance customer service and ensure access to cheaper credit,” he had said.

    He had said that within 18 months, every single customer should have his or her biometrics taken, with an assurance that every identity would be safe.

    According to the CBN, the introduction of BVN is targeted at addressing cybercrime, ATM fraud and other kinds of financial frauds, as well as safeguarding customers’ funds to avoid losses through personal identification numbers (PIN).

    Aside this, the apex bank stated, “The BVN will also strengthen the current Know Your Customer guidelines and allow banks have more confidence in giving out loans. With the BVN, the financial history of a customer is stored at a central location and can be accessed by other banks who seek information about that customer.”

    Also with the BVN, credit history of customers who want to secure loans is made available to banks. Customers with suspicious accounts or transactions will also be tracked with the BVN, making it difficult for fraudsters to maintain bank accounts.

    To enable their customers meet up with the deadline, some banks have since late last year been offering their customers the option of enrolling on Saturday, and in addition to making the enrolment easier for the customers, the CBN, in its latest circular on the BVN, directed that for existing customers, capturing signatures and photo identification documents may not be necessary as the bank is expected to have those records during account opening.

    Since its launch, the CBN and banks have been intensifying efforts to register their customers. They have also intensified efforts in sensitising all their customers on the processes of registration. Most of the banks have indulged in multiple communication channels in wooing their customers to key in. The channels include short text messages, messages displaced on their websites, e-banking platforms, ATMs and flyers placed in strategic places in banks.

    The CBN and banks have also been educating customers on activities of fraudsters. Fraudsters have been sending bank customers emails, requesting them to supply personal details so they could be registered on BVN online. Thus, the banks have been educating customers that all BVN registrations are physical and done only at bank branches nationwide. “Bank customers should ensure that they do not respond to suspicious emails pretending to be from their banks and requiring them to provide sensitive information online as registration is only done at bank branches,” the CBN said.

    Commenting on the BVN progress, Emefiele recently said the project would enable some of the bank customers and citizens at the lower cadre of the consumption ladder get access to banking services and credit facilities.

    The CBN governor said, “This system will see the opening up of consumer credit facility and this will contribute to productivity and development of Nigeria. The banks have supported this because this is the opportunity we have been yearning for, to open up consumer credit facility. With biometrics of consumers taken, we will be comfortable to lend to customers and defaulters will be blacklisted.

    “We are saying that with this project, people will be able to buy cars easily, do mortgage easily with the kind of data that would be fed into the centralised system and access bank credit easily. By extension, we would see how it would affect productivity in the economy. Given the opportunity that we have right now, where the customers’ biometric is given, it makes it comfortable for us to lend money to farmers who need money to buy fertiliser, and to cobblers, barbers, or any form of business,” he explained further.

    Mr. Gunther Mull, Managing Director of Dermalog Identification Systems, the German company that was engaged to deploy and implement the BVN system, said the platform would make life easier for banks and their customers.

    Already the CBN is introducing measures to make Nigerians comply with the BVN, especially high net worth individuals.

    The CBN has warned that any bank customer without the number would be deemed to have inadequate know-your-customers (KYC) and this may affect his or her transactions with the bank. The regulator recently announced that from next month, banks would stop honouring transactions from N100 million and above, from customers that don’t have the BVN.

    Such transactions, according to the central bank, include but are not limited to, money transfers, loans and contingencies.

    The Director, Banking and Payment Department, CBN, Mr. ‘Dipo Fatokun had explained that the policy was introduced in furtherance of the regulator’s efforts to develop a safe, reliable and efficient payment system in the country.

    The scheme is also expected to improve the banking system’s Know-Your-Customer (KYC) requirements as stated by the Financial Action Task Force (FATF), as well as to support innovative banking solutions, especially for retail banking.

    A cross section of bank’s customers who spoke to our correspondent on the BVN initiative said they welcomed the idea. While some said they have enrolled, many others admitted they haven’t enrolled. Majority of those that haven’t enrolled said they haven’t had the time to enroll but assured they will do so before the June 2015 deadline.

    Recently, the Group Managing Director/Chief Executive Officer of Fidelity Bank Plc, Mr. Nnamdi Okonkwo in a statement, accentuates this fact as he emphatically stated that the BVN programme will be used to manage the credit score of bank customers. To this end, credit report from credit bureaus, would help lenders to determine who really qualifies for a loan as identities provided by the exercise would be matched against the information. As a matter of fact, this will help check credit worthiness of borrowers as the BVN initiative will provide a centralised customer biometric information system in the banking sector which will make it difficult for people who take multiple loans with no intension of repayment to operate. There is no doubt that the activities of such people are inimical to progress in the banking sector.

    Adewale Olumide, a customer with one of the new generation bank told our correspondent she hasn’t registered but she likes the idea behind the policy.

    “Yes, I am aware of the policy. My bank has been telling me to register. I have seen the advert. I like the policy but I haven’t had time to register, but I will surely do so before the June deadline. I’m just a bit lazy about it,” she said.

    According her, perhaps it’s just the typical syndrome of waiting till the last hour and then rushing to comply. “I believe the deadline is still far. Perhaps, when the deadline approaches, those of us who haven’t registered will rush to register. It’s not a good attitude but that’s our attitude,” she noted.

    Several other banks customers said they will create time to comply before June 2015.

    Meanwhile the Managing Director of Nigerian Interbank Settlement System, Mr. Ade Shonubi spoke on the ongoing bank verification number exercise and other related issues in the banking industry during an interactive session with journalists in Lagos recently confirm that the feedback from the banks is very positive.

    “I think we should start by understanding why we are embarking on the BVN project, you will see that there is no way the Banks would not be enthusiastic about it. When the BVN project was initiated, there were three key areas of focus,” he said.

    Expatiating, he said: “First and most important of all is for us to identify our customers uniquely across Banks and across Accounts. So, once a customer enrolls and obtains a BVN, that same BVN is tied to all his Bank Accounts. Now, relating to identifying is the possibility of Banks blacklisting people who have committed financial infractions. It could be fraudsters; it could be people who have forged documents; etc. What happens today is that Mr. A goes to Bank E, commits fraud, then runs to Bank F and because there is no way of tying all these activities across, we found out that there are quite a lot of losses related to these individuals from one Bank to another.”

    Case for BVN

    According to Shonubi, “BVN removes these losses. The beauty of it all is the unique identification in the financial space. Generally, people say every Nigerian is a crook but in actual sense, maybe only one per cent of Nigerians are crooks but the remaining 99 per cent are considered crooks because of that one per cent.

    “So, BVN allows us, again, to find these individuals and to create that blacklists that other stakeholders in the financial space can have access to. With this, even foreigners through their Banks, may be able to identify fraudsters that have been tracked in the Nigerian Financial space. Secondly, the BVN would allow us begin to build retail credit.

    “Today, the Banks have concerns over identification in retail lending that is why the entire retail consumer lending portfolio is targeted at people with formal employment whose employers can serve as a point of reference. There are however a lot of self-employed people as well as others working in smaller organisations who require this, but do not have access due to the identification issue, as no bank will take the risk of lending to them – considering cases of resignation and eventual run off, how will the Banks get repayment? But with the availability of BVN, these set of individuals will also benefit from Retail Lending as identification and tracking issues will be mitigated. The third, which I have already alluded to, is we want to be able to authorise financial transactions down the road, on an Automated Teller Machine (ATM) or a Point of Sales (PoS). You can use your biometric identifier to say ‘Yes, this is me and I am authorising the payment.’ So, those are the three key focus areas that led to the BVN project being conceived and implemented.”

    In the view economic analysts, as CBN implements the BVN initiative, it has to ensure the security of the data, from rogue bankers and also importantly from damage, as has been the experience with other sectors that engaged in biometric enrolments.

    Besides, they said the apex bank should also create measures to punish banks that might exploit the information they have to blackmail customers with whom they have disagreements.

    While majority agree the BVN is a great initiative that would reduce illegal banking transactions and improve national financial intelligence gathering, they however suggest that the interests of account holders should be accorded importance so that their increased confidence in the banking system would improve the financial standing of banks.

    According to Bamide Alo, “Customers will use banks more when they know that their transactions are safe. BVN offers vast opportunities to protect customers, banks and the entire financial system.”

    The CBN, he emphasised, “should enhance the security of BVN to protect the entire financial system. It should be on the watch for technologies to keep improving BVN capacities.”

  • Bank Verification Number

    Bank Verification Number

    •Banks and their customers must take the initiative seriously to curb frauds

    Worried by the increasing incidence of bank frauds due to the emergence of revolutionised payments system in the country, which also opened new windows for fraudulent manipulations, the Central Bank of Nigeria (CBN) initiated the Bank Verification Number (BVN) scheme last year. It is a system whereby individual banks collect their customers’ biometric data that is then collated to serve as a centralised biometric identification system for the entire industry.

    Unfortunately, many bank customers are yet to key into the scheme, barely three months to the deadline given to all bank account holders to collect the new number. Obviously, many people do not understand its essence because, only a few years back, bank customers were asked to migrate to the 10-digit Nigeria Uniform Bank Account Number (NUBAN), as part of efforts to improve services in the financial sector. So, asking them to go for yet another scheme that seems to them to serve the same purpose as the NUBAN is unnecessary.

    But this is where such bank customers are mistaken. Trust is a critical element in banking. Where this is eroded, people become wary of keeping their money in the banks. And in Nigeria, as in many other parts of the world where bank frauds are on the increase, it becomes imperative for the bankers and regulatory agencies to move miles ahead of fraudsters who are never tired of inventing new tricks to beat whatever security arrangements that are put in place, to checkmate their activities.

    We also have people who take advantage of the lack of the centralised platform that the BVN offers to operate multiple accounts and take loans that they never intended to repay. The activities of such people who constitute serious risks to the banking sector would be drastically curtailed, if not eliminated, when every bank customer gets the BVN.

    Part of the beauty of the scheme is that the individual bank customer’s biometric information that is generated from the registration is a once-and-for-all requirement. So, even if a customer has many bank accounts, all he or she needs do is register for the BVN in any of the banks and the information would automatically be linked to all his or her bank accounts as well as be integrated in the banking system, generally.

    Because it is not easy to manipulate biometric information, BVN protects customer bank accounts from unauthorised access, thus strengthening the financial system; it also makes detection of fraudulent/duplicate bank accounts as well as blacklisted customers easier. When fully integrated, BVN is expected to provide a synchronised efficiency to banking since all banking operations will be verified using the same method, reducing cases of human error or inconsistency.

    With BVN, transaction authentication would be done essentially using only biometric and a PIN; eliminating the use of cards. So, illiterate bank customers therefore do not have to worry much about the difficulties posed by the use of cards because transactions can still be done even if one forgot one’s PIN.

    In order to make registration for the BVN customer-friendly, enrolling for the scheme has been simplified. All a bank customer is supposed to do is walk into his or her bank branch, fill and submit the BVN enrolment form; the customer’s biometric information such as fingerprints and facial imagery, signature, etc. are then recorded and an acknowledgment slip with transaction ID is issued to him or her. A BVN is then created and customer is alerted to arrange to pick it up. To guarantee the integrity of the process, registration can only be done by the individual customer in the bank, not online or by proxy.

    Bank customers must take advantage of the initiative before the restrictions on customers without the BVN take off on July 1. With effect from that date, such customers would be deemed to have inadequate know-your-customers and their transactions may be declined. But the CBN and the deposit banks too must sustain the tempo of enlightenment until everyone that should be included has joined the scheme.

  • BVN: For a safer, better banking

    BVN: For a safer, better banking

    What is Bank Verification Number (BVN)? It is a scheme introduced by the Central Bank of Nigeria (CBN) to protect customers’ transactions and enhance confidence in banking. It involves capturing customers’ fingerprint and signature, among others, at their banks, reports COLLINS NWEZE.

    In banking, security is paramount to pro tect depositors’funds. It is in the light of this that the Central Bank of Nigeria (CBN), through the Bankers’ Committee, Deposit Money Banks and Nigeria Interbank-Settlement System (NIBSS), introduced the centralised biometric identification system, tagged Bank Verification Number (BVN).

    The BVN became imperative following the increasing incidence of compromise on conventional security systems such as password and Personal Identification Number (PIN) of customers.

    The BVN involves identifying an individual based on physiological or behavioural attributes, such as fingerprint, signature and others. The customers unique BVN is accepted as a means of identification across all banks system.

    For the CBN, the exercise is a continuation of the $50 million biometric project it instituted with the Bankers’ Committee, Dermalog and Charms Plc and is expected to assign unique number to every bank customer for enhanced security of transactions.

    However, not until May ending, did banks start issuing BVNs to their customers mainly at their headquarters. Managing Director of NIBSS, Mr. Ade Shonubi said to ensure an efficient implementation, a phased rollout approach is being adopted, beginning from Lagos.

    He said biometric data capture machines have been deployed to about 1000 bank branches in Lagos, adding that to date, over 16,000 BVNs have been issued. At full roll out, about 10,000 enrolment sets will be deployed across 5,000 bank branches nation-wide.

    Customers in Lagos, he said, are already enrolling to get their BVN. The Lagos project is the first phase of the countrywide roll out. He said servers in banks’ headquarters have been configured, deployed and tested, with their staff trained to carry out the enrolment and verification of customers.

    But when The Nation visited some of the bank branches of Diamond Bank, GTBank, Stanbic IBTC Bank, Ecobank and Zenith Bank, the customer services officers were not even aware of the BVN.

    At Stanbic IBTC Bank, Ikeja, an officer seemed at a loss, when asked about the BVN. He said he was even mistaking the BVN for Know Your Customer (KYC) for new account holders.

    At Diamond Bank, Ogba, an officer said she was aware of the BVN, but has not been advised on the registration and capturing of customers’ data. At GTBank Matori Branch, an officer said the bank is working on branch rollout within a short time.

    However, the BVN has already been deployed in all head offices of banks in Lagos, where enrolment began on March 31. It is expected to end the use of drivers’ licence, international passport and other forms of identification for account opening.

    Shonubi explained that the BVN enables each individual to have one identification within the financial system and gives each customer maximum protection and security of transactions. There is no enrolment deadline for the public yet.

    “In many advanced countries, biometric technologies have been used to analyse human characteristics as an enhanced form of authentication for real-time security processes. Biometric refers to identifying an individual based on physiological or behavioral attributes – fingerprint, signature among others. The customers unique BVN is accepted as a means of identification across all banks,” he said.

     

    Enrolment process

    Shonubi said: “The enrolment process is simple and easy.” He explained those bank customers are expected to walk into any branch of their bank, fill and submit the BVN enrolment form and also do data capturing (such as Fingerprint, facial Image etc).

    He said an acknowledgment slip with the transaction identity is issued to the customer. Within 24 hours, the system confirms the application, the BVN is generated, and SMS is sent to the customer for pickup.

    He further explained that to ensure an efficient implementation; a phased rollout approach is being adopted beginning in Lagos.

    He said a customer can only enroll once, while his BVN will be linked to all his bank accounts across Nigeria banks. “The BVN solution is to ensure accountability, protect bank customers’ account from unauthorised access, reduce exposure to fraud, check identity theft, enhance credit advancement to Bank customers, and also encourage financial inclusion,” he said.

    He said the initiative addresses issues of identity theft and ensures that your bank accounts is protected from unauthorised access, thus reducing your exposure to fraud. It will also promote a safe and sound financial system in the country, especially as it will keep records of suspected fraudulent individuals in the banking system.

    “It will make life and banking operations easy for bank customers as BVN is accepted as a means of identification across all banks in Nigeria. This will improve speed of service and reduce queues in banking halls.

    At the point of enrolment individuals shall be required to submit an acceptable means of identification, and update their information at the bank branch physically. Customers of banks will be required to enroll within a fixed period after which they shall no longer be able to operate their bank accounts,” NIBSS said in a statement.

     

    Benefits to customers

    Biometric Project Manager at NIBSS, Oluseyi Adenmosun said BVN gives a unique identity that can be verified across the banking industry making it easier for customers’ bank accounts to be protected from unauthorised access. It is expected to address issues of identity theft, and reduce exposure to fraud in the banking sector.

    The manager added that the purpose of the project is to use biometric information as a means of first identifying and verifying all individuals that have account (s) in any Nigerian bank and consequently, as a means of authenticating customer’s identity at point of transactions.

    Adenmosun said the BVN would also provide a uniform industrially accepted unique identity for customers and authenticate transactions without the use of cards using only biometric features and PIN.

     

    Enrolment requirements

    A statement from NIBSS explained that a unique ID number shall be issued to every bank customer at enrolment and linked to every account that the customer has in all Nigerian banks. Individuals are required to submit an acceptable means of identification for enrolment.

    Equally, customers of banks are required to enroll within a fixed period after which they shall no longer be able to operate their bank accounts.

    “The customer’s all 10 fingers and facial image are captured making it possible for individuals performing banking transactions like applying for loans to identify themselves using their biometric features which will be matched against information in the central database at NIBSS,” it said.

    Also, update of customer information is done at their bank branches physically while lenders are prompted during account opening and credit check if a customer has been blacklisted by any lender. The BVN and unique features of an individual shall be used in conjunction with a PIN on a point of transaction.

    Adenmosun said though there was no perfect system, the essence of technology and safety measures was to frustrate fraudsters. He said the BVN would make it extremely difficult for the fraud perpetrators to succeed.

    “It will not completely eliminate fraud, but it will cut it to the barest minimum. The biometrics cannot be easily stolen because it is based on once and once the system captures it, because it is based on fingerprints,” he said.

    Adenmosun said though the chip and pin technology is deployed in Automated Teller Machines (ATMs) and Point of Sale (PoS), they can be compromised, but the BVN makes that extremely difficult. He explained that for corporate accounts, the account signatories’ BVNs will be captured.

    “In corporate accounts, it is only the signatory to the accounts that are captured, not directors of the company. The directors are not functional users of the accounts, and will not be captured.

    “The whole idea of CBN behind fraud mitigation is to provide special anti-fraud system for banks. It is going to handshake with the BVN project, so that every suspicious account is flagged off. So, we expect that every functional account will have a BVN, and if an account that is used for fraud, does not have a corresponding BVN, then the concerned bank will face the full ambit of the law. That means the bank is allowing an account without BVN to run. That’s how we can track owners of fraudulent accounts.

    “If you don’t have a BVN and the anti-fraud system throws up your account as a suspect, then that bank is also aiding and abetting you. Because the truth of it is that we can only mitigate, we can’t stop fraud completely people will try. And when they try, the account they are trying with, has already been enrolled in the BVN, we will know. And those kinds of accounts would have been stored in what we call a watch list,” he added.

    He said that for every enrollment, the system will have a watch list where suspected reported accounts, relative to BVN, will be stored. “For every enrollment, the system will check the watch list and enquire if such BVN on a watch list. If it is, it will alert the account officer,” he said.

    He said the technology makes it easier for banks to know which account holder is on the watch list, and take extra precautions in handling transactions emanating from such accounts.

     

    CBN’s position

    The CBN said the biometric solution is aimed at providing a central database for the country’s bank customers.

    The innovation means Automated Teller Machines (ATMs) and Point of Sale (PoS) machines will be biometric-based.This means the project will help fix identity challenges facing the banking system. The project, the CBN said, will be driven by satellite technology being worked on by the Nigerian Communications Satellite (NICOMSAT) and MainOne.

    CBN Governor Godwin Emefiele, who before his appointment was, also Chairman, Bankers’ Committee Sub-Committee on Biometrics, believes the project is ambitious and will revolutionalise banking.

    Emefiele said the project would lead to re-setting of credit standard in the banking sector, as well as enhance consumer credit.

    “It is a rare opportunity that needed to be embraced.

    This project has capacity to serve over 160 million people. The good thing is that even when one forgets his/her Personal Identification Number (PIN), once the information is verified, transactions can be done,” he said at the launch of the project in February.

    Former CBN Governor Sanusi Lamido Sanusi, who launched the project in Lagos, said it would be a game changer for financial inclusion, adding that it will address issues relating to unified identity for bank customers.

    Managing Director, Dermalog Gunther Mull said the company is both financially and technically competent to carry out its job. He refuted claims that the company is bankrupt, adding that it has been profitable, growing at over 15 per cent in the last 12 years.

    He praised the CBN for the courage and commitment it has brought to the project, adding that in other countries where the project had been implemented, it was mainly government-driven.