CBN Issues BVN Operational Framework, Watch List For Financial Sector

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BY CHINYERE OBIORA, LAGOS – The Central Bank of Nigeria (CBN) has released the regulatory framework for the operations of Banks Verification Number (BVN) and watch list for the Nigerian financial system.  

This was contained in a circular signed by Director, Banking and Payment System Department of the CBN, ‘Dipo Fatokun to all Deposit Money Banks (DMBs), mobile money operators,  switches,  payment Terminal service providers,  Payment solution service providers,  Micro Finance Banks (MfBs) and other financial institutions.

According to the circular, implementation of the framework is with immediate effect, adding that the document defines the establishment and operations of a Watch-list for the Nigerian Banking Industry.

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It said the development would also address the increasing incidences of frauds with a view to engendering public confidence in the nation’s banking industry.

The CBN said the regulatory framework for BVN and Watch-list operations in Nigeria also defines the roles and responsibilities of stakeholders; clarify the BVN’s operations in Nigeria; define access, usage and management of the BVN information, requirements and conditions and to provide a database of watch-listed individuals.

Other objectives include outlining the process and operations of the Watch-List; and deterring fraud incidences in the banking Industry.

On its scope, the apex bank said the framework provides standards for the BVN operations and Watch-list for the Nigerian Banking Industry, adding that the Watch-list comprises a database of bank customers’ identified by their BVNs and who have been involved in confirmed fraudulent activity in the nation’s banking sector.

In addition, it explained that CBN is responsible for conducting oversight on BVN operations and systems;  monitor other stakeholders to ensure compliance; issue circulars to regulated institutions on the operations of the watch-list; review framework for the operations of the watch-list, as the need arises; and apply appropriate sanctions for non-compliance with the document;

Furthermore. the Nigeria Inter-Bank Settlement System (NIBSS) is expected to collaborate with other stakeholders to develop and review the Standard Operating Guidelines of the BVN; initiate review of Guidelines as the need arises, subject to the approval of the CBN; ensure seamless operations of the BVN system; maintain the BVN database; ensure adequate security of the BVN information; and maintain an on-line real-time Watch-list Portal.

It stated that NIBSS shall put in place a Service Level Agreement (SLA), with relevant stakeholders and provide access to the watch-list database to the Central Bank of Nigeria and comply with the ISO standards for security and business continuity.

For the DMBs, they would not only ensure proper capturing of the BVN data, but also validate same before the linkage with customers’ accounts; ensure all operated accounts are linked with the signatories’ BVN; and ensure customers’ name on the BVN database is the same in all of their accounts across the banking Industry.

The framework further said appropriate penalties shall apply on banks that fail to enlist individuals confirmed to be involved in fraudulent activity, stressing that any other stakeholder, who fails to perform its stipulated responsibilities, shall be a watch-listed individual and shall not be allowed to enter into new relationship with any bank, adding that a bank may choose not to continue business relationship with account holder on the watch-list. 

It however said in a situation where a bank chooses to continue an existing business relationship with holders of account on the watch-list, the account holder shall be prohibited from all e- channels, such as ATM, POS, Internet Banking, Mobile Banking, including issuance of third-party cheques. A watch-listed customer shall not provide reference to another customer, neither shall he/she be allowed access to credit facility or guarantee credit facilities.

It said a watch-listed individual shall remain in the watch-list for a period as specified in the penalty table and in the event of a reoccurrence, the tenure shall begin to count from year one.

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