Central Bank of Nigeria BVN-based Fraud watchlist Regulations

The Central Bank of Nigeria, in collaboration with the Bankers Committee in 2014 deployed a centralized Bank Verification System and launched the Bank Verification Number (BVN) as part of the overall strategy of ensuring effectiveness of the Know Your Customer (KYC) principles, and the promotion of a safe, reliable and efficient payments system.

The BVN gives a unique identity to each customer of Nigerian banks across the banking industry,

The CBN in October 2017 issued a revised framework for BVNs, and also established a watch-list program for  Nigerian Banking Industry to address the increasing incidences of fraud with a view to engendering public confidence in the banking industry.

This framework, which CBN says is without prejudice to existing laws, is a guide for the operations of the Watch-List in the Financial System. The Watch-list is a database of bank customers identified by their BVNs, who have been involved in confirmed fraudulent activities.

This Regulatory Framework guides activities of the participants in the provision of BVN operations. That is, the

  • Central Bank of Nigeria (CBN);
  • Nigeria Inter-Bank Settlement System (NIBSS);
  • Deposit Money Banks (DMBs);
  • Other Financial Institutions (OFIs); and
  • Bank Customers

NIBSS will maintain the Watch-list database on behalf of stakeholders and be responsible for the following:

  • Update the Watch-list database with the enlisted individuals by banks.
  • Use the Watch-list report submitted by banks and duly endorsed by the MD/CEO of
  • the bank, with clearance from the Director, Risk Management Department of CBN
  • to remove delisted individuals from the database.
  • Provide banks with a portal for the verification of watch-listed individuals in their
  • respective categories.
  • Provide Application Programme Interface (API) for eligible institutions to integrate
  • their systems to the BVN database for online validation of watch-listed individuals at
  • transaction time.
  • Keep audit trail of all activities on the watch-list database.
  • Put in place a Service Level Agreement (SLA), with relevant stakeholders.
  • Provide access to the watch-list database to the Central Bank of Nigeria.
  • Comply with the ISO standards for security and business continuity.

For banks, penalties will apply if a bank 'fails to enlist individuals confirmed to be involved in fraudulent activity.'

A watch-listed individual will not be allowed to enter into new relationship with any bank.

A bank may choose not to continue business relationship with account holder on the watch-list. 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 echannels, 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.

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

Penalties that applied to watch-listed customers shall apply to all accounts that he or she is a signatory to.

Document Details

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Year of Document: 
2017
Date of Document: 
Wednesday, October 18, 2017

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