ABUJA, Nigeria – The House of Representatives has ordered the Central Bank of Nigeria, CBN, to halt its recent directive that social media handles be added to ‘Know Your Customer, KYC, requirements for banking customers.
The motion, sponsored by Rep. Kingsley Chinda (PDP-Rivers) and several others, was adopted during Tuesday, July 11, 2023, plenary session in Abuja.
Chinda argued that despite the potential benefits of the directive, it would likely exert unnecessary pressure on Nigerian citizens, particularly during this challenging period.
He contended that the directive conflicts with Section 37 of the Constitution of the Federal Republic of Nigeria, 1999, which protects citizens’ right to privacy.
Chinda noted that banks already possess extensive information about their customers, including names, phone numbers, passport photos, email addresses, National Identification Numbers, NIN, Biometric Verification Numbers, BVN, and utility bills.
He argued that there are more effective ways to monitor money laundering, terrorism financing, and proliferation financing, pointing to existing resources such as the Nigeria Police Force, NPF, the Nigeria Financial Intelligence Unit, NFIU, and the Economic and Financial Crimes Commission, EFCC, among others.
Chinda expressed concern that implementing the CBN’s directive would potentially exclude Nigerians not active on social media from formal banking systems, leading to unintended negative effects.
He highlighted the possible hardships for illiterate or semi-literate business owners, traders, and entrepreneurs, particularly those living in rural areas.
Following the adoption of the motion, the House called for a review and halt to the CBN directive to ease potential hardship for Nigerians.
The Committee on Banking and Currency, once constituted, has been tasked with investigating the matter and reporting back within three weeks for further legislative action.
The Committee on Legislative Compliance, once formed, will be responsible for ensuring implementation.
Nigeria’s Central Bank Mandates Banks to Collect Customers’ Social Media Handles
The Central Bank of Nigeria, CBN, has issued a mandate for financial institutions to obtain customers’ social media handles, email addresses, telephone numbers, and residential addresses as part of its new customer due diligence regulations.
This new mandate is contained in the ‘Central Bank of Nigeria (Customer Due Diligence) Regulations, 2023’ document which was published on the CBN’s website on Friday, June 23, 2023.
The CBN said that this regulation is aimed at strengthening the customer identification process within the financial system.
Purpose of the New Regulations:
The new regulations were implemented to provide additional measures for financial institutions to comply with relevant provisions of the Money Laundering (Prevention and Prohibition) Act (MLPPA), 2022, Terrorism (Prevention and Prohibition) Act (TPPA), 2022, Central Bank of Nigeria (Anti-Money Laundering, Combating the Financing of Terrorism and Countering Proliferation Financing of Weapons of Mass Destruction in Financial Institutions) Regulations, 2022 (CBN AML, CFT and CPF Regulations), and international best practices.
It is also meant to enable the CBN to enforce compliance with customer due diligence measures in accordance with its Anti-Money Laundering, Combating the Financing of Terrorism and Countering Proliferation Financing regulations.
Required Information:
Financial institutions are required to identify their customers, whether permanent or occasional, and natural or legal persons or arrangements, and obtain the following information for individuals:
- Legal name and any other names used (such as maiden name)
- Permanent address (full physical address)
- Residential address (where the customer can be located)
- Telephone number
- Email address
- Social media handle
- Date and place of birth
- Bank Verification number
- Tax Identification number
- Nationality
- Occupation
- Public position held
- Name of employer
- Official personal identification number or unique identifier from an unexpired government-issued document with a photograph and signature, such as a passport, national identification card, residence permit, social security records, or driver’s license
- Type of account and nature of the banking relationship
- Signature
- Politically exposed person status
Furthermore, the CBN has instructed that financial institutions must not establish or keep anonymous accounts, numbered accounts, or accounts in fictitious names.
The new regulations are applicable to all financial institutions under the regulatory purview of the CBN.
