The Central Bank of Nigeria has issued a revised regulatory framework for Bank Verification Number operations in line with its overall strategy of ensuring the effectiveness of Know Your Customer (KYC) principles, and promotion of a safe, reliable, and efficient payments system.
This was disclosed in a circular dated 12th October 2021 and titled “Issuance of revised regulatory framework for Bank Verification Number operations and watch-list for the Nigerian banking industry”, and addressed to all deposit money banks, mobile money operators, super agents, and payment service providers.
The Framework would serve as a guide for BVN operations and Watch-list for the Nigerian Banking Industry. The Framework describes the Watch-list as a database of customers identified by their BVNs, who have been involved in confirmed cases of breaches, as defined within the framework and BVN operation comprises all activities leading to the management of the unique banking identification of customers in the BVN database.
Hear from CBN
Regarding access to the BVN database, the Framework disallows foreign entities access to the BVN database but allows Nigerian financial entities to the extent stated below.
- Banks – Do not require CBN’s approval but must treat such data with strict confidentiality.
- Other financial institutions (excluding PSPs) – Do not require CBN’s approval but requires the consent of customers.
- Payments Service Providers – Access is through NIBSS as defined in the BVN SOG and requires the consent of customers.
- Credit Bureau – Access is through NIBSS as defined in the BVN SOG and requires the consent of customers.
- Other entities that may be approved by the CBN – Access is through NIBSS as defined in the BVN SOG and requires the consent of customers.
Individuals can only access their BVN information and not that of others, while access to BVN information may be granted to the following entities upon presentation of valid Federal High Court orders:
- Law Enforcement Agencies;
- National Pension Commission;
- Pension Fund Administrators; and
- Other entities as may be approved.
The circular listed BVN operations and watch-list participants to include the CBN, Nigeria Inter-Bank Settlement System (NIBSS), banks, other financial institutions, and bank customers.
The Framework listed misuse of the BVN watch-listing process for victimisation; improper linking of accounts/wallets (except Tier 1); and other infraction(s) as may be determined by the CBN as some of the infractions by participants that will attract penalties.
According to the Framework, customers with BVNs on the Watch-list will be disallowed from entering a new relationship with any participant (financial institutions) and participants may choose not to continue any business relationship with account holders on the Watch-list. Where a participant chooses to continue an existing business relationship with account holders on the watch-list, the account holder “shall be prohibited from all electronic channels such as but not limited to ATM, POS, Internet Banking, Mobile Banking, USSD including the issuance of third-party cheques”.
Recall that the Central Bank of Nigeria, in collaboration with the Bankers’ Committee, deployed a centralised Bank Verification Number (BVN) System in February 2014, the Framework is a follow up to promote financial system stability in Nigeria.