CBN Mulls Stiffer Punishment for Fraudsters, Unethical Practices in Banks – Thisday

CBN

Obinna Chima

The Central Bank of Nigeria (CBN) is working on a policy that would ensure that bank customers or officials that engage in fraud, forgeries and other unethical practices are severely punished.

To this end, the central bank in a draft document on the Framework on Local Watch-list for the Nigerian banking system was also to engender the public confidence that will ensure a safe and sound financial system.

As part of the proposed punishment when the draft document is approved, the CBN stated that in a situation where there is confirmed successful and unsuccessful fraud attempts within the amount range, the person (s) involved would be made to be fined between N1 – N250,000.

Also, while for confirmed successful and unsuccessful fraud attempts within the amount range, the customer is expected to be fined N250,001.00 – N1,000,000; confirmed successful and unsuccessful fraud attempts within the amount range – N1,000,001- N50,000,000; while confirmed successful and unsuccessful fraud attempts within the amount range would also attract a fine of N50,000,001 and above, when the policy becomes operational.

The CBN which stated this in a letter addressed to all banks and a copy of which was posted on its website added:

“The Central Bank of Nigeria in collaboration with the Nigeria Inter Bank Settlement System (NIBSS) has come up with the draft framework on local Watch-list for the Nigerian banking system in order to address the increasing incidence of fraud/forgeries and other unethical practices with a view to engendering the needed public confidence that will ensure a safe and sound financial system.

“The Watch-list is a database of bank customers identified by their Bank Verification Number (BVNs) who have been involved in confirmed fraudulent activities. The database will be hosted by NIBSS. In this regard, the draft framework has been developed to provide guideline for the operation of the Watch-List to manage fraud in the system.”

Stakeholders were asked to review and comment on the proposed framework.

“If a potential fraud is found in the operation of your account or you are reported, you agree that we have the right to apply restrictions to your account and report to appropriate law enforcement agencies,” the CBN stated.

Also, the document stated that NIBSS shall maintain the Watch-list database on behalf of stakeholders and shall be responsible for the following: use the watch-list report submitted by banks to add reported fraudulent individuals to the watch-list database; use the watch-list report submitted by banks duly endorsed by the MD/CEO of the bank with the clearance from Law Enforcement Agency to delist individual from the watch-list database; provide banks with a portal for the verification of watch-list individuals indicating the categories of fraud; provide Application Programme Interface (API) for banks to integrate their systems to the watch- list database for online verification of watch-listed individual at transaction time; and keep audit trail of all user activities on the watch-list database to be able to determine the addition of an earlier delisted individual from the database.

In addition, the NIBSS is expected shall put in place a Service Level Agreement (SLA) with relevant stakeholders

“All stakeholders shall cooperate fully with relevant law enforcement agents during the course of investigations. A formal clearance shall be required from relevant law enforcement agency before an individual can be delisted from the watch-list. All aggrieved individuals listed in the watch-list shall go to the appropriate institution(s) to obtain formal request for delisting. Only a bank that placed an individual on the watch-list can request for delisting it.

“Penalties shall apply for any breach of the SLA. Severe penalty will be applied on any bank that fails to enlist an individual/entity confirmed to be involved in any fraudulent activity. Where a bank suffers a loss because of the failure of a bank to enlist an individual/entity confirmed to be involved in fraudulent activity, the defaulting bank should bear the loss.

“Holders of accounts in the watch-list shall be prohibited from all e-channel and non- personal transactions (such as ATM, Internet Banking, Mobile Banking, etc.) including issuance of third-party cheques. Holders must visit bank branches to transact.

“BVN of individual who have committed fraud and are wanted by the bank should be placed in a category (99) that is not allowed to conduct banking transaction in any bank (Post no debit on all accounts linked to the BVN) to force the individual to return to the bank that put them on the watch-list,” it added.