BVN: Banks May Beg Court to Stop FG

October 25, 2017
BVN: Banks May Beg Court to Stop FG

By Modupe Gbadeyanka

Deposit Money Banks (DMBs) operating in Nigeria may have to run to court to challenge an order granted by a court in Abuja to the Federal Government to takeover all funds in accounts without Bank Verification Number (BVN).

According to BusinessDay, this decision follows outcome of the meeting with legal advisers of banks on Tuesday and that of banks chief executives on Monday at the Chartered Institute of Bankers of Nigeria (CIBN) in Lagos.

A source familiar with the outcome of the meeting says that while the banks do not want to be confrontational about this, the issue is beyond corruption as being touted by the FG.

Recall that Justice Abubakar Malami, Attorney-General of the Federation and Minister of on October 17 obtained an order from Federal High Court judge, Justice Nnamdi Dimgba, seeking to confiscate all funds in accounts without BVN to the Federal Government.

The order was obtained against 19 banks in the country with the Central Bank of Nigeria also included as a defendant in the case. The banks have been given an ultimatum of 14 days to advertise accounts without BVN in a national newspaper, during which time, the owners of such accounts are expected to show cause why the money should not be forfeited.

Stakeholders argue that there are many reasons for not having a BVN which include cases of death of an account holder where the probate process is still ongoing or many Nigerians that are outside the country.

They see no legal basis for such sweeping order, saying that if FG wants to enforce such an order, it should have been done by an Act of the National Assembly.

Johnson Chukwu, managing director/CEO, Cowry Asset Management limited told BusinessDay by phone that banks have strong basis to contest the order particularly on the aspect that FG gave a timeline for banks to advertise accounts without BVN in a national newspaper, during which time, the owners of such accounts are expected to show cause why the money should not be forfeited.

Chukwu said there is no provision of such in the Money Laundry Act, adding that the Act does not allow forfeiture of funds for reasons of not having a complete documentation.

He said if the banks are willing to challenge the order, it is good but was concerned that those who may lose their funds may be unable to challenge the order directly because they don’t have the capacity to do so or for other reasons.

The banks CEOs agreed to reach the Attorney General of the federation as well as others in the executive to explain to them the far reaching implications of the order, especially since it also affects foreign investors with funds in Nigeria.

“The economy may shrink again if the federal government goes ahead to seize the funds in the non – BVN linked accounts as the magnitude of the numbers involved is huge .The extent of shrinkage will depend on the volume and whether these accounts were active or dormant in spite of the regulation,” Bolade Agbola, Analyst and CEO of LAM Agro Consult Limited said in an emailed response to BusinessDay.

Ayodeji Ebo, managing director, Afrinvest Securities limited told BusinessDay by phone that the banks should engage with the Federal Government on the issue.

However, Ebo said it may be good for banks to get an injunction to halt the order and engage until agreement is reached.

Data obtained by BusinessDay from Nigeria Inter-Bank Settlement System Limited (NIBSS) shows that a total of 46 million bank accounts are yet to be linked to BVN as at February 2017, the latest period for which data is available.

Total bank accounts in the banking system were 97.57 million as at February 2017 while total accounts linked with BVN stood at 51.72 million, leaving a total of 46 million accounts yet to be linked with BVN, introduced in February 2014 to ensure that all bank accounts have the biometric identification of their owners.

“Expropriating people’s money can give the wrong impression especially for an emerging market like Nigeria,” said the banking source.

“The Government can choose to restrict access to non BVN accounts if it is concerned about money laundering but not seize funds in said accounts, to avoid hurting innocent people.”

Source: BusinessDay

Modupe Gbadeyanka

Modupe Gbadeyanka is a fast-rising journalist with Business Post Nigeria. Her passion for journalism is amazing. She is willing to learn more with a view to becoming one of the best pen-pushers in Nigeria. Her role models are the duo of CNN's Richard Quest and Christiane Amanpour.

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