As part of the efforts to battle the increasing incidents of fraud in the financial sector, the Central Bank of Nigeria (CBN) has planned to close millions of bank accounts that are not linked to a Bank Verification Number (BVN).
The apex bank through its Director of Risk Management Department and Chief Risk Officer, Blaise Ijebor announced the plan at the Prembly Compliance Breakfast Dialogue on Thursday.
According to the CBN Director, the objective of the initiative is to clean up the financial sector and reduce the growing incidence of fraud.
Ijebor explained that the CBN has observed that many bank accounts are not linked to the BVN, making it difficult to track fraudulent activities.
He said the CBN’s decision to close millions of bank accounts that are not linked to the BVN is expected to encourage customers to update their records and link their bank to the BVN.”
“The BVN is a biometric identification system that captures the unique biometric data of bank customers, including fingerprints and facial features. It is a means of verifying the identities of customers and ensuring that they are who they claim to be.”
“This system has been instrumental in curbing fraudulent activities in the Nigerian financial sector since its introduction in 2014. As part of its efforts to combat the growing incidence of fraud in the sector, the Central Bank of Nigeria (CBN) has been collaborating with the Nigerian Inter-Bank Settlement System (NIBSS).
“The NIBSS is a payment infrastructure that facilitates the electronic clearing and settlement of inter-bank transactions in Nigeria. The partnership between the CBN and NIBSS has led to the development of various initiatives to enhance the security of the financial sector, including the BVN system,” he said.
The CBN Director of Risk Management Department and Chief Risk Officer, also emphasized the importance of the BVN system in reducing cases of fraud in the sector, while assuring customers that the process will be conducted transparently and fairly.
Ijebor said that the public has been urged to cooperate with the CBN to ensure the success of this initiative in creating a more secure financial sector for everyone.
He also restated the CBN’s commitment in working with stakeholders to promote a more secure and transparent financial sector in Nigeria. According to him, the reason why CBN is closing bank accounts without BVN is because only 57.01 million registered BVN numbers out of the total 191.4 million bank accounts in the country, with 133.5 million active?
While giving detailed importance of closing bank accounts without BVN, Ijebor further highlighted three areas where cybercriminals are exploiting vulnerabilities.
The first he said, is the Tier-1 account, which allows customers to open an account with minimal documentation and is mostly targeted at the unbanked and rural population.
He said: “This account is dominated by digital banks or fintech firms, and often lacks BVN linkage, which makes it an easy entry point for hackers.”
“Secondly, some banks, especially digital ones, may not meet regulatory requirements, creating a second loophole for fraudulent activity.
“Lastly, hackers can exploit any vulnerability to gain access to bank accounts,” he added.
Ijebor mentioned that the apex bank are working on improving agency banking and enabling agents to register BVN, which will help move Tier-1 accounts to Tier-2.
