The Central Bank of Nigeria (CBN) has issued new directives to financial institutions, including commercial banks, on how to obtain the necessary information on their customers.
The move is part of the Know Your Customer (KYC) requirements that aim to enhance the fight against money laundering, terrorism financing, and proliferation financing.
According to the CBN, financial institutions are required to demand customers’ social media handles, among several other information, as part of the KYC requirements. They are also expected to verify the permanent addresses of customers as filled in their KYC forms.
To ensure compliance with the regulation, the CBN has provided a list of sanctions for defaulting financial institutions.
The sanctions range from N200,000 to N10 million and are directed to the managing director (MD), executive compliance officer (ECO), chief compliance officer (CCO) and the bank.
Some of the infractions and their penalties are:
- Failure to undertake Customer Due Diligence (CDD): The ECO of the non-compliant bank will pay a minimum penalty of N750,000; the CCO will pay N500,000 on other culpable employees; and there will be a minimum penalty of N200,000 per customer without CDD.
- Failure to keep and ensure customers’ records are up to date: The bank will pay a minimum penalty of N10 million.
The CBN has also released three-tiered KYC requirements for different categories of customers based on their risk level and transaction limits. The three-tiered KYC regime seeks to implement a flexible account opening requirements for low-value and medium-value account holders subject to caps and transaction restrictions.
The CBN’s new directives come at a time when it has also released six new directives on how domiciliary bank accounts should operate in the country.
The move is aimed at promoting transparency, discouraging speculation, and ensuring overall stability in the forex market. All commercial banks, including Access, Zenith, and Guaranty Trust, are expected to make the necessary adjustments.
