- Provision of BVN at the point of FOREX purchase from BDCs or for any legitimate banking transaction would not attract any security risk, rather it protects the customer against identity theft, ONU OKORIE writes.
Although critical analysis of Central Bank of Nigeria, CBN’s directive to all bureaux de change, BDCs operators in the country to demand customers’ bank verification number BVN for all FOREX transactions from November 1, 2015, shows that it was for the interest of the nation’s economy and for public good, the policy has continued to attract controversies among stakeholders.
CBN in a circular signed by the Director, Financial Policy and Regulation, CBN, Kevin Amogu said it would discontinue the sale of FOREX to the BDCs that had not availed it the BVNs of all its directors.
According to him, “all banks and licensed BDCs operating in Nigeria as well as the general public are notified that with effect from November 1, 2015, all customers desiring to purchase FOREX through all available channels in Nigeria must provide their BVN, which shall be validated by the CBN authorised FOREX dealer through the Nigerian Interbank Settlement System platform before the transactions are consummated.”
“Any authorised FOREX dealer that fails to provide the required information in its returns or provides a wrong BVN would be penalised and this may include the termination of the FOREX dealership
Although CBN described the action as part of continued efforts to stabilise the FOREX market, stem the rampant cases of FOREX leakages and illicit money transfer from Nigeria, some stakeholders gave a different interpretation to the rewards of the policy to the economy.
For instance, House of Representatives at the plenary session in Abuja passed a resolution inviting the Governor of CBN, Mr. Godwin Emefiele, to explain the requirement of BVN for transactions with BDC operators. Hon. Danburam Abubakar Nuhu initiated the motion under matter of urgent public importance.
Although Nuhu acknowledged the effort of the CBN to stabilise the foreign exchange market by making it compulsory for all BDC to have the BVN of all customers, the lawmaker said the plan to use BVN to stem money laundering could be counter-productive owing to the “proliferation of the BVN of Nigerians.
Stating that there were 2,765 approved BDCs in the country, he tried to convince Nigerians to buy the idea that attempt to use the BVN to stem money laundering will lead to the proliferation of the BVNs of Nigerians.
The House also advised the CBN to consider less demanding operational guidelines for foreign exchange transactions as businesses of BDCs are being hampered by multiple regulations.
“ This will make vital financial information of Nigerians easily accessible to dubious people, in this era of internet fraud, this will endanger our peoples’ hard earned money and cause even more problems than it was meant to solve,” Nuhu said.
Nuhu claimed that the development had caused anxiety in the market, as most clients were wary of disclosing their BVNs to third parties because of the security implications. He added that the House is concerned that this will make the vital financial records of Nigerians easily accessible to dubious people. “In this era of Internet fraud, this will endanger our people’s hard-earned money and cause even more problems than it was meant to solve.”
Despite the position of the Member, there is no doubt that Nigerian financial system would be boosted after effective implementation of BVN.
As CBN pointed out, adoption of BVN as a condition for the purchase of FOREX is expected to reduce the incidence of multiple purchases, round tripping and illicit transfer of funds, facilitate enforcement of authorised limits of FOREX sales to end users, sanitise the retail segment of the market and engender policies that will facilitate better allocation of the FOREX, based on genuine demands.
The apex bank has made it clear that BVN is neither a payment instrument nor an account number and therefore could not be used to access any account by unauthorised users. The banks, BDC operators and even regulators use the BVN to validate the identity of a customer using some biometric information such as fingerprints and photograph obtained at the point of enrolment.
BVN also provides the unique identity of each customer for achieving effective know your customer, KYC principle and fraud prevention. Against this backdrop, it is clear that the provision of BVN by customers at the point of Forex purchase or for any legitimate banking transaction with any of the above named institutions does not
attract any security risk. Rather it protects the customer against identify theft.
CBN has disclosed plans to increase its vigilance on Nigerian banks and other financial institutions to ensure that they are not used as conduits for illicit fund flows, especially in foreign currencies. Recently Global Financial Integrity group, ranked Nigeria as one of the 10 largest countries for illicit financial flows in the world.
The report estimates illicit funds that go through the Nigerian system annually to be $15.7 billion.
“According to the apex bank, in the light of this avoidably negative commentary, we wish to draw the public’s attention to several protocols on illicit fund flows, money laundering, and terrorism financing both in Nigeria and around the world.”
Although CBN vowed that it will continue to support the Federal Government’s fight against money laundering, corruption, and terrorism financing and will block any and every avenue that may be used for these purposes, it also said it would ensure that persons who venture into currency speculation and currency substitution find it unattractive and dangerous.
Managing Director, Nigeria Interbank Settlement System, NIBSS, Ade Shonubi also said that full compliance with the policy would clean the financial system. He made this known at the unveiling of the BVN channels for easy verification for all forex transactions by bureaux
de change operators BDCs and customers. Shonubi disclosed that NIBSS had deployed two services on the Web and phone that would make BVN verification for BDCs customers and others as easy as possible.
At the last Monetary Policy Committee MPC meeting, in Abuja, Emefiele also identified that the policy would boost consumer credit in the financial system. This given that as the policy stimulates know your customer KYC in the deposit money banks, it would as well increase confidence in credit facilitation. According to him, “Given the situation, the MPC emphasised the necessity of focusing on financial market stability and proactive engagement of policy and administrative levers needed to support the environment in which market institutions operate. With the BVN, customers can walk into any shop and present his number and obtain credit after his bank has been contacted.”
The bankers’ committee is sponsoring the BVN project that was launched in February 2014. It was among other things introduced to address safety of customers’ funds, avoid losses through compromise of personal identification numbers and other criminal activities in the industry.