The war against money-laundering tilted a notch higher on October 17 when a court ordered banks to publicly publish all accounts that were not linked to the Bank Verification Number. Such accounts have been temporarily frozen, pending the hearing of a substantive application seeking permanent forfeiture of funds therein to the Federal Government.
A Federal High Court in Abuja, presided over by Nnamdi Dimgba, gave the order, as a sequel to an ex parte application brought before it by the Attorney-General of the Federation and Minister of Justice, Abubakar Malami. Apart from the owners’ identities and the amounts involved, the banks are also to disclose “any investment made with funds from these accounts…” They have 14 days to comply with the order. The Nigeria Inter-Bank Settlement System says 15.72 million accounts are not BVN-compliant out of the 45.85 million bank accounts in the country, as of October 8, 2017.
The BVN is a biometric package, initiated in February 2014 by the Central Bank of Nigeria, under the Know Your Customer policy, aimed at protecting bank customers, reducing fraud and strengthening the Nigerian banking system.
While the Dimgba ruling has been welcomed as an offensive against treasury looters in some quarters, sharp criticism, however, has attended it in others because of its capacity to rob innocent Nigerians of their hard-earned money. Some Nigerians may have genuine reasons for having not linked their accounts to the BVN yet. In this category are Nigerians in the diaspora; those critically ill; long term prisoners; rural dwellers; and those who died intestate. Getting families of the latter to process letters of administration of their estate, or legally transfer ownership of their accounts to those alive, could be cumbersome and long drawn in Nigeria. We should not impose oppression in the guise of fighting corruption.
This set of people should not forfeit their legitimate funds in banks. Not protecting their right is where that court order missed the point. As a result, it should be reviewed to isolate this group of account owners. Perhaps, it is for this reason that legal advisers and banks executives reportedly resolved at separate meetings last week to challenge the judgement.
However, disturbingly, banks often connive with treasury looters to violate the Money Laundering Act 2011, by adopting a slew of unethical practices, such as allowing dubious identities (names of domestic servants and pictures) in the opening of accounts, and accepting deposits that fall within “suspicious thresholds.” With automation, it is mandatory for banks to alert the Economic and Financial Crimes Commission on individual transactions that are above N5 million and more than N10 million for body corporate. Also, cash transfers to, and from abroad, in excess of $10,000 are to be duly declared.
But these extant financial regulations are brazenly breached by banks. Most strikingly, some of their chief executive officers even play leading roles. A case in point was the Nigerian National Petroleum Corporation’s $153 million illegally lodged in four banks when Diezani Alison-Madueke was the Minister of Petroleum Resources. An EFCC investigator, Moses Awolusi, said the plot was perfected in 2014. The amount was recently forfeited to government through a court ruling.
This epitomises systemic failure aggravated by CBN’s weak regulation. The apex bank’s inclusion as the 20th respondent to the 19 money deposit banks the AGF charged in the BVN violation suit is a ringing indictment. Evidently, the CBN failure to enforce its regulations and punish errant banks has encouraged their serial abuse of guidelines for the financial sector for which the government is attempting to punish the innocent along with the guilty.
Godwin Emefiele, Governor of the CBN, therefore, should be conscious of the danger this anomaly poses to the financial system. For some of the 15 million BVN non-compliant accounts not to be abused by money launderers, it is imperative that they should remain inactive until their owners complied with the policy.
With tighter regulatory control or oversight, rather than through judicial declaration, banks could buck the duplicitous trend of maintaining dual policy regimes for the 15 million people and 30.5 million BVN-compliant account holders. Federal and state governments’ adoption of the BVN in the fight against ghost workers has revealed how critical it is in unravelling payroll fraud. For instance, on Wednesday, the EFCC told an Abuja High Court, how a lowly ranked civil servant operated 200 personal bank accounts with which he fleeced the government in a payroll mess. Similarly, it could be effective in tracing looted funds to the perpetrators.
When public interest in the financial sector is being endangered, the CBN as a regulator should leave no one in doubt that it is fully in charge. This was what it did under Lamido Sanusi as the governor in 2009 when it sacked the CEOs of five banks over toxic loans and other abuses.
When banks or their executives aid and abet financial crimes, they should be made to face the full weight of the law. This is the only way to instill sanity in the system. “Handlers of stolen goods are as punishable as the thieves themselves,” Akere Muna reminded Nigerian authorities during an International Anti-Corruption Conference Council in Abuja this year.
The EFCC has recovered more than $2 trillion in 12 years, according to the AGF, as of February 2016. The money passed through the banks; much of it ended up in safe havens in Europe and other parts of the world. But delinquent banks pay a heavy price abroad when caught in such a labyrinth. For instance, shortly after the 2008 financial crisis, seven United States banks were fined $150 billion for various offences ranging from money laundering and tax evasion to mortgage fraud, says the Financial Times of London.
Until the CBN and allied regulatory agencies take their roles seriously, and consequences for criminality engrained in our financial system as the developed nations do, banks will continue to abuse public trust by acting unabashedly as conduits for treasury bandits.
