Nigeria is currently abuzz with the news that the Federal High Court has granted the Federal Government an interim order directing commercial banks to freeze any and all bank accounts without Bank Verification Numbers (BVN) including individuals, corporate bodies and government agencies and publish the names and details of the customers.
The court order, granted on the 17th of October, 2017, directs nineteen named commercial banks to disclose the details of all accounts held with them without BVN’s including their owners and their proceeds in an affidavit of compliance to be filed by each bank and deposed to by their respective chief compliance officers. There is also an interim order directing the banks to freeze all the said accounts by stopping all outward payments, operations or transaction pending the hearing of the application of the Federal Government seeking the forfeiture of the funds in each account to the Federal Government.
The court further granted an interim order directing the banks to disclose any investments made with funds from these accounts without BVN in any products including fixed/term deposits and their liquidation and interest incurred, bank acceptances, commercial papers and any other relevant information related to the transaction made on the accounts.
On February 14th 2014, the Central Bank of Nigeria, through the Bankers’ Committee and in collaboration with all banks in Nigeria, launched a centralized biometric identification system for the banking industry tagged Bank Verification Number (BVN). The major aim of the BVN was to curb identity theft and fraudulent transactions in the global banking systems by uniquely identifying every customer in the Nigerian Banking industry using biometric details including fingerprints and facial images.
Since its introduction in 2014, the BVN has been a requirement for operating a bank account in Nigeria requiring account holders to enroll and obtain their unique BVN. Although it has been in operation for over three years, the Federal Government claims there are over 46 million accounts in banks still not linked to BVN. The supposed basis of the application by the Federal Government to direct banks to freeze non-BVN compliant accounts and have the funds forfeited to them is to fight corruption as they claim some of these accounts belong to state and federal agencies as well as being used for criminal activities and can be presumed to be illicit money.
The court order has naturally caused an outcry amongst Nigerians especially those with legitimate reasons for not having yet complied with the BVN policy. Some legitimate reasons are those Nigerians in the Diaspora who reside abroad in countries where BVN centers are not located or cannot be found. Another reason for non-compliance could be that the account holders are physically incapacitated to enroll for BVN which requires their physical presence at the bank or BVN centers. There are countless other arguable reasons for non-compliance such as bank accounts of deceased people still under contention or profits of companies that are still subject to litigation or other disputes.
The question on most Nigerians minds is the legality of the action of the Federal Government. Is the non-compliance with the BVN policy sufficient grounds for forfeiture of your funds to the government?
There is the argument that such a forfeiture order would be unconstitutional, being a direct infringement of the right of freedom from compulsory acquisition of property. The Constitution does provide for compulsory acquisition for the imposition of penalties or forfeitures for the breach of any law. But this raises the question: Under what law is the Federal Government applying for forfeiture of deposits in bank accounts without BVN?
There is also the argument that BVN is not a condition precedent for operating a bank account under the Money Laundering (Prohibition) Act of 2011. Under the statute, what the law requires is the verifiable identity of the customer such as name, address, photographs and identity cards. Nowhere under the Act is BVN compliance a requirement.
A Lagos-based lawyer has pointed out that the BVN is a policy decision of the Central Bank of Nigeria and not a law or statute and no court of law should base its orders on executive policies that are not backed by law.
He also questioned the binding force of an ex parte order (ie an order given by the court without requiring all the parties to the controversy to be present) upon the world and upon millions of bank customers in Nigeria who are not direct parties to the suit brought by the Federal Government. He pointed out the impropriety of the courts to determine the rights of parties in their absence in contravention of the constitutional right to fair hearing.
However, despite the questions raised on the legality of the court order and the Federal Governments application to forfeit accounts without BVN, the orders must still be complied with by the banks until overturned by the courts.
It is therefore advisable, if possible, to comply with the BVN policy before one is unable to access ones Nigerian bank account either temporarily or permanently.