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CBN to Take Over Funds in Dormant Accounts

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BVN, NIN Mandatory for all New Accounts

CEM REPORT, FINANCE | The Central Bank of Nigeria (CBN) has issued a new regulatory framework that grants the body powers over funds in accounts dormant with a financial institutions for 10 years and beyond.

The regulation also establishes an Unclaimed Balances Trust Fund (UBTF) and a management committee that will manage the funds for investment in treasury bills and other government securities.

In a circular signed by the Director of the Financial Policy and Regulation Department, Chibuzo Efobi, the guideline dated August 6, however recently released grants the CBN access to funds in dormant accounts/unclaimed balances and other financial assets in savings, current, term and domiciliary accounts.

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The apex bank by this new regulation will also have access to financial assets whether in form of salaries, wages, bonuses or commissions held in cards and wallets.

Additionally, funds received from a correspondent bank without sufficient details as to the rightful beneficiary and/or a recall of funds made to the remitting bank to which the Nigerian bank’s account had not been debited, a judgment debt for which the judgment creditor has not claimed the amount of judgment award; and any other deposits or financial assets that may be designated by CBN will also be part of the pool.

The new regulation clearly defines the management procedures of funds trapped in dormant accounts, what the funds could be used for, pending refunds to customers, compliance expectations, monitoring and evaluation, dispute resolution and sanction for violations.

Also, the regulation states that the primary use of the fund will be an investment in Nigerian treasury bills (NTBs) and other securities that may be approved by the Unclaimed Balances Management Committee.

In the eventuality of such funds being claimed after the CBN had taken over the account, the regulation states that such a person should visit the financial institution to fill out an asset reclaim form to commence the process of accessing the money.

“A beneficial owner is expected to visit any bank to fill out an asset reclaim form to commence the process of accessing the money while financial institutions have up to 10 working days to process and verify the claims after which the request is transmitted to the Central Bank.

On receipt, the apex bank, according to the rules, would, within another 10 working days, refund the amount involved to the financial institution originating the request for onward payment to the claimant, whose right to proceed is indefinite.

Where there are disputes, it noted, the resolution would be treated with dispatch in 15 working days.”

On compliance of financial institutions to the regulation the apex bank stipulates sanctions of N2 million, adding that it will employ off-site and on-site monitoring.

“The CBN shall monitor and enforce compliance of financial institutions with this guideline through off-site surveillance as well as on-site routine and target examinations.”

“Contravention of any provision of the guidelines would attract a penalty of not less than N2 million. And for failure to comply with CBN’s directive in respect of any infraction, the party involved would pay a” further penalty of N200,000 daily until the directive is complied with or as may be determined by CBN”.

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