CEM REPORT, FINANCE | The Central Bank of Nigeria (CBN) has been asked to apply breaks to its directive to financial institutions to gather and verify customers’ social media handles as part of its know-your-customer (KYC) procedures.
The House of Representatives during the plenary session on Tuesday argued that the directive infringes upon Section 37 of the constitution, which safeguards privacy rights.
The motion to suspend the directive was sponsored by nine lawmakers.
Honourable Kelechi Nwogu argued that while the move is commendable, it is unnecessary as it is likely to bear pressure on teeming Nigerian masses at a trying period.
He noted that the nation’s financial institutions already have access to enough information about their clients’ identities, including names, phone numbers, passport photos, emails, national identification numbers (NINs), biometric verification numbers (BVNs), utility bills, and other crucial details.
He reiterated that traders who are not on social media will be disqualified adding that millions of Nigerians, could face “untold hardships” as a result of the directive particularly the illiterate or semi-literate business owners, dealers, and entrepreneurs living in rural and village regions without social media handles.
“If the directive takes effect, Nigerians who are not on social media, with large turnovers from their businesses and trades, would be compelled to or systematically excluded from formal banking systems with its attendant negative effects and implications.
“Implementing the CBN’s directive at this point may clearly be unnecessary as it is likely to bear a lot of pressure on teeming Nigerian masses.”
Nwogu stated that there are more effective methods for monitoring money laundering and terrorism financing, such as utilizing the Nigeria Police Force (NPF), Nigeria Financial Intelligence Unit (NFIU), the Economic and Financial Crimes Commission (EFCC), intelligence agencies, and crime tracking agencies.
Recall that CEM reported that the CBN issued revised guidelines on its Customer Due Diligence Regulations 2023 for financial institutions under its regulatory purview.
The revised guidelines include collecting customers’ social media handles as a component of banks’ know-your-customer (KYC) procedures.
The CBN said the move is to deter financial crimes and terrorism while improving the accuracy and comprehensiveness of customer identification.
Also, this policy was to reflect CBN’s commitment to keeping pace with technological advancements and evolving risks in the financial sector.
