The Central Bank of Nigeria (CBN) has announced plans to close millions of bank accounts that are not linked to a Bank Verification Number across various financial institutions (BVN).
The plan, revealed by Blaise Ijebor, CBN director of the Risk Management Department and Chief Risk Officer, at the Prembly Compliance Breakfast Dialogue on Thursday April 6, aims to clean up the sector and reduce the growing incidence of fraud.
The BVN is a one-of-a-kind identifier that captures biometric data from bank customers and is used to verify their identities and prevent fraud.
Ijebor went on to say that the apex bank has been collaborating with the Nigerian Inter-Bank Settlement System (NIBSS) to combat the growing incidence of fraud in the sector.
He added that the financial regulator was considering starting the exercise soon, but he did not specify when the CBN would start cleaning up.
According to Legit.ng’s analysis of the NIBSS website as of April 2, 2023, there were only 57.01 million registered BVN numbers out of the country’s total 191.4 million bank accounts, with 133.5 million active.
Ijebor of the CBN went on to emphasize the importance of closing bank accounts without a BVN and pointed out three areas where cybercriminals are exploiting vulnerabilities.
The first is the Tier-1 account, which allows customers to open an account with minimal documentation and is mostly targeted at the unbanked and rural population.
He said:
“This account is dominated by digital banks or fintech firms, and often lacks BVN linkage, which makes it an easy entry point for hackers.”
“Secondly, some banks, especially digital ones, may not meet regulatory requirements, creating a second loophole for fraudulent activity.
“Lastly, hackers can exploit any vulnerability to gain access to bank accounts.”
Ijebor mentioned that apex bank was working on improving agency banking and enabling agents to register BVN, which will help move Tier-1 accounts to Tier-2.