Ex Parte Order on Accounts without BVN Sparks Debate

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The ruling of a Federal High Court in Abuja that all cash in bank accounts without bank verification numbers would be forfeited to the federal government has generated controversy. Obinna Chima reports

The dust raised by a Federal High Court ex parte order in Abuja that all monies in bank accounts owned by corporate organisations, government agencies or individuals that are without bank verification numbers (BVNs) will be forfeited to the federal government, has not settled.

While some financial market analysts and lawyers have continued to fault the decision of the court, others believe it would help the government in its anti-corruption war.

The court order stated that the decision would be enforced 14 days from the date the order was given.

Justice Nnamdi Dimgba Igwe had granted the order on October 18, 2017, following an application by the Attorney-General of the Federation, Mr. Abubakar Malami (SAN) on behalf of the federal government.

The Federal Government had sought an interim order directing all the money deposit banks (commercial banks) to disclose/declare all individual and corporate accounts in their custody not covered by BVN and for an interim order of forfeiture of the monies therein being accounts with insufficient know your customer guidelines contrary to the directive of the CBN and Section 3 of the Money Laundering (Prohibition) Act, 2011 (as amended. The application was filed on September 28th, 2017.

The judge had ordered the banks to file an affidavit of disclosure before it, showing the names of the affected accounts, the account numbers, outstanding balances, domiciliary accounts and the branch, where the accounts are domiciled.

In specific terms, part of the orders made by the judges included: “1. That the 1st-19th defendant banks shall filed an affidavit of disclosure before this court deposed to by the Chief Compliance Officer of all accounts of: (a) Individuals; (b) corporate bodies and (c) government agencies in their custody without BVN and serve same on the Central Bank of Nigeria.

“2.That the 1st-19th defendant banks shall disclose: (a) the names of the accounts as opened; (b) Account Numbers; (c) outstanding balances (d) Domiciliary Accounts and (e) the branch/location where the accounts are domiciled of all accounts without BVN.

According to the Nigerian Interbank Settlement System (NIBSS), 52 million bank accounts had been linked to their BVNs as of February this year. The total number of bank accounts in the country was estimated at 70 million in 2016.

 

Mixed Reactions

The Senior Special Assistant to the President on Prosecution, Okoi Obono-Obla, welcomed the decision of the court.

Obono-Obla stated that the federal government would  be justified when the order is implemented, saying that those who do not have a BVN to their accounts had violated the CBN policy on BVN and thus, have themselves to blame.

Obono-Obla, who is also the chairman of the Special Presidential Investigation Panel for the Recovery of Property, decried the alarming number of accounts yet to be linked to BVNs.

He, however, stated that the amount in each of the bank accounts were still unknown.

“From Central Bank Statistics, 46 million accounts are yet to be linked with BVN after three years. Anyone who has not complied with that directive, it means that his account is fraudulent and so, whatever is there should go to the government.

“ Our laws are not even as strict as what we find in the U.S. In the United States, if you do not operate in a bank account for three years, all the money in that account goes to the federal government of the United States of America”.

He, however, faulted the argument of banks that not every account without a BVN is fraudulent. He stressed that failure to comply with the BVN policy after two years of implementation suggested that the accounts were fraudulent.

But speaking in a chat with THISDAY, a bank chief executive, who spoke on the condition of anonymity, questioned the legality of the move by the federal government. According to the CEO, the move would discourage financial inclusion and might affect financial system stability.

“What of a situation where somebody has died and the matter is in administration, what do you want the bank to do? To give government the money and face litigation?

“What of Nigerians who are abroad and are still struggling to get their BNVs? What if we send the monies to government and we are sued by the customer(s)?

“And the 14-day time frame is very short. Why the rush? Why not give a time frame, maybe till 2018 for people to get their BVNs? These are the type of things that create uncertainty and instability in the market. We are just coming out of a recession and we try to discourage anything that would destabilise the system.

“We are trying to drive financial inclusion, but there are many people who are not in the banking system that may not want to open accounts once they hear of such things happening,” he said.

Also, the chief executive of the defunct Progress Bank, Mr. Okechukwu Unegbu, argued that the ruling was “basically illegal”.

Unegbu wondered under what law the ruling was given. “Was there any federal gazette on that? Who was the case against?” he wondered.

He added: “In fact, if that is done to anybody’s account, the person has the right to go to court. But for me, if it is something the federal government wants to pursue, let them come out with a law.

“But I must tell you that we are still feeling the impunity of the military mentality. Remember that in banking, your relationship with the customer is confidential.

“However, if the government comes up with a policy to enable it to fight corruption, all of us would support it. But you don’t use draconian laws to enforce such things.”

According to Unegbu, the federal government ought to be developing policies that would encourage financial inclusion and not those that discourage it.

He added that some of the challenges around the BVN scheme ought to have been corrected before resorting to the courts.

“Even the BVN scheme has its problems. If you go to the bank most of the time, before you conclude it, it takes a lot of time. Atimes when you register, the bank will call you back to come and register again.

“The environment should be put right first. If the environment is faulty, there is nothing bank customers can do. Besides, this should be extended to the microfinance banks, where most of their customers do not have BVNs yet.

“So there are holes in the so-called court order. But any order from a court should be obeyed, but it can still be challenged.

“Honestly, I am disturbed because I see it as an order given without considering the challenges in the environment,” he noted

But a former Managing Director of the defunct Liberty Bank, Chief Lawson Omokhodion, welcomed the court order, arguing that it would help the government in its anti-corruption war.

When asked about what would become of the fate of bank customers in the Diaspora, Omokhodion said: “People in the Diaspora have not gone forever. They come home during Christmas, some come once a year and some come twice a year.

“So they have time to link their BVNs to their accounts. Also, the central bank created centres outside the country to enable them to do that.”

He added: “But the truth is that there is no person who genuinely worked for his money, who would not be concerned about the safety of his funds. If I have 25,000 pounds in a British bank account and they tell me there are things I need to do to preserve my money, I would run down there immediately.

“So why won’t you, if you are truly the owner of this account? You would run back to sort things out and return. So for me government is doing the right thing. Government sometimes has been too soft. This country requires tough measures to create order.”

However, human rights lawyer, Ebun Olu Adegboruwa described as illegal, the order granting the forfeiture of funds in accounts without BVNs to the federal government.

In a statement, Adegboruwa, citing Section 36(1) of the 1999 Constitution and Article 7 of the African Charter, said it was not proper to determine the rights of parties in their absence.

He said the BVN was a policy decision and not “backed by law”.

The lawyer also faulted the “bindingness” of the order on millions of bank customers who he said were not directly parties to the suit, as reported The Cable, an online news site.

Adegboruwa said the quest to get revenue for the government should not be to the detriment of the constitutional and fundamental rights of the citizens.

“I am very well concerned about how we deploy interim orders for permanent purposes, such as to forfeit valuable assets without any or fair hearing from the person(s) concerned,” the statement read.

“I think it is improper to obtain interim orders to freeze the bank accounts of estates that are in dispute between the beneficiaries, of estates of deceased persons that are still being contested, of profits of companies that are still subject to litigation or other disputes, just to mention a few examples of the arbitrariness of these orders.

“There is nothing in Section 3 of the Money Laundering (Prohibition) Act 2011 that makes BVN a condition precedent for operating a bank account in Nigeria. Nothing at all. What the law requires is verifiable identity of the customer, such as name, address, photographs, identity cards, etc.

“BVN is a policy decision of the Central Bank of Nigeria and a court of law should not base its orders on executive policies that are not backed by law.

“I get truly worried with the way we adopt ex parte applications to determine very serious and weighty issues of law.

“The other point is the bindingness of an ex parte order upon the whole world and upon millions of bank customers in Nigeria, who are not directly parties to the suit.