A CRITICAL ANALYSIS OF THE BANK VERIFICATION NUMBER
PROJECT INTRODUCED BY THE CENTRAL BANK OF NIGERIA
BY
EHI ERIC ESOIMEME ESQ
LLB, BL, ICA (MANCHESTER), LLM (CARDIFF) DEPUTY EDITOR IN CHIEF AT DSC PUBLICATIONS LTD
AUTHOR OF THE BOOK: A COMPARATIVE STUDY OF THE MONEY LAUNDERING LAWS/REGULATIONS IN NIGERIA, UNITED STATES AND THE UNITED KINGDOM AUTHOR OF THE BOOK: THE RISK-BASED APPROACH TO COMBATING MONEY
LAUNDERING AND TERRORIST FINANCING
MEMBER ASSOCIATION OF CERTIFIED ANTI-MONEY LAUNDERING SPECIALISTS (ACAMS) MILLENIUM VOLUNTEER WELSH GOVERNMENT
STUDENT VOLUNTEER CARDIFF UNIVERSITY EMAIL: [email protected]
PHONE NO: +2348076095047
ABSTRACT
This paper critically analyses the centralized biometric identification system tagged Bank Verification Number (BVN).
The BVN project was introduced by the Central Bank of Nigeria due to increasing incidents of compromise on conventional security systems (password and PIN) and a high demand for greater security for access to sensitive or personal information in the Banking System.
This paper seeks to determine whether or not the project can achieve its core objectives?
The analysis would be done under the following headings: Identity Theft, Beneficial Owners, Financial Inclusion, Direct Discrimination and Blacklisted Customers.
This paper relies mainly on primary and secondary data drawn from the public domain. It also relies on documentary research.
INTRODUCTION
The Central Bank of Nigeria through the’Banker ’Committee’and’in’collaboration’with’all’banks’ in Nigeria on February 14, 2014 launched a centralized biometric identification system for the banking industry tagged Bank Verification Number (BVN).1
The BVN project was introduced due to increasing incidents of compromise on conventional security systems (password and PIN) and a high demand for greater security for access to sensitive or personal information in the Banking System.
The project aims to achieve the following objectives:
1Central’Bank’of’Nigeria,’
Protect Customers Bank Accounts from unauthorized access
Address issues of identity theft, thus reduce exposure to fraud
Enhance the Banking Industry chances of being able to fish out blacklisted customers2
This paper critically analyses the BVN project. Its aim is to determine whether or not the project can achieve its core objectives?
The analysis would be done under the following headings: Identity Theft, Beneficial Owners, Financial Inclusion, Direct Discrimination and Blacklisted Customers.
IDENTITY THEFT
The BVN project requires individuals performing banking transactions (e.g., applying for loans) to identify themselves using their biometric features which will be matched against information in the central database.
The’aim’of’this’approach’is’to’protect’customer s’bank’accounts’from’being’accessed’by’a’person’ who is not the customer.
While this approach is more likely to prevent unauthorized transactions from occurring within the bank, it is unlikely to prevent such transactions from occurring outside the bank.
An’ identity’ thief’ may’ be’ able’ to’ access’ a’ customer s’ bank’ account’ through’ the’ use’ of’ the’ customer s’debit’card.’This’can’be’done’at’any’Automated’Teller’Machine’located’outside’the’ banking premises.
Automated Teller Machines do not require biometric identification.
BENEFICIAL OWNERS
The BVN project requires individuals who are signatories to corporate accounts to enrol. Individuals who are not signatories but are still benefiting from profits paid into the account are not required to enrol.3
This approach is inconsistent with the interpretive note to Recommendation 10 of the Financial Action Task Force (FATF) Recommendations 2012. The interpretive note requires financial institutions to identify the individuals exercising control of the company.
2Central’Bank’of’Nigeria,’ Bank’Verification’Number’(BVN)
(http://www.cbn.gov.ng)
http://www.cbn.gov.ng/Paymentsystem/BVN.asp Accessed 9th of August 2015, See also Central Bank of Nigeria, Bank’Verification’Number ’http://www.bvn.com.ng/ Accessed 3rd January 2015
3Bank’Verification’Number,’ Frequently’Asked’Questions
The non-identification of all directors and shareholders of companies could allow for the unlawful use of such companies for money laundering activities.
Money laundering is the criminal practice of processing ill-gotten’ gains,’ or’ dirty ’ money,’ through’a’series’of’transactions;’in’this’way’the’ funds’are’ cleaned ’so’that’they’appear’to’be’ proceeds from legal activities.4
FINANCIAL INCLUSION
With regards to the provision of financial services, Nigeria lags behind some of its peer African countries. In 2010 for instance, only 36% – roughly 31 million out of an adult population of 84.7 million – were served by formal financial services, compared to 68% in South Africa and 41% in Kenya
Between 2008 and 2010, the percentage of "completely excluded" fell from 53% to 46%, while those served by the "informal sector" fell from 24% to 17%. At the same time, "formal other" doubled from 3% to 6% and "formally banked" rose from 21% to 30%.5
In view of the above stated facts, the Central Bank of Nigeria and other stakeholders in October 2012 implemented a National Financial Inclusion Strategy to decrease the number of Nigerians that are excluded from financial services from 46.3 % to 20.0 % by 2020 as committed to in the Maya Declaration.
Financial Inclusion is achieved when adults have easy access to a broad range of formal financial services that meet their needs and are provided at affordable cost.6
The BVN project may pose a threat to the potential success of the National Financial Inclusion Strategy.
The project requires that customers have to be physically present to enrol.
Customers who are not within the country at the moment risk being excluded from the financial system.
4
E E Esoimeme,’A Comparative Study of the Money Laundering Laws/Regulations in Nigeria, the United States and the United Kingdom (Eric Press 2014) 2. See also D Hopton, MONEY LAUNDERING, A CONCISE GUIDE FOR ALL BUSINESS (2nd Edition, Ashgate Publishing Ltd 2007), P Alldridge, Money Laundering Law,
Although the Central Bank of Nigeria recently approved a centre in London, Beijing, New Delhi, Dubai, New York and Johannesburg for BVN Registration,Diaspora Customers are required to pay the sum of eleven thousand naira, to enrol on the exercise.7
Nigerians, who are unable to enrol due to their inability to pay the required fees, would be denied access to the financial system.8
DIRECT DISCRIMINATION
Section 42 (1) of the Nigerian Constitution and Article II of Universal Declaration of Human Rights provides for the universally recognised norm of non-discrimination.
Section 42 (1) of the Constitution is to the effect that:
A citizen of Nigeria of a particular community, ethnic group, place of origin, sex, religion or political opinion shall not, by reason only that he is such a person:-
(a) be subjected either expressly by, or in the practical application of, any law in force in Nigeria or any executive or administrative action of the government, to disabilities or restrictions to which citizens of Nigeria of other communities, ethnic groups, places of origin, sex, religion or political opinions are not made subject; or
(b) be accorded either expressly by, or in the practical application of, any law in force in Nigeria or any such executive or administrative action, any privilege or advantage that is not accorded to citizens of Nigeria of other communities, ethnic groups, places of origin, sex, religion or political opinions.9
This section will determine if the BVN project directly discriminates against Diaspora Customers by looking into the conditions that must be cumulatively met in order for direct discrimination to be considered to have occurred. These conditions include differential treatment, prohibited grounds, without objective and reasonable justification and no reasonable relationship of proportionality.10
7See’B’Udunze,’ Nigerians’in’diaspora’to’pay’£30’for’BVN’
registration –NIBSS ’(http://sunnewsonline.com 27th July 2015) http://sunnewsonline.com/new/nigerians-in-diaspora-to-pay-30-for-bvn-registration-nibss/ Accessed 8th of August 2015, SeeD’Oketola,’A’Adepegba,’I’Onuba’and’J’Alagbe,’ Uproar as Nigerians in UK pay N10,000 for BVN ’(http://www.punchng.com 18th July 2015) http://www.punchng.com/news/uproar-as-nigerians-in-uk-pay-n10-000-for-bvn/ Accessed 18th July 2015,’See’also’NAN,’BVN: Central Bank Sets Up Centre In South Africa ’
(http://www.aitonline.tv) http://www.aitonline.tv/post-bvn__central_bank_sets_up_centre_in_south_africa Accessed 8th August 2015
8
The Central Bank of Nigeria has ordered, with effect from 31st October 2015, customers WHO HAVEN'T COMPLETED THEIR BVN REGISTRATION would not be able to transact in any Nigerian bank, restrictions would be placed on their ATM use and Internet Banking access. See’Online’Integrated’Solutions’BVN ENROLMENT ’(http://oisservices.com) http://oisservices.com/bvn.php Accessed 8th August 2015
9
Constitution of the Federal Republic of Nigeria 1999 (as amended), s 42 (1)
10
DIFFERENTIAL TREATMENT
One of the conditions that must exist before direct discrimination can occur is that there must be a given difference in treatment, which may concern the exercise of any right set forth by law or any executive or administrative action of the government.11
The BVN project does create a difference in treatment.
While BVN registration in Nigeria is free, Nigerians living in London and other parts of the world have to pay the sum of eleven thousand naira, to enrol on the exercise.
PROHIBITED GROUNDS
Discrimination could be on the grounds of sex, race, colour, national or social origin, property, birth or other status.12
The BVN project does discriminate on the grounds of the domicile and residence of a person.
NO OBJECTIVE AND REASONABLE JUSTIFICATION
The third condition for a direct discrimination to occur is that the distinction or difference in treatment would have no objective and reasonable justification. The existence of such a justification must be assessed in relation to the aim and effects of the measure under consideration.13 This means that the aims and objectives of the BVN registration fee must be looked at to determine if it has no reasonable justification.
The Nigerian Inter Bank Settlement System (NIBSS) have explained that the BVN registration fee which roughly adds up to about eleven thousand Nigerian naira is the cost of the service rendered.
According to the managing director and chief executive of the NIBSS, Mr Ade Shonubi, the company had contracted the gathering of data for the BVN to the company which processes Nigerian Visa applications and passport renewal outside the country, Online Integrated Services (OIS).
He explained that the law in some countries which prevents the data of their nationals from being captured and stored outside their borders makes it hard to gather the necessary data for the BVN.
11
See Belgian Linguistic Case (1979 -80) 1 EHRR 252, Para 10, See also National Union of Belgian Police v. Belgium (1979 -80)’1’EHRR’578’Para s’44,’46
12
Constitution of the Federal Republic of Nigeria 1999 (as amended), s 42 (1), See also the Universal Declaration of Human Rights (1948), Article 2.
13
Even’Nigerian banks in the United Kingdom (UK) are not allowed to share the data of their customers with their parent banks that are here. It is part of the data privacy rules and laws that they have. So just setting up a desk in any country can get you locked up. So the first thing we considered was what can be done legally and by whom. We did some research to find out who supports the Nigerian embassy in gathering data for visa applications and passport renewal application because by law they are covered and allowed to gather data. It is only under that premise that we can then get them to help us with the BVN and that is how OIS came into being, ’he’said.
Shonubi noted that the thirty pounds cost, which would be the base cost across the countries, is the cost of’service’paid’to’OIS.’He’explained’that’ they’are’not’using’the’same’network’that’they’ use to capture visa request; they had to set up a separate and secure one for us. They are the ones incurring this cost; there is nothing that comes to us in terms of money. We just told them to recover’their’cost’and’they’have’agreed’to’go’to’countries’where’we’don t’even’have’Nigerian’
banks. 14
In view of the above stated facts, the Central Bank of Nigeria does have objective and reasonable justifications, for requiring Diaspora Customers, to pay the sum of eleven thousand naira, to enrol.
There is no need to further determine whether or not the BVN project meets the other direct discrimination requirements.
BLACKLISTED CUSTOMERS
As stated earlier, the BVN project requires individuals performing banking transactions (e.g., applying for loans) to identify themselves using their biometric features which will be matched against information in the central database.
This approach aims to’ enhance’ the’ banking’ industry s’ chances’ of’ being’ able’ to’ fish’ out’ customers who have been blacklisted by the Central Bank of Nigeria for not paying back loans.
Although this approach could prevent blacklisted customers from applying for loans, it is unable to prevent non-blacklisted customers from lending money to blacklisted customers.
CONCLUSION
In view of the above analysis, this paper makes the following recommendations:
i. Automated Teller Machines should request for biometric identification.
ii. All Directors and shareholders of companies should enrol.
14LEADERSHIP,’ Why’Diaspora’Customers’Pay’For’BVN’Registration ’(
http://leadership.ng 27th July 2015)
iii. Customers who are unable to enrol at banking premises should be allowed to enrol online. Since it may be impossible to capture their biometric data online, banks could use the biometric information already captured during the voter s’registration’process.’Alternatively, banks could use FreeSpeech voice biometrics solution to automatically confirm and identify such customers.15
15
D Preez,’ Barclays adopts voice biometrics for’customer’identification ’
APPENDIX 1
BIBLIOGRAPHY
BOOKS
Alldridge P, Money Laundering Law, Forfeiture, Confiscation, Civil Recovery, Criminal Laundering and Taxation of the proceeds of crime (Hart Publishing 2003)
Esoimeme E E, the’ Risk-Based Approach to Combating Money Laundering and Terrorist
Financing ’(Eric’Press’2015)
Esoimeme E E, A Comparative Study of the Money Laundering Laws/Regulations in Nigeria, the United States and the United Kingdom ’(Eric’Press 2014)
Hopton D, Money Laundering, A Concise Guide For all Business (2nd Edition, Ashgate Publishing Ltd 2007)
ELECTRONIC SOURCES
Central’Bank’of’Nigeria,’ Bank’Verification’Number’(BVN) (http://www.cbn.gov.ng)
http://www.cbn.gov.ng/Paymentsystem/BVN.asp Accessed 9th of August 2015
Central’Bank’of’Nigeria,’ Bank’Verification’Number http://www.bvn.com.ng/ Accessed 3rd
January 2015
Central’Bank’of’Nigeria,’ National’Financial’Inclusion’Strategy ’
http://www.microfinancegateway.org/sites/default/files/mfg-en-paper-national-financial-inclusion-strategy-oct-2012.pdf
Bank’Verification’Number,’ Frequently’Asked’Questions
http://www.bvn.com.ng/BVN_FAQ.pdf Accessed 3rd January 2015
LEADERSHIP,’ Why’Diaspora’Customers’Pay’For’BVN’Registration ’(http://leadership.ng 27th July 2015)
http://leadership.ng/business/449764/why-diaspora-customers-pay-for-bvn-registration Accessed 1st of August 2015
NAN,’ BVN:’Central’Bank’Sets’Up’Centre’In’South’Africa ’(http://www.aitonline.tv)
http://www.aitonline.tv/post-bvn__central_bank_sets_up_centre_in_south_africa Accessed 8th August 2015
Online’Integrated’Solutions’ BVN’ENROLMENT ’(http://oisservices.com)
http://oisservices.com/bvn.php Accessed 9th August 2015
Oketola’D,’Adepegba’A,’Onuba’I’and’Alagbe’J,’ Uproar’as’Nigerians’in’UK’pay’N10,’000’for’
BVN ’(http://www.punchng.com 18th July 2015)
Preez D,’ Barclays adopts voice biometrics’for’customer’identification
http://www.computerworlduk.com/news/applications/3446244/barclays-adopts-voice-biometrics-for-customer-identification/
Udunze B,’ Nigerians’in’diaspora’to’pay’£30’for’BVN’registration’–NIBSS ’
APPENDIX 2
FREQUENTLY ASKED QUESTIONS
Below are some Commonly Asked Questions about the BVN Project.
Question 1: What is Enrolment?
Answer:’Enrolment’is’the’process’of’capturing’a’customer s’details’which’includes’fingerprint’ and facial image after which a BVN is generated.
Question 2: How does a Customer get a BVN?
Answer: A customer enrols at any branch of a bank where he/she has an account or intends to open an account.
Question 3: Must every customer have a BVN, is it Compulsory?
Answer: Yes it is
Question 4: How long does it take to get a BVN?
Answer: It takes up to 24hrs after Enrolment to get a BVN.
Question 5: What is the Benefit of enrolling for a BVN?
Answer: The BVN helps to reduce fraud, increase the efficiency of banking operations and also enable customer access to future credit facilities.
Question 6: How is the BVN communicated to the customer?
Answer: Once the BVN is generated, the bank would inform you of your BVN. All customers would receive SMS alerts.
Question 7: If a customer forgets his/her BVN what should the customer do?
Answer: The customer should contact his/her bank where the enrolment was carried out, to retrieve the number.
Question 8: How/ where can you update customer information e.g. in case of change of address?
Answer:’ The’ customer’ goes’ to’ his/her’ bank’ and’ follows’ the’ bank s’ processes’ for’ updating’ customer information. A customer can update his/her information only at the bank where he /she has an account.
Question 9: Does the BVN change when customers update their record?
Answer:’No,’the’BVN’doesn t’change.’
Answer: The BVN expires after 10 years. After 10 years of the issuance of the BVN, the customer goes back to his/her bank to re‐enrol.
Question 11: Does my BVN number remain the same for Life?
Answer: Yes it does
Question 12: Can a customer Enrol in one bank and get the BVN from another bank?
Answer: No. The customer can only pick up his/her BVN at any branch of the same Bank he/she enrolled.
Question 13: If a person steals another customers’ BVN and comes to the bank what Happens?
Answer:’The’person s’live’fingerprint’will’not’match’what’is’stored’on’the’customer s’record.’
Question 14: After the BVN has been generated, what next?
Answer:’A’customer s’identity’can’now’be’verified’against’their’BVN.’
Question 15: Does a customer have to be physically present to Enrol?
Answer:’Yes,’because’the’customer s’physical’features’e.g.’Fingerprints’have’to’be’captured.’
Question 16: What is the Enrolment procedure for corporate accounts?
Answer: Individuals who are signatories to corporate accounts will enrol and their BVNs would be linked to the corporate account by the Banks.
Question 17: Can minors be enrolled?
Answer: No, only bank‐able adults can be enrolled.
Question 18: What is Verification?
Answer:’Verification’refers’to’the’process’of’confirming’a’customer s’identity.’
Question 19: What is Offline Verification?
Answer: Offline verification will authenticate the customer by comparing the fingerprint or the facial image with the data stored on the BVN card.
Question 20: What happens if a customer is an amputee?
Answer: The facial features of the customer will be captured as fingerprints will not be required for Amputees.
Question 21: Will biometric function be implemented on POS and ATM terminals, and if yes, how will it work?
Question 22: How would Bank customers Living outside Nigeria Enrol?
Answer: Bank customers living outside Nigeria can now enrol in any of the designated registration centers:
London: OIS Services, 56-57 Fleet Street, London EC4Y 1JU, UK Opening times: Monday to Friday (10am - 4pm)
Tel: +44 (0) 20 7832 0001
Leicester: OIS Services, The Peepul Center Orchardson Avenue, Leicester LE4 6DP, UK Opening Times: Friday (10am - 4pm)
Tel: +44 (0) 20 7832 0001
Washington: OIS SERVICES, Washington DMV, 11900 Parklawn Drive, Suite 160, Rockville, MD, 20852.
Opening times: Monday to Friday (9:00am - 4:00pm) Tel: +1 860 929 8995
Question 23: Who does a customer contact with regards to any biometrics complaint?
Answer: The customer should contact his/her bank.
Question 24: Would a customer have to go to all Banks where he/she has an account to Enrol?
Answer: No, once a customer is enrolled at one bank and a BVN is generated, the customer only has to take the BVN to other banks to link such accounts.
Question 25: Are customers’ information secure?
Answer: Yes they are, the details are encrypted and stored in a secure database.
Question 26: Is it possible to start an enrolment and finish later? Can it be saved like a draft?
Answer: No, because the enrolment is done real time, it is necessary that it is completed in one session
Question 27: What happens if a customer comes to enrol with bandaged/injured fingers?
Answer: Customers with injuries or bandaged fingers are advised to return for enrolment once fingers are healed. However if you require special exemption please contact your Bank.
Question 28: What happens to individuals that cannot write or are illiterates. How do they fill the enrolment form?
Answer: A customer service officer will assist the customer in filling the enrolment form
Question 29: Can a customer choose which of his/her accounts will be linked to the BVN?
Question 30: During Facial capture can a customer leave his/her glasses on?
Answer: No a customer cannot leave his/her glasses on during facial capture
Question 31: What is the basic identification needed for enrolment?
Answer: It depends on the level of account the customer wants to open. Please contact your bank.
Question 32: For joint accounts how does the linking work?
Answer: All signatories of the accounts shall be linked.
Question 33: Are there Terms and Conditions to be agreed to by a customer before giving out his/her details?
Answer: Yes there are Agreement clauses at the end of the enrolment forms.
Question 34: After a customer has enrolled and collected his/her BVN, Would the customer still be required to provide another means of identification at the point of transaction?
Answer: No, a formal identification is not needed because verification is done at the point of transaction.
Question 35: Since I am a Bank customer and the Bank already has my information, do I have to fill an enrolment form?
Answer: Yes, everybody fills a form irrespective of an existing account holder
Question 36: Is there a deadline for every bank customer to be enrolled?
Answer: Yes, the deadline for registration is 31st of October 2015.
APPENDIX 3
ABOUT THE AUTHOR
Ehi has so much passion for legal writing, lecturing/teaching and research. Ehi recently
published’ a’ book’ on’ Money’ Laundering.’ The’ book’ titled’ the’ Risk-Based Approach to
Combating Money Laundering and Terrorist Financing ’has’been’endorsed’by’professionals’in’
the Anti-Money Laundering Industry.
Ehi has edited LLM dissertations, PhD theses and professional books on Money Laundering
Law.
Ehi received an award from the Top Executives in the Law, Legal & Information Services
Industry for his publications in the legal world.
Ehi has been involved in many extra-curricular activities. In December 2012, Ehi worked with
Cardiff Digs/Environmental Champions as a Student Volunteer on a variety of projects. The
projects focused on waste and recycling, housing and energy efficiency, sustainable travel,
fair-trade, environmental tasks including river clean ups, green police and much more. In August
2013, Ehi registered as a Millennium Volunteer (MV) in the Placement Program organised by
Cardiff Digs/Environmental Champions and received a 50 hours certificate by the Welsh
Government to that effect.
For’ more’ information’ on’ Ehi,’ visit’ Ehi s’ LinkedIn’ profile:’
https://ng.linkedin.com/pub/ehi-esoimeme/70/912/b3b
You’ can’ also’ visit’ Ehi s’ website’ here:’
