‘No BVN? Sorry, Your Money Is Now Public Property’
Can the Central Bank of Nigeria (CBN) compulsorily acquire funds in any bank account which lacks a Bank Verification Number (BVN)? That is the question agitating the minds of many Nigerians, in the wake of the ex parte order procured last week by the Attorney-General of the Federation on behalf of the apex bank which purportedly ordered an interim forfeiture of such accounts. Are all the defaulting accounts necessarily being used for unlawful activity, which the Government alleges is its justification for procuring that order? Is forfeiture the only solution to any legitimate concerns about the security implications of leaving BVN-less accounts within the financial system? Let’s see . . .
The BVN Regime Everyone agrees that the goal of Bank Customer Verification Numbers is a laudable one. The reasons are obvious: to check fraud and even terrorist transactions; it is thus clearly in the national interest. It is equally clear that ample opportunity - almost 2 years, if I am not mistaken – was afforded account-holders to comply with the policy. That not all of them have complied so long after the policy was introduced – and even extended – is not surprising, because that is human nature. The real surprise is the option adopted to address the non-compliance. Is that really the only policy tool available to Government deal with the situation, or is it yet another case of policy mismatch by the powers-that-be? To start with, it is pertinent to ask . . .
Can CBN Prescribe Mandatory BVNs? In my opinion, the answer to this question depends on the construction of Sections 57 of the Banks and Other Financial Institutions Act (BOFI) and Section 33(1) (b) of the Central Bank of Nigeria Act. They provide as follows, respectively; - Section 57:
(1) “The Governor may make regulations, published in the Federal Gazette to give full effect to the objects and objectives of this Act;
(2) Without prejudice to the provisions of subsection (1) of this section, the Governor may make rules and regulations for the operations and control of all institutions under the supervision of the Bank”
- Section 33(1)(b): “In addition to any of its powers under this Act, the Bank may issue guidelines to any person and any institution under its supervision.”
What is Forfeiture? In MOHAMMED ABACHA v FRN, the Court of Appeal defined forfeiture as a comprehensive term which means a divestiture of specific property without compensation; it is the loss of some right or property as a penalty for some illegal act, and it imposes a loss by the taking away of some pre- existing valid right without compensation.
Is the Forfeiture Order Valid? This is the ‘Million Naira’ question. Surprisingly, Section 17(1)(b) of the Advanced Fee Fraud Act, 2006 (AFF Act), categorically authorises the forfeiture to the Federal Government, of any property in the possession of any person, body corporate or financial institution, which the court reasonably believes to be the proceeds of some unlawful activity under any law enforceable under the EFCC Act. Beyond this, however, the broader question is whether this statutory provision is constitutional. This question is pertinent having regard to the principle of constitutional supremacy, which prescribes that all laws derive their legitimacy from the Constitution; accordingly, any law which is inconsistent with the Constitution will be invalid and void to the extent of the inconsistency.
In this regard, I believe that Sections 36(1)&(2) and 44(1)&(2)(b) of the Constitution are relevant. The former, i.e. Section 36(1)&(2) provide that:
(1): “In the determination of his civil rights and obligations, including any question or determination by or against any government or authority, a person shall be entitled to a fair hearing within a reasonable time by a court or other tribunal established by law and constituted in such a manner as to secure its independence and impartiality.
(2): “Without prejudice to the foregoing provisions of this section, a law shall not be invalidated by reason only that, it confers on any government or authority, power to determine questions arising in the administration of a law that affects or may affect the civil rights and obligations of any person if such law –
(a) Provides for an opportunity for the person whose rights and obligations may be affected, to make representations to the administration authority before that authority makes the decision affecting that person; and
(b) Contains no provision making the determination of the administrating authority final and conclusive”
Similar provisions in the 1979 Constitution were construed by the Supreme Court in BAKARE v L.S.C.S.C. (1992) 3 NSCC 218 @ 247, where the court held that:
“Subsection (2) deals with the question of the validity of such enabling laws. Under the subsection, which is without prejudice to the provisions of subsection (1) of the section, any law that affects or may affect the civil rights and obligations of any person is valid if:
(a) It provides an opportunity for the person affected, to make representation to the person taking the decision, before the decision is taken; or
(b) The decision made without hearing is not final and conclusive. The two conditions are independent of each other, and are in the alternative”
Section 17(1) of the AFF Act appears to satisfy this requirement, as it provides for publication of the interim order of forfeiture for the benefit of account-holders and third parties; it provides further that, if at the expiration of 14 days of that publication, they fail to show cause why those funds should not be forfeited to the Federal Government, the court will make a final order accordingly.
- Section 44(1) of the Constitution provides that: “No moveable property or any interest in an immovable property, shall be taken possession of compulsorily and no right over or interest in any such property, shall be acquired compulsorily in any part of Nigeria except in the manner and for the purposes prescribed by a law that, among other things –
(a) Requires the prompt payment of compensation therefore; and (b) Gives to any person claiming such compensation, a right of
"SIMPLY PUT, THE POLICY IS ILLCONCEIVED AND ILL-TIMED, GIVEN OUR FRAGILE ONGOING RECOVERY FROM A PROLONGED RECESSION. HIVING-OFF HUNDREDS OF BILLIONS OF NAIRA – REPORTEDLY - FROM SUCH ACCOUNTS, CAN ONLY WORSEN THE LIQUIDITY SITUATION OF BANKS, WITH ITS OBVIOUS CONSEQUENCES ON THEIR LENDING CAPACITY"
access for the determination of his interest in the property, and the amount of compensation to a court of law or tribunal or body having jurisdiction in that part of Nigeria. (2): “Nothing in subsection (1) of this section shall be construed as affecting any general law – (b) For the imposition of penalties or forfeitures for the breach of any law, whether under civil process or after conviction for an offence”
For the foregoing reasons, this provision also appears not to have been violated by the Government in procuring the order; this is because the order was evidently the product of a civil process, allegedly for the breach of a law. By virtue of Section 17(1) of the AFF Act, such a law must be one which the EFCC is authorised to enforce. This caveat is important, because that provision is not self-executing, as the court must be reasonably satisfied that the funds in the affected accounts were the proceeds of some unlawful activity under any law which is enforceable under the EFCC Act. The obvious question is: does the mere fact that funds in certain bank accounts lack BVN, ipso facto, suggest that they are the proceeds of unlawful activity?
I submit that, the answer is a resounding ‘No’. There are any number of reasons or circumstances, which justify or explain why those accounts – or some of them – are not BVN-compliant. One obvious reason is death, i.e., the death of the account-holder. Another one is indifference stemming from the fact that the owner, presumably, possesses another account or accounts and, perhaps, has simply chosen to abandon this particular one.
Conclusion Even though Section 17(1)(b) of the AFF Act was never designed to be used in such a blanket fashion as the Government has evidently done, it is clear that, criticism of the order has more to do with its political correctness and the perceived lack of circumspection by those behind it.
Public outcry to the order, shows that the issues it has thrown up, go beyond its statutory or even constitutional validity. It appears that, rather than any genuine security concerns, the policy was motivated, almost entirely, by the Government’s parlous finances; unfortunately, in its apparent desperation in this regard, the Government seems to have committed a faux pas, if not an outright overkill.
Simply put, the policy is ill-conceived and ill-timed, given our fragile ongoing recovery from a prolonged recession. Hiving-off hundreds of billions of Naira – reportedly - from such accounts, can only worsen the liquidity situation of banks, with its obvious consequences on their lending capacity.
In the long run, the negative impact of the order, could conceivably outweigh the perceived benefits of getting all account-holders to sign-up. The better approach would be, to simply suspend such accounts. This will give the affected banks, freedom to utilise such funds while denying it to their owners. Needless to say, whenever such owners - or their heirs and successors-in-title - are pressed enough, they will show up and comply.