Finance

Banks to physically verify addresses, social media in new KYC

Financial institutions are expected to rely on reliable and independent source documents, data, or information. For individuals, this involves confirming date of birth, residential address, contact details, and the validity of official documentation. In the case of legal persons or legal arrangements, financial institutions are required to undertake searches on public registries or databases, review annual reports or relevant financial statements, and examine board resolutions. The regulations also emphasise the importance of record-keeping and maintaining up-to-date customer information. Financial institutions must retain records obtained through customer due diligence measures, account files, business correspondence, and analysis results for at least five years after the termination or cessation of a business relationship or an occasional transaction.

As part of measure to increase compliance with Anti Money Laundering and Combating Financing Terrorism (AML/CFT) through increased customer due diligence, the Central Bank of Nigeria (CBN) has upped the ante on Know your Customer (KYC) guideline in a newly gazetted document released on its website.

According to the document on Consumer Due Diligence (CDD) banks are expected to do an onsite verification of permanent addresses of customers as filled in their KYC forms. This is in addition to request for social media handles of both individual and corporate customers.

The CDD according to the document is not limited to established customers alone but also extended to customers carrying out occasional transactions such as wire transfers, including cross-border and domestic transfers between financial institutions and when credit or debit cards are used as a payment method to effect money transfer.

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The CDD is also expected to be implemented in situations where customers are carrying out occasional transactions above the applicable and designated threshold of $1,000 or its equivalent in other currencies or as may be determined by the CBN from time to time, including where the transaction is carried out in a single or several transactions or operations that appear to be linked.

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These new regulations, which complement existing provisions outlined in the CBN’s Anti-Money Laundering, Combating the Financing of Terrorism and Countering Proliferation Financing of Weapons of Mass Destruction in Financial Institutions Regulations of 2022, are designed to fortify the fight against money laundering, terrorism financing, and proliferation financing.

Under the new regulations, financial institutions are required to establish internal processes and procedures for conducting customer due diligence measures for both potential and existing customers, including occasional customers.

Financial institutions are expected to rely on reliable and independent source documents, data, or information. For individuals, this involves confirming date of birth, residential address, contact details, and the validity of official documentation. In the case of legal persons or legal arrangements, financial institutions are required to undertake searches on public registries or databases, review annual reports or relevant financial statements, and examine board resolutions.

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The regulations also emphasise the importance of record-keeping and maintaining up-to-date customer information. Financial institutions must retain records obtained through customer due diligence measures, account files, business correspondence, and analysis results for at least five years after the termination or cessation of a business relationship or an occasional transaction.

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