NIGERIA – Every day we watch local TV and in recent times foreign media, billboards, leaflets, personal encounters with bank officers encouraging and enticing us to open accounts or do a form of business with one bank or the other. You look at it and you think “might give it a try someday”. You might already have an account with one but the beauty of various banks publicity stunts would make you want to open more in other banks.
The bank PHBs’ billboards, being the most seductive with thought provoking quotations, Zenith bank taking over streets with tiny billboards everywhere etc. Promotions like the Diamond banks 50 million naira splash, the bank PHB’s ‘you go win’ promo, the Ecobank’s savers harvest promo, the Intercontinental bank’s ‘Happy savers’ promo and so many others are enough to send you running to the banks to open an account. So one day you walk into a bank to open an account, approach the Customer Service Officer and tell him you want to open one probably a savings account. That is when you realize that it’s not as easy as it seems.
You are being asked to provide a valid Identity card and an evidence of utility for address verification. At that point, you remember you haven’t paid your PHCN or Water bills in months or you are squatting with a friend who pays his. The bill is in your friends’ name or if he is a tenant in his landlords’ name. You inform the bank and the bank staff tells you that you have to get a tenancy agreement in addition to the bill. But how can you when you are squatting with the tenant. 
There is no such agreement in your name. In some cases, you could live in an interior or rural area where you don’t get issued with PHCN bills and your only source of portable water might probably be a central borehole or a stream. Or maybe you just don’t have a valid Identity card (which could be a national identity card, drivers’ license, international passport or an identity card of a recognized company or government establishment).
Maybe you just have the identity card of your social club. So what option do you have left? Probably a physical visitation by the bank staff. But how many staff have the time to go visiting prospective customer’s homes to verify their addresses when maybe all they have to open an account is ten thousand naira. You could just end up being shown the way out. And then you think ‘so much for all the publicity – billboards, TV commercials, T-shirts etc ‘.
So why all these formalities? The much talked about money laundering act. Section 3 subsection 1 of the act provides that “a financial institution shall verify its customer’s identity and address before opening an account for, issuing a passbook to, entering into fiduciary transaction with, renting a safe deposit box to or establishing any other business relationship with the customer”. Section 2 paragraphs (a) and (b) provides that “an individual shall be required to provide proof of his identity, by presenting to the financial institution a valid original copy of an official document bearing his names and photograph; and also proof of his address, by presenting to the financial institution the originals of receipts issued within the previous three months by public utilities”.
The main objective of the act is to easily identify and check against the laundering of proceeds from a crime or an illegal act. Also to quickly apprehend culprits or suspected launderers. Section 1 of the act provides that “no person or body corporate shall, except in a transaction through a financial institution, make or accept cash payment of a sum exceeding N500,000 or its equivalent in the case of an individual or N2,000,000 or its equivalent in the case of a body corporate”. Section 10 subsection 1 paragraphs (a) and (b) provides that “a financial institution or designated non-financial institution shall report to the Economic and Financial Crimes Commission (EFCC) in writing within seven days any single transaction, lodgments or transfer of funds in excess of N1, 000,000 or its equivalent in the case of an individual, or N5, 000,000 or its equivalent, in the case of a body corporate”.
If the financial institution doesn’t have records of their customer’s identity and addresses, how could they possibly abide to this? One might not help wondering how this affects an individual who watches a banks TV commercial, enjoys it and finally goes to the bank to open an account with a little sum of money. After all, the real money launderers move with millions. That you drive at 20km/hour doesn’t mean you shouldn’t put on your seat belts. A law is a law and just has to be obeyed no matter how little you invest. Although the real money launderers know how to beat the system and provide an apparent legitimate explanation for the origin of illegal proceeds.
Introduction of the illegally acquired money into the banking system in bits, converting the cash into other financial or monetary instruments, investing in real estate, setting up legitimate businesses, purchase of shares of companies and before you realize it, distinction between legitimate and illegitimate funds is extremely difficult.
A lot has to be done to ensure that every Nigerian has a valid means of identification. The National Identification Card, the Drivers license and the International passport are the most recognized. For a non-driver and one who doesn’t travel out, the National ID is your only option. Majority fall into this category. The question is how easy is it to get a National ID especially for those in the rural areas. Banks are losing a lot of deposits due to these laws. Deposits needed for the banks growth, the individuals growth and the growth of the nation’s economy as a whole. Banks in the country are now engaging in various strategies to ensure they shore up their deposit base and boost their balance sheets.
This is coming on the heels of the decision of the banks to adopt the International Financial Reporting Standards (IFRS) for their financial statements. Most banks are now targeting the N1.2 trillion outside the banking system and unbanked segment of the population, which the CBN put as 79%. The laws are good and have come to stay but efforts should be made to simplify the procedures required to get these means of identification while at the same time applying the utmost caution needed. With the aggressive deposit mobilization and marketing strategies of some Nigerian banks, I believe something has to be done urgently or the next TV commercial might just say………… “the bank that delivers…open an account with just five thousand naira and get a free National ID”.
Mgbenu Chidi is a banker and writes from Minna Nigeria for Trendy Africa. Trendy Africa is a Multi Media Production Company based in Texas and are Publishers of Trendy Africa Magazine, Trendy Africa Fashion Xtra and www.trendyafrica.com
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